Payments For Ecosystem Services Programs Research Articles

Linking green bond yields to the species composition of forests for improving forest quality and sustainability

Forests in India's Himalayan region are undergoing rapid degradation owing to various climatic and man-made stressors, such as invasive species spread and excessive lopping and harvesting of trees. Invasive plants, such as L. camara, pose significant threats to the rich biodiversity of the region due to their ability to replace native vegetation and spread rapidly under a warming climate. Additionally, chir pines (P. roxburghii) are replacing banj oak (Q. leucotrichophora) forests. Oak forests support rich biodiversity and are also preferred by the local communities for meeting their livelihood requirements. In this study, we ask whether green bonds could be utilized for financing the restoration of desirable forest species and enhancing their resilience to natural hazards such as fires. In particular, we explore the possibility of linking green bond yields to the species composition of forests for incentivizing the protection of oak forests. We develop an optimization model of community led restoration of oak and pine forests that are infested with L. camara. Restoring oak forests mitigates the risk of forest fires, improves forest water supply, and controls the spread of the invasive lantana. Findings indicate that such species composition based green bonds, when coupled with payments for ecosystem services programs, can indeed incentivize higher restoration efforts, resulting in an improvement in the biodiversity richness of the region.

Pathways from the payment for ecosystem services program to ecological and socio-economic outcomes

As a new natural resource management tool based on financial incentives, payment for ecosystem services (PES) plays a vital role in balancing socio-economic development and ecological protection. China’s Sloping land conversion program (SLCP) is one of the most expensive PES programs in the world, and its implementation effectiveness has received much attention. However, the complex mechanism by which project implementation affects socio-economic development and ecosystem services remains elusive. To reveal the interaction pathways between PES programs, socio-economic development, and the natural environment, Loess Plateau, a key region for SLCP implementation in China, was selected as the subject of this study. Furthermore, the RUSLE model was adopted to evaluate the changes in soil conservation services between 2000 and 2015. Based on the Structural equation model (SEM), the links between SLCP, agricultural development, population transfer, urbanization, natural environment, and ecosystem services were investigated. The results showed that the soil conservation services in Loess Plateau were significantly improved after SLCP implementation, with a total increase of 13.88 × 108 t from 2000 to 2015. The long-term socio-economic impact of SLCP was not significant, except for the first stage of SLCP implementation where agricultural development was inhibited. The implementation of SLCP directly improved soil conservation services and improved soil conservation services through through its indirect effect on agricultural development. We also found that the different stages of SLCP implementation had different effects on the improvement of soil conservation services. The efficiency of the second stage was higher than that of the first stage. Socio-economic factors and natural environmental conditions had negative effects on soil conservation services. In addition, the socio-economic effects of SLCP implementation varied at different stages. Based on the study results, we suggest that the subsequent SLCP implementation should focus on maintaining the results, and the impact of different socio-economic factors should be considered. This study provides a framework for a better understanding of the complex mechanisms through which SLCP affects socio-economic, ecosystem services, and natural conditions.

Integrated assessment of a payment for ecosystem services program in China from the effectiveness, efficiency and equity perspective

Despite growing interest in understanding the outcomes of payments for ecosystem services (PES) programs, there are few systematic and quantitative studies, particularly integrated assessments that consider ecological effectiveness, economic efficiency, and social equity (3E). By integrating remote sensing images, geographic information, household survey data, and policy documents, we present a demonstration from China between 2000 and 2015, which implemented PES programs extensively. At the forest patch level, the Ecological Welfare Forest Program (EWFP) increased forest coverage by 1.35%–2.03%. Furthermore, the EWFP respectively added 68.23–72.55 ton ha−1, 1.87–2.09 ton ha−1, 23.39–35.81 ton ha−1, and 10.12–11.11 MWh ha−1 of water conservation, soil retention, flood regulation, and local climate regulation services. Our results were consistent using different impact evaluation methods. However, forest recovery was achieved at high economic cost, with one hectare increase of forest cover costing 211,000–319,000 USD. EWFP participants experienced lower increases in human well-being and more unequal income distribution compared to non-participants, largely due to the rapid and disproportional increase of business income such as nature-based tourism. We provide recommendations to improve the multidimensional outcomes of PES programs in our study area and beyond. Although our study is an integrated assessment of one PES program, the 3E perspective and methodology may also apply to other conservation policies.

