The Real Story Behind Costa Rica's Green Miracle

In 1985, Costa Rica's forests had shrunk to just 25% of the country's territory, down from 75% just decades earlier. The nation was losing over 100,000 acres annually—one of the world's worst deforestation rates. Then, around the millennium, something remarkable happened: the trees started growing back.

Today, natural forests cover more than half of Costa Rica, making it one of the few places on Earth that has successfully revived its lost ecosystems. How did a country smaller than West Virginia pull off what most of the world is still struggling to achieve?

Putting a Price Tag on Nature

The story most often told centers on Costa Rica's groundbreaking Payments for Ecosystem Services (PES) program, launched in 1997 as the world's first national scheme of its kind. The concept was elegantly simple: pay landowners for the services their forests provide—carbon sequestration, water protection, biodiversity conservation.

Landowners receive between $44 and $170 per hectare annually depending on how they manage their land. Protecting existing forest earns less; planting native trees on degraded land pays more. The program now covers 540,000 hectares through more than 20,000 contracts—an area roughly the size of Delaware.

"If that payment wasn't there, you can imagine that a lot of people would continually clear the forest," explains Giacomo Delgado, a doctoral researcher at ETH Zurich studying the program's impacts. It's essentially a subsidy compensating for the lost opportunity of farming or ranching.

Two Decades of Surprising Research

But here's where the story gets complicated. After more than 20 years of research, the evidence suggests Costa Rica's famous payment program has had only a modest impact on forest recovery.

A comprehensive 2008World Bank study found "a small but statistically significant increase in the area of forest conserved." Other analyses of the program's early years showed it didn't reduce deforestation or only worked in some regions. A more recent Inter-American Development Bank study detected drops in deforestation only in the first year after enrollment—and there wasn't much deforestation happening anyway.

The newest research adds another layer of complexity. Delgado's team used an innovative approach: analyzing the sounds of tropical forests. Healthy ecosystems produce complex symphonies of frogs, birds, and insects. Damaged areas sound quiet and simple.

Their microphone recordings revealed that land in the payment program—where forests were naturally regenerating on old farmland—sounded much more like healthy, old forests than unprotected pastures. "It's a strong signal that [the payment program] is working for biodiversity," says Laura Villalobos, a Costa Rican economist at Salisbury University.

The Real Success Formula

Yet even this promising research can't prove causality—the holy grail of policy evaluation. "What's really challenging is the issue of causality," explains Hilary Brumberg, a Stanford doctoral researcher studying Costa Rica's forests. "There are just so many confounding factors."

Indeed, Costa Rica implemented multiple forest-saving measures simultaneously. In 1996, the government effectively banned deforestation, making it illegal to convert natural forests. Around the same time, beef prices collapsed, making cattle ranching less profitable and causing landowners to abandon pastures. Meanwhile, the ecotourism industry exploded, creating powerful economic incentives to keep iconic forest ecosystems intact.

Perhaps most importantly, Costa Rica developed a pervasive environmental ethic. Research suggests some people join the payment program not for money but because they want to contribute to forest conservation as a public good.

Beyond the Silver Bullet

This complexity reflects a broader pattern in environmental policy. "Trying to make nature valuable, it turns out, has had a disappointing track record," wrote environmental economist David Simpson in 2018. Payment schemes worldwide show positive but small impacts—hardly the deforestation solution advocates hoped for.

When asked for comment, Costa Rica's government responded: "Costa Rica doesn't have to prove anything to anyone. We are an international leader in financial mechanisms and forest cover restoration."

That confidence isn't misplaced—something clearly worked. But the payment program likely played only a small part in the country's success.