Pricing the Forest: Natural Rubber Markets and CO₂ Sequestration Incentives for Reducing Deforestation in Colombia

This paper explores how market-based incentives specifically natural rubber price mechanisms and CO₂ sequestration bonuses can be strategically utilized to mitigate deforestation in Colombia. Using panel data econometric analysis, we assess the relationship between natural rubber pricing, forest cover trends, and carbon sequestration potential across departments with rubber-growing potential. The findings reveal that elevated natural rubber prices are associated with reduced deforestation rates, particularly when combined with agroforestry practices and access to ecosystem service payments. The study proposes a dual-pronged policy intervention involving sustainable price stabilization and performance-based sequestration bonuses to enhance rural incomes while conserving forested landscapes. These results offer valuable implications for policymakers, environmental NGOs, and private sector actors committed to climate-smart agriculture and rural development.