Socio-economic impacts of scaling back a massive payments for ecosystem services programme in China.

This paper examines the socio-economic implications of scaling back China's Sloping Land Conversion Programme (SLCP), one of the world's largest payments for ecosystem services programmes. Using the consolidation phase of SLCP as a natural experiment, a staggered difference-in-differences design is applied to a panel of rural villages (and households) located in poor and ecologically fragile areas. SLCP consolidation, consisting of a 50% subsidy reduction and suspension of a job training programme, leads to larger income declines in treated villages driven by a reduction in the likelihood that SLCP households transition from farm to non-farm work. These harmful socio-economic effects disappear, however, in villages with stronger land rights and more job training prior to consolidation. When these favourable site-specific characteristics exist, SLCP households remain equally engaged in off-farm work even after subsidy payments and training resources are scaled back. Moreover, on aggregate, village income losses are no longer detectable. The findings provide partial support in favour of the behavioural permanence thesis, highlighting the important role of prevailing local characteristics in mitigating harmful development effects otherwise brought about by programme roll-back.

Considering Farmers’ Heterogeneity to Payment Ecosystem Services Participation: A Choice Experiment and Agent-Based Model Analysis in Xin’an River Basin, China

The concept of watershed ecological compensation is one payment for ecosystem services (PES) program that incentivizes stakeholders undertake environmental conservation activities that improve the provision of ecosystem services. Defining the heterogeneity of farmers’ willingness to participate in watershed ecological compensation is critically important for fully understanding stakeholders’ demands. Accordingly, we designed a choice experiment survey to analyze the heterogeneity of policy preferences and willingness to receive compensation between upstream and midstream farmers in Xin’an River basin, China. Moreover, we simulated the impact of farmers’ social capitals’ heterogeneity with an agent-based model. The results show that there are significant differences in the preferences of agricultural waste recycling rate and agricultural water quality between farmers in the upstream and midstream. The total willingness of farmers in the upstream and midstream to participate in ecological compensation are RMB 149.88 (USD 22.54)/month and RMB 57.40 yuan (USD 8.63)/month, respectively. Social network size has a negative effect on farmers’ willingness to participate the programs. Our findings suggest that the characteristics of farmers’ influence their willingness to participate in the PES program. The results of this research can be used to improve PES management policies in the future, as well as to support sustainable environmental development and rural revitalization.

Impact of precipitation on the two‐stage grassland eco‐subsidy policy effect on stocking reduction in Inner Mongolia, China

AbstractChina launched the Grassland Ecological Subsidy Policy in 2011 for restoring grassland ecology by paying pastoralists to downsize stocking on the degraded grasslands and compensate their income loss from livestock reduction. The policy, the largest payment for ecosystem services program targeting pastoralism in the world, has been so far through two 5‐year stages: 2011 to 2015 with a subsidy at 1.5 CNY per standard mu per year and 2016 to 2020 at 2.5 CNY increased to boost the stocking reduction. How was the boost effect? We investigated that stocking responses in 2010, 2015 and 2018 using the panel data of 410 herder households in the subpolicy forage‐livestock balance areas in Inner Mongolia, China, tested various attributes on stocking rate and stocking reduction rate at the two stages of the policy using econometric models of random effects and ordinary least squares. This study is the first empirical case containing the two 5‐year policy data and with both subsidy and precipitation effects. We confirmed the regulating impact of precipitation on the subsidy policy effect, and more precipitation in the second stage appeared to offset the effect of the increased subsidy. We suggested changing the subsidy targeting mechanism from rewarding stocking reduction to direct grassland restoration.

