Payments For Environmental Services Schemes Research Articles

Payments for environmental services and coffee production in Colombia: Technical efficiency across the world heritage status borders

The breakdown of the Coffee Agreement from the International Coffee Organization in 1989 led to instability of prices in the world coffee market. Uncertainty pushed coffee producers to search for diversified income sources. With land-use change threatening environmental sustainability, UNESCO included the Colombian Coffee Cultural Landscape in the World Heritage (WH) List in 2011 to protect the coffee regions. Also, the government and private firms supported coffee producers with payments for environmental services (PES). This study explores the extent to which PES can affect coffee producers' performance at the Coffee Cultural Landscape using stochastic frontier analysis. The survey data used allowed us to analyze 385 coffee producers around the Andes for the cropping year 2017. The location of each farmer was recorded by GPS. The paper found that the combination of both receiving PES and located within the WH increases efficiency, while the presence of only one of the PES or WH is associated with lower technical efficiency. In general, farms with PES found to be more efficient than farms without PES. While farms outside of WH without PES exhibit higher technical efficiency than farms inside of WH without PES. Both WH status and PES schemes can support policies oriented to economic, environmental and social development.

Assessing the opportunity costs of Chinese herder compliance with a payment for environmental services scheme

Addressing serious grassland degradation without exacerbating already low herder incomes is a major challenge for the Chinese government. In response, the Grassland Ecosystem Subsidy and Award Scheme (GESAS) was introduced in 2011 where herders receive payments if they comply with specified stocking rates set at more sustainable levels. However, compliance with GESAS, as well as low herder incomes in some years, is an ongoing issue. Using a stochastic, dynamic bioeconomic model of representative herder households in the desert steppe grasslands of Inner Mongolia Autonomous Region, the opportunity costs for herders in meeting specified stocking rates under different states of nature are identified and compared with GESAS payments. In addition, the impacts on productivity and environmental services provided by herders operating within or outside of GESAS are identified. The results highlight states of nature under which no incentivising payments are needed for compliance or when the opportunity costs greatly exceed the GESAS payments, thereby increasing the risk of non-compliance. The study highlights the need to unbundle the environmental incentive and welfare components of GESAS if the twin objectives are to be achieved, and the need to define and understand the distribution of possible outcomes in designing grassland and ecocompensation policies.

Dinámica de participación en esquemas de pago por servicios ambientales urbanos: análisis de la intención

This work aims to understand landowners’ participation decision dynamics in an urban Payment for Environmental Services scheme under different payment scenarios. Based on the Theory of Planned Behavior, we formulated a simulation model at the individual level with interaction graphs, conformed by diverse agents in attributes, and parameterized with data of a Colombian Andes zone. The results confirm the relevance of the differentiation processes in the payment offer. This work constitutes the first approach to simulate participation in PES schemes in an urban context.

Models Explaining the Levels of Forest Environmental Taxes and Other PES Schemes in Japan

Between 2003 and April 2016, 37 of 47 prefectures (i.e., sub-national local governmental units) introduced forest environmental taxes—local payment for environmental services (PES) schemes. These introductions are unique historical natural experiments, in which local governments made their own political decisions considering multiple factors. This study empirically evaluates models that explain normalized expenditures from forest environmental taxes as well as other PES schemes (subsidies for enhancing forests’ and mountain villages’ multifunction, and green donation) and traditional forestry budgets for Japan’s 47 prefectures based on the median voter model. Results demonstrate that the median voter model can particularly explain forest environmental taxes and forestry budgets. Specifically, the past incidence of droughts and landslides is positively correlated with the levels of forest environmental taxes. The higher the number of municipalities in a prefecture, the lower the amount of forest environmental tax spent on forests. Moreover, the number of forest volunteering groups, possibly an indicator of social capital in the forest sectors, had strong positive correlations with the levels of forest environmental taxes and forestry budgets. Other PES schemes and forestry budgets had unique patterns of correlations with the examined factors.

