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The global status and trends of Payments for Ecosystem Services

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The global status and trends of Payments for Ecosystem Services

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Abstract

Recent decades have witnessed a considerable increase in Payments for Ecosystem Services (PES)—programmes that exchange value for land management practices intended to provide or ensure ecosystem services—with over 550 active programmes around the globe and an estimated US$36–42 billion in annual transactions. PES represent a recent policy instrument with often very different programmes operating at local, regional and national levels. Despite the growth of these programmes, comprehensive and reliable data have proven difficult to find. This Analysis provides an assessment of the trends and current status of PES mechanisms—user-financed, government-financed and compliance—across the domains of water, biodiversity, and forest and land-use carbon around the world. We report the various dimensions of growth over the past decade (number of programmes, geographical spread, dollar value) to understand better the range of PES mechanisms over time and to examine which factors have contributed to or hindered growth. Four key features stand out for scaling up PES: motivated buyers, motivated sellers, metrics and low-transaction-cost institutions. A unique dataset of over 550 programmes of Payments for Ecosystem Services (PES) worldwide, grouped into water, forest- and land-use carbon, and biodiversity programmes, is used to assess the trends and the current status of such policy instruments.
AnAlysis
https://doi.org/10.1038/s41893-018-0033-0
© 2018 Macmillan Publishers Limited, part of Springer Nature. All rights reserved. © 2018 Macmillan Publishers Limited, part of Springer Nature. All rights reserved.
1Bren School of Environmental Management and Science, University of California, Santa Barbara, Santa Barbara, CA, USA. 2School of Law, University of
California, Los Angeles, CA, USA. 3Forest Trends, Washington DC, USA. *e-mail: salzman@ucsb.edu
Just two decades ago, Payments for Ecosystem Services (PES) was
an obscure term, with only three PES journal references in 1995
(according to a Google Scholar search, see details in Methods).
There are now over 550 PES programmes around the world, with
combined annual payments over US$36 billion. PES has been fea-
tured on the cover of The Economist magazine and become a central
component of Chinas nationwide environmental protection strat-
egy1,2. In 2016 (according to the same Google Scholar search), there
were over 1,900 PES journal references, reflecting the breadth of
scholarship that has emerged.
These numbers show growth but tell us little about the details and
evolution of particular payment mechanisms. Because PES repre-
sents such a recent environmental policy instrument with disparate
practices at local, regional and national levels, comprehensive and
reliable data have proven difficult to find. This article provides an
empirical assessment of the state of PES mechanisms—user-finance,
government-finance and compliance—across the domains of water,
biodiversity and forest carbon around the world. Using data collected
by the Ecosystem Marketplace—an initiative of the non-profit Forest
Trends focused on tracking market-based mechanisms for conser-
vation around the globe—since 2005, we assess the various dimen-
sions of growth (number of programmes, geographical spread and
dollar value not adjusted for inflation). These data provide insights
into which factors have influenced growth and effectiveness.
In economic terms, PES seeks to internalize the positive exter-
nalities (that is, the third-party benefits) generated by natural
systems, creating incentives for landholder behaviour that ensure
service provision. In some circumstances, PES can create additional
revenue streams for conservation and has been described as “mak-
ing trees worth more standing than cut down3. It is important to
recognize, however, that PES captures only a fraction of the values
provided by natural systems. Existence values, option values and
many public goods benefits often remain outside the scope of PES
mechanisms.
Wunder identifies nine different definitions of PES4. We take a
broad view, defining it as the exchange of value for land management
practices intended to provide or ensure ecosystem services.
Researchers have also proposed different categorizations for the
various types of PES5,6. Building on a framework developed previ-
ously6, we group PES mechanisms into three broad categories:
• User-nanced PES. Users of ecosystem services agree to com-
pensate landholders for activities that maintain or enhance
the delivery of ecosystem services. Users may be individuals,
companies, non-governmental organizations (NGOs) or public
actors that are direct beneciaries of ecosystem services protec-
tion, enhancement or re-establishment. is includes payments
by hydroelectric companies to landholders in the upper water-
shed for maintenance of forests and their ecosystem service of
erosion control.
• Government-nanced PES. ird parties acting on behalf
of users compensate landholders for activities that maintain
or enhance ecosystem services delivery. e buyer is a public
or private entity (such as a conservation group) that does not
directly use the ecosystem service. is includes government
programmes in Costa Rica and China that pay landholders for
reduced deforestation or aorestation activities that enhance
ood protection, water quality or other ecosystem services.
