Incentives for Forest Conservation: How Costa Rica Turned Deforestation Around and Why it May Have Gone Too Far

By Deniz Dutton

When it comes to environmental success stories, few countries have done better than Costa Rica. In the late 1970s, the nation was faced with a choice - either allow the recklessness of deforestation to continue or act quickly to preserve the 26% of remaining forest cover. With deforestation proceeding at a rate of 55,000 hectares (212 square miles) per year, novel legislation was passed to protect forests and the biodiversity they contained on the premise that they were a national asset that provided invaluable ecosystem services for all. This legislation, which has been amended a great deal over the years, is known as the Forestry Law. By 1998, Costa Rica announced to the world that it had stopped deforestation completely, thanks to the government’s heroic three-decade-long effort.

The era of reforestation that defined the period between 1979 and 1995 was the result of government subsidies provided to people who made commercial use of forest products instead of simply clearing forests for farmland. While deforestation was banned outright on public land, half the nation’s land area was privately owned, meaning the government needed to come up with a clever way to influence private land use. In 1996, conceptual shifts in the value of forests and the threat of climate change catalyzed a change in the country’s approach to forest management. A revised forestry law created a compensation scheme for the ecosystem services that existing forests provide. This law was the first instance that the country recognized the important role that land stewards, such as indigenous people and farmers, play in protecting the nations’ water, scenic beauty, and biodiversity. The new legislation was dubbed Payment for Environmental Services (PES), a conservation motive which complemented and furthered the successful reforestation campaign of the previous 25 years.

services. The Forestry Law defined environmental services as “services provided by forests and forest plantations that directly affect the protection and improvement of the environment.” The PES scheme financially rewards landowners who maintain their land and its environmental services, while also banning deforestation and allowing landowners to sell the environmental services that forests provide. Under this new policy, Costa Rica stopped deforestation completely, saving one million hectares of forest and planting seven million trees. Today, Costa Rican land consists of over 50% forest cover, close to the policy’s upper limit when considering other land uses, and double the lowest amount from 1983.

One of the biggest factors behind this success was the creation of the National Fund for Forestry Financing, FONAFIFO, which oversees PES, and was established in the 1996 update to the forestry law. FONAFIFO served as an institution to consolidate the five pre-existing forestry funds that had been used to incentivize reforestation, and today it is able to coordinate all of the funding needs of PES. What makes FONAFIFO stand out is its diverse sources of funding. The three largest sources are taxes on fossil fuels (3.5%), water use, and carbon markets. FONAFIFO obtains funding through voluntary means as well, such as an arrangement with banks to issue debit cards that raise money for conservation and a carbon-offset program for individuals looking to offset their vehicle’s emissions. The private sector can also contribute to the fund in return for Environmental Services Certificates. These contributions are made by businesses and institutions that benefit from environmental services that forests provide, and di- rectly subsidize forest landowners, while giving the donors a marketing tool in return. A win-win arrangement.

Ultimately, through their variety of approaches, which have built on one another over the decades and been adapted as necessary, Costa Rica has become the only tropical nation in the world to reverse deforestation. But success does not seem to be without caveats. Much of what I have described is written from the government’s point of view; ask a Costa Rican what they think about the forestry law, and you’ll probably get an earful – especially if they make their livelihood from the land, as roughly a fifth of the population does. Alex Retana, the owner of the Finca Kobo farm on the extremely biodiverse Osa Peninsula, has a strong opinion about the government’s approach to forest conservation:

“The regulation in Costa Rica is stupid, unbelievable, [and] crazy. This is a problem for development and new possibilities.”

Alex has been practicing agroforestry for two decades. On his farm he grows an abundance of cacao, vanilla, pineapple, bananas, and many types of tropical plants. He has acres of old-growth forest and to explore his property is to navigate a matrix of trees. We are sitting across from each other at a table made from imported Chilean wood, in the reception area where he welcomes guests for his famous chocolate tour and overnight stays.

