Main Page Full Report (pdf)

Acknowledging the diversity of forest contexts and the need for tailored approaches, this chapter examines the policy instruments that can operationalize a differentiated forest-climate agenda to achieve conservation and restoration outcomes.

Across tropical regions, governments have pursued, with varying degrees of success, a range of initiatives to curb deforestation, safeguard remaining forests, and promote large-scale restoration. Over time, a robust toolkit has emerged—combining regulatory measures, economic incentives, and targeted subsidies—adapted to local challenges and opportunities.

This chapter provides a curated overview of forest policy instruments, focusing on those that have shown evidence of effectiveness in tropical contexts. It highlights a range of command-and-control regulations, including the creation of protected areas, the protection of species at risk and their habitats, and forest and land-use regulations such as zoning laws and legal requirements for conservation on private lands. It also includes economic incentives and subsidies, such as PES programs, subsidies to increase agricultural productivity, conditions on access to subsidized rural credit, and commercial and market-based policies.

The policies described in this chapter are not an exhaustive catalogue of every possible intervention, but rather a synthesis of key mechanisms that have demonstrated impact and offer lessons for broader applications. The goal is to connect the forest-climate opportunity to practical policy pathways, clarifying what tools are available and what strategic choices are required. Together, these policies demonstrate that effective forest management is both feasible and achievable.

However, the effectiveness of forest policies depends not only on their design but also on the broader enabling environment that supports their implementation. This includes factors such as clear land tenure and property rights, policy alignment across sectors, coordinated institutional arrangements, accountable decision-making, and consistent implementation. These elements help determine whether regulatory instruments and economic incentives can translate into meaningful outcomes on the ground. In this context, the chapter also examines key enabling conditions, such as secure property rights and land tenure, that are essential for forest policies to be effective.

A critical dimension of this discussion is the recognition that forest policies are deeply intertwined with political cycles. Deforestation rates often rise or fall in tandem with shifts in political priorities and electoral incentives. Therefore, while the policy instruments reviewed here have significant potential, their long-term success depends on embedding them within stable, resilient governance frameworks that can withstand political fluctuations.

Overview of Policy Instruments and Evidence on Effectiveness

A diverse and complementary set of policy instruments has been developed in different regions to address deforestation and forest degradation, reflecting the complexity of forest governance and the range of economic, legal, and institutional factors at play. These instruments generally fall into two broad categories: (i) regulatory instruments and (ii) economic incentives and subsidies (Figure 9).

Figure 9. Forest Policy Toolkit

Source: CPI/PUC-RIO, 2025

Regulatory Instruments

In the context of forests, command-and-control regulations refer to legally binding laws, rules, and standards established by governments to control land use, forest management, and conservation. These instruments define what is permitted, restricted, or prohibited, and are enforced through penalties such as fines, sanctions, or loss of rights. Instruments under this approach are often supported by monitoring systems that enable detection of violations and guide enforcement actions.

The command-and-control approach can take various forms depending on the legal and institutional context. These include the designation of protected areas, the protection of species at risk and their habitats, forest and land-use regulations that either permit forest conversion or impose conservation and restoration obligations on public or private lands, and enforcement-centered instruments that rely on monitoring and penalties to ensure compliance.

Protected Areas

Protected areas are among the most widely used policy tools to reduce deforestation. They consist of geographically defined zones, established through legal or other effective means, designed to conserve biodiversity and safeguard ecosystem services by protecting natural features of ecological, biological, or cultural value. Their effectiveness often derives from the combination of heightened oversight and legal deterrence.

In the Brazilian Amazon, forest protection works by increasing monitoring, which raises the likelihood that environmental violations will be detected, while the legal framework imposes stricter penalties for crimes within protected lands. This increases the cost of illegal clearing compared to unprotected areas, discouraging offenders from targeting these zones. Although this significantly lowers deforestation rates in high-pressure regions, protection may displace deforestation rather than eliminate it entirely, as clearing can shift to unprotected areas (Gandour 2018).

Evidence from other countries reinforces the protective effect. In Costa Rica, the national network of protected areas reduced deforestation by about 10% (Andam et al. 2008). Joppa and Pfaff (2010), analyzing 147 countries, find that in 75% of cases protection reduced land conversion. In the Peruvian Amazon, Miranda et al. (2016) show that land-use restrictions within protected zones helps lower deforestation. Effectiveness varies with the protection regime: Nelson and Chomitz (2011) find that, across Latin America and the Caribbean, strictly protected areas reduce fire incidence—a proxy for deforestation—by 3–4%, multiuse protection by 5–6%, and indigenous territories by 16–17%.

