Could Payments for Ecosystem Services Create an "Ecosystem Service Curse"?

Abstract

Payments for ecosystem services (PES) have received much praise and are increasingly perceived as a promising tool to ensure the protection of global ecosystems as well as being able to help alleviate poverty in areas rich in ecosystem services. Given current trends, the scale of payments is likely to grow, creating new circumstances within which ecosystem services will be managed. In this dynamic context, following a precautionary approach, one should focus on establishing systems to handle the risks involved. Based on an analogy to resources that have long been included in the system of market transactions, we suggest that the rapid development of PES can negatively influence regional and potentially national economies. Resource revenues are highly correlated with economic problems in poor countries that are not able to use those revenues to ensure sound development. Problems similar to those that affect resource-rich countries may emerge in the case of economies rich in ecosystem services once PES increase in spatial and monetary scale. The most prominent examples of such problems include rent seeking, unequal bargaining power of buyers and sellers, volatility of payments, which are all related to the quality of institutions. To ensure the long-term positive impacts of PES, such systems should be carefully designed paying particular attention to distribution of property rights and transparency, decentralization of revenues, and capacity building to ensure further development opportunities.

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Copyright © 2013 by the author(s). Published here under license by the Resilience Alliance.
Kronenberg, J., and K. Hubacek. 2013. Could payments for ecosystem services create an "ecosystem
service curse"? Ecology and Society 18(1): 10. http://dx.doi.org/10.5751/ES-05240-180110
Perspective, part of a Special Feature on Ecosystem Services, Governance and Stakeholder Participation
Could Payments for Ecosystem Services Create an "Ecosystem Service
Curse"?
Jakub Kronenberg 1 and Klaus Hubacek 2
ABSTRACT. Payments for ecosystem services (PES) have received much praise and are increasingly perceived as a promising
tool to ensure the protection of global ecosystems as well as being able to help alleviate poverty in areas rich in ecosystem
services. Given current trends, the scale of payments is likely to grow, creating new circumstances within which ecosystem
services will be managed. In this dynamic context, following a precautionary approach, one should focus on establishing systems
to handle the risks involved. Based on an analogy to resources that have long been included in the system of market transactions,
we suggest that the rapid development of PES can negatively influence regional and potentially national economies. Resource
revenues are highly correlated with economic problems in poor countries that are not able to use those revenues to ensure sound
development. Problems similar to those that affect resource-rich countries may emerge in the case of economies rich in ecosystem
services once PES increase in spatial and monetary scale. The most prominent examples of such problems include rent seeking,
unequal bargaining power of buyers and sellers, volatility of payments, which are all related to the quality of institutions. To
ensure the long-term positive impacts of PES, such systems should be carefully designed paying particular attention to distribution
of property rights and transparency, decentralization of revenues, and capacity building to ensure further development
opportunities.
Key Words: aid curse; ecosystem services; global PES; payments for ecosystem services; PES; resource curse
INTRODUCTION
Payments for ecosystem services (PES) are perceived as a
promising and efficient approach that allows for the protection
of ecosystem services by integrating them into the market
system. So far PES have been developed mostly on a regional
scale, although international examples are also available
(Landell-Mills and Porras 2002, Mayrand and Paquin 2004,
Swallow et al. 2009). Their spatial and monetary scale has
remained limited and they have not made significant impacts
on economies in which they were implemented. However,
with their rapid adoption so far, their effects are likely to
change. According to one estimate, ecosystem service markets
may generate benefits for 600–800 million rural poor by 2030
(Milder et al. 2010). Carroll and Jenkins (2008) calculated that
broadly interpreted PES-related transactions are likely to
amount up to US$1.1 trillion by 2050, compared with about
US$87 billion in 2006.
