Institutional challenges for corporate participation in payments for ecosystem services (PES): insights from Southeast Asia

Abstract

Environmental sustainability relies on the adequate financing of biodiversity conservation—increasingly from the private sector. Meanwhile, corporate sustainability relies on the effective management of natural capital and ecosystem services used in production. Payments for ecosystem services (PES) offers an important practical mechanism for addressing these issues. However, the uptake of corporate-financed PES has been underwhelming, implying that companies may face institutional and motivational challenges to participate in PES. This article presents an assessment framework to determine the conduciveness of PES to real-world corporate environmental strategies and actions, be they (a) voluntary or compliance-based, (b) reactive or proactive, (c) requiring low or high amounts of data, (d) seeking a direct or indirect return on investment (ROI), (e) conducted proximal to or far from the operation site, (f) short-term or long-term, and (g) utilising internal or external resources. Interview data elicited from public, private, and civil sector actors in Thailand and the Philippines highlights key barriers to corporate-financed PES. Results imply companies may be: (1) hesitant to get involved with unknown or uncertain concepts such as ecosystem services; (2) reluctant to fund the technical studies and repeat payments that PES requires; (3) disinterested in direct ROI—instead content with philanthropic projects that can boost public relations; and (4) bound by protocols that restrict the spatial and temporal scales at which PES can operate. To overcome these challenges, policy makers could devise reputational and economic incentives, and incorporate ecosystem services into existing institutions such as environmental impact assessments (EIAs) and ISO 14001. Meanwhile, PES practitioners (government agencies and NGOs) should use quick and simple metrics to quantify ecosystem services, and tolerate buyer willingness-to-pay. Increasing corporate ecosystem service demand, and participation in PES, will likely require firm-level institutional change, and business strategies to improve supply chain management and mitigate the negative effects of environmental and climate change.