What types of investment can most cost-effectively ensure ecosystem service provision? A randomized program evaluation

What is the most effective way to slow deforestation and forest degradation? How can we best increase incomes from collection of non-timber forest products? Can education and information provision lead to real changes in behavior that better protects ecosystem services? After decades of attempts to better protect Amazonian forests and the ecosystem services that they provide, we still have no idea what the answers are to these questions. Further, notwithstanding the importance of ecosystem services, we have little evidence about which policy interventions can best ensure service provision and alleviate poverty. A fundamental need is thus for the development of 'program evaluation' methods in order to test policy or intervention effectiveness. In mid-altitude Bolivia, as in many parts of the developing world, agricultural decisions generate negative environmental externalities, reducing the quality and quantity of environmental service provision. Forest degradation, often associated with extensive cattle grazing, diminishes water quality and quantity and increases risks associated with landslides and flooding. There is a global and local interest in maintaining these upper Amazonian watershed forests both for their role in mitigating climate change, but also because their conservation will help local communities adapt to climate change through the maintenance of dry season water supplies. Despite the importance of these ecosystems for local poverty alleviation, local communities continue to graze more cattle than the carrying capacity of the forests, thus creating a tragedy of the commons in which deforestation, water pollution and flooding increase, and human welfare suffers. Our proposed research will explore alternative mechanisms for behavior change to mitigate the negative externalities that result from forest degradation. Our first hypothesis is that by providing targeted local information, or otherwise building local institutional capacity, we can lower collective action barriers at the community level, which will allow for locally imposed incentives through sanctions or positive compensation. As an alternative hypothesis, external donors, through direct payments, may better provide such incentives for improved grazing practices (i.e. a form of payments for environmental services). A rigorous experimental design will allows us to identify generalisable relationships between the provision of targeted information and financial incentives and resulting behavioral and biophysical outcome measures. By phasing in payments in the second year of the project, we will also observe the interaction between collective action and externally provided incentives. Although the list of activities sounds relatively esoteric, the implications of this research will be profound. We will develop and refine the program evaluation tools that are most appropriate for evaluations of ecosystem service provision, and then provide the first robust experimental analysis of what works for environmental service delivery and poverty alleviation and why. Our research will show that if a donor has, e.g. £500,000 to spend on climate change adaptation, whether it will it be most efficient for them, in terms of CO2 sequestered, water supplies protected, or livelihoods enhanced, to invest in local capacity building, information provision or direct payments schemes.