Land-based mitigation policy in Ecuador: Effects of land-use competition and transaction costs

Daniel Ortega Pacheco
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Daniel Ortega Pacheco: Ohio State University
Authors registered in the RePEc Author Service: Daniel V. Ortega-Pacheco

No 201240, Working Papers from Latin American and Caribbean Environmental Economics Program

Abstract: This paper develops an econometric model to estimate the elasticity of forest land conversion in Esmeraldas, Ecuador and evaluates the effect that transaction costs have on incentive-based mitigation activities. Using a logistic share model, the results show a high extent of competition for the use of land between crop production for palm oil processing and land-based carbon mitigation through avoided emissions from deforestation. The net effect of transaction costs is to reduce incentives to stop land conversion into agriculture and therefore reduce GHG emissions avoidance by about 1%. Our results show that the current policy introducing conservation payments in Ecuador’s are not sufficient to significantly reduce deforestation, but that payment levels based on a plausible international carbon price would make an appreciable difference WP40

Pages: 27 pages
Date: 2012, Revised 2012
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