Payments For Environmental Services Programs Research Articles

Auction Design for the Private Provision of Public Goods in Developing Countries: Lessons from Payments for Environmental Services in Malawi and Indonesia

Payments for environmental services programs use direct incentives to improve the environmental impacts of private land use decisions. An auction offers an approach to efficiently allocating contracts among least-cost landholders, which can improve the overall cost-effectiveness of the approach. However, experiences with auctions in developing country settings are limited. We compare the results of two case studies that use auctions to allocate payments for environmental service contracts in Indonesia and Malawi. While the settings and the contracts differ, regularities in auction design allow comparisons and general lessons about the application of auctions to payments for environmental services programs.

Minimização da erosão em função do tamanho e localização das áreas de floresta no contexto do programa "conservador das águas"

Com os crescentes conflitos de uso da água no Brasil, a implantação de políticas para a mitigação desses problemas tornou-se crucial. Nesse sentido, o conceito de Pagamentos por Serviços Ambientais (PSA) tem se difundido ao redor do mundo e, consequentemente, no Brasil. O município de Extrema, em Minas Gerais, implantou a primeira iniciativa municipal brasileira de PSA, conhecida como programa "Conservador das Águas". Neste trabalho, objetivou-se avaliar a perda de solo na sub-bacia das Posses, onde se iniciou o programa "Conservador das Águas", visando determinar a potencialidade que o conceito adotado nesse programa terá para a conservação do solo e otimizar o provimento desse serviço ambiental em função do tamanho e da localização da área de floresta. Quatorze diferentes cenários de uso e cobertura do solo foram analisados, utilizando-se um Sistema de Informações Geográficas e a Revised Universal Soil Loss Equation. A expectativa de perda de solo na sub-bacia das Posses antes e após a implementação do programa "Conservador das Águas" foi de 30,63 e 7,06 Mg ha-1 ano-1, respectivamente. A otimização da conservação do solo pode ser feita adotando-se práticas conservacionistas na pastagem e alocando-se a área de floresta de maneira mais otimizada.

Consequences of actor level livelihood heterogeneity for additionality in a tropical forest payment for environmental services programme with an undifferentiated reward structure

Primary tropical forests provide crucial environmental services, including carbon storage and hydrological regulation. Options for promoting forest conservation include payments for environmental services (PES) programmes that provide financial incentives to local actors, in exchange for reduced forest clearance. The success of voluntary PES (defined in terms of avoided primary forest conversion) is contingent upon behavioural changes in enrolled actors. As both the degree of enrolment and likelihood of sustained behavioural change depend upon how PES compensation structures interact with existing actor economies, local heterogeneity in livelihood strategies may play a strong role in the ultimate success of PES programmes, particularly when compensation is not differentiated with respect to opportunity costs. We examined the influence of livelihood heterogeneity on the potential success of a deforestation-reduction PES with an undifferentiated reward structure. We collected socioeconomic and demographic data at the household and community levels across two large Amazonian extractive reserves where a spatially extensive PES programme (Bolsa Floresta) operates. We show that demographic and socioeconomic status varies widely across households and communities, and found that both households and communities that are most and least likely to convert primary forest receive similar financial incentives. Those households most engaged in manioc agriculture (the primary driver of local primary forest conversion) both benefitted from the highest annual incomes and incurred the greatest opportunity costs. We show that avoided primary forest conversion could be greatly increased with differentiated payment structures adjusted for local differences in opportunity costs and livelihood strategies, and present two metrics that could help to achieve that goal.