• Compliance PES. Parties facing regulatory obligations compensate
other parties for activities that maintain or enhance comparable
ecosystem services or goods in exchange for a standardized credit
or oset that satises their mitigation requirements. is includes
water quality trading, wetlands mitigation banking and the Euro-
pean Unions emissions trading scheme for greenhouse gases.
Given the broad range of PES approaches, some programmes do
not fit neatly into these categories and represent a hybrid approach6.
Watershed PES
The watershed PES sector is the most mature in terms of trans-
action value and and geographical distribution (US$24.7 billion
in 62 countries in 2015). There are currently 387 watershed PES
The global status and trends of Payments for
Ecosystem Services
James Salzman1,2*, Genevieve Bennett3, Nathaniel Carroll3, Allie Goldstein3 and Michael Jenkins3
Recent decades have witnessed a considerable increase in Payments for Ecosystem Services (PES)—programmes that exchange
value for land management practices intended to provide or ensure ecosystem services—with over 550 active programmes
around the globe and an estimated US$36–42 billion in annual transactions. PES represent a recent policy instrument with
often very different programmes operating at local, regional and national levels. Despite the growth of these programmes,
comprehensive and reliable data have proven difficult to find. This Analysis provides an assessment of the trends and current
status of PES mechanisms—user-financed, government-financed and compliance—across the domains of water, biodiversity,
and forest and land-use carbon around the world. We report the various dimensions of growth over the past decade (number of
programmes, geographical spread, dollar value) to understand better the range of PES mechanisms over time and to examine
which factors have contributed to or hindered growth. Four key features stand out for scaling up PES: motivated buyers, moti-
vated sellers, metrics and low-transaction-cost institutions.
NATURE SUSTAINABILITY | VOL 1 | MARCH 2018 | 136–144 | www.nature.com/natsustain
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... To avoid greenwashing of sustainable infrastructure, there is a requirement for independent measurements and assessment of ESG performance metrics for the infrastructure to qualify as a social, green, or sustainable investment. As a result, new business and financing models have been proposed to implement sustainable financing, including through green bonds (Baker et al., 2018;Jeremy & Neil, 2020;Zimmerman et al., 2019), "pay-for-success" models such as environmental impact bonds (EIBs) (Brand et al., 2021;Salzman et al., 2018), green asset-backed securitization (Agliardi, 2021;Berrou et al., 2019;Demidov, 2022), sustainability-linked loans or bonds (Ionescu, 2021;Kölbel & Lambillon, 2022), and new P3 contract structures (Cheng et al., 2021;Hebb, 2019;Hendricks et al., 2018;Hoeft et al., 2021). Pay-for-success or performance-based models measuring outcomes have become favored financing models for smart cities and sustainable infrastructure as it provides asset-specific risk allocations preferrable to all parties involved (Lindsay et al., 2021). ...
... Capital market incentives are potential solutions for long-term sustainable practices adoption as environmental, social, and governance (ESG) sentiment grows (Gernego et al., 2022;Makarenko et al., 2022). New market-based approaches are being developed for climate change mitigation, ensuring clean water, and halting biodiversity loss to achieve the United Nation's Sustainable Development Goals (Salzman et al., 2018;Sattler et al., 2013). The case study below is an example of such an approach. ...
Thesis
The United Nations Environment Program Finance Initiative as well as the National Academies of Science, Engineering, and Medicine recognize the need for financial innovations to facilitate transitioning to a sustainable society. To ignore financial solutions is to risk increasing environmental and social cost and the window to limit global warming under 1.5ﹾC. Under-investment in infrastructure has resulted in significant deterioration in functionality and deficiencies in society’s ability to meet present needs without compromising future generation needs from an environmental, social, and economic perspective. The American Society of Civil Engineers estimated that $5.9 trillion USD would be required to bring infrastructure to an adequate state and currently only 56 percent has been committed. This translates to an annual deficit of $259 billion USD from 2020 to 2029. Aside from the built environment, investment deficits are found in incentivizing sustainable practices in agriculture as well. Yet, while government subsidies have attempted to guide these operations towards sustainable outcomes, the capital market instruments have not been executed in farming due to market and definitional frictions. This dissertation sought to achieve three goals: (1) to understand the economic value and environmental cost of unsustainable practices; (2) to explore the potential for technology-based financing models such as blockchain to facilitate sustainability-linked financing mechanisms; and (3) to demonstrate a proof-of-concept to operationalize agricultural outcomes-based financing using blockchain. The regional use case focused on agriculture in the sub-watersheds of the Great Lakes drainage area. The work presented here leverages a number of methodologies to achieve these goals, including novel data fusion approaches, application of econometric theories, as well as blockchain-enabled funding and financing mechanisms. My initial approach applies data fusion and hedonic pricing to quantify the contribution of nitrogen and phosphorus loading on farmland sales transactions. The data sources and fusion process were derived from AcreValue, the United States Department of Agriculture's Gridded Soil Survey Geographic database and the United