SCIENCE ADVANCES | RESEARCH ARTICLE

SOCIAL SCIENCES Copyright © 2020

The Authors, some
Conditional cash transfers to alleviate poverty also rights reserved;
exclusive licensee
reduced deforestation in Indonesia American Association
for the Advancement
of Science. No claim to
Paul J. Ferraro1*† and Rhita Simorangkir2* original U.S. Government
Works. Distributed
Solutions to poverty and ecosystem degradation are often framed as conflicting. We ask whether Indonesia’s under a Creative
national anti-poverty program, which transfers cash to hundreds of thousands of poor households, reduced Commons Attribution
deforestation as a side benefit. Although the program has no direct link to conservation, we estimate that it NonCommercial
reduced tree cover loss in villages by 30% (95% confidence interval, 10 to 50%). About half of the avoided losses License 4.0 (CC BY-NC).
were in primary forests, and reductions were larger when participation density was higher. The economic value
of the avoided carbon emissions alone compares favorably to program implementation costs. The program’s
environmental impact appears to be mediated through channels widely available in developing nations:
consumption smoothing, whereby cash substitutes for deforestation as a form of insurance, and consumption
substitution, whereby market-purchased goods substitute for deforestation-sourced goods. The results imply
that anti-poverty programs targeted at the very poor can help achieve global environmental goals under
certain conditions.

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INTRODUCTION
Two of the great global challenges of the 21st century are to reduce
poverty and slow tropical deforestation (1). Yet, there is no consen-
sus on the causal relationships between efforts to alleviate poverty
and changes in ecosystems (2–8). Recently, scientists have argued
that it is possible to protect habitats and biodiversity without inter-
fering with, and potentially helping, poverty alleviation goals (9–12).
However, less attention has been paid to whether targeted poverty
alleviation programs, with no direct connection to environmental
goals, can produce positive conservation outcomes. Science-based
evidence for positive outcomes is important because so much inter-
national and philanthropic aid is aimed at poverty alleviation. If that
investment can also advance conservation, the implication would
be globally important because biodiversity and deforestation are dis-
proportionately located in regions with high levels of poverty (13, 14).
Historically, the links between poverty and the environment were
studied at two scales: the macroeconomic scale of gross domestic
product per capita (15, 16), and the local scale, where communities
meet basic needs by exploiting ecosystems (17). These studies typi-
cally suffer from one or more shortcomings: (i) weak designs for
causal inference; (ii) use of broad indicators of economic growth,
rather than of poverty itself; and (iii) failure to isolate the interven-
tions through which poverty changes.
Here, we provide mechanistically grounded, causal evidence
that a national-scale, anti-poverty program in the ecologically and
economically important country of Indonesia also reduced deforesta-
tion as a side benefit. The program uses conditional cash transfers
(CCTs), an increasingly popular way to transfer income to poor
households. By making the transfers conditional on taking specific
actions, usually related to education and health, CCTs aim to en-
hance human capital and thereby reduce the intergenerational transfer
of poverty. Over half of the 30 tropical countries with the most forest
1
Carey Business School and the Department of Environmental Health and Engi-
neering, a joint department of the Bloomberg School of Public Health and the
Whiting School of Engineering, Johns Hopkins University, Baltimore, MD, USA. 2De-
partment of Economics, National University of Singapore, Singapore, Singapore.
*These authors equally contributed to this work.
†Corresponding author. Email: pferraro@jhu.edu
cover have CCTs, and others are planning to create them. One
well-designed study (18) reported that CCTs in Mexico increased
deforestation and argued that this impact arose after the transfers
increased the consumption of land-intensive products. Our study
finds that different mechanisms appear to dominate in an Indonesian
context and these mechanisms could potentially dominate in many
parts of Asia due to the importance of rice as a staple crop and
growing market access in rural areas.
Study context
Indonesia is one of the biologically richest countries and among the
top 10 biodiversity hotspots, with the greatest area affected by pov-
erty (13). It has the third largest area of tropical forest and one of the
highest deforestation rates (19, 20), accounting for about 1 in 5 ha
of total gross tropical forest loss between 2000 and 2012 (21). Mainly
due to this loss, Indonesia is one of the world’s largest emitters of
greenhouse gases (22). Rural villages contribute to this loss through
agriculture and timber removal (23).
