Environmental effects of an incentive-based program on deforestation and hydrological ecosystem services in peri-urban Mexico City

Peri-urban territories that integrate forests and agroecosystems are critical providers of hydrological ecosystem services, yet they face increasing pressures from urban expansion, ecological degradation, and climate variability. However, substantial knowledge gaps persist on whether direct incentive-based conservation programs in these contexts effectively sustain hydrological ecosystem services beyond curbing land-use change and forest loss across enrolled forest and agricultural parcels. This study evaluates the environmental-induced effects of the Altépetl Bienestar Program in Mexico City's Conservation Land, a peri-urban socio-ecological system which plays a key role in metropolitan hydrological regulation. The analysis combined a 25-year land-use and land-cover analysis (1999–2024), spatial econometric modeling of deforestation drivers, and InVEST-based modeling of four related hydrological ecosystem services indicators, including water yield, soil retention, and flow regulation (i.e. baseflow and quick flow). A quasi-experimental approach integrating Propensity Score Matching and Difference-in-Differences was used to construct counterfactuals and assess program-induced changes between enrolled and comparable non-enrolled parcels. Annual deforestation declined by 48% during the implementation period, although forest loss persisted in surrounding agricultural areas, suggesting spatial spillover. Over the long term, urban expansion and climate change were associated with declining water yield, soil retention, and baseflow, and increasing quickflow. Consequently, enrolled areas exhibited significant improvements in soil retention and baseflow, as well as reduced runoff, relative to controls. Results indicate enhanced hydrological regulation, even where avoided deforestation was not statistically distinguishable. Agricultural-supported areas also show gains in soil retention and baseflow, while exhibiting an increased runoff, reflecting differentiated hydrological responses within multifunctional landscapes. Overall, direct economic incentive-based policies focused on hydrological ecosystem services can help moderate land-use pressures, while sustaining selected hydrological ecosystem services through landscape conservation.