Ferraro, Paul J.Simpson, R. David2016-04-192016-04-192002Land Economics 78(3): 339-3530023-7639676_CR_00011.pdfhttp://hdl.handle.net/10919/66217International donors invest billions of dollars to conserve ecosystems in low-income nations. The most common investments aim to encourage commercial activities, such as ecotourism, that indirectly generate ecosystem protection as a joint product. We demonstrate that paying for ecosystem protection directly can be far more cost-effective. Although direct-payment initiatives have imposing institutional requirements, we argue that all conservation initiatives face similar challenges. Thus conservation practitioners would be well advised to implement the first-best direct-payment approach, rather than a second-best policy option. An empirical example illustrates the spectacular cost savings that can be realized by direct-payment initiatives.application/pdftext/plainen-USIn CopyrightSocial impactsHumid zonesEcosystemSemiarid zonesSustainable developmentPayments for environmental servicesEnvironmental impactsEnterprise typesEcotourismNatural resource-based enterpriseConservation strategyConservationEconomic impactsParksNatural resource managementLow-income nationsDirect paymentsCost savingsEcosystem Farm/Enterprise Scale GovernanceArticle - RefereedCopyright 2002 by the Board of Regents of the University of Wisconsin System