Costa Rica’s reforestation program has won accolades the world over. Launched in 1996, the so-called Payment for Environmental Services program, which taxes fuel and uses the revenues to pay farmers who protect forested land, helped the country reverse decades of deforestation. Nearly 60% of Costa Rica was forested in 2020 versus 26% in 1983, according to the World Bank. Last year, the government won the prestigious Earthshot Prize, thanks to the program’s success. But the initiative has struggled in recent years. A fiscal reform passed in 2018 to contain a widening government budget deficit led to spending cuts across the public sector, including in funds earmarked for the forestry program. Since 2020, mobility restrictions and work-from-home policies due to Covid-19 have hit gasoline consumption, reducing tax revenues. And, most recently, the government proposed freezing taxes on fuel to contain rising inflation spurred partly by higher oil... [Log in to read more]