Assessing the potential for synergies in the implementation of payments for environmental services programmes: an empirical analysis of Costa Rica

SUMMARYPayments for environmental services (PES) have been recognized as a promising mechanism for conservation, with the potential to contribute to social objectives such as poverty reduction. This paper outlines a simple framework for assessing the potential for synergies in the implementation of PES programmes, used to analyse the new watershed conservation funding (WCF) channelled through Costa Rica's national PES programme, Pago por Servicios Ambientales (PSA). The WCF financing can only be used in a limited number of watersheds. Given this constraint, the paper examines the mechanisms by which the WCF may potentially contribute to biodiversity conservation and to reducing social development gaps. Although there is significant spatial correlation among the priority areas targeted for the objectives of watershed conservation, biodiversity conservation and social development, the availability of the WCF per unit of land in most watersheds is limited compared to the PSA programme's prevailing payment rate of US$ 64 ha−1, potentially hindering the impact of the WCF on conservation and social development. The analysis helps guide the allocation of the PSA budget in a way that complements the WCF and improves the cost-effectiveness of the PSA budget.

El pago por servicios ambientales y su impacto socioeconómico: El caso del programa de PSA en plantaciones forestales de la zona norte de Costa Rica

espanolEl proposito de la investigacion fue la evaluar los impactos socioeconomicos del programa de Pago por Servicios Ambientales (PSA) en plantaciones forestales de la zona norte de Costa Rica. La metodologia utilizada se baso en estandares de Principios, Criterios e Indicadores (PCI debido a que la plantacion forestal debe competir con otras actividades agricolas y ganaderas que generan mayores beneficios economicos. EnglishThe objective of this study was to assess the socio-economical impacts of the payment for environmental services (PES) program in forest plantation in northern Costa Rica. The research methodology was based on a standard of principles, criteria and indicators (PC&I) in order to characterize the socioeconomic impacts of the program. The standard was the key factor for developing a semi-structured interview, with which the field information was collected. This information was afterwards analyzed quantitatively and statistically to identify the socio-economical impacts on each one of the beneficiaries. The study demonstrated that the PES program did not contribute to increase the economic welfare of the direct beneficiaries, questioning therefore the sustainability of the mechanism over time. Nevertheless, the study showed that the PES program improved the economic welfare of the indirect beneficiaries and related institutions, strengthening the relationships of the direct beneficiaries with financial institutions and forestry sector. Also, the program improved the perception of beneficiaries regarding the sustainable use of natural resources. In conclusion, the mechanism had positive impacts on indirect beneficiaries and related institutions, although it did not improve the socio-economic conditions of the direct beneficiaries, because the forest plantations had to compete with other activities such as agriculture and livestock.

Institutional Rules in Action: A Multi-Level Analysis of Costa Rica’s Payments for Environmental Services Programme

Institutional Rules in Action: A Multi-Level Analysis of Costa Rica’s Payments for Environmental Services Programme

Incomplete property rights, exposure to markets and the provision of environmental services in China

Abstract This paper uses data from a 2003 rural survey to examine the determinants of household provision of environmental services under China's Sloping Land Conversion Program (SLCP), the largest payments for environmental services program in the developing world. The paper examines the determinants of plot-level survival rates of program-planted trees and grasses. It finds that household rights over retired land as well as autonomy in program decision-making (which we argue on the basis of supportive evidence are plausibly exogenous to post-retirement outcomes) have important and potentially countervailing impacts on the provision of environmental services targeted by the program. Households permitted to select what to plant obtain better program outcomes, but do not make the choices that the government would like them to, while those permitted to decide what land to retire perform worse. The analysis also finds that households more vested and experienced in agriculture and with less exposure to off-farm labor markets fare better in managing their planted trees. Significant learning-by-doing effects are also evident, suggesting that greater technical support to farmers could improve outcomes and lower program costs.

Payments for Grassland Ecosystem Services: A Comparison of Two Examples in China and Germany

The degradation of grass-dominated ecosystems and grassland abandonment have become widely spread phenomena across the world. Payments for environmental services (PES) are seen as an innovative approach to stop these trends by making payments to land users in return for adopting practices that secure ecosystem conservation and restoration. Designing efficient PES requires that possible challenges are effectively managed, such as the lack in linearity and immediacy of environmental effects, unexpected monitoring and enforcement costs and possible socio-economic objectives (adequate compensation, equity). The aim of this article is to compare government-financed PES for grassland ecosystem services in two contrasting regions (Xilingol League, China and Brandenburg, Germany) in order to facilitate knowledge exchange on PES design and implementation and the transfer of best practices. Our particular interest is in how different PES mechanisms work, which actors are involved and what characterizes success and failure cases. The comparison shows that both PES programs are not very effective in providing environmental services due to lack of participation of affected farmers (both regions), insufficient monitoring and control (Xilingol) and inappropriate management prescriptions (Brandenburg), which should be improved in future programs.

