Payments for environmental services (PES) have become a popular approach to address environmental degradation. However, evidence on its effectiveness is mixed. PES is not a panacea, but there are many cases where PES can be a promising tool. Yet poor PES design translates into poor performance...

The decision of whether to retain forest or convert to another land use is affected by uncertainty over future land-use returns. This paper examines the design of conservation payments to landowners under uncertainty. Payments are indexed to the returns from forest conversion (agriculture), or...