Starting in 2008, rural forested villages began participating in
Program Keluarga Harapan (PKH; “Family Hopes Program”), which
targets poor households. PKH transfers cash conditional on house-
holds meeting health and education obligations. Transfers are ap-
proximately 15 to 20% of recipients’ consumption and are received
quarterly for between 6 and 9 years (24). Program evaluations report
that the transfers are received by poor households and bring them
above poverty line expenditure levels (25). Our study comprises
7468 rural forested villages exposed to PKH between 2008 and 2012
across 15 provinces (see Materials and Methods and fig. S1). By 2012,
266,533 households in these villages were receiving transfers.
Study design
CCT programs can affect deforestation through multiple mechanisms
(Fig. 1). Among poor agricultural households whose consumption
and production decisions are intertwined, and whose access to credit
and insurance is limited, cash transfers could change consumption and
investment (26). Consumption of forest-intensive goods may in-
crease, which could exacerbate deforestation if those goods are
supplied by clearing forests (18), or reduce deforestation if those

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SCIENCE ADVANCES | RESEARCH ARTICLE
Fig. 1. The impact of CCTs. Directed acyclic causal graph in which a single-headed arrow (➔) represents a potential causal pathway between two variables. To identify
the causal effect of CCTs on deforestation, an empirical design must eliminate the confounding effects of time-varying and time-invariant community characteristics that
are correlated with both deforestation and exposure to CCTs. Such confounders could mask or mimic a causal effect of CCTs on deforestation.
goods are supplied by conserving forests (16). Cash can also allow
households to substitute forest-intensive goods with market-produced
goods. The promise of regularly receiving cash could also help house-
holds smooth their consumption over time, which could affect how
they use forests (e.g., make them less likely to resort to deforestation
when they experience negative shocks). CCTs can also affect de-
forestation through the conditionality obligations themselves or
by indirectly encouraging compliance with forest-use laws through
reciprocity or greater government scrutiny [for a complementary
view of how CCTs can affect environmental outcomes, see (27)].
The net effect of CCTs is thus an empirical question, to which
the answer requires a design that facilitates unbiased estimation of
counterfactual rates of deforestation in the absence of the CCTs. Such
estimation is challenging when the cash transfers are not randomized
across villages. Care must be taken to control for confounding fac-
tors that affect both participation and deforestation (Fig. 1). In
Indonesia, for example, PKH and non-PKH villages differ in im-
portant economic and environmental attributes (table S1), including
their pre-PKH deforestation trends.
To estimate PKH’s causal effect on deforestation, we combined
geo-referenced administrative data, remotely sensed panel data on
annual forest cover loss (21), a field-verified understanding of how
PKH was phased in over time, and statistical methods to estimate
counterfactual deforestation rates in the absence of PKH (Materials
and Methods). The way in which PKH was phased in over time can
be exploited to credibly estimate its causal effects on deforestation
in participating villages. PKH targeting was a function of time-­
invariant subdistrict and household characteristics and of pressure
exerted by the central government on PKH administrators to roll
out the program evenly across provinces within the annual budget
constraint [see the Supplementary Materials (SM)]. This pressure
created some variation in exposure to PKH that was unrelated to
Ferraro and Simorangkir, Sci. Adv. 2020; 6 : eaaz1298 12 June 2020
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deforestation; i.e., earlier and later cohort villages have similar PKH
exposure propensities, but their enrollment timing differs because
of factors not systematically related to deforestation. Another way
to express this idea is that, on the basis of our understanding of how
the program was rolled out, we assume that, across the country, there
are villages that are similar in terms of their poverty, infrastructure,
and other potential confounding variables, but some were enrolled
early and some enrolled late. Consistent with this claim, earlier and
later exposed villages are relatively homogeneous in terms of ob-
servable baseline characteristics (table S1), including pre-PKH de-
forestation trends (fig. S2). Using only the sample of villages that are
eventually exposed to the PKH helps control for unobservable factors
that determine exposure to PKH and are held in common by all PKH
villages. Using panel data on annual forest cover loss further helps
control for time-invariant confounders, both observable and un-
observable, as well as factors that change over time but not across
villages (e.g., national economic and political events). For further con-
trol, and to increase the precision of the estimates, we also control for
changes in precipitation and temperature over time. Because infer-
ring causality from correlations is challenging in nonexperimental
contexts, we also subject our design to a battery of robustness checks.
