Case Example: Costa Rica

This case study examines Costa Rica's transition from high rates of deforestation to net forest restoration between 1986 and 2005. It highlights how a combination of market shifts, policy changes, and financial incentives—most notably the Pago de Servicios Ambientales (PSA) system—contributed to increasing forest cover from 41 percent in 1986 to 48 percent by 2005.

• Costa Rica experienced a significant decline in forest cover between 1943 and 1986, primarily driven by cattle grazing and crop production facilitated by road expansion. Forestland dropped from 3.9 million hectares (77 percent of land area) in 1943 to less than 2.1 million hectares (about 41 percent) by 1986.
• From 1986 to 2005, Costa Rica achieved net forest restoration, primarily through passive restoration (natural regeneration) on abandoned pastures. Forest area increased by 394,000 hectares, reaching 2.45 million hectares, or 48 percent of the country, by 2005.
• The decline of the cattle industry in the 1980s was a critical enabler of restoration. A fall in international beef prices and the removal of national cattle subsidies—part of a World Bank structural adjustment program—reduced the profitability of ranching marginal lands, leading the cattle herd to drop from 2.1 million heads in 1989 to 1.4 million by 2000.
• Legislative actions provided the foundation for restoration by restricting deforestation and removing perverse incentives. The 1969 Forest Law regulated public land use, and Forestry Law No. 7575 (1996) banned the conversion of forested land and the export of round wood and squared timber. Additionally, the government removed a tax on 'unproductive' land, which had previously incentivized deforestation for agriculture.
• Costa Rica implemented a Payment for Environmental Services system, known as "Pago de Servicios Ambientales" (PSA), in 1996. This system is funded by a 3.5 percent fossil fuel tax and fees from ecosystem service beneficiaries, with an average annual budget of $13.3 million in the early 2000s. Payments are provided for activities including forest protection, reforestation, natural forest regeneration, agroforestry, and forest management.
• While the PSA system is widely cited as a success, evidence suggests that market conditions and the removal of cattle subsidies had a more immediate impact on reducing deforestation rates. Furthermore, the PSA system may be biased toward wealthier landowners, as transaction costs and insufficient compensation for opportunity costs can act as barriers for smallholders.

APA

Buckingham, K., & Hanson, C. (2015). Case Example: Costa Rica. World Resources Institute. https://wriorg.s3.amazonaws.com/s3fs-public/WRI_Restoration_Diagnostic_Case_Example_Costa_Rica.pdf

Chicago

Buckingham, Kathleen, and Craig Hanson. Case Example: Costa Rica. World Resources Institute, 2015. https://wriorg.s3.amazonaws.com/s3fs-public/WRI_Restoration_Diagnostic_Case_Example_Costa_Rica.pdf.

Wikipedia

{{cite report |last1=Buckingham |first1=Kathleen |last2=Hanson |first2=Craig |title=Case Example: Costa Rica |publisher=World Resources Institute |date=2015 |url=https://wriorg.s3.amazonaws.com/s3fs-public/WRI_Restoration_Diagnostic_Case_Example_Costa_Rica.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{buckingham2015case, author = {Buckingham, Kathleen and Hanson, Craig}, title = {{Case Example: Costa Rica}}, institution = {World Resources Institute}, year = {2015}, url = {https://wriorg.s3.amazonaws.com/s3fs-public/WRI_Restoration_Diagnostic_Case_Example_Costa_Rica.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }