How Costa Rica has been unlocking the value of its rainforest

By and large, Costa Rica has learned from its mistakes; in the last 25 years, the country has doubled the size of its forests while tripling its GDP per capita. In the same time period, developing countries such as China, India, Indonesia and Brazil also have multiplied their GDPs per capita, but they all have done so with a high environmental cost.

Costa Rica is proving that the protection and restoration of nature is not a burden for growth and prosperity. I believe my home country can be a powerful model for countries that still aren’t listening to what their rainforests have to say.

Perhaps the best way to explain Costa Rica’s shifting attitude toward forests is to tell you the story of my grandfather, Arturo Echandi Jimenez.

Arturo’s story

In 1939, 30-year-old Arturo — a third-generation coffee grower — bought 1,112 acres of pristine rainforest in the country’s central highlands to settle with his wife and young kids.

In those early years, he focused on clearing the land for coffee production. At that time the government gave easy land title, cheap credit and technical support to coffee growers in order to promote settlement in frontier areas. These incentives helped establish coffee as the country’s main export crop for 150 years.

Like many Costa Ricans, Arturo did not clear all his land of forest — only around 250 acres in the more fertile areas of the property. Also like his neighbors, Arturo used the area that was kept forested in many ways. He used the timber for farm needs and the stream that ran through it to run his coffee mill. In addition, the trees shading the coffee plants created an optimal environment for the coffee to grow.

For more than 25 years, Arturo made a good living on his farm, providing a stable income for his family and employing more than 30 people. But in 1969, things took a dramatic turn.

The national government passed a set of new policies that incentivized cattle ranching. The emerging fast food industry in the United States had created a huge meat market, and Costa Rica quickly responded to this opportunity.

Among these new policies was a tax on “unproductive areas,” which encouraged farmers to develop all of their land. Forests were considered unproductive, so farmers who had kept portions of their properties forested now had to pay this new tax.

Like most landowners, Arturo responded by immediately chopping down all of his forest and dedicating this new area to cattle production — never mind that he had no experience raising cattle.

With credit from the government, Arturo bought 100 head of cattle and began his new livelihood, where he was soon confronted with new challenges. Many cows — mostly European breeds — suffered from extreme weather and diseases. Others were seriously injured trying to navigate the steep slopes of the land. To top it off, the farm’s proximity to a large wilderness area meant that jaguars soon began eating his cattle. Watching my grandfather be forced to poison these magnificent wild animals had a profound impact on me as a child.

My grandfather kept his cows until this activity almost broke him. In 1988, he decided to get rid of the cows and concentrate on coffee. I remember him telling us how frustrated he felt that his beautiful forested farm was now heavily degraded and treeless.

A new approach: paying for nature’s benefits

In the early 1990s I began to work in the Ministry of Environment as head of protected areas, where I was very much engaged in improving policies to restore and protect nature. Learning from some cutting-edge projects by CI in the buffer areas of La Amistad International Park on the border of Costa Rica and Panama, as well as research by the Tropical Science Center and Fundecor, the ministry proposed an innovative approach to create new incentives for keeping forest standing.

We proposed a new mechanism: Payment for Environmental Services (PES). This scheme is based on the idea that forest owners will maintain and restore their forest if they can make as much or more money doing so as destroying it. The PES program would pay farmers for the carbon, water and biodiversity services their land provided — services that benefited people near and far.

We proposed the main source of funding to be a tax on fossil fuels, under the logic that polluters should pay farmers for offsetting their carbon footprint by maintaining and planting trees that absorb carbon. Our biggest supporter was the minister of finance, who saw a win-win scheme that ultimately would save the country money.

As soon as the scheme was in place, I told my grandfather, by then in his late 80s, that now the government would pay him to restore his land. As I explained the rationale of the PES program, he had great questions: “Why would a New Yorker pay to restore my farm?” “I thought trees had lumber, not carbon?”

Arturo entered the PES program with big doubts — until the first big check came for $20,000, when he proudly claimed he was “selling oxygen” to the industrialized countries.

I became Costa Rica’s minister of environment in 2002 and took many international visitors (ministers from Congo, Gabon, Brazil and Mexico) and relevant politicians to my grandfather’s farm to illustrate the benefits of positive incentives for forest conservation.

My dear grandfather passed away in 2006 at 96. He remained a farmer until a month before he died, and he was extremely happy to see his farm forested once more. Since the early 1990s the land has been slowly regenerating; it has now recovered most of its original forest cover and wildlife. One of my cousins even saw fresh tracks from a large jaguar — the first evidence of one in more than 30 years.

To date, the PES program covers more than 1.8 million acres through 8,000 contracts with farmers and indigenous communities. According to the Organization for Economic Co-operation and Development, 63 countries have a PES program at some level of development — but it all originated in my tiny home country, which continues to lead the way.

At a recent meeting of the parties of the Convention on Biological Diversity, we discussed how to narrow the financial gap between what countries are contributing to conservation efforts and the amount that is needed.

In a nutshell, we need to double global resources for conservation in the next six to eight years — and innovative biodiversity financial mechanisms such as PES may be the best way to do it.

Just as Costa Rica’s PES program allowed my grandfather to watch rainforest once again cover his farm, I hope one day when my kids are grown, they will see healthy rainforests across the tropics.