States Geological Survey's Spatially Referenced Regression on Watershed Attributes database. The results suggest that nutrient loading has significant positive influence on farmland prices such that prices increase with contamination and re-valuations of contaminating farmlands is required. The following chapters leverage technology-based financing using blockchains and decentralized oracle networks to reduce investment barriers for sustainable systems. A framework is presented where trusted data from internet-of-things of infrastructure can inform financial transactions on-chain in an efficient manner. This section employs the Model method to justify and predict how blockchains and oracles can use infrastructure internet-of-things data to streamline performance-based financing mechanisms by creating trust and automation. A performance-based proof-of-concept to incentivize regenerative agriculture practices is then implemented on the Ethereum blockchain. This research element highlights the benefits of implementing performance-based incentives on a blockchain via Transaction Cost Economics (TCE) analysis. The combination of blockchain-based platforms and decentralized oracle networks not only show that payment processes are automated, reducing transaction costs, but also that multiple transaction steps in a typical pay-for outcomes program can be executed using a smart contract. This work reveals the value of leveraging data streams, where insights are generated to understand the boundary conditions for the future design of sustainable infrastructure and practices. The findings of this study serve as a key input for technology-enabled financing models that can lower transaction costs and unlock new capital resources.
... These services often include biodiversity conservation, water supply, food production, and soil conservation [1][2][3][4][5]. Nonetheless, the integrated measurement of ecosystem service capacity and regional differences between watersheds has presented a research challenge for geographers, ecologists, and economists [6][7][8][9][10]. ...
Article
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Topographic position indices (TPIs) measure essential impacts on ecosystem service supply capacity. The identification of changes in ecosystem services and value metrics under varying TPIs has become a topical subject of global change research. Multidimensional changes in spatiotemporal and geographical aspects of ecosystem service values (ESVs) are assessed in this article using land cover/use data from 2000–2015. Effects of land-use/cover changes and topographic indices on ESVs are explored using the Chinese terrestrial unit area ecosystem service value equivalence table combined with topographic factors. A sensitivity index is introduced to quantify the robustness of total ESV to land-use/cover and topographic indices. The results show that: (1) The total ESV in the Qihe watershed declined with a change in land-use/cover during the period 2000–2015. The maximum ESV was CNY 1.984 billion in 2005 and the minimum was CNY 1.940 billion in 2010; (2) The response of ESV to land/use cover varied greatly across TPIs, with the most significant change in ESV occurring in the 0.6–0.8 TPI range and the greatest change in a single ecosystem service occurred in water areas; (3) The sensitivity indices of ESVs are all less than 1. The sensitivity indices of unused land and water tended to zero. Woodland sensitivity indices were the highest at 0.53, followed by those of arable land and grassland, owing to the large proportion of arable land and grassland areas in the overall area of land-use categories.
... Monetary valuation advocates for a more efficient use of limited resources and helps in deciding where protection and restoration are economically more efficient and can be delivered at least cost [16,17]. The outcomes of ES valuation studies can support coastal management decisions and conservation policies through, e.g., the establishment of compensation schemes [18], estimation of payments for environmental services [19] and assessment of rates for the use of an ecosystem based on costs of ecosystem degradation [20]. Even considering the limitations of the monetary valuation of ES [21], it is far better to work with rough and ready figures than to ignore large amounts of natural capital goods by pretending they do not exist [22]. ...
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The mapping and assessment of ecosystem services supplied by Atlantic coastal zone biomes provide a highly valuable source of information for understanding their current and potential benefits to society. The main objective of this research is to map and assess the values provided by Provisioning, Regulating & maintenance and Cultural ecosystem services on the Atlantic coastal zone over the period 2005–2015. Global ecosystem service value (ESV) functions were applied to a 100 km coastal zone of countries on the Atlantic coastal zone, using land use and socio-economic data for 2005, 2010 and 2015. Results show that total Cultural ecosystem service values (ESVCult) are largest along the Atlantic coastal zone (50 % of ESVTotal), that Tropical Forest is the biome that provides the largest total ecosystem service value (33 % of ESVTotal) and that Latin America & Caribbean is the Atlantic coastal zone with highest ecosystem service values (55 % of ESVTotal). Results also show a decrease in natural areas, mainly due to the increase in urban areas along the Atlantic coastal zone. Despite this process, there is an increase in unit ecosystem service values over time (+21 %) due to an increase in income (+13 %) and population (+15 %) over the period 2005–2015. These trends in ESV over the years deserve careful attention by policy makers. A decrease in the supply of (due to land use conversion) and the increase in demand for (due to income and population growth) ecosystem services could, potentially, lead to jeopardizing ecosystem.
