Local Effects of Payments for Ecosystem Services on Rural Poverty

This paper estimates the local effects of a Payment for Ecosystem Services (PES) program on income-based poverty rates in rural areas of Costa Rica between 2007-2009. Using household surveys and spatial geographic data, we are able to control for socioeconomic and geographic characteristics at the individual and census-tract level. Our results suggest that while payments did not affect poverty rates at the national level, poverty did increase in places where PES had the greatest effect on deforestation. This effect is stronger for uneducated males, who tend to work in agricultural activities. The trade-off between ecosystem services provision and poverty is not ubiquitous and, when present, could be addressed by targeting those groups that are most affected.