Payments for Ecosystem Services - From Theory to Practice

This study underlines the importance of PES systems, viewed as monetary transfers which form part of an already effective transfer network constituting a given area’s economy, but which are far from being always consistent. In that sense, PES systems could help review the coherence of monetary transfer policies targeting environmental objectives in the perspective of effective sustainable development.

Paris, 19 June 2012: Payments for Ecosystem Services (PES) cannnot be ignored today, when considering environmental and developmental policies. However, there is a considerable lack of clarity regarding their definition, leading to a number of misconceptions, such as the belief that any environmental policy instrument involving a money transfer constitutes a PES instrument.
 
In order to bring more clarity to the subject, this analysis first defines the special features constituting a PES. It is an instrument which aims at protecting the environment by bringing about changes in producers' farming practices by offering them payments. It differs from prescriptive or coercive approaches, such as regulatory instruments where producers are required to pay in order to offset any negative environmental impacts caused by their activities. The archetypal approach consists of a voluntary, contractual and bilateral agreement entered into by a group of ecosystem service (ES) beneficiaries and a group of producers. Although there are numerous examples of this approach, a great number of PES systems differ, especially when payments are not requested from ES users aware of such payments and even more so when payments arise from mandatory taxpayer contributions. These distinctions have led to defining and illustrating a 'mapping' that places the different types of PES in relation to each other on the one hand, and within the scope of environmental public policy instruments on the other.
 
The study shows that the attractiveness of PES systems lies in their ability to mobilize economic agents, associative intermediaries, public bodies and finances. Their main features are pragmatic – in certain circumstances, they are able to provide functional, sustainable and profitable arrangements to partners. However, conditions for their widespread use remain problematic: dependency with regard to the State's regulation or sovereign powers; potential difficulties in overcoming the pilot project stage; the risk of numerous adverse effects, etc. Such difficulties hinder the PES system's potential to establish conditions that can effect profound environmental policy changes in Developing Countries.

The study was written by Yann Lauran & Schéhérazade Aoubid (Ecowhat) and Tiphaine Leménager (Agence Française de Développement).

Please find the full study here.
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