Optimising payment for environmental services schemes by integrating strategies: The case of the Atlantic Forest, Brazil

Payment for Ecosystem Services (PES) schemes is a popular tool to address the problem of environmental degradation. However, these projects do not always produce their best outputs due to the inefficiencies of sustainable development policies. Although some sources of inefficiencies cannot be controlled, the implementation of PES systems following the integrated approach (more than one project acting on the same site) is expected to increase their benefits and offer solutions to some of their problems. Moreover, this integration should provide an optimal combination of both short and long-term ecosystem services, ensuring resilience to environmental and social change. This study analyses nine combinations of PES schemes and a Rural Development (RD) project in three regions of Rio de Janeiro – Brazil. The focus is to analyse how different schemes can promote a continuous and long-term provision of the ecosystem services targeted by each project, as well to assess how the schemes, in general, can contribute to increasing the socio-ecological resilience of the benefitted area. Desk research and field interviews were conducted to obtain the necessary information to analyse the costs and benefits of the schemes. The data collected has provided us with qualitative information to illustrate the theory behind the project, and people's lived experiences. These outcomes and other socio-economic and environmental parameters were analysed through a Multicriteria Decision Analysis. The paper shows the integrated approaches have offered the best trade-off among the costs and benefits in all regions. At the same time, they have a high potential to ensure the sustainability of the ecosystem services in that area while acting towards a resilient community/environment.

Valuing biodiversity protection: Payment for Environmental Services schemes in Lao PDR

AbstractThe design of a Payment for Environmental Services (PES) scheme that involves setting a ‘pseudo market price’ per unit of environmental service requires the estimation of demand and supply. This paper presents the results of discrete choice experiments aimed at estimating the demand for environmental and social services generated by a wildlife protection PES scheme in two protected areas in Lao PDR. The discrete choice experiments targeted international tourists sampled at Vientiane airport and the urban Lao population sampled in Vientiane City as potential buyers of the environmental and social services provided by the PES scheme. The survey was customised to a developing country context to address diversity in respondents' literacy levels, language limitations of the interviewers, socio-cultural conventions, and limited trust in confidentiality and anonymity of the survey process. The marginal benefits of the environmental services so estimated were used to inform the development of a PES scheme.

Guideline framework for effective targeting of payments for watershed services

Payments for Watershed Services (PWS) have become popular for the conservation of environmental services. As effectiveness is influenced by PWS design and the local contexts in which they are implemented, deficiencies in the process of targeting providers can affect the success of PWS schemes in achieving their goals. This article presents a framework based on data obtained from systematic reviews of worldwide Payments for Environmental Services (PES) schemes and the scientific literature to guide the process of targeting PWS schemes, especially in rural private areas in fragmented landscapes. The framework comprises four sets of operational guidelines for the targeting process based on the scientific literature. A table explaining the data extracted from the literature and PES schemes is provided, comprising the targeting criteria of benefits, risk, cost, socioeconomic issues, and readiness. The framework supplements current approaches that focus on biophysical criteria and is the first initiative to incorporate multidimensional aspects of PES in targeting guidelines. As it gathers empirical and scientific knowledge to promote an effective scheme design, the framework can contribute to the achievement of PWS goals.

A market-based mechanism as an alternative solution for watershed management: a case study of the Ciliwung Watershed, Indonesia

The complexity of managing the Ciliwung Watershed in Indonesia has resulted in various externalities such as flooding in the capital city of Jakarta. A non-structural approach using a market-based instrument such as a payment for environmental services (PES) scheme could be considered an alternative policy to overcome such externalities. A compensation mechanism is expected to induce incentives to conserve the watershed in the upstream area with the goal of reducing flooding downstream. This study attempts to determine the amount of compensation that should be paid by the governmental agency in Jakarta to upstream communities to maintain and improve the quality of the watershed area. The contingent valuation method (CVM) was used to obtain the households' willingness to pay (WTP) as a basis for compensation. Lessons learned concern watershed management and the implications of using the PES scheme.

A market-based mechanism as an alternative solution for watershed management: a case study of the Ciliwung Watershed, Indonesia

The complexity of managing the Ciliwung Watershed in Indonesia has resulted in various externalities such as flooding in the capital city of Jakarta. A non-structural approach using a market-based instrument such as a payment for environmental services (PES) scheme could be considered an alternative policy to overcome such externalities. A compensation mechanism is expected to induce incentives to conserve the watershed in the upstream area with the goal of reducing flooding downstream. This study attempts to determine the amount of compensation that should be paid by the governmental agency in Jakarta to upstream communities to maintain and improve the quality of the watershed area. The contingent valuation method (CVM) was used to obtain the households' willingness to pay (WTP) as a basis for compensation. Lessons learned concern watershed management and the implications of using the PES scheme.