There are a number of trends and factors that could drive a
further scaling up of PES, such as the international or even
global dimension of many ecosystem services (Huberman
2009, Strassburg et al. 2009); higher willingness to pay for
ecosystem services in developed countries (Stern 2007,
Wunder and Wertz-Kanounnikoff 2009); better balance of
North–South relations (Romero and Andrade 2004, Huberman
2009, Kronenberg 2012); and economies of scale reducing the
transaction and planning costs of individual projects. Indeed,
the calls for a global PES recently appeared in academic
writing (e.g., Sultanian and van Beukering 2008, Huberman
2009, Wunder and Wertz-Kanounnikoff 2009), policy-
oriented reports (The Economics of Ecosystems and
Biodiversity (TEEB): OECD 2010, ten Brink 2011), and
declarations (Heredia Declaration 2007). REDD+ and the
CDM’s afforestation component provide two examples of PES
already being used at the global level. If PES increased in scale
with new international conservation initiatives using this
instrument, and if these payments reflected the “real value” of
ecosystem services, they would generate significant revenue
streams particularly in the case of poorer but environmentally
well-endowed countries. What may then be “the broader
effects on the economy from scaling-up PES schemes” (Jack
et al. 2008:9470)? And, “to what extent is PES compatible
with an economically viable development trajectory for
economies as a whole” (Bulte et al. 2008:247)? This article
discusses these questions, aiming to highlight some potential
risks that may emerge with the large-scale adoption of PES.
The experience gained so far with provisioning services (such
as food and fiber), many of which have long been included in
the system of market transactions, reveals that poorer countries
may have difficulties to benefit from such revenue streams.
The literature on the “resource curse” demonstrates that
resource-rich countries are often not able to fully utilize their
resources to ensure economic development (e.g., Sachs and
Warner 1995). Instead, they suffer from different types of
economic and social distortions aggravated by resource
revenues, along with additional nuisances for local
populations living in resource-rich areas. Similar problems
1Department of International Economics, Faculty of Economics and Sociology, University of Lodz, 2Department of Geographical Sciences, University of
Maryland, College Park

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have been observed in the case of other capital flows, including
aid (Bräutigam and Knack 2004, Harford and Klein 2005,
Djankov et al. 2008), workers’ remittances (Abdih et al. 2012),
and tourism revenues (Wilkinson 1992), especially when these
are significant relative to the scale of the receiving economy.
We reflect on what can be termed as an “ecosystem service
curse”, whereby countries rich in ecosystem services would
receive payments significant enough to distort their
economies, or at least to distort local economies where
ecosystem services originate.
In this article, we call for caution through indicating potential
problems that may emerge if PES developed too quickly. We
refer to the experiences of resource-rich countries that have
not been able to reap the benefits from selling provisioning
services (referred to as the resource curse). We analyze
whether the same problems may appear in the case of other
ecosystem services for which countries are likely to receive
increasingly significant payments. Based on this analysis, we
briefly summarize some key design elements for PES systems
to help avoid such problems.
LESSONS LEARNT FROM PAYING FOR
PROVISIONING SERVICES
Provisioning of materials is an ecosystem service (e.g.,
Costanza et al. 1997, Rodríguez et al. 2006, Wallace 2007)
which, unlike most other ecosystem services, is largely
included in the system of market transactions. Thus, the
experience gained in this area may now be used in creating
markets for other ecosystem services. Interestingly, resource
revenues have often turned out to be counterproductive and
instead of bringing prosperity they brought or aggravated
economic problems, which led to the emergence of the
resource curse hypothesis. Although this refers mainly to
nonrenewable resources, it has also been observed in the case
of renewable resources, such as timber and agricultural
products (e.g., Ross 2001b, Dube and Vargas 2006).