... For example, Mishra et al. (2019) found that planting bioenergy feedstock such as switchgrass on marginal cropland in the Midwest could be better incentivized through both biomass sales and ecosystem service payments. While markets that facilitate the transfer of these economic benefits back to growers are quickly developing (Salzman et al., 2018), we did not include ecosystem service payments into this analysis. Doing so might alleviate the need for high biomass yields or selling prices. ...
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While provisioning ecosystem services generated through agricultural production are high, this often comes at the expense of other ecosystem services. Approaches that support both farm income and a balanced array of ecosystem services are needed. We employed a landscape modeling approach to demonstrate the financial and ecosystem service outcomes of strategically restoring grassland cover within a Corn Belt agricultural watershed. We assessed potential changes associated with a “Baseline” land use scenario and two alternative scenarios for the Grand River Basin (Iowa and Missouri, USA). In a “Buffered” scenario we simulated the impacts of replacing cropland within 20 m of streams with restored native grassland cover. In a “Productivity-based” scenario we simulated the replacement of annual row crops on poorly performing croplands with native grassland cover. Grasslands comprised 0.4% of the Baseline scenario. Grassland was expanded to 0.8% of the watershed in the Buffered scenario, reducing annual nutrient and sediment loss by 1.44%, increasing soil carbon sequestration by 0.12% over 10 years, and increasing pollinator abundance by 0.01%. The estimated annual value of these enhancements was $1.7 million for nitrogen reduction, $0.1 million for phosphorus reduction, $0.5 million for sediment reduction, and $1.3 million for soil carbon sequestration. Grassland comprised 4.9% of the watershed in the Productivity-based scenario, reduced annual nutrient and sediment loss by 11.50%, increased soil carbon sequestration by 1.13% over 10 years, and increased pollinator abundance by 0.42%. The estimated annual value of enhancements was $18 million for nitrogen reduction, $1.4 million for phosphorus reduction, $2.5 million for sediment reduction, and $14 million for soil carbon sequestration. We also calculated the value of grassland biomass for a potential energy market. The benefit of producing and selling grassland biomass ranged -$445 to $1,291 ha−1 yr−1. Scaled to the watershed, annual revenues ranged -$7.3 million to $21.1 million for the Buffered scenario and -$44.2 million to $128.8 million for the Productivity-based scenario. This study was the first to quantify changes in revenue and the value of ecosystem services associated with grassland restoration in the Grand River Basin and can help inform discussion among watershed stakeholders.
... Regardless of such a broad interpretation, it would take about two decades after the Ehrlichs' articulation (Ehrlich & Ehrlich, 1981) of ecosystem services before the idea of PES as compensation between specific actors would become widely applied in the biodiversity conservation arena (Ferraro, 2011). Today, the PES landscape is vast; a 2018 survey found 550 PES programs worldwide "with combined annual payments over US$36 billion" (Salzman et al., 2018). Perhaps the most visible of these is the international REDD+ program, which stands for Reducing Emissions from Deforestation and forest Degradation, plus the sustainable management of forests and the enhancement of forest carbon stock. ...
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Biodiversity conservation efforts have been criticized for generating inequitable socio‐economic outcomes. These equity challenges are largely analyzed as place‐based problems affecting local communities directly impacted by conservation programs. The conservation of migratory species extends this problem geographically since people in one place may benefit while those in another bear the costs of conservation. The spatial subsidies approach offers an effective tool for analyzing such relationships between places connected by migratory species. Designed to quantify ecosystem services provided and received in specific locations across a migratory species’ range—and the disparities between them—the spatial subsidies approach highlights three axes of inequity: between indigenous and settler colonial societies, between urban and rural populations, and between the Global North and Global South. Recognizing these relationships is critical to achieving two mutually reinforcing policy goals: avoiding inequitable conservation outcomes in efforts to conserve migratory species, and ensuring effective long‐term conservation of migratory species. In demonstrating how the spatial subsidies approach enables the identification and quantification of inequities involving three migratory species (northern pintail ducks, monarch butterflies, and Mexican free‐tailed bats), we argue that a spatial subsidies approach could apply to migratory species conservation efforts worldwide under the context of “payments for ecosystem services.”