RESULTS
On average, exposure to PKH is associated with a 30% reduction in
forest cover loss [95% confidence interval (CI), 10 to 50%] (Fig. 2),
a conclusion that is robust to how "forest" is defined (table S4) and
the administrative level at which we conduct the analysis (i.e.,
villages or the subdistricts into which groups of villages are nested;
table S10). If we were to use the count of pixels of forest lost rather
than the area in hectares lost (table S4), exposure to PKH is associated
with a 16% reduction in forest cover loss (95% CI, 9 to 23%).
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Fig. 2. Estimated impact of PKH on forest cover loss in participating villages.
Black bars depict the estimated average effects. Whisker lines depict 95% CIs. SE
estimates are clustered at the subdistrict level. In the middle bar, the sample is
restricted to participating villages that have primary forest in 2000, and the estimated
reduction in forest cover loss is for all forest areas in these villages. In bar at right,
the analysis is restricted to the primary forest area in the same villages. For the
two bars at right, estimation using the phase-in design is preceded by matching
(Materials and Methods).
After augmenting our data with data on primary forest in 2000
(20), we estimate that almost half of PKH’s impact comes from primary
forest (Fig. 2). The estimated effects in villages without primary forests
are smaller (table S5). The PKH’s estimated effect increases as the
density of participating households per hectare of forest increases
(table S3). Disaggregating villages by cohorts suggests that the PKH’s
deforestation-reducing effect increases with longer exposure, or per-
haps that the villages exposed earlier were more responsive to the
PKH in terms of reducing deforestation (table S3).
To provide evidence that forest loss trends were not driving ex-
posure to PKH (i.e., reductions in forest cover loss were “leading”
PKH exposure rather than “lagging” it), we decompose the PKH’s
estimated effect into year-specific effects, with both leads and lags
(Fig. 3). PKH impacts are not discernible in villages before PKH
exposure (before year 0 in figure), but as soon as a village is exposed
to PKH, impacts are discernible, albeit with more noise than in the
original specification or the lag specification without leads.
We find no statistical evidence in favor of spillovers to non-PKH,
neighboring villages (table S13). We do, however, detect evidence
that PKH’s impact is moderated by variables known to be correlated
with deforestation (tables S7 and S8). In other words, the PKH’s
effects on deforestation appear to be heterogeneous, a feature that
we exploit later to shed light on the mechanisms through which PKH
could reduce deforestation. The estimated effect in Fig. 2 ignores
the potential effect of PKH on forest regrowth, but there is little
evidence of regrowth in the study villages during pre-PKH and post-­
PKH periods (see SM).
Like all nonexperimental designs, our design is potentially sub-
ject to hidden biases. We assess these potential biases through a
decomposition of our estimator, alternative model specifications,
Ferraro and Simorangkir, Sci. Adv. 2020; 6 : eaaz1298 12 June 2020
alternative estimators, and sensitivity tests to hidden bias (Materials
and Methods). First, as described elsewhere (28), our phase-in
design estimator can be decomposed into a weighted average of all
two-group/two-period difference-in-differences (DDs) estimators in
the data. Thus, if the PKH’s effects were time-varying, our phase-in
estimator could be biased. By time-varying effects, we mean that the
PKH’s impacts on forest cover grow or shrink the longer a village is
exposed to the program. The bias associated with this pattern in the
impacts increases with increases in the weights that our estimator
assigns to the DDs that contrast later cohorts to earlier cohorts. In
our study, the weights assigned to the later-to-earlier comparisons
are small (fig. S3), implying that if a bias exists, it is small. Further-
more, the patterns in Fig. 3 and table S3 suggest that, if anything, the
PKH’s impact grows over time. That trend would imply that the bias
in our estimator is toward zero, not away from it (for details, see SM).