Contradictory distributive principles and land tenure govern benefit-sharing of payments for ecosystem services (PES) in Chiapas, Mexico

Payments for Ecosystem Services (PES) are incentive-based instruments that provide conditional economic incentives for natural resources management. Research has shown that when economic incentives are parachuted into rural communities, participation and benefits are collectively negotiated and shared. However, we know little about how benefit-sharing evolves over time in community-based PES. To address this gap, we examine distributional justice in four communities of the state of Chiapas, Mexico, which participate in a PES programme, and we assess how local justice principles compare with the programme’s goals. Our analysis reveals patterns of both continuity and change in how communities share PES benefits, which reflect a suite of contradictory justice principles, including entitlement, merit, need, and equality. The studied communities distribute PES benefits by providing differentiated compensation to diverse groups of landholders via private cash payments, whilst also attending non-landed community members through public infrastructure investments. We show that benefit-sharing is strongly influenced by pre-existing land tenure features and associated norms, which in the study area include three different types of individual and common-property. Yet, we also show that communities continuously adjust benefit-sharing arrangements to navigate distributional challenges emerging from programme engagement. Overall, we provide novel insights on the evolution, diversity, and complexity of distributive justice in community-based PES and we advocate for a context-sensitive, nuanced, and dynamic account of justice in incentive-based conservation.

“How can you put a price on the environment?” Farmer perspectives on stewardship and payment for ecosystem services

As agricultural conservation priorities evolve to address new complex social-ecological problems and emerging social priorities, new conservation incentive program participation and success can be enhanced by incorporating local stakeholder preferences into program design. Our research explores how farmers incorporate ecosystem services into management decisions, their willingness to participate in payment for ecosystem services programs, and factors beyond compensation level that would influence participation. We conducted three focus groups with 24 participants between January of 2019 and May of 2019 in Vermont. Our study revealed that a strong, intrinsic stewardship ethic motivates farmers to enhance ecosystem service provisioning from their farms, though financial pressures often limit decision-making. These results suggest that programs with sufficient levels of payment may attract participation, at least among some types of farmers, to enhance ecosystem services from farms in Vermont. However, farmers may be deterred from participating by perceived unfairness and distrust of the government based on previous experiences with regulations and conservation incentive structures. Farmers also expressed distrust of information about ecosystem services supply that conflicts with their perceptions of agroecosystem functioning, unless delivered by trusted individuals from the extension system. The delivery of context-specific information on how management changes impact ecosystem service performance from trusted sources could enhance farmers’ decisions, and would aptly complement payments. Additionally, farmers expressed a desire to see a program that both achieves additionality and rewards farms who have been stewards, goals that are potentially at odds. Our findings offer important insights for policy makers and program administrators who need to understand factors that will influence farmers’ willingness to participate in payment for ecosystem service programs and other conservation practice adoption initiatives, in Vermont and elsewhere.

Farmers’ preferences for result-based schemes for grassland conservation in Slovenia

Government-funded payments for ecosystem services (PES) have increasingly been used to facilitate transactions between users of environmental services and their providers. In order to improve the link between payments and the service provided, some countries in the EU have promoted result-based schemes (RBS), which remunerate farmers for ecological results, as part of their agricultural policy. Since PES programs are voluntary, it is important to understand farmers’ responses before more large-scale implementations of RBS are initiated. Using a choice experiment and a mixed logit model, we elicited the preferences of farmers in two Natura 2000 sites in Slovenia for different design elements of a hypothetical scheme for dry grassland conservation. We found that the majority of farmers preferred the result-based approach over the management-based scheme both in terms of payment conditions and monitoring; one group of farmers preferred the RBS very strongly (average WTA of more than 500 EUR/ha/yr) and another group less strongly (average WTA about 200 EUR/ha/yr). Farmers also showed a higher preference for on-farm advise and training in small groups than for lectures, which would be offered to a larger audience. A collective bonus, which would incentivise coordination and could potentially increase participation rates in the scheme, significantly influenced the farmers’ willingness to adopt the scheme. However, the estimated average WTA was comparable or lower than the 40 EUR/ha annual bonus payment. Older farmers and those who managed small and semi-subsistent farms were significantly more likely to be highly resistant to scheme adoption no matter its design.

