uniform forest

Impacts of payments for reforestation and afforestation


Ambitious public commitments to expand the area of forest plantations represent a continuation of decades of aggressive government support for forest plantations as a means of carbon sequestration throughout the world. Most of the world’s plantation forests were established with a mix of public incentives including subsidies, tax benefits and preferential access to credit. Although passive regeneration of natural forests may be an inexpensive and technically simple approach to reforestation, government reforestation incentives have often favored the expansion of commercial plantations to generate economic benefits. However, plantations may not perform as well as natural forests in terms of ecosystem services.

As the world seeks to rapidly expand the area of planted and restored forests, clear assessments of forest subsidies are necessary to design policies that achieve desired carbon and biodiversity gains. We assessed the carbon and biodiversity impacts of state-sponsored afforestation by considering one of the world’s longest operating afforestation subsidies, Chile’s Decree Law 701 (DL 701). We quantified the land use, carbon, and biodiversity impacts of DL 701 to guide future national, regional and global afforestation and reforestation policies. 


Using detailed maps of Chilean land use change from 1986 to 2011, we assessed the scale of changes attributed to DL 701 in both native and plantation forests. To assess the impact of afforestation subsidies, we estimated an econometric model of land use change. We then relied on comparisons of a policy baseline to simulated counterfactual scenarios to carefully estimate the scale and uncertainty of the impacts of DL 701 on land use, carbon storage and biodiversity. Specifically, we simulated three historical scenarios: 

  • (S1) a ‘DL 701 baseline’ scenario that reflects historical subsidy patterns without enforcement of native forest protections;
  • (S2) a ‘no-subsidy counterfactual’ scenario with no forest establishment subsidies;
  • (S3) a ‘perfect enforcement counterfactual’ scenario that includes subsidies but restricts their availability to lands that are not covered by native forest. 

We compared simulated land use change in the baseline scenario to the no-subsidy counterfactual to quantify the impact of DL 701, and compared the perfect enforcement counterfactual to the no-subsidy counterfactual to estimate the land use changes that could have been possible with more effective protections for natural ecosystems. The resulting land use outcomes were combined with a carbon bookkeeping model to quantify changes in carbon storage. Finally, we assess the biodiversity impacts of these land use changes using the ‘area-weighted standardized species richness’, a landscape-scale metric of biodiversity.

Key findings

In terms of land use impacts, we found that we could attribute 3.28% of plantation expansion occurring in Chile between 1986 and 2011 to the afforestation subsidies, and that 4.70% of native forest loss during that time period were the result of DL 701 subsidies. Direct conversion of native forest to plantation was the primary contributor to subsidy-driven, native forest loss. In contrast, the restricted subsidy scenario did not result in additional direct conversion of native forests to plantations. 

In terms of carbon storage, we estimated that afforestation subsidies actually decreased total carbon storage in aboveground biomass as a result of driving conversion of native forest to plantation. Similarly, we found that plantation subsidies accelerated biodiversity losses in Chile by encouraging the expansion of plantations into more biodiverse forests. In contrast, by prohibiting plantation subsidies on previously forested lands, the perfect enforcement counterfactual scenario achieved a 573 ± 84 ktC increase in carbon storage, and would also have prevented some of the biodiversity loss.


This study was a collaboration with Dr. Cristian Echeverría at the Universidad de Concepción and Dr. Eric F. Lambin at Stanford University.