Markets and payments for environmental services

There has been increasing interest in the potential of market-based approaches to promote conservation. Over the last decade many Payments for Environmental Services (PES) schemes have been introduced or proposals developed. In PES schemes, land managers, typically forest owners or farmers, are paid to manage their land in ways that protect or enhance environmental services such as carbon sequestration, watershed protection and biodiversity conservation. In some cases payments are made by beneficiaries of environmental services, for example water users and hydropower companies; in others national or local government pay on behalf of beneficiaries.

Our work on PES includes the tracking of new and proposed schemes through global review and case studies, capacity building, and evaluation of social impact and pro-poor design. We explore the extent to which PES can help reduce poverty, as well as satisfying economic and environmental aims.  Research findings are targeted at developing country governments, private firms, donor agencies and other organisations working in the area.
 

Tracking and case studies

We have been tracking the development of PES schemes, with a particular focus on their social impacts.  We have recently conducted a review of payments for watershed services in Africa, Asia and Latin America. This review entitled All that Glitters A review of payments for watershed services in developing countries has recently been published.  Through case studies from around the world, we examine the financial, environmental and poverty aspects of recent initiatives to develop markets, financial compensation mechanisms, fiscal incentives and other market-based instruments for environmental services in rural areas of the developing world.
 

Capacity building and networking

We work to build capacity in Southern institutions, and we have developed guidance by disseminating the lessons from our research on markets for environmental services. We have built a network of partners in several developing countries (including Brazil, China, Costa Rica, Ecuador, Philippines, South Africa, India, Indonesia and the Caribbean) and developed countries to share lessons on markets for environmental services and to initiate policy research and action-learning.

Recent capacity building and training initiatives have included the development and delivery of a training module on payments for environmental services in conjunction with Ecociencia, Ecuador and funded by GTZ. This was tested with regional practitioners in Costa Rica and with German practitioners in Vilm island.

Social impacts and pro-poor design of payments for environmental services in Costa Rica

Case studies conducted in the early years of the national PES scheme in Costa Rica, have shown that it mainly benefits larger farmers and people using their forest for leisure purposes.  Since then a number of measures have been taken to promote participation of small farmers and indigenous communities. We are conducting research to examine the impact of these measures, starting with a national level analysis of trends in participation in the scheme since its introduction. Some initial findings have been published as a chapter in a forthcoming World Bank edited volume on PES.

Green Water Credits

We form part of the Green Water Credits Consortium (led by ISRIC and also involving SEI and LEI), which is working with local partners in the Upper Tana Valley Kenya. A feasibility study conducted by the Consortium has shown the potential viability of a scheme in which downstream water users make payments for soil and water conservation to farmers in rainfed agriculture areas. The next stage will involve design and implementation of the scheme. Our role is to examine the incentives for farmers to participate.

For further information please contact Maryanne Grieg-Gran.