Progress 10/01/04 to 10/01/09
Outputs
OUTPUTS: Payments for environmental services is a conditional cash transfer where the condition for the payment is the conservation of a specific natural resource or the delivery of a particular environmental service. Analysis of this concept was developed by analogy with prior work done on conditional cash transfers programs and how they should be targeted for maximum effectiveness in achieving the condition when there are budget constraints. We learned from these programs that the most effective targeting is to reach individual or resources at risk in terms of not meeting the condition (e.g., non-deforestation), who are most responsive to a transfer in altering behavior toward the condition (i.e., deciding to conserve instead of logging), and where the resource conserved is a valuable source of environmental services. This was applied to payments for avoided deforestation in Mexico, a major theme under the international climate change agreements. We showed that determinants of the risk of deforestation can be used to target transfers using indicators that are both objective and cannot be manipulated such as location, slope, and soil type. We also showed that applying these targeting principles can lead to very large efficiency gains in terms of downstream hydrological services provided by forests in critical watersheds. PARTICIPANTS: Elisabeth Sadoulet, professor, UC Berkeley; Jennifer Alix-Garcia, assistant professor, University of Wisconsin. TARGET AUDIENCES: Academic profession, policy makers PROJECT MODIFICATIONS: Not relevant to this project.
Impacts
This work has been influential in guiding the specification of a very large nationwide Mexican program of PES to prevent deforestation, with the objective of preserving hydrological services. One can expect that this research will also be influential in helping design the numerous programs of avoided deforestation that are emerging following the 2009 UN Copenhagen climate change conference where doing this was the major positive result.
Publications
- Alix-Garcia, Jennifer, Alain de Janvry and Elisabeth Sadoulet. 2004. Targeting Payments for Environmental Services: The Role of Risk. Agricultural and Resource Economics Update, 7(4): 9-11.
- Alix-Garcia, Jennifer, Alain de Janvry and Elisabeth Sadoulet. 2008. The Role of Deforestation Risk and Calibrated Compensation in Designing Payments for Environmental Services. Environment and Development Economics, 13: 375-394
- Alix-Garcia, Jennifer, Alain de Janvry, and Elisabeth Sadoulet. 2005. A Tale of Two Communities: Explaining Deforestation in Mexico. World Development 33(2): 219-236
- Alix-Garcia, Jennifer, Alain de Janvry, Elisabeth Sadoulet and Juan Manuel Torres. 2008. Lessons Learned from Mexico's Payment for Environmental Services Program, in Payment for Environmental Services in Agricultural Landscapes, Leslie Lipper, Takumi Sakuyama, Randy Stringer, and David Zilberman (eds.) Springer
- Alix-Garcia, Jennifer, Alain de Janvry and Elisabeth Sadoulet. 2009. Role of risk in targeting payments for environmental services. In C. Palmer and S. Engel, eds., Avoided Deforestation: Prospects for Mitigating Climate Change, New York: Routledge.
