Paying Smallholders Not to Cut Down the Amazon Forest: Impact Evaluation of a Redd+ Pilot Project

Abstract: We estimate the effects of a REDD+ pilot project offering a mix of incentives including Payments for Environmental Services to reduce deforestation by smallholders in the Brazilian Amazon. We collected original data from 181 individual farmers. We use DID-matching and find evidence that supports the parallel trend assumption. We estimate that an average of 4 ha of forest have been saved on each participating farm in 2014, and that this conservation came at the expense of pastures rather than croplands. This amounts to a decrease in the deforestation rate of about 50 percent. We find no evidence of within-community spillovers. Finally, we use this estimate and the Social Cost of Carbon (SCC) to perform a cost-benefit analysis of the project.