Additionality and Leakage Resulting from PES Implementation? Evidence from the Ecuadorian Amazonia

Payments for Environmental Services (PES) are instruments which seem well suited for forest conservation. However, their impact on reducing deforestation might be weakened by negligible additionality and leakage effects; the first refers to the low variation in net deforestation rates even in the absence of PES, and the second refers to the displaced deforestation behavior to other areas not covered by PES. For the case of Ecuador, we examine both issues by assessing the historical deforestation trend of selected PES-enrolled areas and that of their adjacent areas to identify deforestation patterns before and after PES implementation. We analyze the additional effect of PES on reducing deforestation by comparison to a baseline as well as to comparable reference sites at two different spatial scales. We also analyze potential leakage effects of PES by comparing deforestation development in adjacent areas. We show that PES has achieved marginally low conservation impacts in enrolled areas with an average difference in net deforestation rates of 0.02 percent points over a period of 28 years. Overall, PES-enrolled areas depict lower annual net deforestation rates than unenrolled areas, albeit at a negligible rate, and there is also some evidence that deforestation decreased in adjacent areas after PES implementation. Additionally, there exists a statistically significant linear increasing deforestation trend in adjacent areas as distance increases from the PES-enrolled area. Our empirical results, however, raise the suspicion that the choice of PES-enrolled areas might have been influenced by self-selection.