He elaborates on his statement by telling me about a rule encoded in the forestry law that mandates no landowner can sell plants grown on their land unless these plants have regenerated three times since planting. He gives the example of a palm, which takes 15-18 years to mature enough to produce fruit. So by following the rules, you could potentially sell coconuts after 45 years.

“You’d be dead!” I joked.

“Exactly,” Alex said with a bemused smile.

In the meantime, coconuts imported from Africa are being sold in Costa Rican markets. To Alex, it doesn’t make any practical sense to hinder local small-scale production of goods in favor of those being brought in from abroad. These regulations are in place to protect the environment, to make sure it is never again over-exploited, and they are certainly laudable; but it is worth maintaining a critical eye in cases where these stringent regulations are themselves creating negative environmental externalities.

“Costa Rica imports wood worth 200 million dollars a year from Chile. We have forests, but we don’t have wood. It’s an interesting situation, contradictory.”

That wood must travel over 3000 miles, generating massive and unnecessary fossil fuel emissions. In Alex’s view, Costa Rica has the capacity to sustainably fulfill all of its own wood demands. He tells me about a type of cedar that

goes to waste if not used in some way.

“When this tree is twenty, twenty-two years old, the termites start to eat it. [If you don’t] cut [it], the termite eats it completely,” he said.

It seems that the life histories and ecological niches of Costa Rica’s plants are so diverse that a one-size-fits-all approach, with sweeping, heavy-handed regulations, may not be the optimal approach to forest management in the tropics.

Perhaps the traditional knowledge held by indigenous people and generations of Costa Rican farmers could inform forest management policies that allow the nation’s vast ecological wealth to be used by its people, not just viewed by tourists. As western conservation paradigms have shown, you cannot take humans completely out of the wilderness because we are inherently reliant on nature, and to a less accepted extent, nature relies on us, too. To suggest and act otherwise only causes more problems down the road. In Costa Rica’s case, it may be worth seeing if the nation can have its ecological cake and eat it too – provided it saves some for later

Having an extensive forestry law means there will be law breakers. The Costa Rican government cites “illegal logging” as its most pressing issue. It is estimated that 25 to 35% of wood consumed comes from illegal sources, but the actual figure may be much higher. However, not all illegal wood is harvested in horribly unsustainable ways or perpetuated by greedy criminals; under the forestry law, peasants and indigenous communities utilizing a tree that has fallen naturally on their own land would be committing a crime. Since it is much easier to ignore the laws and go through with logging, there are now thousands of criminals in Costa Rica, each doing what they may have seen their neighbor doing, or just doing it out of necessity. As Alex puts it, “there is legal wood and then there is moral wood.” In this system of redundant laws which seem to benefit large-scale agriculture and plantation operations while overly regulating how small landowners can use their own trees, perhaps illegality loses its moral weight and becomes synonymous with survival.

Despite the rather authoritarian approach to protecting forests at all costs, the Costa Rican government did leave room for wood production in their forestry law. Through plantations and agroforestry projects, sub-categories within PES, wood is able to be produced for domestic consumption without harming existing forest ecosystems, since these projects can only be implemented on land that was already deforested before the ban. Farmers practicing agroforestry are exempt from the intensive permitting process around “harvesting, transportation, industrialization, or export,” according to Article 28 in the forestry law. In 2013, FONAFIFO increased the payments to landowners practicing agroforestry, in order to increase the production of domestic wood.

Agroforestry as a method of growing crops is certainly better for the environment than traditional agriculture and can go a long way to reduce erosion, retain nutrients, and provide habitat for local species. But the other category of reforestation - plantations - are less ecologically friendly. The most common tree grown on plantations in Costa Rica is teak (Tectona grandis). The government promoted the planting of teak in the reforestation efforts of the 1970s because it is a fast-growing tree. However, teak trees have wreaked havoc on their surrounding environment. Teak leaves contain the toxic compounds anthratectone and naphthotectone which suppress the growth of other plants on the forest floor when they decompose. As a result, teak forests are extremely species-poor ecosystems. It is apparent upon looking at any teak forest that no living creature dares to make their home there. Butterflies flit nervously through the skinny, straight trunks and leave as quickly as they came, and no birds sing from the branches of the toxic trees. It is clear that a teak forest is the farthest thing from a thriving tropical forest, yet they still allow plantation owners to benefit from the government’s environmental subsidy programs.

