Designing payments for environmental services in theory and practice: An overview of the issues

By S. Engel, S. Pagiola, Sven Wunder. 2008

2,451 citations recorded by the source corpus.

Payments for environmental services (PES) have attracted increasing interest as a mechanism to translate external, non-market values of the environment into real financial incentives for local actors to provide environmental services (ES). In this introductory paper, we set the stage for the rest of this Special Issue of Ecological Economics by reviewing the main issues arising in PES design and implementation and discussing these in the light of environmental economics. We start with a discussion of PES definition and scope. We proceed to review some of the principal dimensions and design characteristics of PES programs and then analyze how PES compares to alternative policy instruments. Finally, we examine in detail two important aspects of PES programs: their effectiveness and their distributional implications. PES is not a silver bullet that can be used to address any environmental problem, but a tool tailored to address a specific set of problems: those in which ecosystems are mismanaged because many of their benefits are externalities from the perspective of ecosystem managers. PES is based on the beneficiary-pays rather than the polluter-pays principle, and as such is attractive in settings where ES providers are poor, marginalized landholders or powerful groups of actors. An important distinction within PES is between user-financed PES in which the buyers are the users of the ES, and government-financed PES in which the buyers are others (typically the government) acting on behalf of ES users. In practice, PES programs differ in the type and scale of ES demand, the payment source, the type of activity paid for, the performance measure used, as well as the payment mode and amount. The effectiveness and efficiency of PES depends crucially on program design.

Subfields: Economics and Econometrics, Global and Planetary Change

View Paper: https://www.semanticscholar.org/paper/df629dfaf4fdb9c54a0d7dfbe215198ca16ba1f6

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Citations in the corpus

Evaluation of biodiversity policy instruments: what works and what doesn't? (2012, background): “In the PES literature, case studies and descriptive approaches have suggested that the impact is likely to vary according to whether government or users provide funds (Engel et al., 2008).”
The Devil in the Detail: A Practical Guide on Designing Payments for Environmental Services (2016, methodology): “As illustrated in Figure 1, PES is primarily an approach for addressing environmental externalities in situations where the societal benefits from ES provision exceed the costs to ES providers (Engel et al., 2008; Wunder, 2005, 2015).”
The importance of local forest benefits: Economic valuation of Non-Timber Forest Products in the Eastern Arc Mountains in Tanzania (2014, positive): “However, by combining PES with other instruments aimed at socio-economic objectives (Wunder et al., 2008), the legitimacy (Corbera et al., 2007) and ultimately the efficiency and equity outcomes of PES may be improved (OECD, 2007; Pagiola and Platais, 2007; Engel et al., 2008).”
Evaluating the outcomes of payments for ecosystem services programmes using a capital asset framework (2014, background): “, 2012; Tacconi, 2012; Derissen and Latacz-Lohmann, 2013) as a policy tool intended to address a spectrum of land management challenges (Landen-Mills, 2002; Landell-Mills and Porras 2002; Wunder, 2006; Engel et al., 2008; Bond and Mayers, 2010).”
The food waste hierarchy as a framework for the management of food surplus and food waste (2014, background): “…and concepts such as the waste hierarchy (Figure 3), the ‘3Rs’ (Reduce, Reuse, Recycle), extended producer responsibility, polluter pays principle (Engel et al., 2008), life cycle assessment and Sustainable Consumption and Production (SCP) (Pires et al., 2011) were introduced and the paradigm…”
Fairly efficient, efficiently fair: Lessons from designing and testing payment schemes for ecosystem services in Asia (2015, background): “Initially, the PES concept was strictly defined as a market-based environmental policy instrument to achieve environmental protection in the most efficient way (Engel et al., 2008; Pagiola et al., 2005).”
Payments for environmental services as neoliberal market-based forest conservation in Vietnam: Panacea or problem? (2012, background): “In general, three types of buyers have emerged in existing PES plans: private businesses or individuals (users of services); governments (buying on behalf of users); and NGOs (organizing on behalf of sellers rather than buyers) (Engel et al., 2008; Wunder et al., 2008).”
Incentives to Sustain Forest Ecosystem Services: A Review and Lessons for REDD (2009, background): “PES mechanisms have been advocated largely as an independent tool that is most effective when there are strong economic externalities (Engel et al. 2008).”
A place-based approach to payments for ecosystem services (2017, background): “However, the interdependence of different ecosystem functions across landscapes often leads to trade-offs between services provided by different ecosystems or habitats (Engel et al., 2008).”
Problematizing REDD+ as an experiment in payments for ecosystem services (2012, background): “In a large number of cases, PES have contributed to reinforcing collective and individual conservation behavior as schemes have been characterized by low levels of environmental additionality and financial compensation [36,37,58 ].”
Rethinking ecosystem services to better address and navigate cultural values (2012, neutral): “2007; Engel et al., 2008; Juniper, 2011; Muñoz-Piña et al., 2008; Turpie et al., 2008).”