Payments For Ecosystem Services Schemes Research Articles

Forest conservation and the private sector: stakeholder perceptions towards payment for ecosystem service schemes in the tobacco and sugarcane sectors in Malawi

The tobacco and sugarcane industries play an important role in the national economy of Malawi. Collectively, they account for approximately 79 and 22% of the national foreign exchange earnings and gross domestic product, respectively. However, the sustainable production of high-quality tobacco and sugarcane has been threatened due to the continued deterioration of forest ecosystems. Considering the importance of tobacco/sugarcane production for the national economy and rural livelihoods, there is an urgent need to implement effectively different forest conservation initiatives in the country. Considering the complex linkages at the interface of deforestation, sugarcane/tobacco production, and economic activity, this is a complicated task that must be undertaken by both the government and tobacco/sugarcane companies. Incentive-based forest conservation management approaches, including Payment for Ecosystem Services (PES) schemes, can be one of the approaches that can help curb deforestation. However, there are significant knowledge gaps regarding how the private sector can be meaningfully involved in PES schemes, especially in developing country contexts. This paper draws on expert interviews with multiple stakeholders at the interface of tobacco/sugarcane production and forest conservation in Malawi to highlight the role of the private sector in promoting forest conservation among farming communities and the potential for participating in PES schemes. Different forest conservation initiatives are currently being implemented by the sugarcane and tobacco sector, but are not coordinated. While PES schemes are currently not operational in Malawi, there seems to be a relatively high support among private companies towards such incentive-based conservation mechanisms. The introduction of PES schemes as corporate social responsibility (CSR) projects or on a credit-based form (e.g., as conditionality to access credit for farm inputs or eligibility to be contracted to farm tobacco/sugarcane) could be the most appropriate structures for effectively involving the private sector. Establishing an independent multi-stakeholder PES coordination committee would be necessary for the effective coordination and implementation of such PES schemes. However, any future effort to promote a PES scheme in Malawi needs to informed with on-the-ground knowledge and should be weighed against other forest conservation options.

Reasons for Adoption and Advocacy of the Ecosystem Services Concept in UK Forestry

The ecosystem services concept has enjoyed widespread interest and recognition in recent years. In particular, the monetary valuation and commodification of ecosystem services in form of payments for ecosystem services schemes and the development of new markets for ecosystem services has appreciated large popularity. However, who is behind this strong momentum towards ecosystem services and especially why is less well known. In this paper I aim to shed light on this by looking specifically at advocates of the concept of ecosystem services, using forestry in the United Kingdom (UK) as an example. I explore the motivations for accommodating or actively pursuing ecosystem services thinking in this important sector through interviews with forestry and conservation experts. Four prominent groups with a specific interest in the ecosystem services concept in the context of UK forestry are governmental organisations, non-governmental conservation organisations, private forest owners, and the timber and forest industry. These stakeholder groups are interested in this new perspective, chiefly, but not exclusively, because (1) it is required under international obligations; (2) it is in line with dominant market political philosophy; (3) it holds the promise to include the environment more fully into prevailing economic decision-making processes; (4) it can help to draw more attention to biodiversity conservation; (5) it holds the promise of new sources of income from both public and private sources; and (6) it can be used as a convenient argument to promote further tree planting. However, these groups have different, but frequently overlapping reasons for pursuing this new perspective. The results provide a baseline and important insights into who was embracing ecosystem services thinking and why during the early years of the adoption of this approach in the UK.

PESFOR-W: Improving the design and environmental effectiveness of woodlands for water Payments for Ecosystem Services

The EU Water Framework Directive aims to ensure restoration of Europe’s water bodies to “good ecological status” by 2027. Many Member States will struggle to meet this target, with around half of EU river catchments currently reporting below standard water quality. Diffuse pollution from agriculture represents a major pressure, affecting over 90% of river basins. Accumulating evidence shows that recent improvements to agricultural practices are benefiting water quality but in many cases will be insufficient to achieve WFD objectives. There is growing support for land use change to help bridge the gap, with a particular focus on targeted tree planting to intercept and reduce the delivery of diffuse pollutants to water. This form of integrated catchment management offers multiple benefits to society but a significant cost to landowners and managers. New economic instruments, in combination with spatial targeting, need to be developed to ensure cost effective solutions – including tree planting for water benefits - are realised. Payments for Ecosystem Services (PES) are flexible, incentive-based mechanisms that could play an important role in promoting land use change to deliver water quality targets. The PESFOR-W COST Action will consolidate learning from existing woodlands for water PES schemes in Europe and help standardize approaches to evaluating the environmental effectiveness and cost-effectiveness of woodland measures. It will also create a European network through which PES schemes can be facilitated, extended and improved, for example by incorporating other ecosystem services linking with aims of the wider forests-carbon policy nexus.

