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Do Costa Rica’s payments for environmental services work?

  • While Costa Rica is now known as a world leader for conservation policies and ecotourism, the Central American country had some of the world’s highest deforestation rates prior to establishing its reputation.
  • Clearing for cattle pasture and agriculture destroyed much of the country’s biodiverse rainforests in the 1960s and 1970s.
  • Do Costa Rica’s ecosystem payments work?

While Costa Rica is now known as a world leader for conversation policies and ecotourism, the Central American country had some of the world’s highest deforestation rates prior to establishing its reputation. Clearing for cattle pasture and agriculture destroyed much of the country’s biodiverse rainforests in the 1960s and 1970s.



In the 1990s Costa Rica set a new course; one that sought to unlock the value of its ecosystems. While ecotourism was the most obvious path, Costa Rica also pioneered the development of payments for environmental services (“PSA” or pagos por servicios ambientales). In 1996 the country established a program to compensate landowners for keeping forests intact and reforesting degraded areas. A new study, published in Conservation Biology, examines these efforts and concludes concludes that while the program pioneered the institutionalization of a policy that can and likely will create meaningful incentives, to this point in Costa Rica, given other policies, it appears to have had little impact on deforestation.



Deforestation rates in Costa Rica, 1960-2005. Modified from Sanchez-Azofeifa et al 2007. Image by R. Butler.

While the results show little impact on deforestation rates up to this point, a careful consideration of this case provides insight on how that could have happened and how impact could be increased, at a time when ecosystem payments are increasingly on the minds of policymakers, with the world’s tropical countries seeking compensation in the form of carbon credits for protecting their forests.



Some details from the paper:

Payments under the PSA program:

PSA program rules:

PSA program funding:

Financial returns from the program:

Program’s results:

Opening the door for environmental payments in other places

Costa Rica’s experiment “opens the door” for future PSA programs in other parts of the world, say the researchers.

“We believe Costa Rica’s pioneering effort opens the door to further successful PSA programs. The evaluation of its first phase provides important conservation lessons for developing countries interested in similar policies and for new global policies,” they conclude.

CITATION: G. Arturo Sanchez-Azofeifa, Alexander Pfaff, Juan Andres Robalino, and Judson P. Boomhower (2007). Costa Rica’s Payment for Environmental Services Program: Intention, Implementation, and Impact. Conservation Biology. DOI: 10.1111/j.1523-1739.2007.00751.x

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