Incentives, conditionality and collective action in payment for environmental services (original) (raw)
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Incentives, conditionality and collective action in payments for environmental services
As payment for environmental services (PES) initiatives spread to collectively managed natural resources, questions arise because the incentive structures that might be appropriate for individually managed resources will not necessarily promote the collective action required to manage the commons.Theory suggests challenges for cash payments to promote collective action, and for alternative payment types to facilitate conditionality. Possible ways to reconcile this disconnect involve conceiving of PES more broadly through the use of multiple forms of payment including non-cash incentives and placing greater focus on building institutions for collective action than on strict conditionality.
Payments for Environmental Services: Concepts and Applications
RePEc: Research Papers in Economics, 2013
The reports present work in progress being undertaken by the project team. The views and interpretations expressed in these reports are those of the author(s) and should not be attributed to any organization associated with the project. Because these reports present the results of work in progress, they should not be reproduced in part or in whole without the authorization of the Australian Project Leader, Professor Jeff Bennett
Payment for Environmental Services: Hypotheses and Evidence
2013
The use of Payment for Environmental Services (PES) is not a new type of contract but they have become more in vogue because of the potential for sequestering carbon by paying to prevent deforestation and degradation of forest lands. We provide a framework utilizing transaction costs to hypothesize which services are more likely to be provided effectively. We then interpret the literature on PES programs to see the extent to which transaction costs vary as predicted across the type of service and assess the performance of PES programs. As predicted we find that transaction costs are the least for club goods like water and greatest for pure public goods like carbon reduction. Actual performance is difficult to measure and varies across the examples. More work and experimentation is needed to gain a better outlook on what elements support effective delivery of environmental services. 1 We express caution here because the issue as Coase (1960) noted is: are goods underprovided compared to what alternative, and at what cost? Coase (1974) demonstrated that on the coast of England the "classic" public good, the lighthouse was provided privately for years and appeared to work reasonably well. In short, there are costs to using the market and costs of using government. 2 See Wunder (2006) for a comparison of PES to other conservation tools. 3 find that it is not always a win-win situation and the poor do not always gain. 4 This is due to the fact that the transaction costs are larger than the gross surplus to be gained by the trade.
2007
The idea of Payments for environmental services (PES) has an appealing simplicity, which may explain the success of the concept. However, successful projects are far limited though and two constraints have been identified in literature. The first is limited demand: too few service users are so confident about the mechanism that they are willing to pay. The second obstacle is poor knowledge on the institutional requirements entailing incentive and livelihood mechanisms which so far have received comparatively less attention. This paper focuses on both constraints by arguing that monitoring effectiveness and conditionality of PES schemes are crucial and that institutional arrangements for monitoring should be in place. By analysing in a systematic way what types of measurement problems there are, the paper shows that the type of monitoring that is required within a PES has consequences for the institutional arrangement needed for a successful PES. We find that the institutional arrangements for monitoring vary according to (i) the type of environmental service and its underlying production process, (ii) the extent to which the environmental service can be freely observed or measured, (iii) the extent to which activities of the resource managers who provide the environmental service can be freely observed, and finally (iv) the deterministic or stochastic nature of production processes.
An institutional analysis of payments for environmental services
Ecological Economics, 2010
In this paper the characteristics and functioning of PES is analyzed from an institutional perspective. While in theory PES is seen as a market solution to environmental problemsas an alternative to state (hierarchical) and community governancea review of a large amount of case studies shows that PES in practice depends rather fundamentally on state and/or community engagement. Hence PES are foremost a reconfiguration of the roles of public bodies and communities becoming core intermediaries or 'buyers'. First, to establish PES, rights to the land that delivers the environmental service must be clarified. This demands public action. Second, transacting over environmental amenities is very costly. Creating 'markets' for environmental services depends therefore crucially on state and community facilitation. Hence 'buyers' are often public agencies. High transaction costs also influence price setting. Payments do not follow the market format as intermediaries frequently are setting the price, with users often being unaware even of the fact that they pay. Finally, the distinction between payments as incentives and as fair compensations is emphasized. While payments may strengthen community relations and simplify action for environmental care, they may also introduce a purely instrumental logic and in some cases worsen the environmental status by crowding out environmental virtues. For the future, greater awareness of these dynamics is warranted.
The Role of Risk in Targeting Payments for Environmental Services
SSRN Electronic Journal, 2000
Payments for environmental services have become increasingly popular in both the developing and developed world. Existing programs, however, could be made more efficient by taking into account the risk of losing these services in the design of such programs.
Role of Payment for Environmental Services in
Although mountains are rich in natural resources and provide vital ecosystem services to the global community, mountain people are marginalised. As the ecosystem services they provide are mostly free of charge, they have no incentive to invest in the conservation. We examine the feasibility of improving their livelihoods through the sale of water services to downstream communities. Using hydrometeorological data, we assessed the effects of forest conservation on water yield and estimated the value of water services to downstream communities. Results show that if a system of payment for ecosystem services is established, mountain communities can improve their livelihoods by converting their farmland into conservation areas. However, it will take 15 years to increase the water yield, which means that external assistance is required in early years. Policy measures are suggested to establish a market for ecosystem services to encourage upstream communities to take conservation measures.