Abstract:
Ensuring the integrity of the world’s forests is indispensable for mitigating climate change, combatting biodiversity loss, and protecting the livelihoods of rural communities. While many strategies have been developed to address deforestation across different geographic scales, measuring their impact against a fluctuating background of market-driven forest loss is notoriously challenging. In this article, we (1) asses deforestation in Ecuador using a dynamic, counterfactual baseline that excludes non-market factors, (2) identify periods of reduced and excess deforestation, and (3) assess the economic consequences
of associated CO2 emissions using the social cost of carbon metric. We construct a counterfactual market-forces-only reference scenario by simulating heterogeneous profit-seeking agents making satisficing land-use allocation decisions under uncertainty. The model simulates a reference scenario for 2001–2022, a period encompassing dollarization, the beginning of a constitution granting inalienable rights to nature, and the launch of the largest payments for ecosystem services program in Ecuador’s history. On this period, total deforestation was approximately 20% lower than expected in a market-forces-only
scenario (9540 vs.12,000 km2). The largest deviation occurred in 2001–2009, when observed deforestation was 43.6% lower than expected (3720 vs 6590 km2).
From 2010 onwards, deforestation appears to be market-driven. We assess the economic value of avoided CO2 emissions at US $5.7 billion if the reduction is permanent, or US $3.1 billion considering a 1% risk of loss from 2022 onwards. We discuss contributing factors that likely shaped periods of reduced and excess deforestation and stress the need to use realistic baselines.