The idea that abundant resources may have detrimental effects
on economic growth emerged with the Prebish–Singer
hypothesis (Prebisch 1950, Singer 1950) and the so-called
Dutch disease (Corden and Neary 1982). The Prebish–Singer
hypothesis refers to declining prices of commodities compared
with prices of manufactured goods. The Dutch disease concept
suggests that large resource revenues may lead to a significant
inflationary pressure and shift production factors to the
extractive sector, to the detriment of other sectors. The
resource curse concept received much attention in the 1990s
and refers primarily to experiences gained in the second half
of the 20th century in developing countries. From the initial
macroeconomic explanations (e.g., Sachs and Warner 1995),
the focus has gradually shifted towards institutions (“rules of
the game”), suggesting that the effects of resource abundance
on economic performance depend on the quality of institutions
(e.g., Mehlum et al. 2006a,b). Thus, the most widely adopted
explanation is that, unless good institutions are already in
place, resource revenues remove incentives to improve
institutions and infrastructure, and encourage rent seeking
(Harford and Klein 2005, Brunnschweiler and Bulte 2008,
Wick and Bulte 2009). Although the Dutch disease provides
an obvious exception, and even a good institutional setup may
not be able to easily counteract such a situation, most other
manifestations of the resource curse depend on institutions
(see the Appendix for an overview).
Several recent publications on the resource curse provide an
exhaustive review of the debate so far (Auty 2007, Torvik
2009, Wick and Bulte 2009, Van der Ploeg 2011, Frankel
2012). Nevertheless, some countries have been able to avoid
the resource curse and this might have depended on a variety
of factors, such as saving resource income, the political system
and the quality of institutions, the stage of industrialization,
and the type of natural resources (Torvik 2009). The main
intrinsic characteristic differentiating resources that might
have influenced the situations of resource-rich countries is
their appropriability or “lootability”. Resources that are easier
to appropriate facilitate rent seeking, corruption, conflict, and
smuggling, thus potentially preventing economic growth
(Mehlum et al. 2006b, Boschini et al. 2007). Appropriability
is further related to spatial concentration. Point resources, such
as precious metals, diamonds, and oil (as opposed to diffuse
resources, such as agricultural land), are unevenly spread
across a territory, which makes them easier to appropriate
(Ross 1999, 2001a, Leite and Weidmann 2002, Sala-i-Martin
and Subramanian 2003, Isham et al. 2005, Wick and Bulte
2006).
Interestingly, the main focus of the resource curse literature
is not on resources as stocks but on the flows of resource rents.
In particular the focus is on the risk of wasting the potential
that these rents might bring for economic development. Rents
from ecosystem services can be defined similar to resource
rents as the difference between their market value and their
total costs. Providing ecosystem services is often related to
abstaining from some economic activity or modifying
production processes, thus their costs of delivery are related
to opportunity costs for land users, which lays the foundation
for PES. In the case of resources, rents are often private and
can be taxed. In the case of ecosystem services, rents only
emerge when they are subject to market transactions that reveal
the market value of those services. Thus, PES, like other
market transactions, will in most cases lead to the privatization
of ecosystem services rents.
While nonrenewable resources are extracted and depleted,
ecosystem services can be delivered in perpetuity, depending
on the condition of natural capital. This links to the weak vs.
strong sustainability debate and to substitutability between
different forms of capital. In the case of exploiting mineral
resources, long-term development can only be ensured by

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substituting natural capital with other forms of capital (e.g.,
strengthening institutions). Indeed, countries with low or
negative so-called net or genuine savings tend to be more
affected by the resource curse (Atkinson and Hamilton 2003,
Dietz et al. 2007). Meanwhile, ecosystem service “providers”
are paid for ensuring that ecosystems provide those services
for which their beneficiaries are willing to pay. PES depend
on providers’ ability to maintain natural capital so that it
provides the services under consideration in perpetuity.
Depleting natural capital in this case would have more serious
consequences than in the case of mineral resources as it would
deprive a given locality of a potentially infinite stream of
revenues. Furthermore, PES can increase the total (natural and
human made) wealth of a given area if the money is used to
generate other forms of capital. PES can serve as a stimulus
for further development, through co-investment or seed
capital, or through in-kind payments. Nevertheless, as in the
case of resource revenues, this development potential may be
wasted if the money is not used for development purposes but
dissipates within an economy or is siphoned off by elites. We
now relate the risks observed in the case of resource revenues
to PES.