... In response, governments, multilateral development banks, and other institutions are beginning to consider ecosystem services explicitly in major decisions (Mandle et al. 2019). Many countries are committing to ecosystem restoration, with new plans, policies, and financing (BenDor et al. 2015, Salzman et al. 2018, setting aside large areas of land for global agreements such as the Bonn Challenge and New York Declaration on Forests (Suding et al. 2015, Chazdon et al. 2017, Holl 2017 or corporate-led efforts like the Trillion Trees platform (Seymour 2020). Given limited resources to achieve ecosystem protection, however, it is crucial to evaluate the benefits and tradeoffs of different restoration options. ...
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Riparian buffers—forests along rivers—generate many essential ecosystem services, and their protection and restoration are the focus of many policy efforts. Costa Rica is a global leader in this regard, where legislative and executive frameworks work in concert to conserve forests that deliver public benefits such as water quality and carbon storage both locally and globally. Yet implementation and enforcement is an urgent challenge, and could benefit from high-resolution targeting with a quantitative understanding of expected benefits. Here, we undertake such an analysis, focusing on the benefits of implementing Forest Law 7575, which specifies the amount of forest to be preserved along rivers. We model changes in sediment retention, nutrient retention, and carbon sequestration from a baseline scenario based on current land use that is in partial compliance with the law. We contrast this with a simulated reforestation scenario, where riparian forest cover is increased to at least a minimum level of compliance (10 m buffers) everywhere. We find that targeted riparian reforestation—increasing national forest cover by 1.9 %—would substantially increase ecosystem services. Water quality regulation would be improved via an increase of 3.9 % in sediment retention (1.4 Mt/year), 81.4 % in nitrogen retention (0.012 Mt/year), and 85.9 % in phosphorus retention (0.0022 Mt/year). Moreover, riparian reforestation would increase the national carbon stock 1.4 % above current levels (7.0 Mt). Our analysis shows where riparian buffers are most beneficial—generally in steep, erosion-prone, and intensively fertilized landscapes. Through a canton-level analysis comparing potential increases in sediment and nutrient retention with demographic information, we find that these benefits would flow to communities that depend on rivers for drinking water and that are otherwise vulnerable. Small increases in riparian reforestation in Costa Rica, implemented via an existing law, could confer large benefits to rivers and all who depend on them.
... Resources from varied water users (private parties, government, or NGOs) are combined to collect funds for PES and 57 funds have been created in the past decades in South America (Salzman et al. 2018). However, considering the definition of PES given by Wunder (2005) none of the schemes satisfies the conditionality of having a 'defined services' with voluntary buyers and sellers. ...
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Payment for Ecosystem Service (PES) is an increasingly popular mechanism used around the world (both in developing and developed countries) for conserving water resources (particularly restoration of catchment areas) at different scales and dimensions from the pilot project in Nicaragua to the national scheme in China. However, the success of PES in catchment management (popularly known as Payment for Watershed Services) is mixed and patchy which demands further systematic assessment. This paper is an attempt to present an overview of PES schemes implemented around the world and to analyze their effectiveness. We will also highlight key challenges that PES has to encounter as a policy tool in watershed management.
... At the same time, many PES practices have been carried out in different countries, such as China's Grain-to-Green Program (GTGP) (Xie et al., 2022), Costa Rica's forest EC (Tafoya et al., 2020), Ecuador's SocioParamo Program (Bremer et al., 2014), etc. According to statistics, there were more than 552 PES programs in 2017 (Salzman et al., 2018). ...
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China’s ecological compensation (EC) is based on the property rights structure of public ownership of natural resources, which should be based on the spatial planning, which is defined by local government as the boundary of property right management and the distribution of development power. This study combined spatial planning and ecosystem service value (ESV) accounting to design a decision-making framework of EC, which includes “Subject choice, Value accounting, Priority evaluation, Policy supply”. We selected 32 counties (districts) in the Yangtze River Delta region as the research object with the consideration of spatial planning and expert advice, and found that the implementation of EC slowed down the urbanization process and promoted the increase of ecological space. We conducted an accounting and sensitivity analysis on the spatial and temporal changes of ESV in the region from 2000 to 2019, and finally determined the amount and priority of accepting EC. The research results show that the ESV in the study area shows a general trend of increasing and then decreasing in time, and a spatial pattern of high in the south and low in the north and high in the east and low in the west. Forestland and water area are the main providers of ESV in the study area. The sensitivity coefficients of each type of ESV do not change much in each period, but the coefficients between the types have large differences. The total amount of EC in the Yangtze River Delta ecological barrier (YRDEB) is RMB 38,098.11 billion, and Shitai County is the area with the highest priority for compensation. We believe that this decision-making framework has the potential to be applied to the implementation of EC in other regions of China. At the same time, it can also be used to enrich the international views on EC research.