Next, we try alternative estimation strategies (tables S9 and S10).
First, to further control for potential unobserved, time-varying con-
founders, we allow for forest cover trends to differ by village and by
province (Fig. 4). We find that the estimated effect of the PKH is
smaller, in absolute value, than the original estimate by about 20%,
but still well within the CI of the original estimate. Second, we
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preprocess the data by covariate matching, which makes early and
late cohort villages even more similar in terms of observable,
time-invariant, and time-varying attributes that are believed to be
correlated with deforestation trends in the absence of PKH (table S1).
The estimated effect is about 8% larger in absolute value than the
original estimate (Fig. 4). Third, we use an alternative estimator, the
lagged dependent variable model, which assumes that exposure to
PKH is determined by time-varying confounders that are correlated
with prior forest cover loss; e.g., villages could be more likely to be
exposed to PKH after a negative shocks that affected how much land
they could clear in the prior year. The estimated effect is about 2%
smaller in absolute value than the original estimate (Fig. 4). Fourth,
we use an alternative estimator, the generalized synthetic control
(GSC) model, which allows one to estimate treatment effects as they
evolve over time, without imposing linearity. The GSC method
creates a reweighting scheme among never-treated villages to predict
the post-PKH counterfactual trends in forest loss among the PKH
villages. This estimator yields an estimated treatment effect that is
larger in absolute value than our original estimate (table S9) and,
like the year-specific estimates (table S3), suggests that the PKH’s
effect may grow over time. Overall, the alternative estimation strat-
egies yield results that are consistent with the claim that exposure to
PKH is associated with reductions in deforestation.
Our final robustness check, a sensitivity test to hidden bias, is
most informative. Our estimated reduction in deforestation by
the PKH could have been generated by one or more unobserved,
time-varying confounders that were negatively associated with early
exposure to PKH and positively associated with forest loss. Even
after adjusting for a strong form of this potential bias (Materials and
Methods), the estimated impact remains negative, statistically sig-
nificant, and about half the size of our original estimate (Fig. 4 and
table S12).
To show that empirical design matters, we contrast our estimat-
ed impact with estimates from popular designs in the sustainability
science literature for estimating causal relationships (Materials and
Methods). These designs are more limited in their ability to elimi-
nate the effects of confounding variables (29). Estimates from these
designs range from a 71% decrease in forest loss to a 60% increase
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Fig. 3. Estimated impact of PKH on forest cover loss for years before, during, and after implementation, 2001–2012. Black squares depict the estimated
year-specific, average effects during the 4 years before PKH implementation (leads), the year of implementation, and the 4 years after implementation (lags). Whisker
lines depict 95% CIs. SE estimates are clustered at the subdistrict level.
Fig. 4. Assessing rival explanations for estimated PKH impacts. If the estimated
impact in Fig. 2 reflects the true PKH impact, rather than hidden biases in our
design, we would expect that (i) the estimates from the flexible time trend (village
linear time trend and province by year dummy variables), the matched design, and
lagged cover loss design imply an impact similar to the estimated impact in Fig. 2,
and (ii) the estimate from the sensitivity test, which is a stress test that assesses
how much our estimate would change if there were a powerful unobserved
confounder in our design, implies a deforestation-reducing effect of the PKH, albeit
smaller than the estimate in Fig. 2. Estimated percent reduction is calculated by
dividing the estimated reduction in forest cover loss by the (weighted) average
annual forest cover loss in the villages that provide the estimate of counterfactual
loss. Black bars depict the estimated average effects. Whisker lines depict 95% CIs.
SE estimates are clustered at the subdistrict level.
Ferraro and Simorangkir, Sci. Adv. 2020; 6 : eaaz1298 12 June 2020
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(table S6), highlighting the importance of careful control for con-
founding variables when estimating the impacts of anti-poverty
programs on the environment.
DISCUSSION
Estimating causal effects from observational data is challenging.