Designing community-based payment scheme for ecosystem services: a case from Koshi Hills, Nepal

The study was carried out to design payment for ecosystem services (PES) scheme to enhance the effectiveness of existing drinking water supply project. This study determined willingness-to-pay of water users using choice experiment method and identify the willingness of watershed households to participate in the scheme by household survey. The results suggest that creating a multi-stakeholder institution at the local level, led by local body, will make the implementation of the PES feasible. This would create trust between ecosystem managers and service consumers, facilitates monitoring system and encourages their participation in watershed management. In the beginning, water users would like to pay less than their willingness-to-pay because it may take time to improve the situation. This suggests that community-based payment for ecosystem services scheme in rural area can be kicked off, only after the external support this is because the amount committed by water users are not sufficient to implement all required activities and ecosystem managers will not make an investment expecting that they will be paid in the future. The study also recommends providing upstream communities in-kind support rather than cash may reduce the transportation cost as well as risk of corruption. This also ensures that the fund is spent on planned activities.

Rethinking Monitoring in Smallholder Carbon Payments for Ecosystem Service Schemes: Devolve Monitoring, Understand Accuracy and Identify Co-benefits

Monitoring is a key aspect of payments for ecosystem services (PES) schemes, providing a basis for payments. PES monitoring however presents challenges, including in balancing technical accuracy with cost, local equity and legitimacy. This is particularly true in smallholder carbon PES, where managers have limited resources and capacity. Here we explore ways to improve monitoring in smallholder projects. We looked at two well-established projects in Uganda and Mexico, and appraised five monitoring methodologies: two remote sensing and three field measurement approaches. Each methodology varied in data resolution, methodological complexity and degree of local participation. We collected quantitative and qualitative information on four aspects of performance: accuracy; costs; local equity; and local legitimacy. We show that methodologies with greater data resolution and local participation performed better in all four aspects, while greater methodological complexity was not associated with significantly improved performance. We conclude that monitoring in smallholder and other types of PES may be improved through: 1) devolving analyses to the local level; 2) communicating to stakeholders a distinction between ‘applied’ and ‘scientific’ accuracy; and 3) documenting and communicating the diverse functions of monitoring, referred to here as co-benefits – a contrast to simple ‘monitor and pay’ conceptions of PES.

Dancing With Storks: The Role of Power Relations in Payments for Ecosystem Services

The institutional change induced by payments for ecosystem services (PES) schemes is a ‘messy’ process. The uptake and outcomes of PES schemes cannot be fully explained from a rational choice perspective. The notion of ‘institutional bricolage’ is needed to analyse how actors assemble or reshape their actions by combining new institutions such as a PES scheme within other locally embedded institutions. A case study from Japan is used to illustrate how a PES scheme designed to conserve the habitat of a charismatic and endangered flagship species, the Oriental White Stork, has been reshaped by social actors to fit the locally dominant ‘institutional logic’. We also show how the resulting institutional change is not only able to subvert policy makers' original assumptions, for instance about how to target and distribute the payments, but can also contribute to the reproduction of unequal power relations.

Acceptance of a Payment for Ecosystem Services Scheme: The Decisive Influence of Collective Action

As scholars have shown, acceptance is key to the success of Payment for Ecosystem Services (PES) scheme. While many studies adopt a static cost-benefit perspective, few address the social process leading to acceptance. Drawing on Suchman (1995), this article examines the legitimacy process underlying the acceptance of a PES in agriculture. In particular, the role of collective action in the legitimisation process is analysed, using a combination of qualitative and quantitative methods of discourse analysis. Data from an agro-environmental PES scheme in France on water quality shows that acceptance depends on the normative and cognitive legitimacy that actors confer upon a public policy.

Auction winning, social dynamics and non-compliance in a payment for ecosystem services scheme in Indonesia