... In recent years, eco-compensation has gradually become the core of China's environmental protection strategy [30]. Driven by relevant policies, pilot practices of horizontal eco-compensation in river basins have been actively carried out in all parts of China. ...
Article
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Horizontal/interregional eco-compensation is an important policy to promote regional ecological and environmental cooperation and realize sustainable development for river basins. To solve these problems, a horizontal compensation framework based on integrated water rights (IWRs) transaction has been established. Taking the Yellow River basin as an example, the IWRs scheme realizes sustainable development, to a certain extent, improving the current issues of shortages, the low utilization efficiency of water resources, and weak water environmental carrying capacity. Evidence for this improvement includes: (1) an increased revenue of USD 244.71; (2) the water use efficiency in the middle and upper streams (Qinghai, Gansu, Ningxia, Neimenggu, Shanxi) and the overall river basin being obviously improved (the maximum improvement value is 0.1273 m3/USD); (3) the overload situation of water resource carrying status being relieved in some subareas (Ningxia, Neimenggu, Henan, Shandong) and improved in the whole basin (from 0.6366 to 0.6124); (3) the water environmental carrying rate (COD and NH4+-N) of the middle and upper streams (Qinghai, Gansu, Ningxia, Neimenggu, Shanxi) and the whole river basin obviously decreasing (with maximum decreasing values of 0.43 and 1.14, respectively).
... Among them, payment for ecosystem services (PESs) can maintain the sustainable use of ecosystems through economic means and regulate the relationship between stakeholders. As a result, it has been the subject of numerous theoretical studies and practices worldwide [8][9][10][11]. Eco-compensation is a term commonly used in China to describe PESs [12]. Relevant practices in developed countries mostly use watersheds or specific regions as the market scope and trade various ecosystem services as commodities. ...
Article
Full-text available
Eco-compensation is an effective means of coordinating ecological protection and economic development, and the assessment of its standards is core content in the study of eco-compensation projects. To improve the operability of eco-compensation standards, taking Nujiang Prefecture as the study area, we combine the equivalent factor method and water footprint method to evaluate the ecosystem-service-value (ESV) spillover and use the market comparison method to calculate the opportunity cost. The final eco-compensation upper and lower limits model is constructed on the basis of the ESV spillover and opportunity cost. The results show the following: (1) the ecological protection of Nujiang Prefecture has been effective, based on the stabilization of its ESV after an initial increase. The main types of ecosystem services provided are regulation and provision services. Gongshan County makes the most significant contribution to the total ESV. (2) The ratio of the ESV self-consumption in Nujiang Prefecture shows a trend of first rising and then falling. This is mainly explained through the reduction in the use of industrial and agricultural water. After deducting self-consumption through the water footprint method, it can be observed that there is ecological spillover in Nujiang Prefecture. (3) The opportunity cost in Nujiang Prefecture increases yearly from 2005 to 2020 owing to ecological protection policies. Combined with the ESV spillover, it is determined that the rational range of the eco-compensation standard is between CNY 6.17 × 102 million and 120.01 × 102 million in 2005, between CNY 10.02 × 102 million and 128.25 × 102 million in 2010, between CNY 30.34 × 102 million and 197.12 × 102 million in 2015, and between CNY 41.97 × 102 million and 227.52 × 102 million in 2020. The current study can offer decision makers a more flexible eco-compensation standard while coordinating the contradiction between regional ecological protection and economic development.