Impact evaluation of a payments for ecosystem services program on vegetation quantity and quality restoration in Inner Mongolia

Globally, the payments for ecosystem services (PES) program has become a helpful tool that serves the purpose of mitigating ecosystem degradation and protecting ecosystem services. However, the ecological effects of existing PES programs based on counterfactual baselines, quantification and sophisticated statistical analyses are still poorly understood. Taking Inner Mongolia as an example, this study evaluated the ecological effectiveness of the Natural Forest Conservation Program (NFCP) using the matching approach. The findings are as follows. First, 49.8% and 41.5% of the townships had significant gains in vegetation quantity and quality between 2000 and 2015, respectively; while 9.5% and 13.7% of the townships had significant losses in vegetation quantity and quality, respectively. Second, for forest quantity recovered townships, comparing to the NFCP unenrolled townships, the enrolled townships had increased forest quantity by additional 0.377 million ha (5.2%) from 2000 to 2015. Third, for forest quality recovered townships, the enrolled townships on average additionally increased forest quality by 465.513 Gg carbon (3.6%) from 2000 to 2015. Our study helps to promote sophisticated impact evaluation of conservation policies, which would improve the understanding and management of conservation practices in China and abroad.

Three Barriers to Effective Programs with Payment for Ecosystem Services: Behavioral Responses in a Computer-Based Experiment

Financial incentives in the form of payment for ecosystem services (PES) can encourage participation in voluntary conservation programs, but real-world experience with PES is limited for services such as the provision of endangered species habitats. A computer-based laboratory experiment with 139 US college students as subjects suggests there are three barriers to effective PES programs: (1) financial rewards can crowd out altruism—low-level PES in the experiment was less effective than the same program without PES; (2) landowners may assuage guilt over destroying habitats by making contributions to ineffective conservation programs—participants often paired destruction of habitat with token contributions to conservation efforts; and (3) landowners may strategically exit conservation agreements in ways that are detrimental to wildlife—a large proportion of participants chose to leave agreements and destroy habitats when the PESs were structured without credible deterrence of an early exit. Fortunately, the results of the experiment also suggest research to overcome these barriers by ensuring that PES financial incentives are scaled and structured to effectively promote conservation. The lessons from this study—though they issue from the particular context of this experiment—provide suggestions about how to structure benefit sharing schemes that could be used to promote conservation in a range of settings.

Additionality in Payment for Ecosystem Services Programs: Agricultural Conservation Subsidies in Maryland

Some payment for ecosystem services (PES) programs peg subsidy levels to the complexity of conservation projects. We investigate the additionality of conservation subsidies on project complexity using data from Maryland, which has used PES programs aggressively to reduce agricultural nutrient emissions into the Chesapeake Bay. A reduced-form linear model indicates modest overall average additionality. A structural approach using counterfactuals constructed from count data models yields the same overall average but finds that additionality varies with the number of practices subsidized. These results suggest that projections of agriculture’s potential to lower costs of meeting water quality goals may be overly optimistic.

Uncovering Stakeholder Participation in Payment for Hydrological Services (PHS) Program Decision Making in Mexico and Colombia

