Does a trade-off exist between economic and environmental impacts of forest carbon payment programs?

Effective conservation programs should provide environmental benefits, but also promote local economic growth. Studies comparing environmental and economic impacts of conservation programs report mixed results. The potential trade-offs between environmental and economic impacts of conservation policies are examined by modeling a set of alternative policy specifications. The payment policies aim to encourage increased carbon storage by retaining forest on private lands. Policies that contrast in how narrowly they target places offering the greatest cost efficiency of carbon storage are considered. In addition, policies that restrict payments to rural or exurban communities are evaluated. We find environmental goals of the conservation programs can be achieved at little cost in terms of favorable economic impacts. Conservation payment schemes that target places offering higher carbon cost efficiency result in larger positive impacts on labor income, GDP, and total output. Restricting payments to rural areas would lead to better carbon efficiency but lower economic efficiency overall, while favoring exurban areas would have a greater economic stimulus effect. The findings suggest that beneficial environmental and economic outcomes of payment programs may be possible if policymakers can tailor the design of payment programs to the particular context they face.