Poor Household Participation in Payments for Environmental Services: Lessons from the Silvopastoral Project in Quindío, Colombia

As the use of Payments for Environmental Services (PES) approaches in developing countries has grown, concern has arisen over the ability of poorer households to participate. This paper uses data from a PES project implemented in Quindío, Colombia, to examine the extent to which poorer households that are eligible to participate are in fact able to do so. The project provides a strong test of the ability of poorer households to participate in a PES program as it required participants to make substantial and complex land use changes. The results show that poorer households are in fact able to participate at levels that are broadly similar to those of better-off households. Moreover, their participation was not limited to the simpler, least expensive options. Transaction costs may be greater obstacles to the participation of poorer households than household-specific constraints.

Social and environmental impacts of payments for environmental services for agroforestry on small-scale farms in southern Costa Rica

Agroforestry on small-scale farms has potential to provide important ecological services, such as carbon sequestration and maintenance of biological diversity, while also providing on-farm products for domestic use and marketing. Payments for environmental services (PES) are an increasingly popular mechanism for encouraging production of ecological services on agricultural lands and may also contribute to poverty reduction and sustainable farming practices through adoption of new farming technologies. There is little current information, however, on the degree to which PES increase tree planting relative to a baseline or the effects of program participation on farmer livelihoods. This study examined the initial impacts of a recent PES program for agroforestry in southern Costa Rica by: (1) assessing the efficiency of PES in increasing reforestation relative to baseline tree planting activities; (2) examining farmer perceptions of socioeconomic and environmental impacts of PES; and (3) exploring obstacles to adoption of agroforestry practices. Thirty-six participant and non-participant farmers were given semi-structured interviews. Key informant interviews were conducted with forestry engineers, farmers' associations, NGOs, and government agencies. Farmers reported positive economic benefits in the first 2–3 years of program participation. PES participants also planted substantially more trees and more species than non-participant farmers. The PES program was effective in overcoming initial economic and technical obstacles that made adoption of agroforestry unattractive. Strong local organizations played a key role in facilitating adoption. Additional investment in short- to medium-term technical support will likely be necessary for broad retention of agroforestry practices beyond the life of the PES contracts.

User financing in a national payments for environmental services program: Costa Rican hydropower

National government-funded payments for environmental services (PES) programs often lack sustainable financing and fail to target payments to providers of important environmental services. In principle, these problems can be mitigated by supplementing government financing with contributions from leading environmental service users. We use original survey data and official statistics to analyze user financing in Costa Rica's renowned national PES program, focusing on the amounts and sources of user financing, the drivers of contributions, and contributors' perceptions of the PES program. We find that user financing has supported less than 3% of the acres enrolled in the program and that hydroelectric plants are the largest private sector contributors. Large hydroelectric plants tend to contribute while small ones do not. The weight of evidence suggests that in addition to ensuring the provision of forest environmental services, hydroelectric plants' motives for contributing to the PES program include improving relations with local communities and government regulators—common drivers of participation in all manner of voluntary environmental programs. These findings raise questions about the potential of user financing to improve the efficiency and financial sustainability of national PES programs.

Payment for Environmental Services in the Amazon Forest: How Can Conservation and Development Be Reconciled?

