Area Conditions and Positive Incentives: Engaging Local Communities to Protect Forests

Millions of smallholder farmers grow the world’s commodities, and some clear forest to expand their farms and escape poverty. We compare individual incentives with two collective designs: area no-deforestation, which rewards farmers if no forest is cleared, and a new “area no-use” condition, which rewards them if no one earns income from recently deforested land. Which approach works best depends on local cooperation, the cost and reliability of blocking forest use, and whether every farmer must be compensated.

Major revision at Management Science