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Mixed success for carbon payments and subsidies in support of forest restoration in the neotropics

Author

Listed:
  • Katherine Sinacore

    (Smithsonian Tropical Research Institute, Balboa)

  • Edwin H. García

    (Universidad de Panamá)

  • Alex Finkral

    (Eastwood Forests)

  • Michiel Breugel

    (National University of Singapore
    College Avenue West)

  • Omar R. Lopez

    (Instituto de Investigaciones Científicas y Servicios de Alta Tecnología (INDICASAT), Edificio)

  • Carlos Espinosa

    (Universidad Tecnológica de Panamá)

  • Andrea Miller

    (Geoversity and Sostante, Nature-Based Learning)

  • Theodore Howard

    (University of New Hampshire)

  • Jefferson S. Hall

    (Smithsonian Tropical Research Institute, Balboa)

Abstract

Restoration of forests in low- and middle-income countries (LMICs) has the potential to contribute to international carbon mitigation targets. However, high upfront costs and variable cashflows are obstacles for many landholders. Carbon payments have been promoted as a mechanism to incentivize restoration and economists have suggested cost-sharing by third parties to reduce financial burdens of restoration. Yet empirical evidence to support this theory, based on robust, dynamic field sampling is lacking. Here we use large, long-term datasets from Panama to evaluate the financial prospects of three forest restoration methods under different cost-sharing and carbon payment designs where income is generated through timber harvests. We show some, but not all options are economically viable. Further work combining growth and survival data from field trials with more sophisticated financial analyses is essential to understanding barriers and realizing the potential of forest restoration in LMICs to help meet global carbon mitigation commitments.

Suggested Citation

  • Katherine Sinacore & Edwin H. García & Alex Finkral & Michiel Breugel & Omar R. Lopez & Carlos Espinosa & Andrea Miller & Theodore Howard & Jefferson S. Hall, 2023. "Mixed success for carbon payments and subsidies in support of forest restoration in the neotropics," Nature Communications, Nature, vol. 14(1), pages 1-13, December.
    • Handle: RePEc:nat:natcom:v:14:y:2023:i:1:d:10.1038_s41467-023-43861-4
    DOI: 10.1038/s41467-023-43861-4
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    References listed on IDEAS

    as
    1. Stefanski, Stephanie F. & Shi, Xiangying & Hall, Jefferson S. & Hernandez, Andres & Fenichel, Eli P., 2015. "Teak–cattle production tradeoffs for Panama Canal Watershed small scale producers," Forest Policy and Economics, Elsevier, vol. 56(C), pages 48-56.
    2. Eli P. Fenichel & Wiktor Adamowicz & Mark S. Ashton & Jefferson S. Hall, 2019. "Incentive Systems for Forest-Based Ecosystem Services with Missing Financial Service Markets," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 6(2), pages 319-347.
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