Payments For Ecosystem Services Schemes Research Articles

Assessing the Impacts of Nature-Based Solutions on Ecosystem Services: A Water-Energy-Food-Ecosystems Nexus Approach in the Nima River Sub-Basin (Colombia)

Forest ecosystem services are critical for maintaining ecological balance and supporting human well-being from different perspectives. However, rapid land use changes driven by agricultural expansion, urbanization, and industrial activities have significantly altered forest ecosystems, degrading the services they provide. We here conduct an ecosystem service assessment through biophysical and economic estimates for a multipurpose Andean water sub-basin in western Colombia. We compare a business as usual (BAU) with a forest nature-based solution (NbS) scenario focused on forest landscape restoration. The research employed participatory methods for the NbS selection and economic valuation techniques to evaluate water flow regulation, water provisioning, water purification, and food provisioning services. Results show that the NbS scenario yielded a net positive economic impact across most evaluated ecosystem services, with notable trade-offs. Specifically, the NbS scenario increased water retention by 2.9% compared to BAU. Water flow regulation demonstrated the most substantial economic benefit, increasing by EUR 11.39 million/year in the NbS scenario. On the other hand, the food provisioning service presented a reduction of EUR 3.2 million/year in the NbS scenario. These findings highlight the potential of forest-based NbS to address the Water–Energy–Food–Ecosystem (WEFE) nexus challenges. The study’s outcomes provide valuable insights for policymakers and practitioners, supporting the development of Payment for Ecosystem Services schemes and integrating ecosystem service valuation into land use planning and decision-making processes.

The need for carbon finance schemes to tackle overexploitation of tropical forest wildlife.

Defaunation of tropical forests, particularly from unsustainable hunting, has diminished populations of key seed dispersers for many tree species, driving shifts in forest community composition toward small-fruited or wind-dispersed trees with low wood density. Such shifts can reduce aboveground biomass, prompting calls for overexploitation to be included in bioeconomic policy, but a synthesis of existing literature for wildlife impacts on carbon stores is lacking. We evaluated the role of wildlife in tropical forest tree recruitment and found that it was critical to tropical forest carbon dynamics. The emerging financial value of ecosystem services provided by tropical forest fauna highlights the need for carbon-based payments for ecosystem services schemes to include wildlife protection. We argue for three cost-effective actions within carbon finance schemes that can facilitate wildlife protection: support land security opportunities for Indigenous peoples and local communities; provide support for local people to protect forest fauna from overexploitation; and focus on natural regeneration in restoration projects. Incorporating defaunation in carbon-financing schemes more broadly requires an increased duration of carbon projects and an improved understanding of defaunation impacts on carbon stores and ecosystem-level models. Without urgent action to halt wildlife losses and prevent empty forest syndrome, the crucial role of tropical forests in tackling climate change may be in jeopardy.

Evolving nature-based solutions for Australia’s Indigenous estate in 2024 – opportunities and challenges

Globally, there is growing interest and potential for investment in Nature-based Solutions (NbS) to protect, manage or restore ecosystems through incentive schemes including Payment for Ecosystem Services (PES), Nature Repair, Carbon Markets, Common Asset Trusts. Collectively, these NbS markets establish interchangeable mechanisms to help address biodiversity and climate crises, as well as socio-economic issues concerning many Indigenous Peoples and Local Communities (IPLCs). IPLCs manage and/or own almost 32% of the world’s land area through customary and community-based tenure arrangements. Since 2000 several PES schemes have been implemented in Australia. These schemes have been overwhelmingly implemented as public-good expenditure, with governments providing ~90% of total funding. Indigenous people have either the legal right to run or veto a carbon market or nature repair project over 57% of the Australian land mass, increasing to 63% in savanna and 85% in desert regions. Here we critically assess opportunities and challenges for Australia’s Indigenous estate associated with existing and emerging NbS market approaches, especially the Commonwealth’s current Savanna Fire Management (SFM) and Human Induced Regeneration methods, evolving Integrated Farm & Land Management (IFLM) and Blue Carbon methods, and proposed Nature Repair (NR) market. To date, Indigenous NbS interests have focused especially on SFM across northern Australia, with prospective opportunities especially for IFLM and NR markets. Most available schemes focus on remediation of degraded lands and seas, ignoring cost-effective investment opportunities to maintain habitats and ecosystems in less-degraded condition. Government-supported Common Asset Trusts can provide effective models for governance of stewardship schemes relevant to on-going care for relatively intact ecosystems. In Discussion we summarise key methodological, institutional, and policy opportunities and challenges for constructive Indigenous engagement with developing NbS markets. Our purpose is to provide an Indigenous land and sea management context to inform development of rapidly evolving NbS markets in Australia.