Two payment for environmental services programs in the Amazon, namely, Noel Kempff Mercado Climate Action Project in Bolivia and Bolsa Floresta Program in Brazil, have been pioneering initiatives to demonstrate the ability to encourage forest conservation through market mechanisms involving direct payments for avoiding deforestation. This article argues that (a) to be effective in the long-run, programs have to consider the needs and priorities of forest dwellers, which are indeed beyond market-based incentives; (b) a win-win discourse combining forest conservation and poverty alleviation through provision of PES may hide vested interests of developed countries’ institutions and developing countries’ elites. Proving the workability of these types of activities and their quantification for emissions credit will be critical for the launching of reducing emissions from deforestation and degradation (REDD) in the context of a future climate agreement.

User Financing in a National Payments for Environmental Services Program: Costa Rican Hydropower

National government-funded payments for environmental services (PES) programs often lack sustainable financing and fail to target payments to providers of important environmental services. In principle, these problems can be mitigated by supplementing government financing with contributions from leading environmental service users. We use original survey data and official statistics to analyze user financing in Costa Rica’s renowned national PES program, focusing on the amounts and sources of user financing, the drivers of contributions, and contributors’ perceptions of the PES program. We find that user financing has supported less than three percent of the acres enrolled in the program and that hydroelectric plants are the largest private sector contributors. Large hydroelectric plants tend to contribute while small ones do not. The weight of evidence suggests that in addition to ensuring the provision of forest environmental services, hydroelectric plants’ motives for contributing to the PES program include improving relations with local communities and government regulators — common drivers of participation in all manner of voluntary environmental programs. These findings raise questions about the potential of user financing to improve the efficiency and financial sustainability of national PES programs.

Incomplete Property Rights, Exposure to Markets and the Provision of Environmental Services in China

This paper uses data from a 2003 rural survey to examine the determinants of household provision of environmental services under China’s Sloping Land Conversion Program (SLCP), the largest payment for environmental services program in the developing world. The paper examines the determinants of plot-level survival rates of program-planted trees and grasses. It finds that household rights over retired land as well as autonomy in program decision-making (which we argue on the basis of supportive evidence are plausibly exogenous to post-retirement outcomes) have important and potentially countervailing impacts on the provision of environmental services targeted by the program. Households permitted to select what to plant obtain better program outcomes, but do not make the choices that the government would like them to, while those permitted to decide what land to retire perform worse. The analysis also finds that households more vested and experienced in agriculture and with less exposure to off-farm labor markets fare better in managing their planted trees. Significant learning-by-doing effects are also evident, suggesting that greater technical support to farmers could improve outcomes and lower program costs.

When could payments for environmental services benefit the poor?

ABSTRACTSince modification of agricultural production choices in developing countries often provides positive environmental externalities to people in developed countries, payment for environmental services (PES) has become an important topic in the context of economic development and poverty reduction. We consider two broad categories of PES programs, land-diversion programs, where lands are diverted from agriculture to other uses, and working-land programs, where agricultural production activities are modified to achieve environmental objectives. PES programs are generally good for landowners. The distribution of land and land quality is critical in determining poverty impacts. Where ES and agricultural productivity are negatively correlated and the poor own lands of low agricultural quality, they stand to gain from PES programs. Consumers and wage laborers may lose where food supply is inelastic and programs reduce labor demand. Working-land programs may have better distributional effects than diversion programs.

Taking stock: A comparative analysis of payments for environmental services programs in developed and developing countries

Payments for environmental services (PES) are an innovative approach to conservation that has been applied increasingly often in both developed and developing countries. To date, however, few efforts have been made to systematically compare PES experiences. Drawing on the wealth of case studies in this Special Issue, we synthesize the information presented, according to case characteristics with respect to design, costs, environmental effectiveness, and other outcomes. PES programs often differ substantially one from the other. Some of the differences reflect adaptation of the basic concept to very different ecological, socioeconomic, or institutional conditions; others reflect poor design, due either to mistakes or to the need to accommodate political pressures. We find significant differences between user-financed PES programs, in which funding comes from the users of the ES being provided, and government-financed programs, in which funding comes from a third party. The user-financed programs in our sample were better targeted, more closely tailored to local conditions and needs, had better monitoring and a greater willingness to enforce conditionality, and had far fewer confounding side objectives than government-financed programs. We finish by outlining some perspectives on how both user- and government-financed PES programs could be made more effective and cost-efficient.