Nevertheless, the analysis suggests that the estimated negative
correlation between PKH and forest loss can plausibly be interpreted
as reflecting a causal relationship. To provide evidence on which
mechanisms were operative (Fig. 1), we use experimental and
nonexperimental data and predictions from theory (Materials and
Methods). We use data from a 2007 randomized pilot of the PKH,
which was largely in agricultural communities with little or no forest,
to assess the likelihood that the conditionality mechanisms were
operative. In the evaluation of that pilot, no effects on child labor
(agricultural or otherwise) were detected. Moreover, the detectable
health effects were small in the third year and waned by the sixth year,
a pattern that does not match the pattern of the PKH treatment
effect, which appears immediately in the first year and persists over
time (see SM for more details). Thus, although the labor and health
responses of households in the pilot may have differed from the re-
sponses of households in our sample, the evidence does not support
the hypothesis that PKH affected deforestation through condition-
ality obligations.
In contrast, the evidence from our sample of 7468 villages more
strongly supports two other channels: consumption smoothing, whereby
cash substitutes for deforestation as a form of insurance for poor
households, and consumption substitution, whereby market-purchased
goods substitute for deforestation-sourced consumption goods. As
in other nations, deforestation in Indonesia serves as an investment
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in insurance (or a coping strategy) against weather shocks: when the
rice season rains are delayed, poor farmers anticipate lower yields
and deforest more land to compensate for the higher probability of
a negative consumption shock. PKH is most effective at reducing
deforestation in years when a village experiences negative rainfall
shocks (table S14), a pattern consistent with transfers acting as a
consumption smoothing mechanism. Moreover, PKH is most ef-
fective at reducing deforestation in communities with better access
to markets (table S14), a moderating effect that is consistent with
recipients using PKH cash to substitute deforestation-sourced goods
with market-purchased goods, but not consistent with changes in
demand for forest-intensive products or with changes in productive
investments.
Using the same data, we find weak evidence for the reciprocity
channel: The likelihood of citizens voting in favor of an incumbent
candidate in the 2008–2012 period increases with the proportion of
a district’s villages that is exposed to PKH (table S15). That relation-
ship, however, does not necessarily imply that villagers were more
likely to obey government regulations. With regard to villagers
obeying government regulations via the scrutiny channel, we do not
have empirical evidence for or against the scrutiny channel. Never-
theless, multilateral evaluations of PKH and respondents in our field
interviews report that the facilitators who monitor conditionalities
and payments had trouble doing their core mission because of
insufficient funds, large travel distances, and other constraints. Their
ability to also serve as enforcers of forest use rules was therefore
limited (see SM for more details).
There are, of course, other potential mechanisms through which
PKH may have affected forest outcomes. For example, a recent study
reported that migration led to greater reforestation in Nepal (30). In
the PKH context, cash transfers could have been used to facilitate
the migration of some family members, which could have reduced
deforestation through, for example, cash remittances and reductions
in the local labor supply. With new data and creative testing strate-
gies, future studies may identify other mechanisms through which
PKH affected forest cover outcomes.
CONCLUSION
Does reducing poverty have unavoidable environmental costs? In
Indonesia, we find evidence that, under some conditions, the answer
to this question is “No.” Although the PKH program was not de-
signed to protect the environment, it appears to have reduced
deforestation by about 1/10 of an SD. For comparison, in a review
of payments for environmental service programs designed explicitly
to reduce deforestation, the median effect size was 0.12 SD, and those
programs have been criticized for not reaching the very poor (31).
Moreover, the mechanisms through which the program appears to
have achieved its environmental impact are not unique to Indonesia.
Throughout the tropical world, poor households depend on defor-
estation as a means to acquire consumption goods and to provide
insurance against negative shocks. Whether our results generalize
to other settings will depend on role of these mechanisms and other
competing ones. Nevertheless, our study thus offers some hope that
global efforts to eradicate extreme poverty need not have unavoidable
environmental costs.