Public Willingness to Pay for Farmland Eco-Compensation and Allocation to Farmers: An Empirical Study from Northeast China

Farmland eco-compensation, as a typical payment for ecosystem services scheme, aims to address trade-offs between environmental and developmental objectives. As indispensable eco-compensation supporters, the public’s willingness to pay (WTP) for farmland eco-compensation and the allocation to farmers directly affect ecological safety and sustainable development for farmland. Therefore, this study links the public’s WTP for the farmland eco-compensation to the financial subsidies received by farmers and presents a theoretical framework and research approach that connects stakeholders, applying improved choice experiments for empirical study in the black soil region of northeastern China. The results showed that the public has a positive WTP for the farmland eco-compensation program that improves the area, soil thickness, and organic content expeditiously. The public’s WTP allocation for eco-compensation varies considerably, with the share allocated to farmers in their WTP averaging 46.96%, showing a benchmark for compensation standards. The results revealed the influential relationship between the socioeconomic characteristics of the public with WTP allocation and the preferences for farmland eco-compensation, such as the positive correlation between age with WTP allocation and females’ greater preference for eco-compensation. These findings can provide new perspectives and approaches to exploring sustainable pathways for farmland eco-compensation.

Impact of Deforestation on Water Quality in Cameroon

Purpose: The aim of the study was to analyze the impact of deforestation on water quality in Cameroon. Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries. Findings: Deforestation in Cameroon significantly impacts water quality, as evidenced by increased sedimentation, higher pollutant levels, and elevated risks of waterborne diseases. Loss of forest cover reduces natural filtration capacities, leading to higher concentrations of contaminants in water sources. Alterations in hydrological patterns and changes in land use further exacerbate these issues, affecting water availability and aquatic habitats. Unique Contribution to Theory, Practice and Policy: Hydrological cycle theory, land use/land cover change (LU/LC) theory & ecosystem services theory may be used to anchor future studies on impact of deforestation on water quality in Cameroon. Implement land-use planning measures that prioritize the conservation and sustainable management of forest ecosystems, including protected area designation, forest restoration initiatives, and sustainable forest management practices. Develop and enforce policies that incentivize forest conservation and sustainable land management practices, such as payment for ecosystem services schemes, land-use zoning regulations, and carbon offset programs.

Exploring local perceptions and drivers of engagement in biodiversity monitoring among participants in payments for ecosystem services schemes in southeastern Mexico.

Payments for ecosystem services (PES) are widely applied incentive-based instruments with diverse objectives that increasingly include biodiversity conservation. Yet, there is a gap in understanding of how to best assess and monitor programs' biodiversity outcomes. We examined perceptions and drivers of engagement related to biodiversity monitoring through surveys among current PES participants in 7 communities in Mexico's Selva Lacandona. We conducted workshops among survey participants that included training and field deployment of tools used to monitor biodiversity and land cover, including visual transects, camera traps, acoustic recorders, and forest cover satellite images. We conducted pre- and postworkshop surveys in each community to evaluate changes in respondents' perceptions following exposure to biodiversity monitoring training and related field activities. We also reviewed existing research on participatory environmental management and monitoring approaches. One quarter of current PES participants in the study area participated in our surveys and workshops. The majority stated interest in engaging in diverse activities related to the procedural aspects of biodiversity monitoring (e.g., planning, field data collection, results dissemination) and acknowledged multiple benefits of introducing biodiversity monitoring into PES (e.g., knowledge and capacity building, improved natural resource management, and greater support for conservation). Household economic reliance on PES was positively associated with willingness to engage in monitoring. Technical expertise, time, and monetary constraints were deterrents. Respondents were most interested in monitoring mammals, birds, and plants and using visual transects, camera traps, and forest cover satellite images. Exposure to monitoring enhanced subsequent interest in monitoring by providing respondents with new insights from their communities related to deforestation and species' abundance and diversity. Respondents identified key strengths and weaknesses of applying different monitoring tools, which suggests that deploying multiple tools simultaneously can increase local engagement and produce complementary findings and data. Overall, our findings support the relevance and usefulness of incorporating participatory biodiversity monitoring into PES.