Despite their pitfalls, the laws of Costa Rica have undoubtedly gone a long way to restore the nation’s lost forests and ensure their conservation into the future. Now, the question is: can this model be replicated elsewhere, perhaps even in the United States? Whether an environmental conservation paradigm can be implemented is entirely dependent on whether the people involved and impacted have the interest and mindset to see it through. In the United States in recent years, it has been very difficult to pass environmental legislation and in fact prioritize the environment over profit in any capacity, because of the extremely strong political resistance that has to be overcome. When examining the roots of this resistance, it often stems from individuals and corporations who make a living or profit off of natural resources and feel overly burdened by environmental regulations. In Costa Rica, there is less of a conceptualized trade-off between environmental utilization and protection, largely due to society-wide acceptance of nature’s worthiness of protection.

“All my life, I really liked the trees,” Alex told me when I asked him about the origins of his relationship with the land. His father owned a coffee plantation in the central pacific region, and Alex would spend his Saturdays helping his father tend to it.

“When I was 16 or 18 years old, I had a lot of discus- sions with my father, because I [wanted more trees in the Coffee Plantation]. But my father didn’t accept it. ” say that Costa Rica’s conservation success was born out of a different attitude towards nature, one that values it for its function as a whole rather than for its useful component parts.

Alex had different views from his father about integrating nature with agriculture, and he finally got the opportunity to implement these when he bought his own land in his twenties. His father helped him look for farmland, and they went from farm to farm for a couple months. Finally, Alex fell in love with a particular patch of land, and felt called to it – “for the ceibas,” Alex said, which are a particularly gigantic tree that Alex has felt an affinity towards since childhood. While Alex studied livestock production in college, what he loved the most were plants.

When asked if he participates in the PES program to receive compensation for conserving the primary forest on his land, Alex expressed that he doesn’t think he needs the money because he makes enough through ecotourism. “I will not cut the forest,” he said, “I prefer that other people have the chance.”

If a particular attitude towards nature is what made Costa Rica’s conservation plan possible, then the element that went on to make it a veritable success is ecotourism. This is what has provided the single largest alternative income stream to Costa Ricans that have traditionally made their living from the land, and has taken the load off of the PES program in terms of financial support for rural farmers who want to maintain their forests. Alex himself was enrolled in a government program, the Certification for Sustainable Tourism, aimed at producing eco-tourism businesses in the late 90s. Costa Rica’s sustainable tourism model is exemplary and many countries have sent delegations to Costa Rica to learn about how to implement the model at home. The certification consists of tiers so that participants are always motivated to go even further with their sustainable practices to reach the highest level to use as a marketing tool. The CST program has received recognition from the Global Sustainable Tourism Council and the UN World Tourism Organization.

The incentive that sustainable tourism provides to preserve Costa Rica’s natural beauty, along with the PES program, has clearly succeeded tremendously in safeguarding the nation’s forests for future generations. It has even inspired the rest of the world to follow suit: from PES, the internationally utilized REDD+ program was conceived, a UNFCCC-adopted framework for reducing emissions from deforestation and forest degradation, which together produce more greenhouse gasses than the entire global transportation sector. As Costa Rica has long known, without developing tools to halt deforestation, regenerate forests, and manage local natural resources for local needs, climate stabilization goals will not be reached. H

(A massive ceiba tree in Corcovado National Park.)

“For me the most interesting thing is to make ecosystems. Because when you make ecosystems, you can make an extraordinary place,” he said.

For Alex, respect for nature is intrinsic to who he is. More than that, he feels as though he plays a role in nature, and has the competency to influence the way nature manifests on his farm to allow for mutual thriving. It is safe to