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Decentralized forest management programs reduce deforestation rates, although the effects may be modest. More research is needed to assess whether such programs reduce the income of poor households. Proponents of decentralized forest management programs suggest that such programs can contribute to both environmental and poverty reduction outcomes. This review showed that little research has been conducted on the poverty reduction benefits of such programs, and no studies have jointly evaluated both conservation and poverty outcomes. Research is also lacking in the countries where decentralised forest management has the most potential, such as Indonesia and Brazil. Abstract We conducted a systematic review of studies on the impact of decentralized forest management (DFM) on deforestation and poverty in developing countries. The review is motivated by debates over whether the pursuits of conservation and poverty reduction in developing countries tend to conflict or whether they might be complementary. A search for rigorous evaluation studies identified eleven quantitative and nine associated qualitative evaluation studies on DFM. The methodological rigor of these studies varied widely, meaning that the evidence base for the impact of DFM policies is limited in both quantity and quality. Given the evidence available, we find little reason for optimism about the potential for current DFM approaches to achieve both conservation and poverty reduction benefits jointly. We call for the production of much better impact studies, employing randomized field experiments when possible, to assess whether the apparent incompatibility of conservation and poverty reduction might be overcome through programming innovations. Executive summary BACKGROUND Natural forest preservation in the tropics, and thus in developing countries, must be an element of any effective effort to manage climate change. Forests serve as natural carbon sinks, which help to mitigate the effect of other carbon emissions. However, forest cover is being reduced and it is estimated that deforestation is responsible for 10–17 per cent of global carbon emissions. Since 2007, governments have coordinated conservation efforts under the Reducing Emissions through Deforestation and Forest Degradation (REDD+) initiative, which has led to the implementation of various programs designed to reduce the amount of forested land converted to other purposes. Decentralized forest management (DFM) is one approach to forest management which has been widely implemented to reduce deforestation in developing countries. DFM programs relocate decision‐making authority on forest use in the direction of forest communities, rather than central government actors. While the primary goal of reducing deforestation is clear, the policy and academic literature debates the extent to which DFM programs in developing countries should incorporate goals of poverty reduction. Some argue that the targeting of poverty goals will undermine conservation effectiveness (e.g. because behavioral change among poorer households does not have as much potential to promote conservation as that of wealthier households or commercial entities). Others argue that targeting benefits toward the poor would contribute to conservation effectiveness by either promoting sustainable livelihoods or helping to legitimize conservation programming. To move the debate around DFM beyond theoretical discussions and into better‐informed, evidence‐based discussion we examine the evidence on the effects of DFM programs on deforestation and welfare outcomes in low and middle income countries (LMICs), aiming also to assess whether these goals are at odds with each other. OBJECTIVES The first objective of this review is to assess the evidence on the effects of DFM programs on the conservation and poverty outcomes in LMICs. A second objective is to assess the extent to which these programs' effects on poverty in turn affect whether conservation benefits are realized. The third objective is to evaluate how institutional and social conditions (namely, inequality, institutional capacity, corruption, and democratic accountability) moderate the effects of DFM programs. SELECTION CRITERIA The review includes studies of DFM programs that assess effects on (i) deforestation outcomes in forest areas in developing countries or (ii) poverty conditions of populations residing in communities that are proximate to natural growth forest areas in developing countries. We included studies using a range of measures for both deforestation (on‐the‐ground point samples, samples created from satellite imagery) and welfare (consumption, income, or income potential). For a program to be considered a DFM program, de jure responsibility for managing natural forest resources must pass from centralized to local authorities. This responsibility must grant local authorities the right to grant concessions or establish use restrictions. We were flexible as to the precise level of administration to which responsibilities are passed as well as whether or not the decentralization also involves granting local authorities the right to sell or transfer titles to forested lands. For the quantitative synthesis we included (a) randomized studies