Stefan Schwarze, Jana Juhrbandt:
How Cost-effective are National Parks in Reducing Deforestation? The Cost"=effectiveness of the Lore"=Lindu National Park in Indonesia


Georg-August Universität Göttingen, Dept. of Agricultural Economics and Rural Development, Germany

Deforestation in the tropics has large scale consequences for carbon sequestration, biodiversity conservation, and ecosystem services. One way to maintain the integrity of forests is to establish protected areas (PAs) such as national parks. The area worldwide under such conservation regimes increased more than tenfold over the past 4 decades with 18.8 mil. km2 currently under protection. The decision, where to establish a PA, is mainly driven by only considering biological benefits without incorporating the costs of protection. Studies, however, show that the incorporation of costs can greatly increase the efficiency of conservation. Yet, due to limited data availability and methodological problems, there exists little evidence from developing countries on how cost-effective the establishment of PAs has been. The analysis of the effectiveness of national parks is, for example, often based on a comparison of deforestation rates of areas inside and outside of PAs using satellite data. Such an approach, however, might yield biased estimates when areas outside and inside PAs differ in many characteristics, which in turn influence deforestation. Instead, this study applies propensity score matching, which has in previous studies been found to be a suitable methodology to reduce the bias in the evaluation of PAs. The unbiased measure of effectiveness is then combined with the costs of protection to calculate the cost"=effectiveness.

For the analysis we combined geo-referenced data on land use, elevation, slope, roads, and administrative boundaries with socio-economic data from a village survey conducted in 2001. Moreover, we obtained data on cocoa production from a detailed cocoa management study.

Investigating the case of the Lore-Lindu National Park (LLNP), Indonesia, the results suggest that the establishment of the National Park reduced deforestation by 9.4 percentage points between 1983 and 2001. This means that on average the National Park has avoided the deforestation of 1,131 ha year-1 between 1983 and 2001. The opportunity costs account for the vast majority of total economic costs, but they strongly depend on the alternative use of the forested area. The costs of preventing one hectare of forest from being cut increase from USD 842 year-1 in the extensive cocoa production scenario to USD 1,932 year-1 in the intensive cocoa production scenario. Methodological as well as policy implications of the results are discussed.

Keywords: Cost-effectiveness, Indonesia, protected areas


Contact Address: Stefan Schwarze, Georg-August Universität Göttingen, Dept. of Agricultural Economics and Rural DevelopmentPlatz der Göttinger Sieben 5, 37073 Göttingen, Germany, e-mail:
Andreas Deininger, October 2010