Differentiated payments for environmental services schemes: Amethodology proposal

Payment schemes for environmental services face serious budget constraints in Mexico. Payments are equally distributed among forest owners, and the governmental agencies that make payments to beneficiaries do not evaluate the amount of environmental services produced by forested areas. This lack of evaluation could lead to economic and environmental deficiencies that restrict the possible benefits of such programmes. In general, these programmes do not achieve their conservation objectives, and local beneficiaries are not involved in the design or application of these programmes. Similarly, the Payments for Hydrological Environmental Services (PHES) programme of the State of Mexico, Mexico, makes equal payments to beneficiaries of forested areas considering tree density. The objective of the present work was to create a methodology for determining differentiated payments schemes for hydrological environmental services, prioritising areas that contribute the most to groundwater recharge and promote the participation of society. In the Nevado de Toluca Natural Protected Area, the environmental criteria of forest type, tree density and aquifer overexploitation as well as social participation were considered in a multi-criteria analysis implemented in a Geographic Information System. A methodology was developed to determine differentiated payments based on specific forest characteristics that influence the potential capacity of forests to recharge groundwater reserves in addition to the level of social participation. In particular, social participation is key as it could ensure the viability of PHES programmes as conservation alternatives in forested areas with high groundwater recharge potential.

Costing biodiversity protection: payments for environmental services schemes in Lao PDR

ABSTRACTA Payments for Environmental Services (PES) scheme that involves setting a ‘pseudo market price’ requires the estimation of demand and supply. This paper presents the estimated marginal costs of anti-poaching patrols designed to enhance biodiversity in two protected areas in Lao PDR. This supply information was used in conjunction with environmental production functions and estimated demand for biodiversity to determine the ‘price’ paid per patrol. Marginal costs were estimated through uniform-price conservation actions: Teams of local people interested in being part of the PES scheme bid for the number of patrols they would like to provide in response to a range of offered prices. The auction process generated a sequence of well-behaved price-quantity pairs that track the individual marginal cost function of each bidding team accounting for both fixed and variable costs. The marginal costs vary across bidders. These variations can be explained by differences in competing employment and income opportunities across bidders, village locations and seasons. The results provide evidence of heterogeneous opportunity costs of supply and suggest an efficiency loss in assuming homogeneity.

Pricing biodiversity protection: Payments for environmental services schemes in Lao PDR

A failure of markets to coordinate demand with supply indicates that the transaction costs of an exchange outweigh the benefits that buyers and suppliers expect to gain from trade. As a result, some goods and services are not traded in markets, despite potential demand and prospective supply. This is the case for some environmental services that exhibit the public good and common pool resource characteristic of non-excludability caused by the prohibitive transaction costs associated with defining, defending, and trading property rights over them. Payment for Environmental Services (PES) schemes are being used in an attempt to facilitate the operation of markets. However, few PES schemes involve the ‘negotiation’ of prices based on comparable estimates of demand and supply. This paper reports on two applications of a PES scheme design that mimics market processes for traded goods and services to an extent beyond existing attempts. It demonstrates how ‘efficient’ prices for biodiversity protection can be ‘negotiated’ through agent intervention and discusses the challenges encountered in the process.

How do Payments for Environmental Services Affect Land Tenure? Theory and Evidence From China

Recent academic endeavours have questioned whether the rapidly unfolding Payments for Environmental Services (PES) may have profound influence on land tenure which would in turn impact the conservation efficacy of PES. This paper developed a game-theory model in the context of rural China, which describes the endogenous formation of land rights as a bargaining process between ordinary villagers and village leaders. This model gave rise to theoretical predictions pertaining to the implications of two PES schemes in China for land tenure, namely the Sloping Land Conversion Programme (SLCP) and the Ecological Public-Benefit Forest Compensation Programme (EPBFCP). The theoretical predictions were tested using primary data collected through large-scale field surveys. These data were analysed using the Propensity Score Matching method and panel data models. Both the theoretical analysis and the empirical results find that the SLCP has likely enhanced land tenure security by increasing the bargaining costs of village leaders' attempts to reallocate SLCP lands to other households. On the other hand, villagers tend to have less motivation to de-collectivise those forest lands enrolled in the EPBFCP, which somewhat stands in the way of the country's agenda to further de-collectivise communal forests and allocate them to individual households.