Conservation auctions for payment for ecosystem services (PES) are useful to identify the levels of incentives that will cover the opportunity costs of farmers supplying ecosystem services. Although auctions are increasingly used for allocation in PES schemes, the factors that lead to their successful implementation and eventual environmental outcomes are poorly understood in developing countries. We investigated the socio-economic and institutional contexts that led to smallholders' auction winning and eventual compliance using linear mixed-effects models, and post-auction and post-contract surveys. We employed a case study of a conservation contract preceded by a sealed-bid, multiple round, uniform price auction for watershed services from coffee farmers in Lampung, Indonesia. The auction participants presented low education levels, low asset endowments and small plot sizes. The study obtained evidence that farmers with larger plot areas were more likely to win the contracts, suggesting economies of scale. Most farmers considered the auction a fair self-selection mechanism to allocate contracts where allocation was not influenced by power or social rank. Non-compliance was associated with labor availability constraints, short duration of land ownership and existence of previous conservation applications, suggesting lax of capability to invest in applying conservation agriculture. Final bids were however not good predictors of compliance, among other factors, calling into question the potential of auctions to elicit the actual incentive from the farmers. Ensuring that farmers understand the purposes of auctions for effective contract allocation beyond a mere game and identifying farmers that might encounter difficulties fulfilling the contract could increase the likelihood that such a PES scheme would be successful.

An Assessment of Intermediary Roles in Payments for Ecosystem Services Schemes in the Context of Catchment Management: An Example from South West England

Payments for Ecosystems Services (PES) schemes are an underdeveloped component of the policy mix for catchment management in many countries. The importance of intermediaries to such schemes is acknowledged in the literature but few studies go beyond theory to evaluate practice. This paper analyses generic intermediary functions for PES. It then evaluates an innovative example from southwest England that provides illustrations, and some lessons regarding necessary capabilities and characteristics for intermediaries, and understanding of their form, functions and modalities. The ‘UpStream Thinking’ project was co-developed by a private water company and an environmental charity. The former translated effective demand from shareholders and water customers for improved raw water quality into finance, whilst the latter had capabilities for catchment-scale on-farm delivery and trusted acceptance as an intermediary. While any sector can potentially provide a PES intermediary, the value driven, not-for-profit and politically neutral voluntary sector proves to be a good fit. Such ‘boundary organisations’ are also well placed for horizontal coordination of catchment management authorities and actions.

Transaction costs, communication and spatial coordination in Payment for Ecosystem Services Schemes

Agricultural producer participation and spatial coordination of land use decisions are key components for enhancing the effective delivery of ecosystem services from private land. However, inducing participation in Payment for Ecosystem Services schemes for coordinating land management choices is challenging from a policy design perspective owing to transaction costs associated with participation. This paper employs a laboratory experiment to investigate the impact of such costs on participation and land use in the context of an Agglomeration Bonus (AB) scheme. The AB creates a coordination game with multiple Nash equilibria related to alternative spatially-coordinated land use patterns. The experiment varies transaction costs between two levels (high and low), which affects the risks and payoffs of coordinating on the different equilibria. Additionally, an option to communicate is implemented between neighbors arranged on a local network to facilitate spatial coordination. Results indicate a significant difference in participation and performance under high and low transaction costs, with lower uptake and performance when transaction costs are high. These effects are, however, impacted by transaction costs faced in the past. Communication improves both AB participation rates and performance with the effect being greater for participants facing high transaction costs.

Allocating Group-Level Payments for Ecosystem Services: Experiences from a REDD+ Pilot in Tanzania

Payments for ecosystem services (PES) typically reward landowners for managing their land to provide ecosystem services that would not otherwise be provided. REDD+—Reduced Emissions from Deforestation and Forest Degradation—is a form of PES aimed at decreasing carbon emissions from forest conversion and extraction in lower-income countries. A key challenge for REDD+ occurs when it is implemented at a group, rather than an individual landowner, level. Whilst achieving a group-level reduction relies on individuals changing their interaction with the forest, incentives are not aligned explicitly at the individual level. Rather, payments are made to a defined group as a single entity in exchange for verified reduced forest loss, as per a PES scheme. In this paper, we explore how REDD+ has been implemented in one multiple-village pilot in Tanzania with the village defining the group. Our findings suggest that considerable attention has been paid towards monitoring, reporting, verification (MRV), and equity. No explicit mechanism ensures individual compliance with the village-level PES, and few villages allocate funds for explicit enforcement efforts to protect the forest from illegal activities undertaken by individual group members or by outsiders. However, the development of village-level institutions, “social fencing,” and a shared future through equal REDD+ payments, factor into decisions that influence the level of compliance at the village level that the program will eventually achieve.

