Cost-effective compensation to avoid carbon emissions from forest loss: An approach to consider price-quantity effects and risk-aversion

► Necessary compensation to avoid the loss of natural forests is probably smaller than expected. ► The introduction of “Optimized Land-Use Diversification” produced declining compensation. ► Compensation reduced from US$ 176 to US$ 124/ha per year under ignorance of risks. ► Modeling risk-avoidance further lowered compensation to only US$ 47/ha per year.