Although the PKH was not an environmental program, one can
evaluate how the benefits of PKH’s avoided CO2 emissions compare
to its implementation costs (Materials and Methods). Depending on
Ferraro and Simorangkir, Sci. Adv. 2020; 6 : eaaz1298 12 June 2020
assumptions about the persistence of PKH’s effects on deforestation,
the economic value from reduced carbon emissions alone could cover
the PKH implementation costs (Table 1).
Our study does not, however, imply that conservation funds should
be redirected to poverty alleviation. Drawing such a conclusion re-
quires analyses, similar to Table 1, for a larger set of environmental
and social values across a range of environmental and anti-poverty
interventions. Our study, with its emphasis on better design for
causal inference and on elucidating multiple mechanistic pathways,
offers one exemplar for future research in that direction.
MATERIALS AND METHODS
To ensure sufficient detail to evaluate and replicate our results, we
provide a detailed SM section. All data and code used in this study
can be found at https://osf.io/uzaxg/. Here, we provide an outline of
the key aspects of Materials and Methods.
Determination of PKH assignment across villages
(section S1)
The key task in any observational design is to uncover the treatment
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assignment mechanism. To understand how the PKH was imple-
mented, we used program documentation from government and
nongovernment sources, supplemented with field surveys with PKH
program administrators in Jakarta, and field surveys of heads of
villages in forested areas in Bali, Sumatera, and Kalimantan.
Sample (sections S2a and S2b)
We use a panel data set that runs from 2001 to 2012. We end the
period in 2012 for two reasons: (i) the eligibility criteria used to con-
struct the list of PKH-eligible households changed in 2013, and (ii)
the way in which tree cover was measured from satellite data changed
in 2013. Causal inferences are most credible if the criteria for deter-
mining eligibility do not change during the study period. Our final
Table 1. Benefit-cost analysis of PKH for carbon storage. The social
benefits of delayed CO2 emissions are compared to PKH costs, both
measured per MT of averted CO2 (Materials and Methods). No other
benefits from the PKH program are included (e.g., from poverty alleviation
or non-CO2, ecosystem services). In the first four scenarios, all CO2 is
assumed to be emitted immediately after the trees are cut; delayed
emissions would increase the benefit-cost ratios. The scenarios vary
assumptions about how long the avoided CO2 emissions are delayed.
Given current forest cover loss rates, the average village will have
deforested all forests unaffected by the PKH in 50 years. Scenario 2
assumes that villages begin deforesting the PKH-protected forests at the
historical rate after 50 years. Scenario 3 assumes a delay for only the
maximum PKH eligibility period, while scenario 4 assumes a delay for the
minimum eligibility period.
How many
How many Benefit-cost
years after
years does ratio for
Scenario trees are cut is
PKH delay
carbon
carbon
deforestation? storage
released?
1 Permanently – 10.29
2 50 years Immediately 4.27
3 9 years Immediately 0.95
4 6 years Immediately 0.64
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sample consists of 15 provinces, distributed across Sumatera,
Kalimantan, Bali, and West Nusa Tenggara Islands, representing
53% of Indonesia’s forests with 75% or more canopy cover in 2000
and accounting for over 80% of the forest cover loss between 2000
and 2012 (fig. S1). After applying inclusion and exclusion criteria
for villages, we had a sample of 26,574 villages, of which 7468 villages
received the PKH between 2008 and 2012, and 19,106 villages had
never received the PKH by the end of 2012. The number of villages
that are newly exposed to PKH each year is 1251 in 2008, 307 in
2009, 633 in 2010, 1624 in 2011, and 3653 in 2012.
