Elsevier

Ecological Economics

Volume 65, Issue 4, 1 May 2008, Pages 834-852
Ecological Economics

Taking stock: A comparative analysis of payments for environmental services programs in developed and developing countries

https://doi.org/10.1016/j.ecolecon.2008.03.010Get rights and content

Abstract

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.

Introduction

As ecosystems have become increasingly degraded worldwide, and the valuable environmental services (ES) that they provide lost or reduced, there has been a growing search for solutions. Among these, the payments for environmental services (PES) approach has been applied increasingly often in both developed and developing countries. Numerous PES and PES-like initiatives are being implemented, at a wide variety of scales ranging from small watersheds to entire nations. Despite this growing interest, there have been few efforts to systematically document the characteristics and effectiveness of different PES programs, and even fewer efforts to compare them. This Special Issue of Ecological Economics has attempted to fill this gap by providing detailed case studies of some of the most important PES programs.

In this concluding article, we synthesize the information presented in the case studies included in this Special Issue, and make a structural comparison of their characteristics with respect to design, costs, environmental effectiveness, and livelihood outcomes. Finally, we draw lessons from the analysis of these cases for improved PES design.

We begin by briefly reviewing our sample cases of PES programs, highlighting important design characteristics (Section 2). We then examine the available evidence on the effectiveness of PES programs in achieving environmental objectives (Section 3) and in helping reduce poverty (Section 4). We close with some conclusions and policy perspectives (Section 5).

Section snippets

PES case studies

In this Special Issue we follow Wunder (2005) in defining PES as (a) a voluntary transaction where (b) a well-defined environmental service (ES) or a land use likely to secure that service (c) is being ‘bought’ by a (minimum one) service buyer (d) from a (minimum one) service provider (e) if and only if the service provider secures service provision (conditionality).

The sample of PES case studies presented in this Special Issue is built around those presented at the workshop on PES Methods and

Effectiveness and efficiency of PES programs

In the theoretical literature on PES, it has been suggested that the direct nature of the PES transaction induces PES to be both more effective and more cost-efficient than indirect tools such as ICDPs or eco-friendly premiums requiring investments in alternative lines of production (Ferraro and Kiss, 2002, Ferraro and Simpson, 2002, Ferraro and Simpson, 2005). In this section, we examine how effective PES programs have been at achieving their stated objectives of improving ES generation. We

Distributional impacts of PES programs

Although the primary objective of PES programs is to improve the provision of ES, many programs also have additional objectives, as shown in Table 5. In this respect, the differences between user-financed and government-financed programs are striking. While all four user-financed programs have no side objectives,38

Conclusions and perspectives

PES has attracted considerable attention in recent years. Its growing popularity has not yet been matched, however, with careful analysis of how it works, and of its strengths and weaknesses. This Special Issue of Ecological Economics has attempted to help fill this gap by providing detailed case studies of some of the most important PES programs. As the analysis in this paper has shown, these PES programs often differ substantially one from the other. Some of the differences reflect adaptation

Acknowledgments

Funding for this research and the corresponding workshop was provided in part by the Robert Bosch Foundation, the Center for International Forestry Research (CIFOR), the European Union (EU), and the International Institute for Environment and Development (IIED). We would like to thank Paul Ferraro and John Dixon for helpful comments on an earlier draft. The opinions expressed are those of the authors and do not necessarily represent those of the World Bank Group, CIFOR, or IIED.

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