Payment for ecosystem services (PES) is a market-based policy approach intended to foster land use practices, such as forest conservation or restoration, that protect and improve the benefits from healthy, functioning ecosystems. While PES programs are used globally, they are an especially prominent environmental policy tool in Latin America, where the vast majority are payment for hydrological services (PHS) programs, which incentivize the conservation and restoration of ecosystems associated with water production and clean water for clearly defined water users. As a market mechanism, PHS approaches involve a transactional relationship between upstream and downstream water users who are connected by a shared watershed. While existing literature has highlighted the important role of non-state actors in natural resource management and program effectiveness, few studies have explored the role of stakeholder participation in the context of PHS programs. Building on the collaborative learning approach and the Trinity of Voice framework, we sought to understand how and to what extent PHS program stakeholders are engaged in PHS design, implementation, and evaluation. In this paper we explored (1) the modes of stakeholder engagement in PHS programs that program administrators use, and (2) the degree to which different modes of stakeholder participation allow PHS stakeholders to have decision power with which to influence PHS policy design and expected outcomes. To better understand the role of stakeholder participation, and the different ways participation occurs, we used a comparative multiple-case study analysis of three PHS program administration types (government, non-profit, and a mixed public–private organization) in Mexico and Colombia that have incorporated stakeholder engagement to achieve ecological and social goals. Our analysis draws on institutional interviews to investigate the modes of stakeholder engagement and understand the degree of decision space that is shared with other PHS stakeholders. Across all cases, we found that the trust between key actors and institutions is an essential but underappreciated aspect of successful collaboration within PHS initiatives. We conclude with recommendations for ways in which program administrators and governmental agencies can better understand and facilitate the development of trust in PHS design and implementation, and natural resources management more broadly.

Has the Sloping Land Conversion Program in China impacted the income and employment of rural households?

As the largest scale payment for ecosystem services program in the developing world, one of the key objectives of the Sloping Land Conversion Program (the SLCP) is to increase rural households' income and to reallocate their employments. This paper estimates the effects of the SLCP on rural households' income and employment changes using the unique panel dataset of 1001 rural households in six provinces from 1995 to 2014. Following a strict parallel trend and other econometrics tests, the Propensity score matching-Difference-in-differences (PSM-DID) estimation technique was used. Based on the unique panel dataset, this paper expands upon existing studies by estimating the effects of mid-to-long-term and subsidy scheme adjustment of the SLCP on rural households' income and employment. Our empirical results indicate that 1) the SLCP has no significant effect on rural households’ total income, while it has a negative effect on farm income. 2) The SLCP has a positive effect on forestry labor input. 3) Half reduction subsidy of the SLCP has caused different effects on rural households’ income and employment compared with that before policy adjustment. 4) The income effects of the SLCP are indifferent by income, location, demographic or resource endowment sub groups. Policy decision-makers should pay more attention to create more off-farm opportunities for rural households enrolled in the SLCP to maintain the achievements of the SLCP.

Role of social networks in building household livelihood resilience under payments for ecosystem services programs in a poor rural community in China

Payments for ecosystem services (PES) programs may bring unintended consequences to the coupled socio-ecological system (SES) and incur unexpected feedbacks between social and ecological systems. This paper explores how the SES responds to PES intervention and investigates the role played by social networks in building resilience in a traditionally poverty-stricken area of China. The structure of social networks is measured through the social network analysis with degree and betweenness. Then, we develop an agent-based model to examine how social networks function to affect household livelihood resilience. The model captures feedbacks between PES intervention, social networks, household livelihood decisions, and environmental changes. Results show that the livelihood resilience of rural households is expected to decline during 2013–2030 within the current PES scheme. Social networks impose significant positive impacts on resilience building. However, their effects decay over time due to the fading structure and function of social networks along with massive rural-to-urban migration. Besides environmental conservation, policy-makers should take measures for socio-cultural conservation and preservation, reinforcing the identity, structure, and function within SESs for rural development in China.

Neighborhood impacts on household participation in payments for ecosystem services programs in a Chinese nature reserve: A methodological exploration

Neighborhood impacts on household participation in payments for ecosystem services programs in a Chinese nature reserve: A methodological exploration

Grassland Subsidies Increase the Number of Livestock on the Tibetan Plateau: Why Does the “Payment for Ecosystem Services” Policy Have the Opposite Outcome?

