What happens when the money runs out? Forest outcomes and equity concerns following Ecuador’s suspension of conservation payments

Payments for Ecosystem Services (PES) are now a prominent policy instrument for conserving tropical forests. PES are voluntary, direct, and contractual: an ES buyer pays an ES steward for adopting conservation practices for a fixed term. A defining feature of PES is its ‘quid pro quo’ conditionality, e.g. stewards are paid only if they deliver contracted conservation outcomes. Most studies on PES effectiveness focus on the steward’s compliance with contract conditions. By contrast, the buyer’s compliance has received scant attention despite the fact that PES programs across the globe have delayed payments, suspended re-enrollment, or shut down altogether. ‘Use-restricting’ PES depend on the continued flow of funding to pay for conservation; however, institutional, political, and economic factors can disrupt or terminate PES funding. What happens when the PES money unexpectedly runs out? Do stewards continue to conserve or revert to their former practices? We use mixed methods to study equity concerns and forest outcomes of an unexpected, two-year interruption in conservation payments to 63 private landowners residing in Ecuador’s Amazon and enrolled in the Socio Bosque program, compared to similar landowners who did not enroll. Using quasi-experimental methods, we found that during the payment suspension period enrolled properties did not maintain their conservation outcomes where deforestation pressures were high (e.g. close to roads). Where deforestation pressures were low, enrolled properties continued to conserve more, on average, than similar properties not enrolled. Findings from 40 interviews and 26 focus groups conducted before, during, and after the payment suspension exposed profound landowner uncertainty regarding their contract rights. Poor official communication and imbalanced PES contract terms reinforced power inequalities between the state and rural ES stewards. Our work highlights the need to plan for financial volatility and to protect participants’ rights in PES contract design.