Can national payments for standing forests deter deforestation? An opportunity cost analysis of the Tropical Forests Forever Facility

Shun Mitamura, Jagu Schippers Emma (), Thierry Brunelle () and Yann Kervinio ()
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Shun Mitamura: CIRED - Centre International de Recherche sur l'Environnement et le Développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - Université Paris-Saclay - CNRS - Centre National de la Recherche Scientifique - ENPC - École nationale des ponts et chaussées - IP Paris - Institut Polytechnique de Paris
Jagu Schippers Emma: CIRED - Centre International de Recherche sur l'Environnement et le Développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - Université Paris-Saclay - CNRS - Centre National de la Recherche Scientifique - ENPC - École nationale des ponts et chaussées - IP Paris - Institut Polytechnique de Paris
Thierry Brunelle: CIRED - Centre International de Recherche sur l'Environnement et le Développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - Université Paris-Saclay - CNRS - Centre National de la Recherche Scientifique - ENPC - École nationale des ponts et chaussées - IP Paris - Institut Polytechnique de Paris
Yann Kervinio: CIRED - Centre International de Recherche sur l'Environnement et le Développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - Université Paris-Saclay - CNRS - Centre National de la Recherche Scientifique - ENPC - École nationale des ponts et chaussées - IP Paris - Institut Polytechnique de Paris

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Abstract: National payments for standing forests could be a complement, or an alternative to baseline-based reduced deforestation mechanisms. The Tropical Forests Forever Facility (TFFF), launched at COP30, exemplifies this approach by proposing uniform per-hectare payments combined with penalties for deforestation. This paper evaluates whether such payments are economically sufficient to deter deforestation. Using spatially explicit estimates across tropical forest countries, we benchmark the TFFF's reward-penalty structure against the opportunity costs of forest conversion. Results show substantial heterogeneity in agricultural opportunity costs. While the TFFF's base payment of $4 per hectare represents only a small share of aggregate opportunity costs, its penalty mechanism ($400-800 per hectare) could economically deter deforestation in regions with low to moderate agricultural returns. However, the mechanism is unlikely to counterbalance agricultural opportunity costs in areas of high agricultural value, notably in Brazil. The findings suggest that national per-hectare standing forest payments can provide meaningful deterrence in specific contexts, but their effectiveness depends critically on spatial economic conditions and institutional enforcement capacity. Uniform land-based incentives should therefore be complemented by targeted domestic policies.

Keywords: Tropical Forests Forever Facility (TFFF); REDD+; Payments for ecosystem services; Opportunity cost; Climate finance; Paris Agreement (search for similar items in EconPapers)
Date: 2026-07-08
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