This newsletter presents the overall conclusions from the environmental service incentive (ESIs) component of the Roles of Agriculture Project Phase II. The objective is to draw policy implications and to deliver practical policy guidance to design, implement and enforce ESIs consistent with poverty alleviation in developing countries. A key conclusion is that ‘pro-poor ESIs’ needs to be defined clearly in order to avoid confusion over the concept. The main source of confusion is whether poverty alleviation is treated as an objective before intervention, or an consequence or outcome of ESIs. The paper gives policy guidance for pro-poor ESIs in the following areas:
- for the design of ESIs:
- defining targeting criteria for eligible areas;
- determining contract types and payment levels;
- establishing compliance requirements;
- finding sustainable financing sources;
- reducing transaction costs whilst for collecting information on scheme design;
- for the implementation of ESIs:
- addressing insecure or unclear land tenure;
- overcoming initial investment requirements;
- easing technical capacity complaints;
- reducing transaction costs for arranging and implementing a contract;
- for the enforcement of ESIs:
- establishing an effective punishment scheme to free-riding land owners;
- reducing transaction costs for monitoring a contract.