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Progress 01/01/08 to 12/31/08
Outputs
OUTPUTS: In a paper published in Environment and Development Economics, one of the two main journals in the field, we showed how to target payments for environmental services (PES) for avoided deforestation according to the risk of deforestation. Untargeted payments can lead to huge costs that produce little outcome as forest owners are being paid to do what they would do without a payment, namely conserve the forest in place. Targeting according to the risk of deforestation is efficient, but requires predicting the level of risk a forest is exposed to. This has to be done through indicators that cannot be manipulated as forest owners would otherwise strategically inflate the risk of deforestation to quality for payment. We show that predictions that cannot be manipulated can effectively be done using such variables as location, slope, and soil type. We calculate the resource saving that targeting for intended deforestation allows, which is simply huge. The program of payments for environmental services recently introduced in Mexico is evaluated in "Lessons Learned from Mexico's Payment for Environmental Services Program". We show that there is substantial mis-targeting in the program, with large potential efficiency gains, in particular by directing payments at forested areas that are most critical for hydrological services downstream in the watersheds. Finally, in a paper published in World Development, we address the issue of collective action in rural communities in West Africa. This is important for the management of common property resources held by a community, including forest and grazing lands. We find that communities have numerous organizations, but that these organizations are quite ineffective not because of corruption or elite capture, but because they have limited administrative capacity and are seriously short of resources to fund their programs. PARTICIPANTS: Mexico project: Jennifer Alix-Garcia: Assistant professor at University of San Francisco. Juan Manuel Torres: professor at CIDE, Mexico. Elisabeth Sadoulet, professor, UC Berkeley West Africa project: Tanguy Bernard, Agence Francaise de Development, France. Pierre Rondot and Marie-Helene Collion, World Bank. TARGET AUDIENCES: Mexico Project: The National Institute for the Environment (INE), which is the think tank of the ministry of the Environment in Mexico. Presentations were also made in conferences and to the Forestry Service in Mexico. West Africa project: This is part of a World Bank effort to understand and evaluate the role of producer organizations as intermediaries for some of their development projects. We held seminars at the World Bank for the project managers of the African Rural Group. Other target audience: Academic, reached through publications and seminars PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.
Impacts
Targeting of PES for efficiency has rarely been addressed. Our work has been influential in many programs where targeting can be done in terms of program objectives. This is the case for conditional cash transfers where the condition is child education. In this case, we showed that huge savings can be achieved by targeting children at risk of not going to school. Work on the targeting of PES in Mexico has been done in close collaboration with the Mexican Ministry of the Environment. One can expect that demonstration of potential gains from effective targeting, as well as efficiency losses due to poor targeting in the current large scale program, can be influential in helping the Mexican government redesign its current program.
Publications
- Bernard, Tanguy, Marie-Helene Collion, Alain de Janvry, Pierre Rondot, and Elisabeth Sadoulet. 2008. "Do Village Organizations Make a Difference in African Rural Development A Study for Senegal and Burkina Faso." World Development 36(11): 2188-2204.
- Alix-Garcia, Jennifer, Alain de Janvry and Elisabeth Sadoulet. 2008. "The Role of Deforestation Risk and Calibrated Compensation in Designing Payments for Environmental Services." Environment and Development Economics, 13: 375-394
- Alix-Garcia, Jennifer, Alain de Janvry, Elisabeth Sadoulet, and Juan Manuel Torres. 2008. "Lessons Learned from Mexico's Payment for Environmental Services Program." In Managing Environmental Services in Agricultural Landscapes. David Zilberman, Randy Stringer, Leslie Lipper, and Takumi Sakuyama (eds.) Springer
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Progress 01/01/07 to 12/31/07
Outputs
My major activity in relation to this project was acting as co-diretcor of the World Development Report 2008, "Agriculture for Development", published in October 2007. This is the main annual flagship report of the World Bank, with considerable visibility and presentation in a large number of countries. This is the first time the World Bank returns to agriculture in a World Development Report since 1982. Conditions for agriculture in serving as an instrument for development have changed markedly since that date, requiring a whole new analysis. The current interest in returning to agriculture (in a context of rapidly rising food prices, persistent rural poverty, water scarcity, and climate change ) implies that many governments and international donors are now asking how to invest more and better in agriculture, while at the same time achieving poverty reduction and environmental sustainability. The Report placed a great deal of emphasis on the role of payments for
environmental services as an instrument to create incentives toward conservation. Some of the work done under this AES project on payments for environmental services, and on effective targeting for cost efficiency in making payments, thus found its way into the Report. The Report analyzes in detail how to achieve a balance between the growth, poverty, and environmental functions of agriculture in development. It can expectedly be quite influential in helping governments and development agencies find a compromise between food security, the production of biofuels, and climate change. During the period, I personally presented the Report in public events in Delhi, Bamako, Sussex, Berlin, London, Washington DC, Ottawa, Paris, Brussels, The Hague, Buenos Aires, Asuncion, and Brasilia. The Report has been the 2007 best seller among World Bank publications. It has been extensively covered in the press across the world.
