RT Journal Article
SR Electronic
T1 Conservation Payments under Uncertainty
JF Land Economics
JO Land Econ
FD University of Wisconsin Press
SP 36
OP 56
DO 10.3368/le.91.1.36
VO 91
IS 1
A1 Engel, Stefanie
A1 Palmer, Charles
A1 Taschini, Luca
A1 Urech, Simon
YR 2015
UL http://le.uwpress.org/content/91/1/36.abstract
AB The decision of whether to retain forest or convert to another land use is affected by uncertainty over future land use returns. This paper examines the design of conservation payments to landowners under uncertainty. Payments are either indexed to the returns from deforestation (agriculture), or to a market value associated with forest nonuse benefits. Payment size depends on the degree of correlation between payments and agricultural returns, and their relative volatility. Market-based payments for reducing emissions from deforestation and degradation (REDD) are simulated for Brazilian soybean growers. Payments indexed to carbon prices are larger than those indexed to international soybean prices. (JEL Q23, Q24)