Data (section S2c)
Our outcome variable is forest cover loss, for which our measures
come from Hansen et al. (21). To avoid including losses from non-­
native forests (e.g., rubber plantations), we defined “forests” as pixels
with tree cover canopy density greater than 75%, with a robustness
check using a 30% threshold (table S4). To designate forest in our
sample as “primary,” we use polygons of Indonesia’s primary forest
in 2000 from Global Forest Watch (GFW), which are based on data
from Margono et al. (20). To calculate regrowth, we use Vegetation
Continuous Fields data from Song et al. (32). Our treatment vari- Rival explanation robustness checks (section S5)
Traditional designs and estimators (section S3)
We implement (table S6) (i) a “before-after” design, which uses
longitudinal data to infer the effect of PKH by detecting a shift
in deforestation between pre-PKH and post-PKH periods; (ii) a
“with-without” design, which seeks to infer the effect of PKH by
looking at post-PKH cross-sectional differences in deforestation
between PKH and non-PKH villages; and (iii) a sophisticated
version of the “before-after-control-impact” design, also called a
DD design, which seeks to combine the designs of (i) and (ii) to in-
fer the effect of PKH by contrasting the trends in deforestation for
PKH and all non-PKH villages; we call this design the fixed-effects
panel data design using the full sample of villages. We implemented
these estimators using Stata 16 MP.
Heterogeneity in PKH impact (section S4)
To test for the heterogeneity of treatment effects, we interact the
PKH variable with characteristics that are believed to be moderators
of forest use (tables S7 and S8). Other tests of heterogeneity are used
in the mechanism analysis.

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able is a binary variable indicating whether a village was exposed to We conduct five supplementary analyses to probe the credibility of
the PKH program in a given year. Its value was obtained by merging the assumptions required to infer causality from correlation in the
Indonesian village boundaries data from Statistics Indonesia with the main analysis. To decompose our two-way, fixed-effects estimator
village indicator of PKH recipients from The National Development into its constituent 2 × 2 DDs and weights, we use the DDtiming
Planning Ministry (BAPPENAS). We also use alternative definitions command in Stata 16 MP (fig. S3). To allow for unit-level time
of treatment in various measures of “exposure intensity,” which are trends and fully flexible province-by-year effects (table S10), we use
based on BAPPENAS annual data on the number of participants in a variant of our two-way, fixed-effects estimator in which we add
each village. To capture temporal variation in weather, we use data linear and/or quadratic unit-level time trends and interaction terms
on average annual surface temperature and average precipitation of the year and province dummy variables. To preprocess the sample
during the wet season (end of September until end of December) using matching, we use the GenMatch command in R (tables S1, S9,
from NASA. We obtained polygon data of protected areas from and S11). We then use the matched data with our two-way, fixed-­
World Database of Protected Areas in 2016. Palm oil, wood fiber, effects estimator from section S2. To estimate the lagged dependent
and logging concessions polygons were obtained from GFW. For variable (lagged forest cover loss) model, we use the xtreg command
the subdistrict attributes that were used to assign PKH eligibility, we in Stata 16 MP (table S9). Assuming that lagged forest cover loss is
obtained data from the National Team for the Acceleration of positively associated with exposure to PKH and positively associated
Poverty Reduction. For elevation and slope data, we used SRTM with current forest cover loss, this estimator and the fixed-effects
90m Digital Elevation Database version 4.1. For road data, we estimator provide bounds on the true PKH impact. To implement
use data from the Socio Economic Data and Applications Center at the GSC estimator (33), we used the gsynth command in R (3.6)
Columbia University. For distance measures, we used ArcPro 2.4. (table S9). To test for the sensitivity of our results to hidden bias
(an unobservable confounder), we followed a method introduced by
Estimand and estimators (sections S2d to S2g) Altonji et al. (34) and further developed by Oster (35). We assume
The estimand (the average treatment effect on the treated), the that the relationship between PKH and an omitted, unobserved
main estimator, and the required assumptions for inferring causal- confounding variable can be recovered from the relationship be-
ity from the estimated correlations are described in detail in section tween the PKH and the observable variables in our model (e.g.,
S2d. In order to estimate the effect of the PKH on deforestation village fixed effects). Using the areg command followed by a post-­
in participating villages, we use a linear, additive, two-way fixed-­ estimation psacalc command in Stata 16 MP, we then explore the
effects panel data estimator, using only the sample of 7468 villages conditions under which the omitted variable could substantially
that were exposed to the PKH sometime between 2008 and 2012 change our conclusions, as well as calculating a lower and upper
(equation in section S2d). We used the same estimator when the bound on the treatment effect if this unobserved variable were to
unit of analysis was the subdistrict level (N = 521). Variants of these explain all unexplained variation in exposure to PKH and forest
estimators were used to estimate how the PKH effect varies by type cover loss (table S12).