Heterogeneous Impact of a Collective Payment for Environmental Services Scheme on Reducing Deforestation in Cambodia

Payments for Environmental Services (PES) are increasingly used in tropical countries as incentives to improve forest conservation outcomes, notably in forests managed or owned by rural communities. However, little is known about the performance and the suitable conditions under which collective PES can be effective. We assess the impact of a collective PES on reducing deforestation in the Cardamom Mountains, Cambodia. We use a quasi-experimental approach combining covariate matching with difference-in-difference estimation as a procedure to assess program effectiveness on reducing deforestation. We find that the PES program contributed additionally saving on average about 0.17 percentage point of the enrolled PES area per year during 2005–12. We also highlight that characteristics such as slope, proximity to roads, and number of households are associated with heterogeneous PES impact. We finally call for improving both data availability and impact assessment methods in order to test better theories of change that take into account not only the ability of payments to reduce opportunity costs of conservation but also to consider how PES are turned into improved community collective action likely to improve the local enforcement of conservation.

PES Impact and Leakages over Several Cohorts: The Case of the PSA-H in Yucatan, Mexico

We assess the impact of a payment for environmental services scheme implemented in Mexico, the PSA-H, over the 2005-2012 period. By studying several cohorts of program beneficiaries we are able to shed lights on the permanence of the program's impact. Based on the exploitation of 2.5 to 20m resolution SPOT images and ejido-surveys carried out in 76 ejidos located in the Cono Sur of Yucatan, we find that the program's effects are cancelled after communities choose to withdraw from the program, as well as evidence of leakages. We discuss these results from a policy perspective.

Local Governance, Social Networks and REDD+: Lessons from Swidden Communities in Vietnam

Swidden is often blamed for deforestation but research has shown that these traditional systems can have a role in maintaining and enhancing carbon stocks and therefore could be compatible with efforts such as payments for environmental services (PES) and Reducing Emissions from Deforestation and Forest Degradation (REDD+) schemes in Vietnam. This would require that PES and REDD+ project developers build on existing local governance structures. In this paper we attempt to understand such structures though analysis of information and resource exchange in two communities in Vietnam, focusing on traditional local governance guiding swidden practices, and mass organisations. Results show a high diversity of formal (government-formed networks) and informal (traditional) swidden governance structures that can be embedded in REDD+ and PES schemes, where geographical accessibility, socio-cultural practices, and capacities of government will also determine which structure will work best for swidden communities to participate in REDD+/PES.

Correcting inequity: How the implementation of the Kasigau Corridor REDD+ Project in fact redresses past injustices—Response to Chomba et al.

Chomba et al. recently examined at how present day actions can reinforce or aggravate historical injustices around land, and what should be done about it. The authors looked at the benefit distribution policy and practice of the Kasigau Corridor REDD+ Project (KCRP) in Kenya, with the aim of understanding the extent to which it addressed equity, particularly with respect to historical injustices concerning land in Kenya. We agree with Chomba et al. that land tenure in Kenya has involved dispossession enabled by colonial and post-colonial land policies, which left many local people with little or no land entitlement. However, we strongly disagree with them when they argue that because the revenue distribution policy of the KCRP mapped onto the existing land distribution, it automatically reinforced inequality. In this response, we will highlight several important inaccuracies in their paper that may give a false impression of the KCRP, then broach some of these genuine and pressing land-related issues which we felt Chomba et al. missed out elaborating on, which would have helped inform future policy around payment for environmental services schemes in Kenya and elsewhere.

Contributions of institutional economics to analysis of payments for environmental services schemes : A literature review and some perspectives

Cet article propose un etat des lieux de l’apport de l’economie institutionnelle a l’analyse des dispositifs de paiements pour services environnementaux (PSE) dans la litterature scientifique recente sur la base d’une selection bibliographique d’articles nous paraissant les plus significatifs. Trois principaux axes thematiques sont identifies : la conceptualisation des PSE, l’architecture et la gouvernance des dispositifs dedies aux PSE et la comprehension de leurs impacts. Differents approches issues de l’economie institutionnelle coexistent. Nous discutons alors des complementarites et des possibles contradictions inherentes a leur mobilisation.

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

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

Pollution of inland waters in Brazil: the case for goal-oriented initiatives

This article examines the use of output-based aid and payment for environmental services to reduce water pollution in Brazil. Two nationwide initiatives are reviewed. First, the output-based aid concept of the River Basin Clean-up Programme (PRODES) to tackle the problem of sanitation deficit in urban areas is presented. Second, the payment for environmental services scheme supported by Brazil’s National Water Agency (ANA) through the Water Producer Programme to promote water conservation on rural properties is discussed. Both programmes are evaluated not only as financing mechanisms for water conservation but also as strategies for implementing Brazil’s water policy.