Payments for Ecosystem Services and Biodiversity

Abstract

Payments for ecosystem services (PES) have emerged in the past few decades as a policy response to biodiversity loss and ecosystem conversion that have negative impacts on people. The original premise leading to PES was that resource owners or users could be incentivized to conserve nature, and the ecosystems services it provides such as clean water, carbon sequestration, or biodiversity protection, when financial compensation greater than the opportunity cost of conservation is offered. Proponents claimed that if payments could be mediated through market transactions with final users of ecosystem services this approach would be more effective and efficient than government regulation. Currently, PES programs and schemes range widely in focus and scope, with some driven by market-like transactions more than others. This article provides an overview of the history of the development of the concept of PES and the lessons learned from implementation in many parts of the world, especially in the Global South, where most experiences may be drawn. In addition, the article summarizes key critiques of the PES approach and provides analysis of views on potential improvement in their design and implementation.