How spatial targeting of incentive payments for forest carbon storage can be adjusted for competing land uses

Spatial consideration of costs and benefits plays a critical role in assessing the effectiveness of payments for ecosystem services (PES). While spatial assessment has received much attention, few, if any, studies have explicitly considered spatial variations in the benefits and landowners’ opportunity costs of competing land uses as targeting criteria for PES. The objective of our research is to identify different spatial targets for PES based on spatial variations in ecosystem benefits and opportunity costs for competing land uses. As a case study, we use incentive payments for forest carbon storage in the Central and Southern Appalachian Regions of the eastern United States. We find, on average, supplying forest carbon storage by converting pasture to forest is approximately five times more cost effective than mitigating deforestation for urban use because of its lower opportunity cost and its higher per hectare gain in carbon storage. We also find that the targeted areas that have positive net social benefits in supplying forest carbon represent 9.32% of the case-study region’s pasture land, while zero pixels are identified with positive net social benefits when urban use is the competing land use. These findings imply that the spatial targeting of the region’s areas that have positive net social benefits should focus on afforesting pasture instead of preventing forestland from being converted to urban use. The results also help target cost-effective areas for afforestation of pasture for carbon storage.