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This Campbell systematic review examines the effects of payment for environmental services (PES) programmes on deforestation and poverty, and whether environmental and poverty reduction goals conflict with one another. The review summarizes evidence from 11 studies covering six PES programmes in four countries. The modest effectiveness of PES programmes means that they are not cost‐effective. Relative to the extensive investment to measure forest conditions, efforts to assess the effects of PES programmes on deforestation and poverty are limited and methodologically weak. Abstract We conducted a systematic review of studies on the impact of payments for environmental services (PES) that set natural forest conservation as the goal on deforestation and poverty in developing countries. The review is motivated by debates over whether the pursuits of conservation and poverty reduction in developing countries tend to conflict or whether they might be complementary. A search for rigorous impact evaluation studies identified eleven quantitative and nine associated qualitative evaluation studies assessing the effects of PES. The methodological rigor of these studies varied widely, meaning that the evidence base for the impact of PES policies is limited in both quantity and quality. Given the evidence available, we find little reason for optimism about the potential for current PES approaches to achieve both conservation and poverty reduction benefits jointly. We call for the production of high quality impact evaluations, using randomisation when possible, to assess whether the apparent incompatibility of conservation and poverty reduction might be overcome through programming innovations. Executive summary BACKGROUND Natural forest preservation in the tropics, and thus in developing countries, must be an element of any effective effort to manage climate change. Forests serve as natural carbon sinks, which help to mitigate the effect of other carbon emissions. However, forest cover is being reduced and it is estimated that deforestation is responsible for 10‐17 per cent of global carbon emissions. Since 2007, governments have coordinated conservation efforts under the Reducing Emissions through Deforestation and Forest Degradation (REDD+) initiative, which has led to the implementation of various programs designed to reduce the amount of forested land converted to other purposes. Payment for environmental services (PES) programs is one type of intervention commonly implemented under the REDD+ umbrella. PES programs allow for direct exchange between those demanding ‘environmental services’ such as protection or rehabilitation of natural forests and those in a position to provide them locally. While the primary goal of reducing deforestation is clear, the policy and academic literature debates the extent to which PES programs in developing countries should incorporate goals of poverty reduction. Some argue that the targeting of poverty goals will undermine conservation effectiveness (e.g., because behavioural change among poorer households does not have as much potential to promote conservation as that of wealthier households or commercial entities). Others argue that targeting benefits toward the poor would contribute to conservation effectiveness by either promoting sustainable livelihoods or helping to legitimize conservation programming. In this review, we assess the effects of PES programs on deforestation and welfare outcomes in low and middle income countries (LMICs), and whether the twin goals of improving both environmental and human welfare outcomes are at odds with each other. We also examine how inequality, institutional capacity, corruption, and democratic accountability may moderate the effects of PES programs. Conducting this review is important for moving the debate around PES beyond theoretical discussions and into a better‐informed, evidence‐based discussion. OBJECTIVES The first objective of this review is to assess the evidence on the effects of PES interventions on conservation and poverty outcomes in LMICs. A second objective is to assess the extent to which effects on poverty in turn affect whether conservation benefits are realized. The third objective is to evaluate how institutional and social conditions (namely, inequality, institutional capacity, corruption, and democratic accountability) moderate the effects of PES programs. SELECTION CRITERIA The review includes studies of PES programs that assess effects on either (i) deforestation outcomes in forest areas in developing countries or (ii) poverty conditions of populations residing in communities that are proximate to natural growth forest areas in developing countries. We included studies using a range of measures for both deforestation (on‐the‐ground point samples, samples created from satellite imagery) and welfare (consumption, income, or income potential). We required that PES programs have a clear start date when either payments or rewards are themselves offered to individual or corporate property holders to maintain or rehabilitate (for example, via planting endemic species) natural forests, or institutions are established to facilitate such offers. For quantitative synthesis we included (a) randomized studies and (b) quasi‐experimental studies that employ strategies for causal identification with clearly delineate treated and control areas and use some method for removing biases due to non‐random assignment of the intervention. Qualitative data are used in the synthesis to provide descriptions and context for interventions that are included in the quantitative synthesis. Such data were drawn from the quantitative studies themselves as well as qualitative studies that cover the same programs or settings as the quantitative studies. SEARCH STRATEGY To find the articles included in this review, we searched a variety of databases using key words related to PES programs. The set of databases and list of keywords were assembled based on consultation with a Campbell Collaboration information retrieval specialist. We also carried out hand searches of key journals in relevant fields, using publisher search engines and references cited in papers accepted for review as well as in review papers or thematically relevant papers identified during the search. DATA COLLECTION AND ANALYSIS For studies eligible for inclusion in the review we systematically collected data on study characteristics, findings, and moderators. Risk of bias was assessed based on the guidance of the IDCG Risk of Bias Tool (version March 2012). We extracted qualitative information from both the included quantitative studies as