This setting lets you change the way you view articles. You can choose to have articles open in a dialog window, a new tab, or directly in the same window.
Open in Dialog
Open in New Tab
Open in same window

American Economic Review: Vol. 103 No. 3 (May 2013)

Expand

Quick Tools:

Print Article Summary
Export Citation
Sign up for Email Alerts Follow us on Twitter

Explore:

AER - All Issues

AER Forthcoming Articles

Liquidity Constraints and Deforestation: The Limitations of Payments for Ecosystem Services

Article Citation

Jayachandran, Seema. 2013. "Liquidity Constraints and Deforestation: The Limitations of Payments for Ecosystem Services." American Economic Review, 103(3): 309-13.

DOI: 10.1257/aer.103.3.309

Abstract

A popular environmental policy is to pay forest owners for avoiding deforestation on their land. This is an example of "payments for ecosystem services" (PES). This paper shows that liquidity constraints can limit the effectiveness of PES programs. If an individual would have cut down trees to sell them, his opportunity costs are more front-loaded than the stream of PES income. If credit constrained, he might decline the program even if the net present value (NPV) of the PES income exceeds the NPV of his opportunity costs. I present evidence consistent with this prediction using data on forest owners in Uganda.

Article Full-Text Access

Full-text Article

Additional Materials

Authors

Jayachandran, Seema (Northwestern U)

JEL Classifications

O13: Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products
Q23: Renewable Resources and Conservation: Forestry
Q28: Renewable Resources and Conservation: Government Policy
Q53: Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
Q54: Climate; Natural Disasters; Global Warming
Q58: Environmental Economics: Government Policy


American Economic Review


Quick Tools:

Sign up for Email Alerts

Follow us on Twitter

Subscription Information
(Institutional Administrator Access)

Explore:

AER - All Issues

AER - Forthcoming Articles

Virtual Field Journals


AEA Member Login:


AEAweb | AEA Journals | Contact Us