Indigenous lands stand out as highly effective in contexts of high deforestation pressure. Nolte et al. (2013) highlight their strong deterrent effect in the Brazilian Amazon, while Baragwanath, Bayi, and Shinde (2023) show that these territories not only reduce deforestation but also encourage secondary forest regrowth on previously cleared lands. Sze et al. (2022) extend this evidence across the tropics, finding that Indigenous lands avoid deforestation at rates comparable to other protected areas, with even greater effectiveness in Africa.

The contrast with undesignated public lands is stark. In Brazil, areas with undefined tenure status are particularly vulnerable to illegal deforestation and land grabbing, as shown by Azevedo-Ramos and Moutinho (2018) and Azevedo-Ramos et al. (2020). These findings underscore the critical role of regulatory protection and secure land tenure in preventing forest loss, and the value of designated protected areas as a core component of effective forest governance.

Wildlife Protection Regulations

Wildlife Protection Regulations aim to conserve species-at-risk by prohibiting the killing of endangered species and requiring the protection of their habitat—actions that, in turn, help conserve forests.

Regulatory frameworks are used to safeguard biodiversity and fauna. Wildlife sanctuaries—protected areas specifically designed to preserve biodiversity—and national parks in Thailand significantly increase forest cover, as well as the size and continuity of forested areas (Sims 2014). These areas experienced increases in both the average size of individual forest patches and the size of the largest remaining patches of continuous forest. Comparisons between the two types of protected areas show that wildlife sanctuaries are more effective than national parks at protecting forest within core areas (as opposed to edges) and at preventing fragmentation, which occurs when forests are broken into smaller, isolated areas.

Forest and Land-Use Regulations

Forest and land-use policies impose different types of land limitations, ranging from fully protecting forests to granting permission to convert forests into other land uses. Consequently, they guide where different economic activities can take place—especially those related to agriculture. Bruggeman, Meyfroidt, and Lambin (2015) evaluate a zoning law in Cameroon that separated forested areas in a permanent (PFE) and non-permanent forest estates (NPFE). The PFE includes forests dedicated to protection but also to production. The NPFE comprises remaining forestlands that may be cleared or managed by local populations through community forests. Results show that the land-use zoning effectively curtails deforestation in the PFE, indicating that forest production units can be an effective tool to control deforestation.

Brazil’s Forest Code stands as the country’s primary legal framework regulating land use on private rural properties. It mandates the conservation of native vegetation through two core mechanisms: Legal Forest Reserves (Reserva Legal – RL), which require that 80% of land in the Amazon and 20% in other biomes remain forested, and Permanent Preservation Areas (Áreas de Preservação Permanente – APPs), which aim to conserve water resources and prevent soil erosion. Soares-Filho et al. (2014) estimate that these two requirements protect 193 ± 5 Mha of native vegetation, containing 87 ± 17 GtCO₂. They argue that while the Forest Code has severely restricted deforestation on private properties, it has proved challenging to enforce, particularly in the Amazon. A consequence of this legislation is the accumulation of “environmental debt”—areas where the legal thresholds for RL and APPs are unmet, requiring restoration at the landowner’s expense. Authors estimate that this debt is around 21 ± 1 Mha, and that its elimination via forest restoration would sequester up to 9 ± 2 GtCO₂. As such, the Forest Code exemplifies both the transformative potential and the implementation challenges of large-scale regulatory instruments aimed at forest conservation and land-use management.

Enforcement-Centered Instruments

A subset of command-and-control instruments prioritizes enforcement to ensure compliance with environmental laws and regulations. These include monitoring systems—often using advanced technologies like satellites—and enforcement actions such as fines or sanctions for illegal deforestation. These approaches are particularly important in contexts where governance capacity is uneven, and where deterrence plays a significant role in shaping land-use decisions.

Technological advancements have enhanced the effectiveness of enforcement-centered measures. Real-Time Deforestation Detection System (Sistema de Detecção de Desmatamento em Tempo Real – DETER), a system that processes satellite imagery and issues near-real-time deforestation alerts, has played a pivotal role in enforcement in Brazil. This tool has enabled the country to overcome law enforcement shortcomings by targeting environmental enforcement in the Amazon in regions indicated by the alerts. Assunção, Gandour e Rocha (2023) finds that this system reduced municipality-level deforestation by 25% between 2006 and 2016. Complementary evidence from Assunção et al. (2023) shows that, by issuing a “priority list” of municipalities to be targeted with more intense environmental monitoring and enforcement, deforestation reduced by 43%, with spillover effects extending to neighboring areas. These findings illustrate how targeted enforcement—especially when combined with credible deterrence—can achieve substantial gains.