or (b) quasi‐experimental studies that employ strategies for causal identification with clearly delineated treated and control areas and use some method for removing biases due to non‐random assignment of the intervention. Qualitative data is used in the synthesis to provide descriptions and context for interventions that are included in the quantitative synthesis. Such data were extracted from the quantitative studies themselves as well as qualitative studies that cover the same programs or settings as the quantitative studies. SEARCH STRATEGY To identify the articles included in this review, we searched a variety of databases using key words related to DFM programs. The set of databases and lists of keywords were assembled based on consultation with a Campbell Collaboration information retrieval specialist. We also carried out hand searches of key journals in relevant fields, using publisher search engines and references cited in papers accepted for review as well as references in review papers or thematically relevant papers identified during the search. DATA COLLECTION AND ANALYSIS We collected data on the study characteristics, findings, and moderators of all included studies. Risk of bias was assessed based on the guidance of the IDCG Risk of Bias Tool (version March 2012). We extracted qualitative information from both the included quantitative studies as well as qualitative studies that covered the same types of programs and contexts as our quantitative studies. We used such qualitative data to establish that conditions recorded in quantitative data are being interpreted correctly and to provide descriptions and context for interventions that are included in the quantitative synthesis. For effects on forest cover, whenever possible, we standardize them to annual forest cover change rates. For effects on material welfare and poverty outcomes we use percentage change over estimated average counterfactual outcome (e.g., for income effects, per cent change in income relative to the average income of the control group). For each hypothesis, we synthesized estimates using meta‐analysis when the following conditions were met: (i) more than two studies meeting the quantitative inclusion criteria; (ii) effect sizes for common outcome constructs; and (iii) effects measured against similar comparators. RESULTS Our database search returned 1272 articles on DFM programs. After eliminating articles that were not relevant to our hypotheses or conducted with appropriate methodological rigor, we were left with 12 studies of DFM programs. Of these, eight DFM studies were quantitative impact evaluations. The studies cover eight programs in seven countries (Bolivia, Ethiopia, India, Kenya, Malawi, Nepal, and Uganda). The evidence base is limited both in terms of the number of eligible studies and the methodological quality of included studies. None of the studies are based on randomized experiments, and so the potential for hidden selection or confounding biases is the most pertinent problem. Few of the studies create comparison groups that allow them to address spillover and leakage of effects from program areas to non‐program areas. Finally, none of the studies investigated forest conservation and welfare effects jointly, which made it difficult to address our question of how these two goals relate. Effects on Deforestation Outcomes The included studies that report the effects of interventions on forest conservation outcomes included research on programs in Bolivia, India, Kenya, and Nepal, although only the studies from India and Bolivia report effects on forest cover change. These studies used a wide range of outcome variables (e.g., different forest types), so it is difficult to synthesize an average effect of these programs. Across the studies the reported effects of DFM programs on the annual forest cover change rate range from 0.026 percentage points (s.e.=0.060, 95% CI: [‐0.09, 0.14]) for a study examining DFM and community forest use in India to 0.80 percentage points (s.e.=0.20, 95% CI: [0.41, 1.19]) for a study examining DFM‐based administration of protected forests in Bolivia. Effects on Human Welfare Outcomes Three studies assess the effects of DFM on welfare or poverty outcomes, evaluating programs in Ethiopia, Malawi, and Uganda. They differed in the nature of the comparisons that they made, but all found that DFM did lead to a boost in either a households' forest or household income on average. Effects ranged from a 35 per cent increase in per capita consumption expenditure in Ethiopia (s.e.=9.44, 95% CI: [16.5, 53.5]) to a 2 per cent gain in Uganda (s.e.=2.36, 95% CI: [‐2.63, 6.63]). Nevertheless, these average effects are not so helpful in assessing effects on poverty if they do not characterize consequences for poor households specifically. Indeed, the study of DFM programs in Uganda suggested that poor households in areas neighbouring DFM programs might have been harmed: among members of the lowest income quartile, the effect of devolution to local public institutions on income per capita was a 6 per cent reduction, although this was not statistically significant (s.e.=8.43, 95% CI: [‐22.52, 10.52]), while devolution to local parastatals yielded a 10 per cent loss of income (s.e.