Cash falling onto a forest, symbolizing payments for ecosystem services.

Can Cash Really Save Our Forests? The Truth About Paying for Ecosystems

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Soraya Malik in Climate & Environment October 2026 • 4 min read.

"Discover how financial incentives are changing the game in forest conservation and whether these strategies can truly reverse deforestation trends worldwide."


Deforestation continues to be a critical environmental issue, contributing significantly to global carbon emissions. As trees are cut down, they not only stop absorbing carbon dioxide but also release stored carbon back into the atmosphere, accelerating climate change. This is particularly concerning in low-income countries, where deforestation rates are often highest.

To combat this, conservation strategies like REDD+ (Reducing Emissions from Deforestation and Forest Degradation) have been developed to provide financial incentives for developing countries to preserve their forests. One increasingly popular approach is Payments for Ecosystem Services (PES), where forest owners are directly paid to keep their forests intact. But does this approach really work, and is it worth the cost?

A fascinating study conducted in Uganda sought to answer these questions by implementing a randomized controlled trial. Researchers evaluated the impact of offering cash payments to forest-owning households in exchange for conserving their forests. The results offer valuable insights into the potential and challenges of using financial incentives to protect our planet's vital ecosystems.

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Why Forest Payments Matter

Forests support ecological processes and human well-being through services such as carbon storage, biodiversity protection, water regulation, and material resources. Paying for these services is intended to make those benefits visible in economic decisions, but payments alone cannot guarantee that forests will be protected. Their effectiveness depends on how ecological outcomes, social benefits, and risks are measured.

Measuring What Forests Provide

Ecosystem-service assessments use several approaches, including mapping and modelling the supply and demand for services and evaluating their economic and non-economic importance through valuation techniques. A 2018 review emphasizes that methods should be selected according to the aims and requirements of the assessment. Research on forest ecosystem-service valuation remains fragmented across methods, scales, and regions, while the IPBES working paper notes that practical use in day-to-day planning decisions remains limited.

From Forest Use to Ecosystem Services

Deforestation is the removal or destruction of forest followed by conversion to non-forest uses such as farms, ranches, or urban areas. Historical accounts describe forest clearing as a practice reaching back thousands of years, with cultivation and settlement among its early drivers. In the Greco-Roman era, urbanization and resource extraction intensified forest loss, including the use of Mediterranean timber for ships and homes.

The Ugandan Experiment: How Cash Payments Impacted Deforestation

Cash falling onto a forest, symbolizing payments for ecosystem services.

The study, conducted in 121 villages in Uganda, focused on private forest owners (PFOs). Sixty of these villages were randomly selected to participate in a PES program where households received annual payments of 70,000 Ugandan shillings (approximately $28 USD in 2012) per hectare of forest they conserved. For two years, researchers monitored changes in tree cover using high-resolution satellite imagery to compare deforestation rates between the treatment villages (those receiving payments) and control villages.

The primary goal was to determine if the financial incentives could effectively reduce deforestation. However, researchers also looked at secondary goals to see if the payments caused other changes. These secondary goals include how the payments impacted emergency forest conservation, or shifted tree cutting.

  • Additionality: Would the payments lead to genuine conservation that wouldn't have happened otherwise?
  • Leakage: Would deforestation simply shift to nearby, unprotected areas?
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What Recent Research Shows

A 2025 systematic review and meta-analysis examines the proximate causes and underlying drivers of deforestation and forest degradation worldwide between 1990 and 2023. Research on the Brazilian Amazon similarly finds that deforestation dynamics vary across countries and sub-regions rather than following one uniform pattern. A global synthesis published in PNAS reports that converting native forest affects soil properties, soil biodiversity, and the capacity to support ecosystem services.

The Limits of Forest Protection

Payments or other conservation measures cannot address forest loss effectively if underlying pressures such as illegal timber cutting, mining, logging, and development projects continue. Deforestation and fragmentation can reduce land quality, soil health, wildlife habitat, and other ecosystem services at the same time. The NRDC also emphasizes that forest degradation destroys ecosystems and natural resources on which people depend, showing why isolated interventions may fail to protect the wider system.

The Trade-Off Problem

In tropical dry-forest landscapes, maintaining carbon stocks and biodiversity depends on trade-offs created by local deforestation pressures and broader socioeconomic factors. Strategies for sustainable resource management therefore need to examine how one ecosystem service may interact with alternative land-use pathways. The comparison is not simply between conservation and development; it is also between different combinations of services and economic uses.