Exploring Landscape Values and Willingness to Pay for Perceived Ecosystem Services: The Case of Malampaya Sound, a Socio-Ecological Production Landscape and Seascape

Since the 1990s, the Philippines has established numerous protected areas aimed at preserving regions with distinct biological and ecological characteristics. However, transitioning towards a more comprehensive approach to managing these protected areas, one that effectively conserves biodiversity while also supporting the welfare of local communities, remains a formidable task. Understanding the sources of the goods and services upon which communities rely, whether directly or indirectly, and their perceptions of ecosystem services (ESs) is a crucial aspect that can inform decision-making for both protected area managers and policymakers. This research specifically examines the mapping of landscape values as perceived by local communities within Malampaya Sound Protected Landscape and Seascape (MSPLS) in the Philippines. Using survey questionnaires administered to 114 randomly selected participants, the study identifies the ESs within MSPLS and maps the associated landscape values. The respondents were tasked with assigning values to the ESs using a typology of 14 landscape values, and their willingness to pay (WTP) to enhance the ESs within MSPLS was also investigated. Analysis of socio-demographic data, the identified ESs, and the perceived landscape values was conducted to uncover significant relationships between the variables. Our findings reveal that the respondents prioritize provisioning services, particularly fisheries, agriculture, and agroforestry. Regarding landscape value preferences, economic value is most prominently perceived (37.4%), followed by subsistence value (30.8%) and life-sustaining value (6.8%). This study further unveils the socio-economic factors influencing the ranking of ESs and trends in WTP for ES improvements in Malampaya. Additionally, a potential payment for ecosystem services scheme in MSPLS is estimated at PHP 532,000, approximately USD 10,600.

On the palm oil-biodiversity trade-off: Environmental performance of smallholder producers

Oil palm remains an important source of rural income in South East Asia. At the same time, Indonesia has become a hotspot for large-scale species extinction and a loss of biodiversity in favor of agricultural production. The present study sets out to assess the environmental performance of smallholder oil palm production with respect to biodiversity. Using a panel dataset that combines conventional farm data together with an account of plant diversity, we estimate a restricted hyperbolic environmental distance function. We integrate loss of biodiversity as an undesirable output into the production model which allows explaining shortfalls in environmental performance and the derivation of shadow prices of biodiversity conservation. We find a substantial environmental inefficiency, which is partly explained by both chemical and manual weeding practices, highlighting the potential for improvements in both the environmental and the economic dimension. Moreover, the value for conserving one species of the average biodiversity on a farmers plantation was 325 USD in 2018. Payments for ecosystem services schemes could be a viable policy response to conserve meaningful levels of biodiversity while simultaneously allowing smallholders to increase palm oil output. In general, addressing drivers of environmental performance in PES designs amplifies its effect without reducing output.

Tourism firms’ attitudes and willingness to contribute to payments for ecosystem services in tourism

ABSTRACT The purpose of this study is to contribute to the discussions of the role of tourism firms in maintaining important natural environments and cultural ecosystem services of a tourism destination. More precisely, this study explores the tourism firms’ attitudes and willingness to participate in safeguarding and maintaining cultural ecosystem services in a destination through a tourism-related local payments model, Landscape and Recreation Value Trade (LRVT), developed in the Ruka-Kuusamo area in Finland. Five main themes illustrating tourism firms’ attitudes towards LRVT and willingness to contribute to it were identified: benefits, concerns and challenges, implementation, characteristics of a firm, and need for raising awareness. Based on the findings many of the expressed benefits and challenges of LRVT originate from and are connected to evaluating the impacts on the competitiveness of the firm and the competitive advantages for the destination. The study brings insight into the planning, design, and implementation of voluntary tourism-related payment schemes for ecosystem services, and discusses their potential to enhance ecological conservation, support the local economy, and serve as an incentive for private firms to act in a more sustainable manner.

Evaluating the determinants of participation in conservancy land leases and its impacts on household wealth in the Maasai Mara, Kenya: Equity and gender implications

Understanding the impact of conservation interventions on local communities is important in determining their effects on livelihoods and wellbeing. However, impacts are often not uniform and there are important equity dimensions when evaluating interventions. Therefore, in this paper, we investigate determinants of participation in conservation land leases in the Mara Conservancies in southern Kenya and its impact on household wealth. We find that land ownership determines who can participate in and benefit from conservancy land lease payments, and by how much. The design of the land lease payment scheme therefore has the potential to reinforce and, in cases, amplify existing inequities as it is built upon a legacy of unequal historical land distribution processes that limit the participation of women and poor landless households. We observed significantly higher incomes amongst participant households compared to non-participants, but these differences disappeared after propensity score matching. These results suggest that the differences were not caused by participation in conservancies. Our findings suggest that the design and outcomes of land-based conservation or payment for ecosystem services schemes should consider historic and existing land tenure systems if they are to reduce inequality.

