with the highest average number of application attempts is Durango, followed by Nuevo León, San Luís Potosí, and Aguascalientes ( **Figure 3** ), where the average number is just above 3, and for most states the average is 2-3.<sup>7</sup> These statistics illustrate that there is more demand for the program than the budget can allow, which is the basis for the regression discontinuity approach.

## _Selection Process of Applicants_

Applicant point scores are assigned by the national office of CONAFOR and used to prioritize the limited funds for the program. Applicants send in information about the property they wish to submit, and about their household or community. This is then combined with information from multiple geographic layers produced by different government agencies that reflect national conservation and social priorities. Because point scores are based on observable characteristics and are clearly defined, they are unlikely to be manipulated or influenced by subjective judgement.<sup>8</sup> After assigning point scores, CONAFOR admits properties into the PES program in the order of their total score until the available state budget for each sub-program has been allocated. This means that the score cutoff determining who receives payments differs by state, year, and program modality and is unlikely to be systematically correlated with characteristics that could influence outcomes. **Appendix Table A1** shows in detail the criteria used to award points for 2011-2014, including both land and applicant characteristics. **Appendix Figure A2** shows the percent contribution of the different elements of CONAFOR’s point system across time. In 2015, environmental value contributed approximately 40 percent, social elements 25 percent and deforestation risk 5 percent. Implementation capacity contributed the remaining 30 percent.

# **3. DATA**

This study uses two data sources: interpreted satellite data and survey data. Satellite-based data are used to study program impacts on land-cover change or avoided deforestation. For the land-cover analysis, we compiled data for the entire population of both private and common property applicants to the program in all 32 states between 2011 and 2014. We include applicants from each of these four individual years, but combine them into two groups for purposes of analysis – we suggest that those who applied in 2011 or 2012 represent “medium term” effects, while those more recent applicants (2013-2014) represent “short term” effects. The survey data are used to measure program impacts on land-cover management activities, as well as community-level social capital and household welfare indicators. The survey, which took place in 12 states, focused on common property communities, which currently receive the majority of the program’s budget. These states include 60% of the common property applicants to the program between 2011 and 2014, and our sample represents approximately 30% of the total applicants to the program during these years. Communal governance structures own more than 45% of land with forest or vegetative cover in Mexico (Registro Agrario Nacional _,_ 2012) and are crucial to the maintenance of Mexico’s forests and biodiversity.

> 7 It bears mentioning that in terms of sustainability of conservation, re-enrolling the same properties over time is likely to be the correct approach, since it may guarantee sustained conservation of lands at high risk of conversion.

> 8 Approximately two-thirds of the points assigned in each year are based on geographic covariates, such as location within an overexploited aquifer or being a majority indigenous municipality. The remaining points are based on observable applicant characteristics or documented certifications, such as whether the applicant has a property management plan or whether the applicant has a registered agroforestry program.

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