=5.12, 95% CI: [‐20.04, 0.04]). The Role of Institutional and Social Conditions We aimed to address a number of hypotheses regarding the influence of institutional and social conditions (inequality, institutional capacity, corruption, and democratic accountability) on the effects of DFM programs. However, due to limitations of the evidence base we were unable to assess these hypotheses. We did however extract qualitative data from included studies and associated qualitative studies that provide some insights into the role of institutional and social conditions in the context of PES programs These studies highlighted issues of institutional capacity, describing situations where DFM programs did not have the ability to carry out their mandates. We also found qualitative support for the idea that democratically accountable DFM institutions may result in larger conservation effects. However, this hypothesis does rest on the possibly erroneous assumption that all forest edge community members favour conservation, an assumption that was challenged in qualitative accounts from Mexico. AUTHORS' CONCLUSIONS Limitations in the evidence base preclude definitive hypothesis tests, but we do find that DFM reduce deforestation rates. In terms of program effects on human welfare and poverty outcomes, the evidence is very limited and we cannot conclude that the evidence indicates non‐negative effects. Our review aimed to assess the extent to which conservation and poverty reduction goals conflict, and the scope for “win‐win” strategies that generate both significant environmental and human welfare benefits. Based on the evidence available, we do not find that an evidence‐based case can be made for conservation and poverty‐reduction goals being complementary in DFM programming. Our final conclusion re‐emphasizes the poor state of the evidence base for conservation programming. Much advanced scientific effort and extensive investment has gone into measuring forest conditions around the world. Relative to that, efforts to assess the effects of DFM programs on deforestation and poverty is limited and methodologically weak. Conservations researchers should look to recent work in development economics for guidance on executing field experiments that might provide more credible evidence (Banerjee and Duflo, 2011; Casey et al., 2012; Karlan and Appel, 2012).

This Campbell systematic review examines the effects of payment for environmental services (PES) programmes on deforestation and poverty, and whether environmental and poverty reduction goals conflict with one another. The review summarizes evidence from 11 studies covering six PES programmes in four countries. The modest effectiveness of PES programmes means that they are not cost‐effective. Relative to the extensive investment to measure forest conditions, efforts to assess the effects of PES programmes on deforestation and poverty are limited and methodologically weak. Abstract We conducted a systematic review of studies on the impact of payments for environmental services (PES) that set natural forest conservation as the goal on deforestation and poverty in developing countries. The review is motivated by debates over whether the pursuits of conservation and poverty reduction in developing countries tend to conflict or whether they might be complementary. A search for rigorous impact evaluation studies identified eleven quantitative and nine associated qualitative evaluation studies assessing the effects of PES. The methodological rigor of these studies varied widely, meaning that the evidence base for the impact of PES policies is limited in both quantity and quality. Given the evidence available, we find little reason for optimism about the potential for current PES approaches to achieve both conservation and poverty reduction benefits jointly. We call for the production of high quality impact evaluations, using randomisation when possible, to assess whether the apparent incompatibility of conservation and poverty reduction might be overcome through programming innovations. Executive summary BACKGROUND Natural forest preservation in the tropics, and thus in developing countries, must be an element of any effective effort to manage climate change. Forests serve as natural carbon sinks, which help to mitigate the effect of other carbon emissions. However, forest cover is being reduced and it is estimated that deforestation is responsible for 10‐17 per cent of global carbon emissions. Since 2007, governments have coordinated conservation efforts under the Reducing Emissions through Deforestation and Forest Degradation (REDD+) initiative, which has led to the implementation of various programs designed to reduce the amount of forested land converted to other purposes. Payment for environmental services (PES) programs is one type of intervention commonly implemented under the REDD+ umbrella. PES programs allow for direct exchange between those demanding ‘environmental services’ such as protection or rehabilitation of natural forests and those in a position to provide them locally. While the primary goal of reducing deforestation is clear, the policy and academic literature debates the extent to which PES programs in developing countries should incorporate goals of poverty reduction. Some argue that the targeting of poverty goals will