Payments for Environmental Services

Abstract

Payments for environmental services (PES), also sometimes called payments for ecosystem services, emerged from the perceived need of conservation practitioners around the world for more cost-effective and equitable ways of using scarce funds. Also sometimes referred to as ecocompensation, rewards, or cash transfers, PES consist of direct conditional payments from the users of environmental services (or their collective representatives) to landowners or stewards who provide them by adopting environmentally friendlier practices of protection or restoration. Environmental service (ES) users effectively rent out certain partial land rights from landholders (e.g., limiting their rights to deforest). This only works when ES provision can be well-monitored and enforced and when landholders can flexibly and legitimately change their preferred modes of production. Otherwise, ES users might prefer to buy out environmentally sensitive lands entirely (e.g., creating municipal reserves for spring protection in a watershed), although becoming responsible for land stewardship may over time be costly. While some PES started as long-term public environmental subsidy programs (e.g., the US Conservation Reserve Program), the big push for PES in this millennium came from economists arguing for more direct, performance-based incentives. The PES approach has become more popular among both scholars and conservation practitioners over the last few decades, with the majority of PES programs focused on forest conservation. Geographically, PES have been most popular in the Americas (North, South, Central) and in China. PES can predominantly be seen as a private lands counterpart to public protected areas, although in most countries PES are far less extensive. Increasingly, PES are applied alongside a mix of policy approaches, as a tool in a toolbox of conservation mechanisms, with the aim of incentivizing landholders to engage in sustainable practices, and promising potential long-term provenance of ES while also supporting livelihoods. PES contracts can range from short term to the indefinite duration of perpetual conservation easements. With more application of PES globally, and a font of new experiences to study, a growing body of research has emerged, seeking to evaluate the environmental and poverty reduction impacts of PES. These studies assess the successes and limitations of PES schemes, and promote best practices in preconditions, design, and implementation, as well as contextual backdrops that can affect the effectiveness and efficiency of PES schemes. Some obstacles and conditions may not be designed away, such as land-tenure insecurity and organizational capacity to pay for ES: these jeopardize the emergence and expansion of PES schemes, especially in tropical forest frontiers. However, despite the worrying record of government-led PES schemes in terms of design and implementation errors, their ability to organize collective payments at scale and to intelligently bundle them into complex policy mixes may be important future arguments in their favor.

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Identifiers

DOI

10.1093/obo/9780199363445-0140

Journal

Environmental Science

Year

2023