Traditional approaches to halting tropical deforestation by small-scale farmers have primarily focused on increasing the private benefits of sustainable alternatives, such as agroforestry, or on increasing the costs of deforestation through regulation or by correcting domestic policy distortions.

A recent study by scientists from CIFOR, CIAT, ICRAF, and CSERGE sought to enhance the effectiveness of these approaches by investigating whether small-scale farmers in Pucallpa in the Peruvian Amazon would be willing to supply carbon sequestration services at a cost below the estimated global benefits carbon sequestion provides. If they would be, it might be possible to create viable markets for carbon sequestation.

To find out how much compensation would be needed to get farmers to switch from slash-and-burn agriculture to forest preservation and agroforestry systems that sequester carbon, the authors used a methodology known as the the Contingent Valuation Method (CVM). The amount of compensation they demanded was then compared to the global benefits of reducing carbon emissions and to the cost of emission reduction by switching to cleaner fuels. The results show that farmers place positive values on the environmental services of forests and mutually beneficial trade in carbon sequestration services appears to be possible. This implies that paying farmers to sequester carbon could be a cost-effective way to enhance the effectiveness of traditional forest conservation efforts, while benefitting resource-poor farmers.

The study was carried out by Joyotee Smith from CIFOR, Susana Mourato from CSERGE, Erik Veneklaas, Keneth Reategui, and Glendy Sanchez from CIAT, and Ricardo Labarta from ICRAF.