Do individual PES buyers care about additionality and free-riding? A choice experiment

Based on a survey of the French population, this study investigates consumer preferences for forest ecosystem services (FES) provision towards efficiency and equity in the context of additionality, and differences in willingness to pay (WTP) for FES between a tax-based and a donation-based payments for ecosystem services (PES) scheme. We show that consumers prefer equity to strict additionality adherence, with this preference being significantly stronger among females. However, consumer preferences are heterogeneous, and respondents with a closer connection to forests express the opposite preference. Regarding WTP, we find no systematic difference between the two payment vehicles, though WTP does vary depending on how respondents perceive potential free-riding. When considering that non-contributors also benefit from a particular PES scheme, a small group perceived this as unfair and reacted by reducing their contribution. A second, significantly larger group interpreted this as an opportunity to contribute to the common good and showed a higher WTP, indicating a markedly altruistic attitude towards FES provision in French society. We conclude by discussing the role of altruism in PES, the dilemma posed by the partial economic and legal incompatibilities of additionality and equity, and the environmental impact of environmental credits when credit buyers do not account for additionality.

Fire-smart solutions for sustainable wildfire risk prevention: Bottom-up initiatives meet top-down policies under EU green deal

Fuel management for wildfire risk prevention generally lacks economic sustainability. In marginal areas of southern Europe, this limits fuel treatment programs from reaching the critical mass of required treated area to modify landscape flammability, the fire regime and its impacts.This study investigates key fuel management initiatives for wildfire risk prevention in southern EU countries. We compared local approaches through a bottom-up selection of 38 initiatives, which we analyzed systematically through a set of fire-smart criteria: sustainability, cost-benefit ratio, synergies and inter-sectoral cooperation, integration between strategic prevention planning and multiple land governance goals (e.g., rural development, biodiversity conservation, energy supply), innovation and knowledge transfer, and adaptive management.We summarized lessons learned from the most innovative initiatives, by identifying solutions and functional approaches for building sustainable fuel management at the landscape scale, under fire-smart management principles. These make synergistic use of private, public and European resources to activate value chains that valorize the products, by-products and services generated by fuel management activities and their positive externalities on ecosystem services. The multiple mechanisms include fire-marketing, Payment for Ecosystem Services schemes, specific taxes, or environmental compensatory measures. These mechanisms catalyze the interest of multiple stakeholders (economic actors, private owners, land and fire management agencies) improving the cost-efficiency of landscape fuel management.We contend that the EU Green Deal offers the political backing and framework (mainstreaming of EU strategies and funding opportunities) to enable the replication of documented fire-smart models and functional approaches to wildfire risk prevention.

Small tradeoffs between social equity and conservation outcomes in a freshwater payment for ecosystem services scheme.

Conservation programs around the world aim to balance social equity, economic efficiency, and conservation outcomes. Tradeoffs among these three objectives necessarily exist but have been quantified in only a handful of systems. Here, we use a multi-objective mathematical optimization model in a large, water-limited river basin to quantify these tradeoffs in a freshwater payment for ecosystem services (PES) program aimed at establishing environmental flows (e-flows). Across a range of budgetary and future climate scenarios, we find that tradeoffs between social equity and conservation outcomes are small. We also show that payment schemes in which incentives are allocated to a single water use sector are much less cost-effective than schemes in which incentives are allocated among multiple sectors. Thus, allocating payments equally among agricultural, municipal, and industrial sectors can be both more equitable and more cost-effective. Overall, our results illustrate how some carefully designed conservation programs may be able to achieve a triple bottom line of social equity, economic efficiency, and conservation effectiveness.