SOCIOECONOMIC IMPACTS OF PES
The literature on PES has already touched upon many of the
problems related to the resource curse. However, these
references remain scattered and are often only raised as side
issues. In particular, many attempts have been made to study
the impacts of PES on the poor and to devise PES in such a
way that would help improve the situation of the poor (e.g.,
Grieg-Gran et al. 2005, Pagiola et al. 2005, 2008, Bulte et al.
2008, Wunder 2008, Jourdain et al. 2009, Milder et al. 2010,
Muradian et al. 2010). However, empirical studies have not
confirmed that PES schemes have so far contributed to poverty
alleviation (Wunder 2008, Pattanayak et al. 2010). Rather,
they indicate that if PES attempt to solve both poverty and
environmental problems at the same time, this may reduce
their efficiency in meeting these objectives. Thus, some
authors argue that PES should focus on one of these objectives
at a time, that is, protection of ecosystem services for which
they were created (Bulte et al. 2008, Wunder 2008, Zilberman
et al. 2008, Ferraro 2009) and then the other might be achieved
as a side effect. However, ignoring this dual nature of PES
might lead to important unintended side effects.
For example, Karsenty (2004, 2007) suggests that PES might
keep poor communities in a poverty trap as they would receive
payments for refraining from some types of activity that might
harm ecosystem services. They might become passive
“conservation rentiers”, losing any dynamism and innovation
potential they might have had, had they pursued their
traditional development path. Activities that are prohibited
may have actually been more labor intensive (Pagiola et al.
2005) or related to higher innovation and learning-by-doing
gains (Karsenty 2004, 2007, Hutton et al. 2005). Clements et
al. (2010) suggests that the new economic incentives to protect
ecosystem services may lead to the erosion of local rules and
social norms, which may also affect preferences for different
forms of economic activity. Indeed, abundance of resources
and the related resource revenues reduce the innovation
potential of resource-rich countries. Often it is not the
abundance of production factors that forces innovation and
enhances competitiveness but their scarcity (Porter 1990).
Authors such as Wunder (2006) respond that in many poor
countries economic development or innovation do not
frequently occur and indeed PES may be a unique opportunity
offered to such communities. Wunder (2006) suggests that
PES do not necessarily mean capping development because
people in poor communities are involved in diversified
activities, only some of which might conflict with providing
a given ecosystem service. However, Wunder (2006) agrees
that the negative social phenomena related to extra financial
flows for ecosystem services (“PES trap”) had not occurred
because so far these payments have not been large enough to
change the situation in this way. Indeed, most PES studies
adopted a narrow focus, studying individual projects and their
income redistribution impacts. At the same time, they
neglected the regional, national, and especially international
context in which important welfare or development issues
emerge. Larger scale PES could also have significant
unintended side effects on the poor (also on those who would
not take part in PES) (Pagiola et al. 2005, Wunder 2008,
Zilberman et al. 2008). For example, retiring land from
agriculture and other uses leads to higher land prices and lower
accessibility of land and nonprotected ecosystem services, as
well as higher prices of commodities, especially food.
Although there are also potential opportunities to create jobs
with the use of PES, such as in tree-planting, tourism or
silvopastoral practices, as well as potential positive
externalities for agriculture (from forest and water
conservation), and further economic opportunities may
emerge with new capital available to poor communities, again,
all of these depend on how PES are designed. These
opportunities may be undermined by rent seeking, unequal
bargaining power, and volatility of payments; these are
problems that affect the development opportunities of
resource-rich countries but are also highly relevant in the case
of ecosystem-rich countries.
Rent seeking
Rent seeking emerges when new actors take over rents, often
by manipulation, corruption or force, from those who would
have been entitled to receive those rents in normal
circumstances.
