Designed to provide the reader with a solid understanding of what Payments for Ecosystem Service (PES) are and how they work, this primer is intended for an audience interested in exploring the potential of PES — either as prospective PES sellers themselves or as staff of organisations that work directly with communities or landowners who may be interested in PES.
It is emphasised that Ecosystems provide society with a wide range of services — from reliable flows of clean water to productive soil and carbon sequestration. People, companies, and societies rely on these services for raw material inputs, production processes, and climate stability. At present, however, many of these ecosystem services are either undervalued or have no financial value at all. In response to growing concerns, markets are emerging for ecosystem services in countries around the world. Formal markets now exist related to carbon emissions, water, and biodiversity.
PES deals can offer the rural poor an opportunity to augment their income as stewards of the land by implementing practices to restore and maintain ecosystem services. Some of the key benefits of PES for the rural poor in the short term are that they can lead to increased cash income and increased knowledge of sustainable resource use practices through training and technical assistance. In the longer term, PES can benefit the poor through improved resilience of local ecosystems and flow of ecosystem services.
The paper concludes by outlining a four step approach to developing PES deals:
- the first step is identify ecosystem service prospects and potential buyers. This would include defining, measuring, and assessing the ecosystem services in a particular area, identifying prospective buyers, and considering whether to sell as individuals or as a group;
- the second step is to assess institutional and technical capacity which includes assessing legal, policy, and land ownership context, examining existing rules for PES markets and deals, and surveying available PES-support services and organisations;
- third comes structuring the agreements involving designing management and business plans, reducing transactions costs, reviewing options for payment types, and establishing the equity and fairness criteria for evaluating;
- the fourth and final step is to implementing the PES Agreements. This should include finalising the PES management plan, verifying PES service delivery and benefits, and monitoring and evaluating the deal.
