Were Conservation Payments Wasted in the Brazilian Amazon? Lessons from failure

A recent World Bank study analyzes the effects of a large-scale system of conservation payments, the Bolsa Floresta, introduced in 2007 by the Brazilian Government. Through a statistical evaluation of participant and non-participant protected areas, it concludes that the difference between both groups was statistically insignificant. Which lessons can we draw from this experience, and how does the Global Conservation Standard avoid a waste of conservation payments?

The Bolsa Floresta is co-funded funded by Amazon State and the Amazon Fund, mainly sponsored by Norway and Germany and supported by industry contributions. Over the years, it has benefited protected areas of more than 10 million hectares. It consists of a mix of (1) direct income subsidies to households inside protected areas that have signed a zero-deforestation commitment and send their children to school, (2) a payment to local associations that promote the interests of local communities, (3) a subsidy to forest-friendly production systems chosen by the communities, and (4) an infrastructure component, providing for electricity, water supply, sanitation and communications systems. This adds up to an annual amount of approximately 300 Euro per participating household.

The authors of the World Bank study analyze whether the program was successful when compared to protected areas in Amazonas State and the Legal Amazon overall that were not selected as recipients of the payments. They find that for the period selected the effectiveness of the conservation payments has been very low.

Does that mean that compensating communities for conservation is not worth the effort? The answer is no, but it is interesting to zoom in on the factors that have been influencing the low overall effect:

1. During the observed period 2007 to 2016, overall deforestation rates in the Brazilian Amazon were reduced, due partly to economic factors, but also due to the national zero-deforestation policy, improved monitoring and enforcement. Therefore, it is partly difficult to discern the influence of the conservation payment system.
2. In theory, the Bolsa Floresta offers carrots and sticks. However, even in protected areas where deforestation continued, no participant community was excluded from the program.
3. The implementers focused the assistance on low-hanging fruit, areas that were under low deforestation pressure, because communities that do currently not benefit from forest destruction are more likely to participate.
4. In the few areas where deforestation threat was high in the beginning, the subsidy was also not effective, because the opportunity cost (the lost income compared to the conservation payments) was too high.
5. Highest effectiveness could be found under mid-range deforestation pressure, where the payments obviously offered an incentive for communities to change their land use behavior.

The study did however not assess long-term positive influence the payment may have on education, sanitation and local economics.

In order to grant effective conservation, the Global Conservation Standard relies on a system of annual reporting and spontaneous verification. If it detects land use not in line with the Conservation Agreement, it foresees a staggered system of sanctions against the local project partners, with the aim of getting them back to compliance. It acknowledges that Conservation Credit Units experience a price differentiation, depending on the value of the ecosystem, opportunity costs for the neighboring communities, and the attractiveness to investors of particular projects supported inside a project area. “The most important factor however”, Dutschke explains, “is our careful selection of implementing partner associations, which can be held accountable over the whole project lifetime.”