The Effectiveness of Payments for Environmental Services

Background

In the 1990s, some countries began making monetary or in-kind payments to stewards of natural ecosystems as an incentive to them to protect their land. Payments for ecosystem (or environmental) services (PES) initiatives are based on the principle that while nature conservation benefits a wide range of citizens, it is some individuals or groups who bear the cost of conservation, when they choose to not to develop their land, known as the ‘opportunity cost’ of conservation. The number of PES initiatives has grown considerably across the 1990s, as has the number of research studies on their effectiveness. The authors conducted a review of research studies to evaluate the effectiveness of PES initiatives in generating social and environmental benefits. 

Research Goals & Methods

The authors focused on the role of two types of factors which determine the environmental and socioeconomic effectiveness of PES initiatives: contextual factors and scheme design. They examined contextual factors like political, institutional, and socioeconomic conditions at the site and the different values of ecosystem services. They also examined the design of the PES schemes such as the type and amount of payment, the length of the contract, and whether it targeted specific beneficiaries. They included empirical studies, comparative case studies, and meta-analyses of PES initiatives in the review.

Conclusions & Takeaways

The authors first discussed studies which used experimental research designs to measure the impact of PES initiatives, for example, through comparing the observed results with what we might see if the intervention had never been made. They found that PES initiatives are less effective when communities are already protecting nature without any incentives, and when the beneficiaries of the scheme are not identified correctly. These studies did not report significant socioeconomic benefits of PES initiatives. Next, the authors discussed other research studies which did not use experiment research designs.  These studies suggest that the following factors limit the effectiveness of PES initiatives: poorly functioning institutions, unclear property rights, and a low science evidence-base for decision making. Finally, most studies focus on the ecological outcomes of PES, and future research should study the social impacts of PES, for example, by understanding whether PES payments are shared equitably.