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This report describes the 'Watershared' model of reciprocal watershed agreements, a grassroots approach to incentive-based conservation used in Latin America. Unlike national Payment for Environmental Services (PES) schemes, Watershared relies on local negotiations, social norms, and non-economic incentives to encourage upstream landowners to protect forests that ensure water security for downstream users.

This research paper evaluates the relative contributions of agricultural output prices and conservation policies to the reduction of deforestation in the Brazilian Amazon between 2002 and 2009. Using a panel of 380 municipalities, the authors find that while agricultural prices drive deforestation, conservation policies implemented in 2004 and 2008 significantly curbed forest clearings without negatively impacting local GDP or population trends.