undermine conservation effectiveness (e.g., because behavioural change among poorer households does not have as much potential to promote conservation as that of wealthier households or commercial entities). Others argue that targeting benefits toward the poor would contribute to conservation effectiveness by either promoting sustainable livelihoods or helping to legitimize conservation programming. In this review, we assess the effects of PES programs on deforestation and welfare outcomes in low and middle income countries (LMICs), and whether the twin goals of improving both environmental and human welfare outcomes are at odds with each other. We also examine how inequality, institutional capacity, corruption, and democratic accountability may moderate the effects of PES programs. Conducting this review is important for moving the debate around PES beyond theoretical discussions and into a better‐informed, evidence‐based discussion. OBJECTIVES The first objective of this review is to assess the evidence on the effects of PES interventions on conservation and poverty outcomes in LMICs. A second objective is to assess the extent to which effects on poverty in turn affect whether conservation benefits are realized. The third objective is to evaluate how institutional and social conditions (namely, inequality, institutional capacity, corruption, and democratic accountability) moderate the effects of PES programs. SELECTION CRITERIA The review includes studies of PES programs that assess effects on either (i) deforestation outcomes in forest areas in developing countries or (ii) poverty conditions of populations residing in communities that are proximate to natural growth forest areas in developing countries. We included studies using a range of measures for both deforestation (on‐the‐ground point samples, samples created from satellite imagery) and welfare (consumption, income, or income potential). We required that PES programs have a clear start date when either payments or rewards are themselves offered to individual or corporate property holders to maintain or rehabilitate (for example, via planting endemic species) natural forests, or institutions are established to facilitate such offers. For quantitative synthesis we included (a) randomized studies and (b) quasi‐experimental studies that employ strategies for causal identification with clearly delineate treated and control areas and use some method for removing biases due to non‐random assignment of the intervention. Qualitative data are used in the synthesis to provide descriptions and context for interventions that are included in the quantitative synthesis. Such data were drawn from the quantitative studies themselves as well as qualitative studies that cover the same programs or settings as the quantitative studies. SEARCH STRATEGY To find the articles included in this review, we searched a variety of databases using key words related to PES programs. The set of databases and list of keywords were assembled based on consultation with a Campbell Collaboration information retrieval specialist. We also carried out hand searches of key journals in relevant fields, using publisher search engines and references cited in papers accepted for review as well as in review papers or thematically relevant papers identified during the search. DATA COLLECTION AND ANALYSIS For studies eligible for inclusion in the review we systematically collected data on study characteristics, findings, and moderators. Risk of bias was assessed based on the guidance of the IDCG Risk of Bias Tool (version March 2012). We extracted qualitative information from both the included quantitative studies as well as qualitative studies that covered the same types of programs and contexts as our quantitative studies. We use such qualitative data to establish that conditions recorded in quantitative data are being interpreted correctly and to provide descriptions and context for interventions that are included in the quantitative synthesis. For effects on forest cover, whenever possible we standardized them to annual forest cover change rates. For effects on material welfare and poverty outcomes, we used percentage change over estimated average counterfactual outcome (e.g. for income effects, per cent change in income relative to the average income of the control group). For each hypothesis, we synthesised estimates using meta‐analysis when the following conditions were met: (i) more than two studies meeting the quantitative inclusion criteria; (ii) effect sizes for common outcome constructs; and (iii) effects measured against similar comparators. RESULTS Our database search returned 1382 articles on PES programs. After eliminating articles that were not relevant to our hypotheses or conducted with appropriate methodological rigor, we were left with 20 articles on PES programs. Of these 11 PES articles conducted quantitative impact evaluation of these programs. The 11 PES articles cover six programs in four countries (Costa Rica, China, Mexico, and Mozambique). The resulting evidence base is weak both in terms of the number of eligible studies and the methodological weaknesses of the included studies. None of the studies are based on randomized experiments, and so the potential for hidden selection or confounding