The findings revealed a notable difference: tree cover in the treatment villages declined by 4.2% during the study period, compared to a more significant 9.1% decline in the control villages. This suggests that the PES program did have a positive impact on reducing deforestation. But the story doesn't end there. The research also considered the economic implications by valuing the delayed carbon dioxide emissions resulting from the reduced deforestation. They concluded that the environmental benefit was 2.4 times greater than the program's costs.

The Bigger Picture: Can Payments Save Our Forests?

The Ugandan study provides compelling evidence that PES programs can be a valuable tool in forest conservation. By offering direct financial incentives, these programs can encourage forest owners to protect their trees and contribute to global climate change mitigation efforts. However, the success of such programs depends on careful design, effective implementation, and ongoing monitoring. While PES programs might not be the only solution to stopping deforestation, they represent a promising step towards creating a more sustainable future for our planet’s forests.

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The Evidence Beyond Carbon

Forest ecosystem services support national and regional economies, improve people’s lives, protect biodiversity, and help mitigate climate change. PNAS research adds that the consequences of native-forest conversion extend below ground, affecting soil biodiversity and ecosystem-service capacity. Together, these findings suggest that forest-payment schemes should assess more than carbon alone.

Forecasting Forest Futures

AI-driven assessment is being developed to simulate future land-use and land-cover change and to anticipate how forest dynamics and ecosystem services may respond to alternative development pathways. Such modelling could help compare conservation, restoration, and development scenarios before decisions are implemented. One cited analysis estimates that nature-related shocks linked to pollution, deforestation, land-use change, and over-extraction could cost the global economy upwards of $5 trillion, with risks including water-supply disruption, pollution, and loss of pollination services.

More Than Carbon Storage

Deforestation affects several categories of ecosystem service at once. It can reduce carbon sequestration and biodiversity, disrupt water cycles, increase flood risks and soil erosion, and diminish timber and non-timber forest products. This combination means that forest protection must account for regulating, provisioning, and supporting services rather than treating carbon payments as a complete solution.

Livelihoods and Measurable Benefits

Case studies from the Amazon and West Africa link deforestation to global demand for soy, beef, and cocoa, with consequences for biodiversity, climate regulation, and local livelihoods. An FSC case study in Vietnam reports that sustainably managed forest ecosystem services can help address climate change and biodiversity loss, and that their impacts can be measured to show sponsors a return on investment. The FAO’s State of the World’s Forests 2026 highlights restoration pathways intended to support resilience, biodiversity, agrifood systems, livelihoods, and sustainable futures.

Study at a glance
Study designRandomised or controlled trial[1]
PopulationForest-owning households[1]
Sample size121 villages[1]
SettingUganda[1]
Duration2 years[1]
ComparisonControl villages[1]
Main outcomeChange in land area covered by trees[1]
Effect sizeTree cover declined by 4.2% in treatment villages versus 9.1% in control villages[1]
Times cited551[1]

What the village-level trial can establish

Randomised or controlled trial (level 3 of 8)

Random assignment across villages supports a causal comparison of the program offer within this study: the design contrasts villages receiving payments with control villages.[1]

The measured outcome was change in tree-covered land, so the trial speaks to tree cover during the study, not every ecological or social effect of conservation payments.[1]

How later work places the Uganda result

A later study using the same Ugandan experiment reports that the intervention-period reduction did not carry over into changes in pro-environmental behavior, intrinsic motivation, self-efficacy, or perceived forest benefits six years after incentives ended.[2]

Later work on payment design reports less annual deforestation when participants had to enroll all their forest than under contracts allowing selective enrollment, suggesting contract structure can matter alongside whether payments are offered.[3]

A 2026 synthesis cites the Uganda trial as an example of measurable tree-cover gains while also noting baseline and over-crediting problems across projects; those broader concerns are not findings established by this Ugandan trial itself.[4]

What the contrast says about payments

The smaller decline in paid villages indicates that the program was associated with less tree-cover loss than in control villages during the trial, rather than stopping loss altogether.[1]

Because the comparison was randomized, the contrast is more informative about the payment offer than a simple before-and-after observation, while its outcome remains specifically tree cover.[1]

The researchers' carbon valuation also judged the delayed-emissions benefit larger than the program's cost, offering an economic comparison alongside the land-cover result.[1]

What remains unresolved

  • Would the tree-cover difference persist after payments end, given later evidence that behavioral measures did not change years after incentives stopped?[1] [2]
  • How would payment results change under contracts that require enrollment of all forest rather than allowing owners to select parcels?[3]
  • How consistently do payment programs produce benefits across settings, given the review's concerns about the quality and small scale of the evidence base?[5]