Are buyers of forest ecosystem services willing to consider distributional impacts of payments to local suppliers? Results from a choice experiment in Antananarivo, Madagascar

SUMMARYA controversial issue in the debate on payments for ecosystem services (PESs) is whether distributional goals should be considered in the design of such schemes. We contribute to this debate by analysing the preferences of citizens of Antananarivo (Madagascar) as potential buyers of forest ecosystem services from a developing country. We conducted a choice experiment to investigate citizens’ willingness to pay to conserve the endemic spiny forests in southwest Madagascar and their preferences for including distributional goals in the design of a PES scheme aimed at spiny forest conservation. We found that respondents were willing to pay for forest conservation and preferred a PES scheme in which the poorest households in a community would receive the largest share of payments over a scheme in which every household would receive the same share, which, in turn, they preferred over a PES scheme in which they would have no information about its distributional impact. In comparing these results with those of a similar survey in a developed country (in Cottbus, Germany), we find that the preference ranking regarding distributional impacts is identical. However, citizens in Cottbus attach greater importance to the consideration of distributive goals in PESs than citizens in Antananarivo.

Can payments for ecosystem services schemes mimic markets?

A Payments for Ecosystem Services (PES) scheme can be understood as a mechanism that performs the role of a ‘market’ for Ecosystem Services (ES) in circumstances where such a market would otherwise fail to develop. We investigate the potential for and limits of PES schemes to act in lieu of competitive markets and propose a PES scheme design that mimics markets. This is achieved by applying their underpinning concepts of demand and supply to the determination of ‘market clearing’ prices, while reducing transaction costs of buyer and supplier engagement through the involvement of agents. The proposed design combines economic valuation techniques to estimate ES demand with a novel tendering process that allows the estimation of individual marginal cost curves of potential ES suppliers. Supply actions and ES are linked through ‘conversion factors’ derived from bio-physical models that act as environmental production functions. Demand and supply so estimated enable the determination of a ‘market clearing’ price which, when offered to suppliers, provides static and dynamic incentives for cost-effective supply. Mutually beneficial exchange between buyers and suppliers, as is facilitated under the PES scheme design, improves resource use efficiency while allowing both the buyers and the suppliers to secure surpluses.

Operationalizing payments for ecosystem services in Brazil's sugarcane belt: How do stakeholder opinions match with successful cases in Latin America?

In this paper the initial draft design of a payment for ecosystem services (PES) scheme in a municipality within the sugarcane belt of São Paulo state, Brazil (PES-RC), is compared with prevailing characteristics of successful PES cases in Latin America (PES-LA). This systematic comparison is performed by analyzing four major characteristics of PES: identity of traded ecosystem service (ES); spatial scale; type of transaction involved between ES providers and beneficiaries; and the involved actors. Information on the biophysical characteristics, institutional arrangement and financial options of PES-RC were assessed using participatory methods. We found that on the one hand there is an agreement between our case study and the prevailing successful cases of PES-LA regarding the traded ES (water) and the PES spatial scale (local). However, stakeholder opinions diverge from the success cases when it comes to the type of transaction (cash preferred in PES-RC; in-kind in successful PES-LA) and the involved actors. Our results raise the question whether stakeholder opinions or the characteristics of successful (or failure) cases should be prioritized when planning and operationalizing new PES schemes. We argue that stakeholder participation should be considered as an additional success criterion for the construction of public policies directed towards PES implementation.

Payments for Ecosystem Services and Wealth Distribution

Payment for ecosystem services (PES) has come to be regarded as a promising market-based policy instrument to internalize environmental externalities. The potential of PES is linked to the relationship between the willingness to pay (WTP) of ecosystem service buyers and the willingness to accept (WTA) of ecosystem service providers. This study uses an economic model to analyze factors that influence aggregate WTP and WTA in a PES scheme. We demonstrate that wealth disparity between ecosystem services buyers and providers can increase transactions. Furthermore, when wealth disparity exists between the buyers and sellers, the wealthier population would contribute more into the program and the poorer population would benefit more from it. Under these conditions, PES can be socially progressive and mitigate preexisting economic inequality. In this sense, the economic model provides justification for integration of PES and poverty alleviation programs. Results of our study indicate that PES is not a universally applicable conservation tool, and there is a need for a more targeted approach to the design and application of PES.

Payments for ecosystem services in Indonesia

AbstractPayments for ecosystem services schemes are viewed as having the potential to achieve positive biodiversity and ecosystem service outcomes and social outcomes, and they have been widely studied since their development in the 1990s. We describe the state of payments for ecosystem services in Indonesia, where nine schemes were identified, four involving water and five involving carbon. We also assess the perceptions of stakeholders (donors, government, and non-government agencies) regarding the status of such schemes in Indonesia, and their views on what factors support or constrain their development. The main factors perceived to support payments for ecosystem services schemes were easily identifiable ecosystem services and service users, and the long-term support provided by individuals or institutions that facilitate the schemes, building on existing relationships between communities and these facilitating agencies. Stakeholders identified problems relating to regulation: the lack of regulation specifically in relation to payments for ecosystem services, but also overlap and uncertainties regarding regulations. Other constraining factors identified were the lack of recognition of environmental problems amongst potential buyers, and issues of rights and tenure for local communities. With so few operational programmes to date, covering a relatively small land area, and such constraints to further development, payments for ecosystem services schemes appear to have limited scope to supply ecosystem services successfully and sustainably at scale.