The Grassland Ecological Protection Award Policy was implemented to address severe grassland degradation in China. This policy utilizes grassland subsidies as an incentive to control the number of livestock and has become the largest payment for ecosystem services program. Although many studies have analyzed the performance of this policy, it remains controversial as to whether grassland subsidies are effective at reducing the number of livestock; moreover, there is still a lack of quantitative studies on the roles of household livelihood assets and livelihood strategies in reducing the number of livestock. On the basis of the sustainable livelihood framework, this paper constructed an analytical framework to research how grassland subsidies affect the number of livestock under the effects of different livelihood capitals and local socioecological contexts. After choosing the Pumqu River Basin of the Tibetan Plateau as the research area, this study classified sample households on the basis of grassland sizes and then examined the effects of grassland subsidies on the number of livestock of different groups of rural households by considering livelihood capital. The results showed that (1) for all the sample households, grassland subsidies caused herdsmen to raise more livestock, which was contrary to the expectation of the grassland protection policy. The invalidation of grassland subsidies was mainly caused by the poor design and implementation of the policy at the local level. (2) In addition, for rural households with different grassland sizes, the subsidies could be effective in reducing the number of livestock for households with small grassland sizes while increasing the number of livestock for households with large grassland sizes. This indicates that some supporting policies and measures for households with smaller grassland sizes should be provided to stimulate the reduction in the number of livestock, and for households with large grassland areas, grassland circulation should be encouraged to promote the large-scale production of livestock husbandry. The finding of this study can help governments to formulate policies tailored towards appropriate subsidies for addressing grassland degradation.

Normative, livelihood, and demographic influences on enrollment in a payment for ecosystem services program

Payment for ecosystem services (PES) has emerged as a leading conservation mechanism worldwide, and its success depends largely on landholders’ willingness to enroll in and comply with these programs. Researchers have suggested program duration and perceived social norms may influence enrollment, but empirical evidence is sparse. There is also conflict over the influence of other socioeconomic, demographic, and farm characteristics. This study, based in Fanjingshan National Nature Reserve in southwestern China, uses a choice experiment and mixed-effects model to quantify how payment level, duration of program, social norms, and demographic and economic factors affect farmers’ willingness to enroll in a PES program. Results suggest higher neighbor participation increases willingness to enroll, as does higher payment level, but contract duration does not. Other factors associated with higher enrollment include being allowed to plant economically productive trees, having lower educational attainment, having local off-farm work, owning no livestock, and not having lived in one’s current neighborhood since birth. These results suggest PES implementers may improve enrollment by targeting households with these conducive characteristics and by utilizing tree species with sellable products like tea and herbs. Moreover, results suggest implementers may improve enrollment by emphasizing neighbors’ enrollment while recruiting new participants, thereby capitalizing on perceived social norms.

Additionality in Payment for Ecosystem Services Programs: Agricultural Conservation Subsidies in Maryland

Some payment for ecosystem services (PES) programs peg subsidy levels to the complexity of conservation projects. We investigate the additionality of conservation subsidies on project complexity using data from Maryland, which has used PES programs aggressively to reduce agricultural nutrient emissions into the Chesapeake Bay. A reduced-form linear model indicates modest overall average additionality. A structural approach using counterfactuals constructed from count data models yields the same overall average but finds that additionality varies with the number of practices subsidized. These results suggest that projections of agriculture’s potential to lower costs of meeting water quality goals may be overly optimistic.

Household’s Allocation of Payment for Ecosystem Services in “La Antigua” Watershed, Veracruz, México

Payment for ecosystem services (PES) is an environmental policy looking to improve ecosystem conservation and well-being. Assets have been used to evaluate socioeconomic outcomes of the program; however, the allocation of PES at a household level and its explaining variables have not been addressed. Thus, the aim of this article is to study the allocation of PES in nondurable and durable goods and the determinants of this household decision. Results from the La Antigua watershed located in Mexico indicate that the PES program is primarily used in durable goods, mainly on health, house infrastructure, agricultural inputs, and reforestation. Econometric models show that this allocation to one or several assets depends on the average age of the household head, on participation in a community organization, and on the average income. In contrast, government transfers are not significant. Based on this, policy recommendations are made related to the program’s socioeconomic outcomes and alignment with other conditional cash transfer.