Indeed, near-real-time forest monitoring and alert systems based on satellite imagery have contributed to tracking deforestation on a global scale. One such tool available worldwide is Global Forest Watch (GFW), a platform that offers open data on deforestation and forest cover. By interviewing users of these systems in Madagascar, Indonesia, Bolivia, and Peru, Musinsky et al. (2018) find that the use of such tools made significant contributions to improving the ability of conservation and forest management organizations to respond to and reduce the impacts of fires, deforestation, and other illegal or undesirable forest activities.

MapBiomas Alerta, a system for validating and refining alerts on the deforestation of native vegetation across all Brazilian biomes using high-resolution images, has also contributed to these efforts. The government of the state of Goiás has adopted this tool to combat illegal deforestation since 2020. According to the State of Goiás Secretariat of Environment and Sustainable Development (Secretaria de Estado de Meio Ambiente e Desenvolvimento Sustentável – SEMAD/GO), the alerts have enabled more effective monitoring (Cardoso et al. 2024).

Economic Incentives and Subsidies

Unlike command-and-control approaches that rely on legal obligations and penalties, economic incentives and subsidies are designed to encourage forest conservation by altering the economic conditions under which land-use decisions are made. They aim to shift the cost-benefit calculus of land users by providing positive incentives to conserve forests rather than convert them. Examples include PES programs, subsidies that promote agricultural intensification, credit subsidy regulations, and commercial and market-based policies.

Payments for Environmental Services

PES programs provide financial incentives for forest owners to keep their forests intact. Payments are made conditional on voluntary pro-environment behaviors, such as conserving biodiversity, sequestering carbon, and maintaining water quality. An important aspect in this context is the sustained monitoring and enforcement of the conditions for cash transfers. Many cases have demonstrated strong potential of these programs to reduce deforestation.

For example, Jayachandran et al. (2017) find that PES contracts in Uganda, which offered annual payments per conserved hectare to forest-owning households, significantly reduced deforestation without shifting deforestation into adjacent areas. Similarly, Arriagada et al. (2012) document that Costa Rica’s PES program increased farm forest cover by 11–17%.

Other studies underscore the importance of local context: Alix-Garcia et al. (2015) observed that a PES program in Mexico, which paid landowners for protecting forest, reduced the expected land cover loss by 40-51%, being more effective in areas with lower poverty rates. Wong et al. (2023) show that a PES program in Brazil was able to keep forest cover in rural communities above 80%, and the underlying mechanism to reduce deforestation was an increase in reports of illegal deforestation. Finally, Moros et al. (2023) find that conservation gains in Colombia persisted even after payments ended, suggesting that PES can have lasting impacts when properly structured.

Subsidies for Increased Agricultural Productivity

Subsidies aimed at increasing agricultural productivity—for example, by providing fertilizers, high-yield seeds, or training—also show promise in reducing deforestation. The underlying mechanism is that increased productivity can reduce the need to expand farmland, especially in small-scale agricultural areas, thus lowering deforestation pressures.

Fertilizer and seed subsidy program in Malawi reduced pressure for agricultural expansion by improving productivity on existing farmland (Abman and Carney 2020). Such a policy, which aimed at increasing small-scale agricultural productivity, had positive environmental spillovers. Similar findings have emerged from Uganda (Abman et al. 2023) and Zambia (Pelletier et al. 2020), where agricultural intensification efforts—through training and subsidies for better seeds and fertilizers, respectively—were associated with lower deforestation rates. These cases highlight the value of integrating conservation goals with agricultural development policies.

Credit Subsidy Policies

Since rural credit is a primary tool through which governments in developing countries support agriculture—and given that agricultural expansion is a major driver of deforestation—linking credit subsidies to strict environmental requirements provide an effective strategy to curb deforestation.

Assunção et al. (2020) show that tying rural credit in the Brazilian Amazon to stricter environmental requirements was effective in reducing deforestation. The authors evaluate the impact of a credit policy established by the Brazilian Central Bank, which made the concession of subsidized rural credit in the Amazon conditioned upon proof of compliance with legal titling requirements and environmental regulations. The estimates show that the total deforested area during the study period was about 60% smaller than it would have been in the absence of the policy.

Commercial and Market-Based Policies

Commercial and market-based tools harness the power of markets to drive conservation outcomes. Examples include voluntary or mandatory zero-deforestation supply chain policies, certification schemes, and trade policies that condition market access in compliance with environmental standards. These measures can amplify state-led conservation efforts by aligning commercial interests with sustainability goals.