Coordinated service provision in payment for ecosystem service schemes through adaptive governance

In this paper, we look to the adaptive governance literature for insight into how payment schemes for the provision of ecosystem services might be designed to achieve multiple socially desirable objectives over different spatial scales instead of simply focusing on localised benefits for service providers. Using the principles of adaptive governance, we explore how the concepts of lateral information flows and incentive alignment might shape ecosystem service payment schemes and allow the coordination of ecosystem service priorities across different jurisdictions. We suggest that progressing from purely anthropocentric assessments of payment schemes towards biocentric evaluations may lead to improved design principles. We discuss specific advantages of adaptive governance approaches over traditional centralised governance models related to policy-experimentation at multiple spatial scales, institutional variety and deliberative decision-making processes that establish dialogue between service providers and beneficiaries that promote group learning.

Economic incentives for sustainable hilsa fishing in Bangladesh: An analysis of the legal and institutional framework

Bangladesh's hilsa shad (Tenulosa ilisha) comprises the largest single-species fishery in the country, constituting 11 per cent of the total catch and employing 2.5 million people directly or indirectly. Since 2003, following a sharp decline in catch figures, the hilsa fish has been the subject of a government conservation programme offering fishers economic incentives or payments for ecosystem services (PES). While PES schemes are widely used to conserve natural resources such as forests and watersheds, Bangladesh's programme is a rare example of PES for sustainable fishery management. Catch figures have improved since the programme was introduced; but concerns remain about fishers’ socioeconomic conditions and the long-term sustainability of Bangladesh's hilsa fishery. This paper analyses the conservation scheme's legal and institutional frameworks, identifying challenges to its design and implementation, and makes recommendations to overcome them.

From local scenarios to national maps: a participatory framework for envisioning the future of Tanzania

Tackling societal and environmental challenges requires new approaches that connect topdown global oversight with bottom-up sub-national knowledge. We present a novel framework for participatory development of spatially-explicit scenarios at national scale that model socio-economic and environmental dynamics by reconciling local stakeholder perspectives and national spatial data. We illustrate results generated by this approach and evaluate its potential to contribute to a greater understanding of the relationship between development pathways and sustainability. Using the lens of land use and land cover changes, and engaging 240 stakeholders representing sub-national (seven forest management Zones) and the national level, we applied the framework to assess alternative development strategies in the Tanzania mainland to the year 2025 - under either a business as usual or a green development scenario. In the business as usual scenario, no productivity gain is expected, cultivated land expands by ca. 2% per year (up to 88,808 km2), with large impacts on woodlands and wetlands. Despite legal protection, encroachment of natural forest occurs along reserve borders. Additional wood demand leads to degradation (i.e. loss of tree cover and biomass) up to 80,426 km2 of wooded land. The alternative green economy scenario envisages decreasing degradation and deforestation with increasing productivity (+10%) and implementation of Payment for Ecosystem Service schemes. In this scenario, cropland expands by 44,132 km2 and the additional degradation is limited to 35,778 km2. This scenario development framework captures perspectives and knowledge across a diverse range of stakeholders and regions. Although further effort is required to extend its applicability, improve users’ equity, and reduce costs the resulting spatial outputs can be used to inform national level planning and policy implementation associated with sustainable development, especially the REDD+ climate mitigation strategy.

Payment for Ecosystem Services (PES) in Latin America: Analysing the performance of 40 case studies

Market instruments such as Payment for Ecosystem Services (PES) emerged as a concept to compensate and encourage landowners to improve land management practices for the maintenance and provision of ecosystem services. Since the early 1990s hundreds of PES schemes have been implemented around the world with varying levels of success. The high investments required to implement such schemes, and the stakes involved, argue for an analysis of PES cases to determine factors that contribute to a particular outcome. The paper analyses 40 PES cases in Latin America providing insights that will inform policy and decision makers in designing future PES initiatives with higher chances of success. In this study we analyse each case using a set of criteria (related to ecosystem type, compensation package and incentives, spatial and temporal scales, institutional arrangements, and policy frameworks) to determine those most important for a particular outcome. These insights provide information on programme factors that contribute to the potential for success of a given PES scheme. Although this classification can be further improved, it provides a useful reference for decision-makers on what might be considered best practice on the ground concerning PES schemes.