Payment for environmental services: hurdles for their positive impact

Basque Centre for Climate Change (BC3) 
  • Researchers suggest that payment for environmental services (PES) may have diminished results due to poor design
  • Rendering payment for environmental services a valuable tool to protect the environment, adaptation to cultural and socioeconomic context is key
  • Pressure from population growth and the production of commodities will make economic incentives a vital component of environmental conservation


Payment for Environmental Services

The Payment for Environmental Services (PES) is a practice emerged over the past 20 years. PES involves offering incentives (in cash or in kind) to land owners and farmers for managing their land so that it provides an ecological service to society. Such remunerated services typically include carbon sequestration to mitigate climate change, watershed management to provide clean water, or the protection of habitats and species, hence the protection of biodiversity.

Researchers published an article in the journal Nature Sustainability suggesting that shortcuts in design and execution of PES programmes may make them less effective. Such design defects would lower their capacity to provide the right incentives to land owners and, as a result, thwart the attempts to attain positive environmental impact via PES programmes.


The study has been conducted by the Basque Centre for Climate Change (BC3) and the Basque Foundation for Science, Ikerbasque, together with partners from Brazil, Canada, Germany and France.


A silver bullet or just an important part of the solution?

The team of scientists analysed a new global dataset accrued from 70 PES projects over the past 20 years around the world. Design and implementation features, together their own field-based observations were taken into the analysis. PES programs assessed included watersheds, forest carbon and biodiversity schemes from Europe North America, South America, Asia, Australia, and Africa.

From their findings, authors highlighted, on the one hand, the relevance of PES to address environmental problems, to the benefit of society. They found, however, that PES programs are sometimes perceived by policymakers as a silver bullet. Their misconception potentially leads to misguided PES implementation when perhaps other policy programs would be better suited to deal with the goal of environmental protection.

“Well-designed and executed PES programmes can have an important role all around the world to protect the environment and benefit society” said Unai Pascual, Ikerbasque Professor at BC3. “In some situations PES can be applied to safeguard valuable environmental services for current and future generations that otherwise could be lost, but this comes at a cost as it requires that society offers adequate compensations to land owners for their efforts in undertaking land use practices in order to secure such environmental services.”

Sven Wunder, principal economist with the Center for International Forestry Research (CIFOR) said that “naturally enough, due to differences in contexts, priorities and goals, PES programs vary in design and execution”. “While we recognize variations in strategy will always exist, we note that PES designers often take impractical shortcuts, oversimplifying circumstances, leading to deficiencies in execution, and thus probably in impact.”

Difficulties arise, for example, when the beneficiaries from the environmental service offer the service provider less compensation than expected, when the institutional and legal framework for introducing and administering PES are lacking, and when the landholder’s control over the environmental service is weak, the report said.

Crescent lake oasis in Dunhuang, Gansu province, China. Oases are invaluable water resources in arid regions as the Gobi desert.

Globally, given financial constraints and mounting environmental degradation, pressures are escalating to put conservation programs to more effective use while considering their social impact. This is especially so in regions where poverty and social problems are most prevalent.

“The role of different types of PES need to be evaluated carefully, as PES can have different impacts on different social groups, for example on people who require compensation for the environmental services they secure (e.g., upland landowners and landless farmers) as well as those who bear the costs of providing the payments (e.g. poor and rich water consumers in cities)”, said Unai Pascual.

As added Pascual, “such evaluations will allow to design better PES programmes by using the experience which we have accumulated over the last 20 years around the world. This should hopefully help achieve conservation impacts in ways that are environmentally effective, economically efficient and socially equitable.”


Image credits:

Picture of Small dam near Jatashankar temple (Pachmarhi Cantt, India) was downloaded from Wikimedia Commons and licensed via a Creative Commons Attribution-Share Alike 3.0 Unported (CC BY-SA 3.0) license.

Crescent lake oasis picture was downloaded from Maxpixel and is in the public domain.

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