Innovative Incentives Aid Farmers and Forests

New flexible payments and market tools help protect forests and support farmers

In tropical regions, clearing forests for farming is a common choice for income. But Stanford researchers believe smarter incentives can help farmers conserve forests without risking their livelihoods. 

Traditional PES programs require farmers to protect entire forests for compensation, which often proves too strict. Stanford’s solution is a flexible PES model where payments depend on the amount of forest conserved. This approach encourages more farmers to participate. 

"By offering payments that are proportional to conservation, we can encourage more farmers to engage and still achieve meaningful environmental benefits," said Irene Lo, assistant professor at Stanford.

Beyond flexible contracts, the research explores how improving market systems can help. In places like Indonesia, uncertain prices push palm oil farmers to clear land for quick profits. Transparent pricing and data-sharing platforms could reduce this trend.

The platform Pempem lets farmers view daily prices from various buyers, reducing the pressure to clear land by giving them better market access and price certainty.

“These platforms offer dual benefits,” Lo said. “They help farmers secure better livelihoods and give buyers the information they need to make smarter sourcing decisions.”

Stanford’s interdisciplinary team, combining supply chain knowledge, economic theory, and field research, aims to transform these ideas into working models. Their collaboration with organizations like The Nature Conservancy signals growing interest in practical conservation solutions.

Field experiments continue as the researchers test these strategies on the ground. They also plan to integrate findings into broader climate models to assess impacts on deforestation and carbon emissions.

Stanford’s research highlights how innovative policy design and market tools can drive both environmental protection and sustainable farming. The team believes their work will offer valuable insights for global conservation efforts.