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In Costa Rica, policymakers know in their hearts that the time of ‘cheap’ conservation of biologically important land is gone. Conservation policy has often been a ‘shot in the dark’ when it comes to acknowledging the opportunity costs of forest conservation. In theory, knowledge of opportunity costs could help authorities calibrate payments for ecosystem services so that they provide a cost-effective incentive by compensating for opportunity costs.

Although different models exist to estimate opportunity costs, they tend to have limited applicability to real-time policy making. We propose using market prices for land as an initial proxy indicator for opportunity cost. Land prices are easy to understand, and in a well-functioning market should roughly represent the net present value of the benefits derived from the land over time. We show that the competitiveness of conservation policies will in future depend on a policy mix of PES acting in concert with national forest policy and local land-use regulations. However, to be effective, PES will need to complement strengthened municipal-level land-use zoning regulations, both in rural and peri-urban areas.