# **6. DISCUSSION**

Our research evaluates the environmental, socioeconomic, and social capital effects of Mexico’s payments for ecosystem services program, for the 2011-2014 cohorts. This study is the first to use a regression discontinuity design to identify the impacts of a PES program globally. In contrast to prior studies that may focus on specific regions or small-scale programs, we study a national-level government program and the sample greatly resembles the average program applicant. In addition, our results are robust to a series of specification checks.

We find evidence that the program achieved its primary goals of reducing rates of land cover change and promoting land management activities. Our analysis suggests the program reduced the loss of tree cover, although we detect statistically significant effects only for areas at high risk of deforestation. The magnitudes of the estimated impacts are consistent with prior work (Alix-Garcia, Shapiro and Sims 2012, Alix-Garcia, Sims and Yanez-Pagans 2015, Sims and Alix-Garcia 2017). We note that as measured in the Hansen et al. data set, deforestation rates in Mexico were quite low during this period, making it difficult to detect impacts but possibly reflecting the overall success of national efforts to reduce deforestation. Given the serious limitations of the environmental indicators provided by the Hansen et al. data, we do not recommend using these estimates to perform cost-benefit analysis as they would likely understate potential benefits by an unknown multiple.<sup>19</sup> We found that the PES program had medium to large effects on land-cover management activities that support the provision of ecosystem services. Participant communities increased management activities by an estimated 48% or 0.60 standard deviation relative to controls, with effects being larger for the 2011-2012 cohort (0.80 standard deviation).

We did not find statistically significant or substantial changes in housing, assets and food consumption of households in participant communities. We found suggestive evidence that the intervention reduced emigration and increased enrollment rates for secondary education in treated households. These results are similar to prior results on Mexico’s program (Alix-Garcia et al. 2015; Sims et al. 2017) but are not as positive, possibly due to the erosion in the real value of payments over time and increased mandates for the communities to spend the funds on land-management activities. Future research should consider whether these mandates translate into additional ecosystem services and whether they may effectively increase the participation or implementation costs of the program.

Our results also show that PES significantly increased community social capital (by 8-9% or 0.40 standard deviation) and had no statistically significant or large impacts on household-level measures of trust and participation. In addition, PES did not crowd out other freely contributed community work devoted by households.

## _Policy Lessons_

These findings suggest several policy lessons regarding the potential scale-up of PES programs. First, the finding of impact on land-cover management activities, one of the program’s primary goals, suggests that the program effectively generated behavioral changes at the community and household

> 19 The remote sensing data do not capture forest degradation or reforestation, do not measure impacts in areas with important types of cover that are not classified as forests (e.g. arid zones), and represent only one indicator of a broad range of ecosystem services supported by the program.

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