Costa Rica's Payment for Environmental Services Program: Intention, Implementation, and Impact

We evaluated the intention, implementation, and impact of Costa Rica's program of payments for environmental services (PSA), which was established in the late 1990s. Payments are given to private landowners who own land in forest areas in recognition of the ecosystem services their land provides. To characterize the distribution of PSA in Costa Rica, we combined remote sensing with geographic information system databases and then used econometrics to explore the impacts of payments on deforestation. Payments were distributed broadly across ecological and socioeconomic gradients, but the 1997-2000 deforestation rate was not significantly lower in areas that received payments. Other successful Costa Rican conservation policies, including those prior to the PSA program, may explain the current reduction in deforestation rates. The PSA program is a major advance in the global institutionalization of ecosystem investments because few, if any, other countries have such a conservation history and because much can be learned from Costa Rica's experiences.

Growth, carbon sequestration, and management of native tree plantations in humid regions of Costa Rica

The Costa Rican government has provided incentives for reforestation programs since 1986 and initiated a Payment for Environmental Services program in 1996. These incentives yielded native species reforestation programs throughout the country. This research aims to provide information about growth, carbon sequestration, and management of seven native tree species (Vochysia guatemalensis, Vochysia ferruginea, Hyeronima alchorneoides, Calophyllum brasiliense, Terminalia amazonia, Virola koschnyi, and Dipteryx panamensis) growing in small and medium-sized plantations in the Caribbean and Northern lowlands of Costa Rica. A total of 179 plots were evaluated in 32 farms. Overall, I found that V. guatemalensis, V. ferruginea, H. alchorneoides, and T. amazonia were the species with the fastest diameter, total height, and volume growth; and T. amazonia and D. panamensis sequestered more carbon. Moreover, I found that the plantations that had been thinned before this assessment had the best growth. The results of the present research enhance the criteria elaborated in previous research findings to improve species choices for reforestation and silvicultural management in Costa Rica and in other regions with similar ecological features. Furthermore, they support the concept that tropical plantations can serve diverse economic, social, and ecological functions that may ultimately help reduce atmospheric CO2 accumulation.

Could Payments for environmental services improve rangeland management in Central Asia, West Asia and North Africa?

Although several institutional and management approaches that address the degradation of the rangelands have been tested in the dry areas of Central and West Asia and North Africa (CWANA), impact has been limited. Nonetheless, the development of National Action Plans to combat desertification highlights the interest of governments to tackle this issue. Payment for Environmental Services (PES) may be a viable policy option, though, to date, most PES programs have focused on the management of different resources (forests, watersheds). The purpose of this paper is to examine whether PES could be a viable option to promote sustainable rangelands management in the dry rangelands of CWANA. Specifically, it focuses on the scientific gaps and knowledge related to the local and global environmental services produced by rangelands and addresses questions related to the beneficiaries of these services. Institutional conditions necessary for the implementation of such schemes are discussed. (Resume d'auteur)

Land Rights in Rural China: Facts, Fictions and Issues

China's rural economic reforms radically altered land tenure in rural China. With the granting of land use rights and residual income rights to farming households between 1979 and 1983, agriculture shifted from a collective-based to a familybased system. Land was not privatized, however. Ownership remained "collective", with local officials, typically at the village level, exercising a major influence over the allocation of land and the way households could use land. The initial land allocations to families were typically based on household size, household labour supply, or both. The central government's policy was that these allocations were supposed to be for 15 years. In some villages, land use contracts have been respected; in other villages, however, local leaders have periodically redistributed land among households and have intervened throughout the reform period to determine how farmers are able to use the land. The initial reforms triggered an unprecedented acceleration of agricultural growth in China. From 1979 to 1984, the gross value of agricultural output increased in real terms at an annual rate of 7.6 per cent, and grain production rose by 4.9 per cent annually.' Empirical studies attribute a significant part of this increase to enhanced incentives, as farmers were able to keep the output and