- Payments for environmental services (PES) generate simultaneous benefits for conservation and production, according to evaluations of an IDB-backed project in Brazil.
- Participating properties had 7% more high-quality pastureland and increased native vegetation cover compared with similar properties that did not participate in the initiative.
- Technical assistance is critical: these payments work best when combined with rural extension services, action plans, and ongoing technical support.
Payments for environmental services (PES) can be an effective tool for reconciling production and conservation in rural landscapes, provided they are well designed and implemented. Evidence from the Atlantic Forest Connection project in Brazil shows that these instruments can generate simultaneous benefits for biodiversity, climate, and agricultural productivity, according to independent studies of the project supported by the Inter-American Development Bank (IDB).
The Atlantic Forest is the second-largest tropical rainforest area in the world. It spans 17 Brazilian states, is home to half of the country’s population, and is a biodiversity hotspot with thousands of animal and plant species. However, human-driven deforestation has resulted in the loss of more than 90% of its original forest cover.
To help address such loss in biodiversity in Brazil and other parts of the world, Target 19 of the Global Biodiversity Framework under the Convention on Biological Diversity sets an ambitious objective: mobilizing at least $200 billion annually by 2030 to finance biodiversity conservation and sustainable use.
Unfortunately, public resources alone are insufficient to finance such actions. However, they can play a catalytic role by helping reduce risks, strengthen institutional capacities, structure projects, and mobilize private, philanthropic, and international cooperation funding toward verifiable conservation and sustainable-use goals. This is where PES programs can make a difference.
PES programs have gained prominence as instruments that create economic incentives for farmers, communities, and rural landowners who conserve or restore ecological functions. Their effectiveness depends on program design, territorial targeting, environmental additionality, contract permanence, and robust monitoring systems. However, many programs face significant challenges, particularly in generating evidence of impact, monitoring results, and creating institutional arrangements capable of operating at scale.
The Atlantic Forest Connection project, financed by the Global Environment Facility (GEF) and led by the IDB, promoted conservation across the southeastern forest corridor, focusing on the Paraíba do Sul River Basin and the Serra do Mar corridor. Between 2017 and 2024, several PES modalities were used as key instruments to support rural producers in adopting conservation practices, forest restoration, and sustainable landscape management.
The project operated across approximately 60,000 square kilometers for nearly a decade. It was coordinated by Brazil’s Ministry of Science, Technology and Innovation and implemented by the Foundation for Scientific and Technological Enterprises (Finatec) in partnership with the governments of São Paulo, Rio de Janeiro, and Minas Gerais.
A central question in conservation policy is whether economic incentives generate environmental outcomes. To assess this, researchers conducted an independent and rigorous analysis comparing participating properties with similar properties that did not receive incentives.
More than 56,000 hectares of smallholder properties were managed for environmental recovery and increased carbon storage, involving hundreds of producers and local institutions. Impact evaluations show that the interventions helped avoid approximately 270,684 tons of carbon emissions, mainly through reduced deforestation and forest regeneration.
In addition, independent evaluations point to positive impacts on conservation and on the environmental conditions that support productive land use. Properties participating in conservation-focused PES contracts recorded an additional increase of one hectare of native vegetation compared with the control group, while those engaged in multiple land-use schemes showed between 7% and 10% less pasture-quality degradation.
In conservation PES schemes, the study also suggests greater restoration cost-efficiency, with results achieved mainly through assisted restoration at an estimated cost of $2,500 per hectare, compared with a local benchmark of approximately $4,570 per hectare in the Paraíba Valley. These findings demonstrate that PES programs can generate simultaneous benefits for biodiversity conservation and sustainable agricultural production.
Another key lesson was that PES contracts performed better when accompanied by continuous technical assistance. In Atlantic Forest Connection, this support translated economic incentives into action plans and the implementation of restoration practices, pasture management, and agroforestry systems, highlighting the importance of combining PES with rural extension services and productive development policies.
The project also served as an innovation laboratory to strengthen the design, monitoring, and implementation of PES programs. Digital platforms and participatory applications were developed to track contracts and record field data, while technologies such as LiDAR and environmental DNA were tested to map vegetation structure and identify species from soil and water samples. These pilots generated data, technical knowledge, online platforms with continuous access to project databases, and monitoring protocols.
At the same time, the project tested mechanisms to improve PES program efficiency. In some regions, reverse auctions were conducted, with producers competing to offer the lowest price per unit of environmental service, and proposals delivering the greatest environmental benefit per unit of investment were selected.
In the Paraíba Valley, the project also promoted experiences integrating PES with sustainable value chains. One pilot evaluated the cultivation of macaúba palm (Acrocomia aculeata) in silvopastoral systems—which combine trees, pasture, and livestock on the same plot—linking degraded pasture restoration with vegetable oil and bioenergy production.
In this model, PES acts as a transition mechanism, reducing initial risks for producers and creating conditions to attract private investment in sustainable production systems.
A recurring question in the international biodiversity finance agenda is how to design public policies that align rural production with nature conservation in productive landscapes.
Recent evidence suggests that these agendas are not necessarily at odds. Conserving ecosystem services—such as water regulation, soil fertility, pollination, and climate stability—is increasingly relevant to the sustainability and resilience of rural production systems.
In this regard, the Atlantic Forest Connection project generated valuable evidence for designing incentive-based policies. During implementation, the project tested different PES models in productive landscapes, combining economic incentives, technical assistance, and environmental monitoring systems. Beyond contract implementation, it enabled the assessment of institutional arrangements, operational mechanisms, and monitoring tools that facilitate application at scale.
This body of evidence constitutes one of the project’s main legacies. In São Paulo, practical lessons from the project contributed to the regulation of the state PES policy and inspired initiatives such as the Refloresta-SP program. They also provided input for the development and improvement of restoration and conservation programs in Minas Gerais and Rio de Janeiro.
The lessons learned are also contributing to the implementation of Brazil’s National Policy on Payments for Environmental Services. In this context, the IDB is supporting the Brazilian government through technical cooperation aimed at strengthening the policy’s operational instruments and advancing the implementation of the National PES Registry.
The Atlantic Forest experience suggests that incentive-based instruments, when combined with technical assistance, monitoring systems, and integration with agricultural and environmental policies, can help guide the sustainable management of productive territories. PES programs are therefore emerging as tools capable of linking conservation, biodiversity restoration, and the development of more resilient rural landscapes across Latin America and the Caribbean.
At the IDB, we continue supporting countries across the region in designing and implementing nature-finance instruments that connect production and conservation.