Assessing Community Readiness for Payments for Ecosystem Service Schemes for Tropical Primary Forest Protection in the Democratic Republic of Congo

Primary forest conservation is essential for limiting climate change, for meeting conservation objectives, and the Sustainable Development Goals. Schemes that compensate communities for forgone extractive uses are important policy tools, but effective deployment demands an understanding of local deforestation drivers and host communities’ preferences. We use Q-methodology to reveal discourses present in three communities in the Democratic Republic of Congo. Our results reveal three factors with a common emphasis on forest conservation and preferences for compensation in the form of social investments, rather than cash. The main contrasts were in attitudes towards farming. The first discourse, we call conservationist—open to ideas, displayed a commitment to learning better practices for community material benefit in service of forest conservation. The second discourse, which demonstrated greater confidence in their capacity to support livelihoods from farming, we call aspirational artisans. The third, which was acutely aware of the impact of their farming on forest conservation, we called passive, conflicted farmers. We also demonstrate an aspiration for the continued development of farming amongst participants, which although still correlated with preferences for forest conservation, may lead to compensation schemes inadvertently stirring future land use tensions if design does not reconcile agricultural development and conservation.

The Dynamics of Implementing Payment for Ecosystem Services Scheme in Lake Naivasha Basin Ecosystem, Kenya

Lake Naivasha Basin is located in Nakuru and Nyandarua counties in the Republic of Kenya. It is an important ecosystem to the economy of Kenya, consistently contributing upwards of 1% of the national Gross Domestic Production. However, this landscape is continuously and rapidly degrading due to intensive land use practices and land fragmentation in spite of the existence of various natural resource management policies in Kenya. The promotion of Payment for Ecosystem Services (PES) as a policy option to foster ecosystems sustainability by increasing the capacity of government authorities and local communities in Kenya to conserve riparian and forest ecosystems so as to reduce the vulnerability of dependent communities and production enterprises to the observed and anticipated effects of climate change is implied in the key environmental and natural resources policies in Kenya. We examine whether the Lake Naivasha Basin Payment for Ecosystem Services (LNB-PES) scheme embodied the critical characteristics of an effective PES mechanism and if it achieved the desired ecological and livelihood results. A total of 1,191 heads of households and 11 key informants were interviewed for this study. The study results indicate that the LNB-PES scheme had some functional and conceptual inadequacies although it achieved remarkable adoption and compliance by participating farmers. Based on these results, we recommend that a new PES scheme with a conditionalities enforcement mechanism be initiated for the LNB with a view to informing the mainstreaming of the concept of enforceable PES in the existing policy framework, the development of a national or basin-level PES policy, and, support watershed restoration and climate change adaptation through the provision of forest technical extension services to land owners for the creation of woodlots and other watershed protection initiatives at farm level.

Exploring the policy and institutional context of a Payment for Ecosystem Services (PES) scheme for mangroves in southwestern Madagascar

Although Payments for Ecosystem Services schemes emerged since the 1980′s to manage forest ecosystems, their application to mangrove forests is still recent, and evidence of their effectiveness is still questioned towards the complex legal status of mangroves. This study explored the context of policy and institution regarding the Payment for Ecosystem Services (PES) implemented in the mangroves of the Southwestern Madagascar. We used Policy content analysis to examine the interactions between the Madagascar sectoral policies and the PES design frameworks developed under the Reduction of Emission from Deforestation and forest Degradation (REDD+) mechanism of the United Nations Framework Convention on Climate Change. In addition, semi-structured interviews with national and local stakeholders were conducted to identify i) institutional interplay between PES and mangroves and ii) challenges faced with the implementation of PES in the mangroves. We found that environmental, fisheries and land use planning policies that concern mangrove management are coherent with the frameworks and supportive of PES implementation. Lack of clear legal frameworks and coordination between the sectoral ministries, weakness of government organisations due to political instability, and limited local governance capacity are the major challenges for the implementation of PES schemes in mangroves. These led to lower motivation to collaborate in mangrove conservation efforts among the members of local communities. We emphasized that the existence of the mangrove PES initiative like in the Baie des Assassins could be a catalyst for Madagascar to develop clear policy, legislation, and institutions to support effective implementation of the PES schemes in mangroves.