Mechanism
PES increase the value of land that is important in terms of
ecosystem services. As PES are usually tied to land ownership,
PES might lead to further concentration of wealth and to

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excluding poorer land users from the land they have been using
in order to capture PES (Redford and Adams 2009, Milder et
al. 2010). Additionally, rent seeking and appropriation of land
providing ecosystem services may lead to conflicts (Ferraro
and Kiss 2002).
In developing countries people working the land are not
necessarily landowners (Karsenty 2004, 2007, Wunder 2006,
2008, Porras et al. 2008). Although so far it has been thought
that customary rights might often guarantee effective control
and no formal systems of property rights need to be introduced
(Wunder 2006), with a global system of PES this would
probably have to change, in order to ensure its objectivity and
universality within an international setting. Indeed, when
institutions are weak and stakes are high, various forms of rent
seeking become more attractive, which is known as a moral
hazard effect.
Evidence
Rent seeking has already appeared in the PES-related literature
as a potential threat (Ferraro and Kiss 2002, Landell-Mills and
Porras 2002, Rosa et al. 2003, Karsenty 2004, 2007, Pagiola
et al. 2005) but most authors downplayed its importance on
the grounds that PES have not been large enough to attract
larger players (Rosa et al. 2003, Robertson and Wunder 2005,
Wunder 2005, 2006, 2008). Rent seeking has been feared by
some donor agencies that were considering getting involved
in PES (Wunder et al. 2008a) and by some providers of
ecosystem services (Wunder 2008). For example, rent seeking
was identified as a serious problem in the case of an
internationally financed carbon sequestration project in
Madagascar in which large amounts of available money
attracted powerful players. As a result, profits from selling
carbon credits did not reach local communities but led to the
appropriation of resources by the state and other actors (Pollini
2009). Ebeling and Yasué (2008) plotted potential REDD
income against the World Bank’s governance indicators and
observed that some countries in particular would be likely to
receive significant payments relative to their GDP and at the
same time are among those with the poorest governance
structures.
Evidence of rent seeking can also be found in the earlier
examples of government-funded PES-related schemes, such
as soil conservation programs in the U.S. Farmers who
conformed to the initial standards were soon overridden by
powerful local committees that influenced the government to
change the rules regarding what practices could be funded
(Elmendorf 2003). Other examples of strategic behavior
emerged with reference to other government subsidy schemes
with environmental objectives, including the largest U.S. and
EU agri-environmental programs (Martin et al. 1982, Baylis
et al. 2004, Salzman 2005, Wunder et al. 2008b, Wunder and
Santiago 2010).
Unequal bargaining power
Negotiations between the participants of the ecosystem service
market are affected by unequal bargaining power; in most of
these cases, buyers are exploiting their position to the
detriment of the providers’ interest.
Mechanism
Apart from uncertain land tenure, other problems, such as
limited experience and understanding of novel mechanisms
or poor enforcement of legal contracts may limit the access of
ecosystem service providers to PES (Ferraro and Kiss 2002,
Kosoy and Corbera 2010). In principle, this is most often the
case of relatively isolated groups that do not have enough
knowledge and experience to make informed decisions when
confronted with new ideas presented by powerful external
stakeholders. Alternatively, if not exploited, smallholders may
be excluded from participation in PES schemes due to higher
transaction costs of organization and inclusion. Commodification
of ecosystem services can create new socioeconomic
hierarchies, repositioning of actors, or can reproduce unequal
power relations in access to wealth and environmental
resources (Kosoy and Corbera 2010). Indeed, PES criticisms
often focus on the related problems of equity and legitimacy
(Karsenty 2004, 2007, Corbera et al. 2007, Hubacek et al.
2009).
