Healing the Wounded Land: The Role of Public Economic Incentives in Scaling Up Restoration Efforts in Six Latin American Countries

Landscape restoration is an effective nature-based solution for combating rural poverty and climate change across Latin America.

Land degradation costs Latin American economies an estimated US $52 billion per year. Restoring that land is a major economic opportunity: Restoring a hectare of land can add $1,140 in economic value for landholders, creating revenue from wood and non-wood forest products, crops, food security, carbon storage, and ecotourism.

Without well-designed public incentives that reward farmers and forest managers living in rural communities, it will be difficult to protect and begin restoring 50 million hectares of land by 2030. That level of ambition is required to safeguard Latin America’s ecological integrity and economic productivity.

Despite the proven long-term economic and ecological benefits of restoration, the up-front costs are too steep for smallholder farmers and the rural poor. If restoration does not pay rural communities, they are less likely to keep the land healthy and productive. Incentives can also help to reduce investment risk for the private sector.

Governments should use their public budgets to reward landholders for the ecosystems services that restored land produces – and help new farmers and local communities begin to restore. Well-managed public incentive programs can show investors that it is worthwhile to fund rural landholders that restore and protect land. The ecosystem services that they produce, especially carbon sequestration, can build significant value for private sector companies.

Several Latin American countries have developed public incentives for landscape restoration, but they can still improve them to revitalize more land, benefit more rural communities, and achieve long-term financial sustainability.

Chile, Colombia, Costa Rica, Guatemala, Mexico, and Peru have programs that directly pay landholders to restore their land by growing new trees and conserving natural forests. These policies could be improved to maximize economic benefit for landholders and ecological benefit for the climate, the soil and water, and biodiversity.

For each program, this brief calculated the total payment in 2021 US dollars that each landholder receives for growing a single tree or conserve a single hectare of forest. This first-of-its-kind practical analysis allows policymakers to compare the total cost of each program across countries and types of restoration, as shown below.

Policymakers looking to improve their forest and landscape restoration incentive programs should consider the following seven recommendations:

This Issue Brief supports the Restoration Policy Accelerator, a peer-to-peer learning program for policymakers that design and implement public incentives for restoration.