Background

Payment for Ecosystem services is a new tool for financing conservation. Wunder (2007) defines PES as a voluntary transaction whereby a well defined environmental service (or land-use likely to secure that service) is being bought by a (minimum one) service buyer from one or more service providers, if and only if the service provider(s) secures service provision (conditionality). Ecosystems are the planets life support systems for the human species and all other forms of life. Ecosystem services are benefits humans derive from ecosystem functioning
[Read more at FAO ]. Some examples of ecosystem services include: waste treatment, pollination, natural hazard regulation, and cultural services that include  spiritual, religious, and aesthetic values, recreation and ecotourism. The three main services currently targeted by PES initiatives include climate change mitigation (carbon sequestration), watershed services and biodiversity conservation (MEA, 2005).

PES initiatives seek to compensate providers of ecosystem services while those who benefit from these services pay for them. PES schemes tend to be more efficient and effective that the previous regulatory approaches and subsidies employed by governments that were unable to reduce poverty and conserve ecosystems. Apart from being more flexible and cost – efficient PES projects can, by supplying a steady flow of payments, lead to sustainable ecosystem management and thus integrated development and poverty reduction (Maryand and Paquin, 2004, Rawlings and Rubio 2006; Pattanayak et al., 2010).

Read more about the importance of correct PES design on our PES Issues page.


References

  • Mayrand, K and Paquin, M (2004). Payments for Environmental Services: A Survey and Assessment of Current Schemes. Commission for Environmental Cooperation of North America
  • Millennium Ecosystem Assessment (MA), 2005. Ecosystems and human well-being: current state and trends. Washington, D.C., Island Press.
  • Wunder, S. 2005. Payments for Environmental Services: Some Nuts and Bolts. CIFOR, Occasional Paper No.42
  • Pattanayak, S.K., S. Wunder, and P.J. Ferraro (2010). Show Me the Money: Do Payments Supply Environmental Services in Developing Countries? Review of Environmental Economics and Policy 4(2): 1–21. (in)
  • Persson, U. M and Alpί zar,F (2011). Conditional Cash Transfers and Payments for Environmental Services . A Conceptual Framework for Explaining and Judging Differences in Outcomes
  • Rawlings, L.B., and G.M. Rubio (2005). Evaluating the Impact of Conditional Cash Transfer Programs. World Bank Research Observer 20(1): 29–55 (in)
  • Persson, U. M and Alpί zar,F (2011). Conditional Cash Transfers and Payments for Environmental Services. A Conceptual Framework for Explaining and Judging Differences in Outcomes