Romero and Andrade (2004) emphasized that even
conservation organizations may expect to make a deal paying
relatively little for conservation in poor countries where the
current opportunity costs of environmental protection are low
compared to developed countries. Thus in the case of markets
for ecosystem services, with fewer and better informed buyers
than sellers, the buyers could dictate the conditions (Wunder
2008). The more homogenous a service is, the easier it might
be for the buyer to change a provider (thus providing the buyer
with higher bargaining power because of substitutability),
potentially undermining the financial sustainability of a
scheme.
PES are often arranged through intermediaries who have major
influence on the price and conditions of the transaction. Not
only is their bargaining power much larger than that of most
ecosystem service providers when deciding on the conditions
of the transaction, but also they may use many other
opportunities to capture a disproportional part of benefits
(Neef and Thomas 2009, Kosoy and Corbera 2010, Vatn
2010). For example, offering to “help” by providing access to
a bank account to those who do not have access to an account
and would not be able to receive the payments otherwise. There
is a strong focus in the literature on the need to employ “honest
brokers” ensuring that the interests of both buyers and sellers
are secured (Rowcroft et al. 2011).
Alternatively, large ecosystem service providers, sometimes
those that have pushed out smaller providers in the first place,
may resort to dishonest practices by demanding higher prices

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than economically justified. This is related to information
asymmetry, that is, providers may know or at least pretend to
know the specificity of ecosystem services better than the
buyers and inflate the opportunity costs of supplying these
services. This may happen especially when ecosystem service
providers realize that the scheme is not monitored well enough
and that no sanctions are imposed on those who do not fulfill
the original agreements (Salzman 2005, Ferraro 2008, OECD
2010, Pattanayak et al. 2010).
Evidence
Based on some preliminary evidence with initial voluntary
projects, some authors feared that relatively large REDD
payments might “create incentives for government and
commercial interests to actively deny or passively ignore the
rights of indigenous and other forest-dependent communities
to access and control forest resources” (Brown et al.
2008:113). Based on experiences from Meso-America,
Corbera et al. (2007) indicates that the above problems are
more likely to emerge in PES programs carried out in protected
areas where managers and intermediaries make all decisions.
Another study of PES in Mexico demonstrated that because
of the poor knowledge of ecosystem service providers and
their poor capacity to prepare project proposals, “substantial
funding was lost in the preparation of unsuccessful project
proposals” (Corbera et al. 2009:751).
Volatility of payments
Due to various primarily external reasons, the value of PES
may vary significantly over time.
Mechanism
The discussion on PES so far has not paid enough attention to
the dynamics of the situation that PES are supposed to solve.
Ecosystem services change over time, as do the pressures on
ecosystems, properties of ecosystems, and the preferences and
needs of society. In addition, service recipients may not be
satisfied with the service or they may find a more cost-effective
way of acquiring the same service elsewhere. These dynamics
may influence price fluctuations similar to those experienced
in other natural resources-related markets. Volatility of
payments would translate into volatility of income for
ecosystem service providers. Pagiola et al. (2005) noted that
the stability of income for ecosystem service providers
depends on the financial sustainability of the PES scheme.
Although incomes are likely to be stable in the short term, one
cannot ensure that the scheme would last in the long term.
Even if, in principle, ecosystem services can ensure an infinite
stream of benefits, this depends on many additional factors,
such as demand for those ecosystem services and their
substitutability. If funding ends with the end of a given project,
the local population may not find it easy to identify and pursue
new development prospects (Hutton et al. 2005, Carolina Elia,
personal communication).
Volatility is related to changing perceptions and values
associated with different ecosystem services. The attention
and preferences of the public might change and associated
decrease in funding might lead to a decrease of the ecosystem
service provision due to, for example, land conversion.
Alternatively, the public might start recognizing the
importance of certain services but these might not be available
anymore due to previous overharvesting or destruction. A
change in preferences cannot just create new service flows
given certain irreversibility and uncertainty with regard to
ecosystem responses (Hubacek et al. 2009). Finally,
knowledge about the importance of certain ecosystem services
may change, diverting attention of buyers to different services
and thus impacting upon ecosystem service providers. Had a
given community specialized in one type of ecosystem
services, its vulnerability and dependency on PES would
increase.
