Towards market- or command-based governance? The evolution of payments for environmental service schemes in Andean and Mesoamerican countries

Abstract

Payments for environmental services (PES) are a hybrid mode of governance, situated between markets and hierarchies. However, market structure has been used as a theoretical model to inform PES design. Based on 16 cases from Andean and Mesoamerican countries, we analyze whether PES schemes have, since their implementation, gradually incorporated more market characteristics or whether and to what extent these schemes have changed towards more reliance on command-based mechanisms. The schemes analyzed cover a range of governance mechanisms, from small markets to almost complete hierarchical organization. Our results suggest that over time an increasing number of the schemes have incorporated characteristics of a hierarchy to organize ecosystem service users. Mostly through the use of taxes/tariffs and by governments acting directly on users’ behalf. Contractual agreements, with payment levels either bilaterally negotiated or set by intermediaries, and providers being mainly individual and communal landholders, remain at the core of most schemes studied. Intermediaries are important actors in almost all schemes analyzed. They organize and/or represent users, and are usually national or local governments. The evolution of the schemes analyzed suggests that there is no convergence towards a market for ecosystem services, but an increasing complexity in the schemes' design.