Carbon Taxation as An Instrument to Promote Wildfire Prevention and Avoid Biodiversity Loss in Portugal: An Order of Magnitude Analysis

Climate change is one of the main challenges of the current century. Emissions taxes are one of the proposed ways to help in addressing this issue. In this sense, Portugal has introduced an Addition Tax on Carbon Emissions through Law N. 82-D/2014. One of the most notorious impacts of climate change in the country is the wildfires increasing in frequency and intensity. Forests provide various ecosystem services not valued by traditional markets, such as carbon sequestration. Recently, Portugal has created new environmental policies that deal with fire prevention and biodiversity conservation through payment for ecosystem services schemes. In this context, the objective of this work was to perform an order of magnitude analysis of the revenue from the Addition Tax on Carbon Emissions (Law N. 82-D/2014) and contrast it with the investment costs of RCM N. 121/2019 (Payment for Ecosystem Services) and of RCM N. 59/2017 (Prescribed Burning Program). The results indicated that the Addition Tax revenue was much greater than the costs of the other two policies combined, even if expanding the use of prescribed burning in the country. This suggested that these policies can work synergistically, as development agendas recommend, such as the Sustainable Development Goals. This analysis framework might be helpful for other countries, especially in the Mediterranean Basin.

Rediscovering wild food to diversify production across Australia's agricultural landscapes

Conventional agriculture currently relies on the intensive and expansive growth of a small number of monocultures, this is both risky for food security and is causing substantial environmental degradation. Crops are typically grown far from their native origins, enduring climates, pests, and diseases that they have little evolutionary adaptation to. As a result, farming practices involve modifying the environment to suit the crop, often via practices including vegetation clearing, drainage, irrigation, tilling, and the application of fertilizers, pesticides, and herbicides. One avenue for improvement, however, is the diversification of monoculture agricultural systems with traditional foods native to the area. Native foods benefit from evolutionary history, enabling adaptation to local environmental conditions, reducing the need for environmental modifications and external inputs. Traditional use of native foods in Australia has a rich history, yet the commercial production of native foods remains small compared with conventional crops, such as wheat, barley and sugarcane. Identifying what native crops can grow where would be a first step in scoping potential native food industries and supporting farmers seeking to diversify their cropping. In this study, I modeled the potentially suitable distributions of 177 native food and forage species across Australia, given their climate and soil preferences. The coastal areas of Queensland's wet tropics, south-east Queensland, New South Wales, and Victoria were predicted to support the greatest diversity of native food and forage species (as high 80–120 species). These areas also correspond to the nation's most agriculturally intensive areas, including much of the Murray-Darling Basin, suggesting high potential for the diversification of existing intensive monocultures. Native crops with the most expansive potential distribution include Acacia trees, Maloga bean, bush plum, Emu apple, native millet, and bush tomatoes, with these crops largely being tolerant of vast areas of semi-arid conditions. In addition to greater food security, if diverse native cropping results in greater ecosystem service provisioning, through carbon storage, reduced water usage, reduced nutrient runoff, or greater habitat provision, then payment for ecosystem service schemes could also provide supplemental farm income.

Negotiating over payments for wetland ecosystem services

AbstractThis paper proposes and examines the economic efficiency of novel payment schemes for the provision of wetland ecosystem services. By definition, payments for ecosystem services typically involve voluntary transactions between the beneficiaries and providers of ecosystem services. We develop a theoretical model that addresses the role that a third party—such as a social planner or government agency, acting in the interest of society—can play to ensure the optimal provision of ecosystem services. We consider different regulatory frameworks combining payments for ecosystem services with a subsidy that the third party grants to the beneficiaries or providers of ecosystem services. We compare the outcomes of the different policy mixes characterized by different levels of involvement of the third party. Of particular interest is the comparison between the outcomes of payments for ecosystem services subsidy arrangements in which the third party plays decentralized and centralized roles. Our results show, among other things, that the third party is indifferent between a negotiated payment for ecosystem services combined with a subsidy scheme and the constrained first‐best payments for ecosystem services subsidy scheme, in the presence of transaction and administrative costs. However, beneficiaries and providers may have conflicting preferences over the two payments for ecosystem services schemes.

Carbon and Biodiversity Policies

Wildfires are a concern in many European countries, and they might occur more frequently given climate change. Carbon sequestration is an ecosystem service provided by forests that is affected by fires and is neglected in traditional markets. Recently, the European Union (EU) has created environmental policies that address climate change, wildfires, and biodiversity conservation through payment for ecosystem services schemes. This study aims to estimate the monetary carbon savings of avoiding wildfires in five Mediterranean countries using historical wildfire emissions data and the auction prices in the EU Carbon Market. Portugal is further studied since the country has a new ecosystem services payment policy. The results indicate that, by avoiding fires, the countries could have annual benefits in the order of millions of euros. For Portugal, the value of the policy incentive is inferior to the value of the carbon sequestration service provided by avoiding fires and could be reexamined.