Philippe DELACOTE

Philippe Delacote is a Senior Research Fellow (Directeur de recherche) at INRAE and the Climate Economics Chair. He holds a PhD in Economics from the European University Institute (EUI). Philippe Delacote’s research interests include Environmental Economics and Development Economics, more precisely focusing on the climate-forest-agriculture nexus. His work focuses on the evaluation of forest conservation programs, adaptation to extreme weather events and climate mitigation options in agriculture and forests.

Title of the presentation: Flexibility in conservation contracts increases the cost-effectiveness of conservation payments

Abstract: Payments for Environmental Services (PES) are widely used to protect tropical forests and mitigate climate change, but rigid pricing structures fail to account for possible increases in landowners’ opportunity cost of conservation caused by abrupt changes in market conditions. When incentives are inflexible, contract breaches can reduce environmental benefits and waste financial resources. We tested whether introducing flexibility into PES contracts improves outcomes by allowing partial payments when deforestation stays below a set threshold. Using a Becker-DeGroot-Marschak auction embedded in a randomized controlled trial, we compared a flexible PES, a more stringent zero-deforestation PES, and a control group. Although the stricter PES had higher potential for avoided deforestation, its high breach rate led to lower actual conservation. The flexible PES, while more costly overall due to higher compliance, achieved greater forest protection at a lower cost per hectare: on average, participants under the flexible contract conserved 0.144 hectares (effect size = 0.12 SD) more forest than those under the stringent contract. These findings suggest that flexible PES contracts can improve both the effectiveness and efficiency of conservation interventions in dynamic and risk-prone agricultural frontiers.

Email: philippe.delacote@inrae.fr