Can giving people direct cash reverse deforestation?

Tropical forests are the world’s greatest store of carbon, shelter abundant wildlife, and sustain the communities who call them home — protecting them protects us all. Yet deforestation is still happening at alarming rates. In 2024 alone, the world lost 6.7 million hectares of tropical forest — driving more emissions than the entire U.S. power sector.

In response, we’ve seen a boom in conditional conservation models, particularly carbon credit projects and Payments for Ecosystem Services (PES) – both performance-based financial incentives given to people who protect or restore nature. But many of these schemes have struggled. Some exclude people with unclear land rights. Others are too complex or too slow to make a difference, resulting in massive loss of trust.

Meanwhile, the funding gap needed to address this crisis has ballooned to an estimated $700 billion a year, including $216 billion for forests alone. If we want new results, we need new approaches.

Can a new forest conservation fund reach the people keeping forests standing?

The new Tropical Forests Forever Facility, launching at the UN’s COP30 in Belèm, has an ambitious $125 billion goal and a promising model: rewarding forest countries for performance, earmarking 20% of funds to be channeled to local and indigenous peoples. Philanthropy is stepping up too, with new strategic commitments from Skoll, IKEA Foundation and others focused on forest protection and land use. 

These new sources of financing are essential. But it’s still not yet clear how these funds will reach Indigenous peoples and local communities, and whether we can find approaches that address poverty and climate outcomes at the same time. Bill Gates’ COP30 call to action rings loud: is the money designated for climate delivering the greatest possible impact for the most vulnerable people?

Direct cash transfers could help people protect forests if it’s done right

There’s strong evidence that forest conservation works better when it’s locally led. Communities often outperform top-down programs both ecologically and socially. 

And there’s reason to believe that lump-sum cash transfers could help. People exploit forest resources because they have few alternative livelihoods — conservation is hard to prioritize when you’re broke. 

But cash can change that — reams of evidence shows that providing households with lump-sum cash helps them increase and diversify their income sources. Under the right circumstances, giving money directly can help people move away from harmful activities like poaching or illegal mining, can reduce reliance on forest resources like charcoal or timber and can help say no to jobs in extractive industries or commercial agriculture that encroaches on forests. 

Ketty Marcelo, an indigenous leader from the Amazon communities in Central Peru, shares her experience of receiving regular cash transfers from the NGO Cool Earth: ‘Cacao or coffee projects create a lot of work and bureaucracy for us. You can skip all [the complications of an agriculture project], give people the income and trust them to make choices to support themselves and their territories.’  That’s a win for poverty reduction, and a win for conservation. 

We’ve seen this firsthand. Jean Paul, a former charcoal burner in Rwanda, used a $1,100 GiveDirectly transfer to generate new sources of income and leave charcoal production behind:

Cash is also faster and more efficient. In GiveDirectly’s largest-scale programs, up to 85% of the funding goes directly to recipients — far higher than what most conditional conservation cash programs, renowned for high transaction and implementation costs, can deliver.

Bill Gates’ words resonate again: it’s time to put human welfare at the center of our climate strategies.

GiveDirectly’s pilot in Liberia is testing what is possible

Yet that win-win isn’t guaranteed. Give cash to a pastoralist, and they might buy more livestock, increasing grazing pressure. Give cash to a logger, and they might choose to buy a chainsaw. 

The research on the conservation outcomes of cash programmes addressing poverty is mixed —  with some large-scale programmes designed for poverty alleviation having negative environmental outcomes (e.g. Oportunidades in Mexico) whereas others resulting in significant improvements in tree cover (e.g. in Indonesia).

What’s clear is that results vary significantly based on market access, how recipients already engage with the environment, and the targeting and adequacy of the transfer. That’s why we’re testing a uniquely designed direct cash model in Liberia, funded by Irish Aid. 500 families in Sinoe County received:

1. $60 payments for 5 months to cover basic needs and replace the ~⅓ of income currently earned from forest explotation—paid to everyone in the area, not just landowners like typical Payments for Ecosystem Services programs
2. Training throughout in forest stewardship and small business skills from our local partner
3. A one-time $400 payment in month 6 to invest in alternative livelihoods—based on evidence from a randomized study in Liberia – with the goal of permanently shifting families away from forest use rather than tying ongoing payments to specific actions.

We don’t have the full results yet, but we’re already hearing from recipients who’ve left mining or logging and started businesses and farms (on land outside of the forest) with their capital injection.

Cash as the catalyst for impactful conservation 

Too many conservation finance schemes like carbon markets suffer from low trust. They promise a lot, but it’s hard to tell what they have delivered. 

If designed and evaluated well, direct cash transfers may help fix that. We don’t presume that cash is a “silver bullet,” but paired with strong nudges and monitoring, lump-sum cash may help people permanently shift people out of forest-exploiting livelihoods. 

Cash can also catalyse other forms of conservation finance, acting as both a proof of concept and a bridging mechanism for other funding. GiveDirectly’s engagement with carbon project developers suggests this is a compelling value proposition. In Liberia, the upfront provision of cash by GiveDirectly is creating the foundation for a ‘payment for stewardship’ programme, pitched as a model which could inspire the roll-out of the TFFF globally.

To make this case we need to refine and evaluate cash and cash-plus models for conservation outcomes, across different landscapes. But the potential is transformative — helping people escape the poverty that fuels deforestation, while protecting the forests that sustain us all.

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Learn more about this work from The Economist (article & podcast) & Yale’s School of the Environment (article) and get involved in the movement on cash for conservation here.