The Effectiveness of Payments for Environmental Services
Background
The academic debate on how effectively Payments for Environmental Services (PES) achieve environmental and socioeconomic goals continues to grow. Researchers initially focused on defining the concept and documenting early field experiences. Over time, they shifted their attention to designing effective incentives, analyzing behavioral responses, conducting systematic reviews, and applying counterfactual-based impact evaluations to assess outcomes more rigorously.
Goals and Methods
The authors use a theory of change framework to evaluate the environmental effectiveness and welfare implications of PES programs. They define environmental effectiveness by examining program costs, direct changes in land or resource use by participants, indirect effects on land or resource use outside the contracted areas, and the impacts of these changes on environmental service provision. The context, design, and implementation of PES programs shape each of these factors. To assess welfare impacts, the authors analyze socioeconomic and environmental factors, emphasizing the interconnectedness of program outcomes and their broader implications.
Conclusions and Takeaways
PES relies on incentives rather than disincentives, distinguishing it from conventional environmental policy tools. Effective design allows PES to address market failures cost-effectively, while poor design wastes resources and causes adverse outcomes. Contextual factors and design principles identified in theoretical reviews significantly influence PES performance in practice. Evidence shows that PES delivers notable positive environmental impacts, particularly at local or sub-national scales, though its effects on social outcomes remain modest. Researchers must advance theoretical and empirical studies to clarify how PES interacts with other policies, uncover heterogeneous effects, and identify causal mechanisms. Comparative analyses of PES initiatives, driven by growing standardization and data availability, can provide practitioners with valuable insights to refine design and implementation.
Reference:
The Effectiveness of Payments for Environmental Services. World Development. 2017;96:359 - 374. doi:10.1016/j.worlddev.2017.03.020.