Effects of Payment for Environmental Services (PES) on Deforestation and Poverty in Low and Middle Income Countries: A Systematic Review

This Campbell systematic review examines the effects of payment for environmental services (PES) programmes on deforestation and poverty, and whether environmental and poverty reduction goals conflict with one another. The review summarizes evidence from 11 studies covering six PES programmes in four countries. The modest effectiveness of PES programmes means that they are not cost‐effective. Relative to the extensive investment to measure forest conditions, efforts to assess the effects of PES programmes on deforestation and poverty are limited and methodologically weak. Abstract We conducted a systematic review of studies on the impact of payments for environmental services (PES) that set natural forest conservation as the goal on deforestation and poverty in developing countries. The review is motivated by debates over whether the pursuits of conservation and poverty reduction in developing countries tend to conflict or whether they might be complementary. A search for rigorous impact evaluation studies identified eleven quantitative and nine associated qualitative evaluation studies assessing the effects of PES. The methodological rigor of these studies varied widely, meaning that the evidence base for the impact of PES policies is limited in both quantity and quality. Given the evidence available, we find little reason for optimism about the potential for current PES approaches to achieve both conservation and poverty reduction benefits jointly. We call for the production of high quality impact evaluations, using randomisation when possible, to assess whether the apparent incompatibility of conservation and poverty reduction might be overcome through programming innovations. Executive summary BACKGROUND Natural forest preservation in the tropics, and thus in developing countries, must be an element of any effective effort to manage climate change. Forests serve as natural carbon sinks, which help to mitigate the effect of other carbon emissions. However, forest cover is being reduced and it is estimated that deforestation is responsible for 10‐17 per cent of global carbon emissions. Since 2007, governments have coordinated conservation efforts under the Reducing Emissions through Deforestation and Forest Degradation (REDD+) initiative, which has led to the implementation of various programs designed to reduce the amount of forested land converted to other purposes. Payment for environmental services (PES) programs is one type of intervention commonly implemented under the REDD+ umbrella. PES programs allow for direct exchange between those demanding ‘environmental services’ such as protection or rehabilitation of natural forests and those in a position to provide them locally. While the primary goal of reducing deforestation is clear, the policy and academic literature debates the extent to which PES programs in developing countries should incorporate goals of poverty reduction. Some argue that the targeting of poverty goals will undermine conservation effectiveness (e.g., because behavioural change among poorer households does not have as much potential to promote conservation as that of wealthier households or commercial entities). Others argue that targeting benefits toward the poor would contribute to conservation effectiveness by either promoting sustainable livelihoods or helping to legitimize conservation programming. In this review, we assess the effects of PES programs on deforestation and welfare outcomes in low and middle income countries (LMICs), and whether the twin goals of improving both environmental and human welfare outcomes are at odds with each other. We also examine how inequality, institutional capacity, corruption, and democratic accountability may moderate the effects of PES programs. Conducting this review is important for moving the debate around PES beyond theoretical discussions and into a better‐informed, evidence‐based discussion. OBJECTIVES The first objective of this review is to assess the evidence on the effects of PES interventions on conservation and poverty outcomes in LMICs. A second objective is to assess the extent to which effects on poverty in turn affect whether conservation benefits are realized. The third objective is to evaluate how institutional and social conditions (namely, inequality, institutional capacity, corruption, and democratic accountability) moderate the effects of PES programs. SELECTION CRITERIA The review includes studies of PES programs that assess effects on either (i) deforestation outcomes in forest areas in developing countries or (ii) poverty conditions of populations residing in communities that are proximate to natural growth forest areas in developing countries. We included studies using a range of measures for both deforestation (on‐the‐ground point samples, samples created from satellite imagery) and welfare (consumption, income, or income potential). We required that PES programs have a clear start date when either payments or rewards are themselves offered to individual or corporate property holders to maintain or rehabilitate (for example, via planting endemic species) natural forests, or institutions are established to facilitate such offers. For quantitative synthesis we included (a) randomized studies and (b) quasi‐experimental studies that employ strategies for causal identification with clearly delineate treated and control areas and use some method for removing biases due to non‐random assignment of the intervention. Qualitative data are used in the synthesis to provide descriptions and context for interventions that are included in the quantitative synthesis. Such data were drawn from the quantitative studies themselves as well as qualitative studies that cover the same programs or settings as the quantitative studies. SEARCH STRATEGY To find the articles included in this review, we searched a variety of databases using key words related to PES programs. The set of databases and list of keywords were assembled based on consultation with a Campbell Collaboration information retrieval specialist. We also carried out hand searches of key journals in relevant fields, using publisher search engines and references cited in papers accepted for review as well as in review papers or thematically relevant papers identified during the search. DATA COLLECTION AND ANALYSIS For studies eligible for inclusion in the review we systematically collected data on study characteristics, findings, and moderators. Risk of bias was assessed based on the guidance of the IDCG Risk of Bias Tool (version March 2012). We extracted qualitative information from both the included quantitative studies as well as qualitative studies that covered the same types of programs and contexts as our quantitative studies. We use such qualitative data to establish that conditions recorded in quantitative data are being interpreted correctly and to provide descriptions and context for interventions that are included in the quantitative synthesis. For effects on forest cover, whenever possible we standardized them to annual forest cover change rates. For effects on material welfare and poverty outcomes, we used percentage change over estimated average counterfactual outcome (e.g. for income effects, per cent change in income relative to the average income of the control group). For each hypothesis, we synthesised estimates using meta‐analysis when the following conditions were met: (i) more than two studies meeting the quantitative inclusion criteria; (ii) effect sizes for common outcome constructs; and (iii) effects measured against similar comparators. RESULTS Our database search returned 1382 articles on PES programs. After eliminating articles that were not relevant to our hypotheses or conducted with appropriate methodological rigor, we were left with 20 articles on PES programs. Of these 11 PES articles conducted quantitative impact evaluation of these programs. The 11 PES articles cover six programs in four countries (Costa Rica, China, Mexico, and Mozambique). The resulting evidence base is weak both in terms of the number of eligible studies and the methodological weaknesses of the included studies. None of the studies are based on randomized experiments, and so the potential for hidden selection or confounding biases is the most concerning issue. Few of the studies create comparison groups that allow them to address spill‐over and leakage of effects from program areas to non‐program areas. None of the studies investigated forest conser