Sources

  1. Cash for carbon: A randomized trial of payments for ecosystem services to reduce deforestation (American Association for the Advancement of Science (AAAS), 2017)
  2. Payments for ecosystem services did not crowd out pro-environmental behavior: Long-term experimental evidence from Uganda (pmc.ncbi.nlm.nih.gov)
  3. Redesigning payments for ecosystem services to increase cost-effectiveness (pmc.ncbi.nlm.nih.gov)
  4. Forests as Living Public Infrastructure: Evidence Requirements for Mediterranean Wildfire Risk Governance, Restoration and Carbon Accounting (2026)
  5. Incentives for climate mitigation in the land use sector—the effects of payment for environmental services on environmental and socioeconomic outcomes in low‐ and middle‐income countries: A mixed‐meth (onlinelibrary.wiley.com)

About this Article -

Written with AI assistance from published research, and reviewed by the Mystum team. See our About page for more information.

This article is based on research published under:

DOI-LINK: 10.1126/science.aan0568, Alternate LINK

Title: Cash For Carbon: A Randomized Trial Of Payments For Ecosystem Services To Reduce Deforestation

Subject: Multidisciplinary

Journal: Science

Publisher: American Association for the Advancement of Science (AAAS)

Authors: Seema Jayachandran, Joost De Laat, Eric F. Lambin, Charlotte Y. Stanton, Robin Audy, Nancy E. Thomas

Published: 2017-07-21

Everything You Need To Know

1

What is Payments for Ecosystem Services (PES), and how does it aim to help with deforestation?

Payments for Ecosystem Services (PES) is a conservation strategy where forest owners receive direct financial incentives to keep their forests intact. The idea behind PES is to provide economic motivation for preserving forests, thereby reducing deforestation and its contribution to global carbon emissions. By offering payments, PES programs aim to make conservation financially attractive, encouraging landowners to protect their trees rather than cutting them down for alternative land uses. The effectiveness of PES depends on careful design, implementation, and consistent monitoring to ensure genuine conservation and prevent unintended consequences like leakage.

2

In the Uganda study, what were the key findings regarding the effectiveness of cash payments in reducing deforestation?

The Uganda study revealed that offering cash payments to forest-owning households significantly reduced deforestation. In villages where households received payments of 70,000 Ugandan shillings (approximately $28 USD in 2012) per hectare, tree cover declined by 4.2% over the study period. In contrast, control villages (those without payments) experienced a more substantial decline of 9.1%. This indicates that Payments for Ecosystem Services (PES) can effectively reduce deforestation rates. Furthermore, the study found that the environmental benefit from delayed carbon dioxide emissions was 2.4 times greater than the program's costs, highlighting the economic viability of PES as a conservation strategy.

3

What are 'additionality' and 'leakage' in the context of Payments for Ecosystem Services (PES) programs, and why are they important considerations?

In the context of Payments for Ecosystem Services (PES) programs, 'additionality' refers to whether the conservation achieved through the payments would not have occurred otherwise. It's crucial to ensure that payments lead to genuine conservation efforts that go beyond what would naturally happen. 'Leakage' refers to the potential shift of deforestation activities to nearby, unprotected areas as a result of the PES program. If deforestation simply moves to a different location, the overall environmental benefit is undermined. Both additionality and leakage are important considerations because they can significantly impact the overall effectiveness and cost-efficiency of PES programs. Addressing these issues requires careful monitoring, adaptive management, and consideration of broader landscape-level dynamics.

4

How do strategies like REDD+ relate to Payments for Ecosystem Services (PES) in the fight against deforestation?

REDD+ (Reducing Emissions from Deforestation and Forest Degradation) and Payments for Ecosystem Services (PES) are both strategies aimed at combating deforestation by providing financial incentives for forest conservation. REDD+ is a broader framework developed under the United Nations, offering financial incentives to developing countries for preserving their forests to reduce carbon emissions. PES is a more specific approach where forest owners are directly compensated for maintaining their forests. PES can be a mechanism used within REDD+ initiatives to implement conservation activities at the local level. Both strategies recognize the importance of economic incentives in promoting forest conservation and contributing to global climate change mitigation efforts.

5

What are the broader implications of the Uganda study's findings for global forest conservation efforts and climate change mitigation?

The Uganda study's findings have significant implications for global forest conservation efforts and climate change mitigation. The study offers compelling evidence that Payments for Ecosystem Services (PES) can be a valuable tool for reducing deforestation and its associated carbon emissions. The study suggests that direct financial incentives can effectively encourage forest owners to protect their trees. The success of such programs hinges on careful design, effective implementation, and ongoing monitoring. PES programs are not a singular solution, but a promising step towards creating a more sustainable future for our planet’s forests.

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