Evidence
On a global scale, the unpredictability of carbon prices
provides the most obvious example of how preferences and
payments change. In particular, the REDD+ scheme exhibits
the many risks that affect the level of payments, such as
unknown future demand for carbon credits, unclear plans of
donors, market pressure favoring the lowest cost solutions,
and undecided future of the scheme itself (Phelps et al. 2011).
Other factors add to this uncertainty, such as the overall
economic situation, e.g., the current recession, and changes in
the political framework, e.g., the expiration of the Kyoto
Protocol and lack of a successor framework.
POLICY IMPLICATIONS AND CONCLUSIONS
With increasing scale of PES, new problems may emerge,
similar to those that have been linked to other relatively large
revenue streams, notably resource revenues. These problems
are not specific to ecosystem services and yet, on a limited
scale, they have already occurred in the case of PES. At least
to some extent these problems can be mediated by proper
design of PES and thus, they should attract the attention of all
stakeholders responsible for developing this instrument.
Further research is necessary on how to design a global system
of PES taking into consideration the risks that we have
highlighted. Indeed, all of these risks refer to governance
structures, including institutional frameworks, monitoring,
communication, and participation.
Strengthening institutions emerges as the most important
issue; this includes enforcement of regulations and
decentralization of resource revenues. Targeting providers
directly and studying the socio-political situation in regions
in which important ecosystem services exist prior to offering
PES to those regions might prevent rent seeking. It would also
ensure that PES do not cause counterproductive distributional

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consequences that might negatively affect the environment.
Where applicable, this could also be achieved by reducing the
appropriability of ecosystem services, for example by
introducing objective eligibility criteria, such as period of use
of a given plot of land. Similar to some other international
undertakings, accredited auditors should be responsible for
verifying whether the system works in countries receiving
PES, preventing any negative consequences as early as
possible. Ensuring the transparency of this system will also
require tight controls in order to avoid exertion of undue
bargaining power.
A global system of PES would require the creation of national
agencies that would be responsible for promoting the system
in the respective countries and adjusting global standards to
local conditions. These agencies would have to be independent
from national authorities to minimize the problems of rent
seeking and corruption. These agencies should be responsible
for promoting information on local markets internationally,
thus fostering efficient and effective design of PES
transactions (e.g., prices, services, cooperation rules, socio-
political situation in regions rich in ecosystem services).
Nationally, these agencies should improve access to
information on PES, including promoting PES good practices
in local languages. Apart from reducing the differences in
bargaining power and thus promoting the participation of
smaller ecosystem service providers in PES, information
availability should increase the influence of service providers
on designing PES. Indeed, thanks to participation of service
providers in designing PES, their interests are better taken into
account than in the case of traditional resource management
in which decisions are frequently made centrally. Involving
providers in discussions on PES might enhance their
engagement and interest in participation (Corbera et al. 2007,
Turner and Daily 2008, Hubacek et al. 2009). This would also
help to avoid some of the problems that have been highlighted
(e.g., conflicts) and it would bring additional benefits to the
protection of ecosystem services, such as learning-by-doing
and preventing free riding.
A global system of PES needs to reduce the vulnerability of
its participants to price volatility. Such a system should
promote mechanisms that guarantee a fair price to ecosystem
service providers in order to encourage a long-term provision
of these services. Again, examples of such mechanisms are
available in the commodity market. In poorer communities
such a system would need to introduce capacity building
mechanisms to ensure that these communities can absorb the
funds, and to bring about other benefits such as improved
social capital, and future development opportunities. A good
system of PES should help to diversify the economies of poor
countries so that they do not depend exclusively on PES but
still manage their ecosystems in a sustainable way. Indeed,
PES should have an educational component on the importance
of ecosystem services and on the mutual dependence of
providers and buyers. After all, because of irreversibility, new
markets reflecting new preferences will not be able to undo
many of the changes that we introduce to ecosystems.