Impacts
Help restore attention to the role of agriculture for development, and in particular the possibility of using payments for environmental services to manage water scarcity, reduce deforestation, and mitigate climate change.
Publications
- deJanvry, A. et al, The World Bank, 2007, World Development Report 2008- Agriculture for Development (Derek Byerlee and Alain de Janvry co-directors). Washington D.C.: The World Bank
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Progress 01/01/06 to 12/31/06
Outputs
The principle of payment for environmental services that we developed in previous years consisted in identifying how to target payments on resources most at risk. This is a general principle that can be applied to any program of conditional cash transfer: the transfer is made conditional on meeting a condition, such as preserving a natural resource. If budgets are insufficient to pay for the preservation of all existing natural resources of the type, payments can be targeted on the resources most at risk of disappearing without a payment. In that sense, payments are targeted to maximize conservation response relative to the counterfactual of no payment. In 2006, we applied this principle to large social programs that provide cash transfers to parents in exchange of having them send their children to school. The PES principle applied here is to target payments to parents of children most at risk of not going to school. Papers on Mexico were influential in the design of
a $2.5 billion dollars program, Oportunidades. Results showed that major cost savings could be achieved, with much larger educational impacts if transfers were targeted following the "at risk" principle, and the paper develops the targeting formulas that could be used. We similarly showed how to best target children vulnerable to shocks that may lead parents to send them to work instead of to school. In Brazil, we showed that the implementation of conditional cash transfers can be decentralized, but that it can fall prey to clientelistic capture, and that it may overcrowd school facilities, reducing school performance across the board. These results were presented as a keynote speaker in a major international conference on conditional cash transfers held in Istanbul, July 2006, and published in some of the major journals in the profession.
Impacts
Improve the design of conditional cash transfer programs to improve efficiency in using scarce funds in inducing behavioral responses by beneficiaries.
Publications
- de Janvry, A., Sadoulet, E. 2006. Making Conditional Cash Transfer Programs More Efficient: Designing for Maximum Effect of the Conditionality. World Bank Economic Review, 20(1): 1-29.
- de Janvry, A., Frederico F., Sadoulet, E., Nelson, D, Lindert, K., Benedicte de la Briere, Lanjouw, P. 2006. Brazil's Bolsa Escola Program: The Role of Local Governance in Decentralized Implementation. DECRG, The World Bank.
- de Janvry, A., Frederico F., Sadoulet, E., Vakis, R. 2006. Can conditional cash transfer programs serve as safety nets in keeping children at school and from working when exposed to shocks? Journal of Development Economics, 79(2): 349-373.
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Progress 01/01/05 to 12/31/05
Outputs
We analyzed the impact of Mexico's payment for environmental services program. This was based on an extensive survey and case studies done in collaboration with Juan Manuel Torres, professor at the Mexican Center for Teaching and Research in Economics (CIDE). Results show that payments as they were distributed in 2003 and 2004 did not necessarily achieve the goals of the program. They were largely allocated to hectares of land which were not within critical watersheds. They were also so fragmented in their distribution that they are unlikely to be providing measurable services to downstream water providers. In addition, they were not targeted at forests which were at risk of being lost. Our results show that there was little pressure to deforest in the communities chosen to receive payments and that, as a result, there were very few behavioral changes induced by the program payments. In some cases, however, the payments did serve to increase participation in
conservation activities. One beneficial effect of the targeting was that the majority of payments went to poor and very poor forest-holders.
Impacts
Improve the design of PES systems to improve efficiency in using scarce funds for the purchase of environmental services.
Publications
- Jennifer Alix-Garcia, Alain de Janvry, Elisabeth Sadoulet, Juan Manuel Torres. 2005. An Assessment of Mexico's Payment for Environmental Services Program. Rome: FAO, 85pp.
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