Payments for Ecosystem Services: Rife with Problems and Potential—For Transformation Towards Sustainability

Payments for Ecosystem Services: Rife with Problems and Potential—For Transformation Towards Sustainability


Payments for ecosystem services (PES) are monetary or in-kind payments that are made to land owners or stewards for the ‘services’ that their land provides such as fresh water, climate regulation, and soil formation. These payments are meant to act as an incentive to protect natural landscapes. Research on PES interventions has increased substantially from 2000 onwards. For example, the authors of this study found that there were 13 google scholar search results for “payments for ecosystem services” published before 2000, 182 results for studies published between 2001 and 2006, and 6830 results for studies published between 2007 and 2015.

Research Goals & Methods

The authors reviewed the literature on PES interventions to identify the main problems with their design and implementation and made recommendations to address these problems.

Conclusions & Takeaways

They identified the following main problems with PES design and implementation: (i) PES try to address certain negative consequences of production but may causes other unintended consequences: for example low-carbon agriculture for carbon credits may lead to food or livelihood insecurity; (ii) ecosystem conservation is seen as the responsibility of those who pollute because they make the payments, instead of the stewards of the land; (iii) monetary incentives may replace altruistic motivations for conservation; (iv) PES interventions may exacerbate existing inequalities by valuing efficiency over equity, or those preferring landowners who can contribute larger services; (v) PES interventions can have large monitoring costs; (vi) the ideal conditions for PES interventions rarely exist, where property rights are clearly understood and negotiations can occur on equal terms; and (vii) PES interventions are often prescribed as a ‘one-size-fits-all’ solution but may be against the values of local stakeholders.

To address these problems, the authors recommend that PES design and interventions should: (i) focus on rewarding stewardship rather than specific actions; (ii) assign rights and responsibilities more equally to avoid signaling to stakeholders that payments give a right to pollute; (iii) include in-kind payments and copayments where ecosystem service providers bear a part of the cost to encourage intrinsic or altruistic motivations; (iv) design programs aiming at long-term shifts in norms rather than short-term additionality, which tends to value large landowners more; (v) establish peer or community-based monitoring; (vi) involve more parties throughout the supply chain; and (vi) invite ecosystem service providers or landowners to propose place-based solutions instead of imposing pre-design schemes.


Chan KMA, Anderson E, Chapman M, Jespersen K, Olmsted P. Payments for Ecosystem Services: Rife With Problems and Potential—For Transformation Towards Sustainability. Ecological Economics. 2017;140:110 - 122. doi:10.1016/j.ecolecon.2017.04.029.


  • University of British Columbia
  • Copenhagen Business School