biases is the most concerning issue. Few of the studies create comparison groups that allow them to address spill‐over and leakage of effects from program areas to non‐program areas. None of the studies investigated forest conservation and welfare effects jointly, which made it difficult to assess how these two goals are related. Effects on Deforestation Outcomes The PES studies that assessed programs' effects on forest cover included nine studies of four programs in Costa Rica and Mexico. The studies focused on two types of measures: impact on deforestation rate (where the best‐case scenario is a deforestation rate of 0) and impact on forest cover (which allow for a positive outcome in the expansion of forested land). Keeping in mind the weakness of the evidence base, the studies that focus solely on reducing deforestation suggest that PES programs have, on average, tended to reduce the annual rate of deforestation by 0.21 percentage points (s.e.=0.09, 95% CI: [0.03, 0.39]). Effect sizes are a bit larger for studies that examine forest cover change, which measures not only forest loss, but also forest gain. Estimated effects on annual forest cover change rates ranged from 0.50 percentage points (s.e.=0.20, 95% CI: [0.11, 0.89]) for a study in Costa Rica to 1.6 percentage points (s.e.=0.80, 95% CI: [0.03, 3.17]) for a study in Mexico. One study suggests an outlier effect of 10 percentage points (no standard error or confidence interval provided in the original study), but this study suffers from a high risk of bias. Effects on Human Welfare Outcomes The evidence base on the effects of PES on welfare outcomes is very limited, with only two studies in two countries (China and Mozambique) included in the review. These studies find that PES improved participating households' incomes by 4 per cent (s.e.=1.55, 95% CI: [0.96, 7.04]) in Mozambique and by 14 per cent (s.e.=3.42, 95% CI: [7.3, 20.7]) in China. However, these average effects do not necessarily tell us how these programs affect poor households. For PES to contribute to poverty reduction, poorer household must be able to participate at high rates. But participation in PES programs is typically more difficult for poor households than wealthier households (a fact documented by in a number of the studies included in the review). The study from Mozambique includes estimates for poor households and finds that the welfare effects were substantially less in absolute terms, and not statistically significant for these households. The Role of Institutional and Social Conditions We aimed to address a number of hypotheses regarding the influence of institutional and social conditions (inequality, institutional capacity, corruption, and democratic accountability) on the effects of PES programs. However, due to limitations of the evidence base we were unable to these hypotheses. We did however extract qualitative data from included studies and associated qualitative studies that provide some insights into the role of institutional and social conditions in the context of PES programs. A study on the Mexican PSAH PES program found that forest conservation effects were worse in poorer areas. Qualitative information from Costa Rica was consistent with this account. Several of the studies also addressed the issue of institutional capacity, describing situations where PES programs did not have the ability to carry out their mandates. Corruption and possible misappropriation of project resources were also factors raised in a qualitative study of PES in Mexico. The study found that program resources were applied to address inadequacies in other government programs. AUTHORS' CONCLUSIONS Limitations in the evidence base preclude definitive hypothesis tests, however the evidence we find suggests that PES does reduce deforestation rates. The effect is modest however and seems to come with high levels of inefficiency. In terms of PES effects on poverty, we cannot say that the evidence indicates beneficial effects. Available evidence shows that PES programs are less effective in poor areas and are less likely to attract participation of poor households than wealthier ones. These are troubling findings but they are based on only a handful of cases and therefore deserve much more empirical attention. Our review aimed to assess the extent to which environmental and poverty reduction goals conflict with one another, how different conservation strategies fare in terms of such trade‐offs, and the scope for ‘win‐win’ strategies that generate both significant environmental and poverty reduction benefits. Based on the evidence available, we do not find that a case can be made for conservation and poverty‐reduction goals being complementary in PES programming. Our final conclusion re‐emphasizes the poor state of the evidence base for PES programming. Much advanced scientific effort and extensive investment has gone into measuring forest conditions around the world. Relative to that, efforts to assess the effects of PES programs on deforestation and poverty are limited and methodologically weak. Researchers should consider the recent work in development economics for guidance on executing field experiments that might provide more credible evidence (Banerjee and Duflo, 2011; Casey et al., 2012; Karlan and Appel, 2012).