Payment for Environmental Services

The concept of payment for ecosystem services (PES) has garnered substantial international interest as a cost-effective means to improve environmental management and improve livelihoods by rewarding people for their efforts in providing ecosystem services, such as watershed protection, soil stabilization etc. PES was originally defined as a voluntary transaction for a well-defined ecological service, with at least one buyer, at least one provider, and based on the condition that the buyer(s) only pay if the provider(s) continue to deliver the defined ecosystem service over time (Wunder 2005). While not specifically designed for poverty alleviation, PES has been acclaimed for the role that payments can have in lifting offering service providers towards alternative and higher-order economic activities diversified livelihood opportunities and greater opportunities for improving their well-being (Pirard et al 2010). The key to finding such a win-win outcome is a conditional offer of the right mix of incentives in exchange for an alteration in the behaviour or activities of specific land-users. In this way, PES as a social negotiation market-based and voluntary approach may be more acceptable to potential participants than traditional laws or regulations implemented by government, since both parties can perceive gains from the outcome. The design and implementation on PES will have great influence on future REDD+ activities and there are a great many lessons to be learned from nascent PES schemes in the Greater Mekong region. Indeed, the various schemes underpin the flexible definition of what constitutes PES, in terms of voluntary participation.

Increased efforts are needed to disseminate existing knowledge on first-generation of REDD+ pilot projects and that from PES schemes, and to generate new knowledge relevant to the economic choices and trade-offs of REDD+, are needed to inform policymakers, practitioners and investors in the region. Experience with PES schemes in the region are also relevant to design and implementation of REDD+. However, it is important that this takes place in the context of lessons learned from previous experience of working in the region.

Building on earlier CIFOR work on PES, the USAID-funded project “Economic Choices and Trade Offs of REDD+” carries out a comparative review of the major countries of the Greater Mekong aiming to provide sufficient policy recommendations to inform potential plans for broader scaling up and replication.