Publication: Designing Payments for Environmental Services in Theory and Practice: An Overview of the Issues
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Published
2008
ISSN
09218009
Date
2012-03-30
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Abstract
Payments for environmental services (PES) have attracted increasing interest as a mechanism to translate external, non-market values of the environment into real financial incentives for local actors to provide environmental services (ES). In this introductory paper, we set the stage for the rest of this Special Issue of Ecological Economics by reviewing the main issues arising in PES design and implementation and discussing these in the light of environmental economics. We start with a discussion of PES definition and scope. We proceed to review some of the principal dimensions and design characteristics of PES programs and then analyze how PES compares to alternative policy instruments. Finally, we examine in detail two important aspects of PES programs: their effectiveness and their distributional implications. PES is not a silver bullet that can be used to address any environmental problem, but a tool tailored to address a specific set of problems: those in which ecosystems are mismanaged because many of their benefits are externalities from the perspective of ecosystem managers. PES is based on the beneficiary-pays rather than the polluter-pays principle, and as such is attractive in settings where ES providers are poor, marginalized landholders or powerful groups of actors. An important distinction within PES is between user-financed PES in which the buyers are the users of the ES, and government-financed PES in which the buyers are others (typically the government) acting on behalf of ES users. In practice, PES programs differ in the type and scale of ES demand, the payment source, the type of activity paid for, the performance measure used, as well as the payment mode and amount. The effectiveness and efficiency of PES depends crucially on program design.
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Publication Taking Stock: A Comparative Analysis of Payments for Environmental Services Programs in Developed and Developing Countries(2008)Payments for environmental services (PES) are an innovative approach to conservation that has been applied increasingly often in both developed and developing countries. To date, however, few efforts have been made to systematically compare PES experiences. Drawing on the wealth of case studies in this Special Issue, we synthesize the information presented, according to case characteristics with respect to design, costs, environmental effectiveness, and other outcomes. PES programs often differ substantially one from the other. Some of the differences reflect adaptation of the basic concept to very different ecological, socioeconomic, or institutional conditions; others reflect poor design, due either to mistakes or to the need to accommodate political pressures. We find significant differences between user-financed PES programs, in which funding comes from the users of the ES being provided, and government-financed programs, in which funding comes from a third party. The user-financed programs in our sample were better targeted, more closely tailored to local conditions and needs, had better monitoring and a greater willingness to enforce conditionality, and had far fewer confounding side objectives than government-financed programs. We finish by outlining some perspectives on how both user- and government-financed PES programs could be made more effective and cost-efficient.Publication Evaluation of the Permanence of Land Use Change Induced by Payments for Environmental Services in Quindío, Colombia(World Bank, Washington, DC, 2014-09)The effectiveness of conservation interventions such as Payments for Environmental Services (PES) is often evaluated, if it is evaluated at all, only at the completion of the intervention. Since gains achieved by the intervention may be lost after it ends, even apparently successful interventions may not result in long-term conservation benefits, a problem known as that of permanence. This paper uses a unique dataset to examine the permanence of land use change induced by a short-term PES program implemented in Quindío, Colombia, between 2003 and 2008. This the first PES program to have a control group for comparison. Under this program, PES had been found to have a positive and highly significant impact on land use. To assess the long-term permanence of these changes, both PES recipients and control households were re-surveyed in 2011, four years after the last payment was made. We find that the land use changes that had been induced by PES were broadly sustained in intervening years, with minor differences across specific practices and sub-groups of participants. The patterns of change in the period after the PES program was completed also help better understand the reasons for the program s success. These results suggest that, at least in the case of productive land uses such as silvopastoral practices, PES programs can be effective at encouraging land owners to adopt environmentally-beneficial management practices and that the benefits will persist after payments cease.Publication Payments for Environmental Services in Costa Rica(2008)Costa Rica pioneered the use of the payments for environmental services (PES) approach in developing countries by establishing a formal, country-wide program of payments, the PSA program. The PSA program has worked hard to develop mechanisms to charge the users of environmental services for the services they receive. It has made substantial progress in charging water users, and more limited progress in charging biodiversity and carbon sequestration users. Because of the way it makes payments to service providers (using approaches largely inherited from earlier programs), however, the PSA program has considerable room for improvement in the efficiency with which it generates environmental services. With experience, many of these weaknesses are being gradually corrected as the PSA program evolves towards a much more targeted and differentiated program. An important lesson is the need to be flexible and to adapt to lessons learned and to changing circumstances.Publication Evaluation of the Impact of Payments for Environmental Services on Land Use Change in Quindío, Colombia(World Bank, Washington, DC, 2013-09)The growing use of Payments for Environmental Services (PES) for conservation has fostered a debate on its effectiveness, but the few efforts to date to assess the impact of PES programs have been hampered by lack of data, leading to very divergent results. This paper uses data from a PES mechanism implemented in Quindío, Colombia, to examine the impact of PES on land use change. Alone among all early PES initiatives, the Silvopastoral Project included a control group of nonparticipants, whose land use changes were monitored throughout the project period, as well as detailed baseline data on both PES recipients and control group members. By comparing the land use changes undertaken by PES recipients to those undertaken by control group members, we can distinguish the impact of PES from that of other factors. The results show that payments had a positive and highly significant impact on land use change, under a variety of model formulations. PES recipients converted over 40 percent of their farms to environmentally-friendly land uses over 4 years, increasing environmental service provision by almost 50 percent. In contrast, control group members converted less than 20 percent of their farms, increasing environmental service provision by only 7 percent.Publication Brazil's Experience with Payments for Environmental Services(World Bank, Washington, DC, 2013-08-01)Since 2006, there has been an explosion of Payments for Environmental Services (PES) projects in Brazil, as well as efforts to pass PES laws at federal, state, and municipal levels. Even in this short period, an extraordinarily rich range of experiences has developed, with examples of the application of PES at a variety of scales, ranging from microwatersheds to entire states; in a variety of contexts, from remote forest frontier areas to the periurban fringe of megacities like São Paulo; and using a variety of approaches, using direct payments by users, sales to regulated and voluntary carbon markets, government funding, and mixes of these approaches. In this paper, we provide an overview of Brazilian PES efforts to date, and attempt to extract some initial lessons.
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