Responses to this article can be read online at:
http://www.ecologyandsociety.org/issues/responses.
php/5240
Acknowledgments:
We are grateful for encouraging discussions and comments
on earlier drafts from Ian Bateman, R. Kerry Turner, and
Ragnar Torvik. Jakub Kronenberg acknowledges funding from
the British Council’s Young Scientists Programme and a grant
supporting young researchers provided by University of Lodz
(no. 545/176).
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Appendix. Manifestations of the resource curse.
Problems
Selected references
Dutch disease (appreciation of the real exchange rate leading to export
difficulties of the manufacturing sector, resulting in loosing the related positive
externalities in an economy, undermining its long-term competitiveness)
Corden and Neary 1982, Sachs and
Warner 1995, Sachs 1999,
Gylfason et al. 1999
Volatility of commodity prices and their long-term decline relative to the prices
of manufactures
Prebisch 1950, Singer 1950,
Hausmann and Rigobon 2003
Volatility of resource export earnings (changes in demand and prices in
international markets), contributing to macroeconomic boom and bust cycles
(borrowing in good times, repaying in bad times; high levels of government
spending in good years followed by deep cuts in bad years); often combined with
volatility of exchange rates
Knack and Keefer 1995, Manzano
and Rigobon 2001, van der Ploeg
and Poelhekke 2010
Volatility of rates of extraction (may be affected by technological processes but
also by political instability)
Humphreys et al. 2007
Volatility of timing of payments by corporations to states, again leading to
macroeconomic boom and bust cycles
Humphreys et al. 2007
Poor institutions that have not been able to ensure development without resources
are not able to be effective once resources are discovered and exploited, either
(imperfect markets, poor legal systems, badly defined property rights)
Ross 1999, 2001b, Mehlum et al.
2006a,b, Robinson et al. 2006,
McSherry 2006, Smith 2007
Weak democracy (weak, unaccountable states – fewer connections between the
state and citizens, fewer taxes, less information, lower demand for government
services by citizens)
Moore 2001, Ross 2001a
Corruption (spending in political campaigns or coercion – funding militias);
related to poor institutions and weak democracy
Sala-i-Martin and Subramanian
2003, Vicente 2010
False sense of security leading to overconsumption and underinvestment
(resource windfalls encourage unsustainable and unwise policies, unnecessary
projects, clientelism, unjustified public expenses, excessive borrowing,
insufficient investment in educational and social reforms); related to poor
institutions and weak democracy
Mansoorian 1991, Ross 1999,
Gylfason 2001, Manzano and
Rigobon 2001, Robinson and
Torvik 2005, Aslaksen and Torvik
2006, Robinson et al. 2006, Collier
and Hoeffler 2009
Rent seeking and conflicts (those in power and those who already control
resources abuse their authority to appropriate resource revenues and remain in
power, either by various forms of bribery, delaying reform, etc., or through
armed conflict); additionally, this diverts resources away from more productive
activities; related to poor institutions and weak democracy
Gelb 1988, Baland and Francois
2000, Acemoglu et al. 2004, Auty
2001ab, Ross 2001a,b, Torvik
2002, Fearon and Laitin 2003,
Humphreys 2005, Collier and
Hoeffler 2005, Acemoglu and
Robinson 2006, Robinson et al.
2006, Bulte and Damania 2008
Unequal expertise (foreign extractor may know more about the resource, its
value, quantity, extraction technologies than the government of the resource-rich
country leading to differences in bargaining power)
Bougrine 2006, Humphreys et al.
2007
Grievances for local populations (reducing quality of life as a result of resource
extraction: forced migration, inadequate job opportunities, environmental
degradation, unfair distribution of benefits, military repression)
Collier and Hoeffler 1998, 2004,
Azam 2001