In this context, Heilmayr et al. (2020) evaluate the Amazon Soy Moratorium in Brazil—an agreement by grain traders not to purchase soy grown on land deforested after 2008. The authors find significant deforestation reductions linked to the policy, particularly where it was bolstered by public property registries and monitoring systems.

Certification schemes, such as those governed by the Forest Stewardship Council (FSC), also contribute. FSC is a voluntary forest certification that promotes the sustainable management of forests through a range of practices, e.g., selective logging and improved fire management. Such certifications may provide a price premium or reputational benefits to timber producers. Miteva, Loucks, and Pattanayak (2015) show that FSC-certified timber concessions in Indonesia reduced deforestation by 5% compared to non-certified concessions, underscoring how market mechanisms can align commercial interests with forest conservation.

Enabling Environment: Securing Land and Property Rights

As demonstrated above, regulatory instruments and economic incentives and subsidies can provide effective results in reducing deforestation. However, complementary efforts are needed to address the enabling conditions that support their implementation. Specifically, structural governance reforms play a crucial role in removing persistent barriers that undermine conservation and restoration outcomes, such as policies to ensure the security of land tenure and property rights.

Secure land tenure and clear property rights provide landowners with the confidence and incentives to invest in sustainable land management. Without them, land users may overexploit resources due to weak accountability. Measures such as land demarcation, registration, and formal certification strengthen tenure security, promoting land-use intensification and reducing pressure to clear new areas. Additionally, resolving conflicts, clarifying boundaries, and formalizing usage rights reduce transaction costs and foster cooperation, enabling more effective self-governance of common-pool resources, including forests.

A land registration program in Benin, which formalized customary land rights to improve agricultural productivity and support community forest management, reduced deforestation by around 20% by increasing tenure security (Wren-Lewis et al. 2020). Similarly, titling indigenous communities in the Peruvian Amazon significantly reduced both forest clearings and degradation (Blackman et al. 2017). Granting full property rights was also found to significantly decrease deforestation within indigenous territories in the Brazilian Amazon (Baragwanath and Bayi 2020). Such findings underscore that formal and collective property rights might provide an effective way to reduce deforestation.

A meta-analysis of over 30 publications on the relationship between land tenure and tropical deforestation found that land tenure security is associated with reduced deforestation, regardless of the form of tenure (Robinson et al. 2014). In Indonesia, the legal status of land was shown to influence land-use practices, with weak property rights in surrounding areas increasing the likelihood of forest clearing by fire, highlighting the importance of secure land tenure at the landscape scale (Balboni et al. 2024).

Political Risks

Deforestation is deeply intertwined with political cycles and incentives, which can either mitigate or exacerbate forest loss depending on the context. Multiple studies illustrate how electoral dynamics and political instability shape land-use decisions, often in ways that undermine conservation gains.

In Indonesia, forest fires decline in election years, as they may jeopardize electoral chances (Balboni et al. 2021). However, deforestation rates in the same country increase in the year leading up to a district head election (Cisneros, Kis-Katos, and Nuryartono 2021). Similar evidence exists for Brazil, where deforestation in election years is higher when the mayor of a municipality ran for reelection compared to municipalities where the incumbent did not seek reelection, reflecting electoral manipulation of forest resources (Pailler 2018).

Beyond electoral cycles, political risks also arise from shifts in governance structures and rent-seeking behavior as candidates manipulate economic or political systems to gain wealth or advantage without creating new wealth for society. In Indonesia, politicians lose power through district splits, illegal deforestation rates increase—and they point that such illegal activity might be facilitated by such officials. However, when alternative sources of rent increase, such as through oil and gas exploration, politicians have more to lose from being found engaging in illegal activity in the forest sector, decreasing forest extraction (Burgess et al. 2012).

Another example of the connection between politics and deforestation is the Action Plan for the Prevention and Control of Deforestation in the Legal Amazon (Plano de Ação para Prevenção e Controle do Desmatamento na Amazônia Legal – PPCDAM), a set of deforestation-related policies in the Brazilian Amazon, and how it affected special interest groups operating in the region (Bragança and Dahis 2022). The policies had greater impacts in municipalities governed by politicians who were also agricultural producers, showing thatenvironmental policies can change political incentives at a local level, increasing its impact on environmental and social outcomes.

Together, this literature underscores that deforestation is highly susceptible to political cycles, institutional volatility, and the incentive structures of local elites. These findings point to a critical need: policies must be designed not only for technical effectiveness but also for political resilience. Shielding conservation efforts from short-term political pressures—whether by embedding enforcement in independent institutions, strengthening legal frameworks, or aligning economic incentives with long-term forest stewardship—is essential for sustained impact.

↑ Go back to the top of the page