of forest (sections S2e and S2f) and by intensity of exposure (section
S2g). To implement the same estimator with counts of pixels rather Spillovers (section S6)
than hectares, we use an inverse hyperbolic sine transformation To detect spillovers from PKH villages to neighboring non-PKH
(because of the zero forest loss values in the panel). We implemented villages, we use the sample of 19,106 never-treated villages. Using
these estimators using the “xtreg fe” command in Stata 16 MP. ArcPro 2.4, we identify whether a never-treated village shared
All statistical tests are two-sided. Detailed results are found in administrative boundaries with a PKH village. Using the main
tables S3 and S4. fixed-effects panel data estimator and two ways of assessing the

Ferraro and Simorangkir, Sci. Adv. 2020; 6 : eaaz1298 12 June 2020 6 of 8

SCIENCE ADVANCES | RESEARCH ARTICLE
intensity of exposure to neighboring PKH villages, we estimate the
localized spillover effects on forest cover loss (table S13).
Mechanisms (section S7)
To shed light on mechanisms, we combine theory, the results from
evaluations of randomized 2007 pilot PKH program (25), and addi-
tional analyses with our nonexperimental data. We explore the
implications for each mechanism listed in Fig. 1, and we test those
implications against our observational and experimental data (tables
S14 and S15).
Benefit-cost analyses (section S8)
To calculate the metric tons of CO2 equivalent emissions per hectare
in the PKH communities’ forests, we use GFW data. We estimate
the average aboveground biomass (AGBM) from provinces in our
sample with canopy cover greater than 30% in 2000 and then
multiply that value by 0.5 to obtain carbon per ha, and then by 3.67
to convert it to CO2 per ha. We conservatively estimate that 75%
of the AGBM is lost soon after clearing in the form of greenhouse
gas emissions, and the remaining 25% is permanently sequestered
in wood products. We use government and multilateral donor data
to determine the average cash transfers and the average cost of
delivering the cash and monitoring conditionalities per village per
year. We calculate the value of delaying a metric ton of CO2 equiv-
alent emissions using a formula that takes into account the social
cost of CO2 (assumed to be USD $31, the U.S. Environmental Pro-
tection Agency’s estimate for the year 2010 using a 3% discount rate
social cost of CO2), the duration from deforestation to carbon
emissions, the effective discount rate, and the delay in deforestation
induced by the PKH program.
SUPPLEMENTARY MATERIALS
Supplementary material for this article is available at http://advances.sciencemag.org/cgi/
content/full/6/24/eaaz1298/DC1
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Acknowledgments: P.J.F. and R.S. thank J. Alix-Garcia, A. Balmford, P. Kareiva, C. McIntosh,
P. Stephan, B. Meiselman, K. Sims, C. Weigel, and S. Wunder for helpful comments on earlier
versions and V. Yulaswati, BAPPENAS, for PKH data. Funding: R.S. gratefully acknowledges
financial support from the UNCE project (UNCE/HUM/035) and AYSPS Dissertation Fellowship.
Author contributions: P.J.F. and R.S. designed the study, interpreted the results, and wrote
the final manuscript. R.S. supervised data collection and data analysis. Competing interests:
The authors declare that they have no competing interests. Data and materials availability:
All data needed to evaluate the conclusions in the paper are present in the paper and/or the
Supplementary Materials. Additional data related to this paper may be requested from the
authors. All data and code used in the analysis are available at https://osf.io/uzaxg/.
Submitted 14 August 2019
Downloaded from https://www.science.org on July 19, 2023
Accepted 29 April 2020
Published 12 June 2020
10.1126/sciadv.aaz1298
Citation: P. J. Ferraro, R. Simorangkir, Conditional cash transfers to alleviate poverty also
reduced deforestation in Indonesia. Sci. Adv. 6, eaaz1298 (2020).
8 of 8
 Conditional cash transfers to alleviate poverty also reduced deforestation in
Indonesia
Paul J. Ferraro and Rhita Simorangkir

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