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Payments for Ecosystem Services

Payments for environmental services: a solution for biodiversity conservation?

Payments for environmental services no conservation panacea

Authors: S. Wertz-Kanounnikoff
Publisher: Institut du développement durable et des relations internationales (IDDRI) / Institute for Sustainable Development and International Relations, 2006

Full text of document

Can biodiversity be conserved through direct payments to landholders to adopt sustainable land-use practices? This paper reviews the literature on payments for environmental services (PES) – where environmental services are defined as the benefits that humans obtain from ecosystems – to assess the use of PES in terms of its economic, social and ecological impacts.

The paper outlines the main modes of implementation to date. These have moved from supply-side to demand-side concerns, and have particularly addressed:

  • watershed services
  • carbon sequestration
  • biodiversity conservation
  • landscape beauty.

This review finds that, if properly designed, PES can ensure long-term conservation financing as it is the ultimate users who pay for the generation or preservation of given services. However, a number of risks and shortcomings of the PES approach are also identified, for example:

  • if transaction costs are prohibitively high due to a lack of clearly defined property rights and enforcement mechanisms, PES mechanisms are less effective
  • PES only accords value to ecological systems of value for humans, and does not provide a mechanism for protecting other services. Bundling of services can potentially go some way to overcoming this problem
  • participation in PES is difficult for the poor as they do not necessarily have proper land titles or the necessary knowledge and ability to manage administrative tasks required by PES schemes
  • there is also the risk that PES can further impoverish the poor or disadvantaged, as for instance if they are required to pay for services that were previously provided for free. PES can in some cases be seen as compensating the poor for not developing
  • there are difficulties in attributing an economic value to environments that have a high cultural value.

The paper concludes that PES is a useful tool, but cannot be considered as panacea for biodiversity conservation.