well as qualitative studies that covered the same types of programs and contexts as our quantitative studies. We use such qualitative data to establish that conditions recorded in quantitative data are being interpreted correctly and to provide descriptions and context for interventions that are included in the quantitative synthesis. For effects on forest cover, whenever possible we standardized them to annual forest cover change rates. For effects on material welfare and poverty outcomes, we used percentage change over estimated average counterfactual outcome (e.g. for income effects, per cent change in income relative to the average income of the control group). For each hypothesis, we synthesised estimates using meta‐analysis when the following conditions were met: (i) more than two studies meeting the quantitative inclusion criteria; (ii) effect sizes for common outcome constructs; and (iii) effects measured against similar comparators. RESULTS Our database search returned 1382 articles on PES programs. After eliminating articles that were not relevant to our hypotheses or conducted with appropriate methodological rigor, we were left with 20 articles on PES programs. Of these 11 PES articles conducted quantitative impact evaluation of these programs. The 11 PES articles cover six programs in four countries (Costa Rica, China, Mexico, and Mozambique). The resulting evidence base is weak both in terms of the number of eligible studies and the methodological weaknesses of the included studies. None of the studies are based on randomized experiments, and so the potential for hidden selection or confounding biases is the most concerning issue. Few of the studies create comparison groups that allow them to address spill‐over and leakage of effects from program areas to non‐program areas. None of the studies investigated forest conservation and welfare effects jointly, which made it difficult to assess how these two goals are related. Effects on Deforestation Outcomes The PES studies that assessed programs' effects on forest cover included nine studies of four programs in Costa Rica and Mexico. The studies focused on two types of measures: impact on deforestation rate (where the best‐case scenario is a deforestation rate of 0) and impact on forest cover (which allow for a positive outcome in the expansion of forested land). Keeping in mind the weakness of the evidence base, the studies that focus solely on reducing deforestation suggest that PES programs have, on average, tended to reduce the annual rate of deforestation by 0.21 percentage points (s.e.=0.09, 95% CI: [0.03, 0.39]). Effect sizes are a bit larger for studies that examine forest cover change, which measures not only forest loss, but also forest gain. Estimated effects on annual forest cover change rates ranged from 0.50 percentage points (s.e.=0.20, 95% CI: [0.11, 0.89]) for a study in Costa Rica to 1.6 percentage points (s.e.=0.80, 95% CI: [0.03, 3.17]) for a study in Mexico. One study suggests an outlier effect of 10 percentage points (no standard error or confidence interval provided in the original study), but this study suffers from a high risk of bias. Effects on Human Welfare Outcomes The evidence base on the effects of PES on welfare outcomes is very limited, with only two studies in two countries (China and Mozambique) included in the review. These studies find that PES improved participating households' incomes by 4 per cent (s.e.=1.55, 95% CI: [0.96, 7.04]) in Mozambique and by 14 per cent (s.e.=3.42, 95% CI: [7.3, 20.7]) in China. However, these average effects do not necessarily tell us how these programs affect poor households. For PES to contribute to poverty reduction, poorer household must be able to participate at high rates. But participation in PES programs is typically more difficult for poor households than wealthier households (a fact documented by in a number of the studies included in the review). The study from Mozambique includes estimates for poor households and finds that the welfare effects were substantially less in absolute terms, and not statistically significant for these households. The Role of Institutional and Social Conditions We aimed to address a number of hypotheses regarding the influence of institutional and social conditions (inequality, institutional capacity, corruption, and democratic accountability) on the effects of PES programs. However, due to limitations of the evidence base we were unable to these hypotheses. We did however extract qualitative data from included studies and associated qualitative studies that provide some insights into the role of institutional and social conditions in the context of PES programs. A study on the Mexican PSAH PES program found that forest conservation effects were worse in poorer areas. Qualitative information from Costa Rica was consistent with this account. Several of the studies also addressed the issue of institutional capacity, describing situations where PES programs did not have the ability to carry out their mandates. Corruption and possible misappropriation of project resources were also factors raised in a qualitative study of PES in Mexico. The study found that program resources were applied to address inadequacies in other government programs. AUTHORS' CONCLUSIONS Limitations in the evidence base preclude definitive hypothesis tests, however the evidence we find suggests that PES does reduce deforestation rates. The effect is modest however and seems to come with high levels of inefficiency. In terms of PES effects on poverty, we cannot say that the evidence indicates beneficial effects. Available evidence shows that PES programs are less effective in poor areas and are less likely to attract participation of poor households than wealthier ones. These are troubling findings but they are based on only a handful of cases and therefore deserve much more empirical attention. Our review aimed to assess the extent to which environmental and poverty reduction goals conflict with one another, how different conservation strategies fare in terms of such trade‐offs, and the scope for ‘win‐win’ strategies that generate both significant environmental and poverty reduction benefits. Based on the evidence available, we do not find that a case can be made for conservation and poverty‐reduction goals being complementary in PES programming. Our final conclusion re‐emphasizes the poor state of the evidence base for PES programming. Much advanced scientific effort and extensive investment has gone into measuring forest conditions around the world. Relative to that, efforts to assess the effects of PES programs on deforestation and poverty are limited and methodologically weak. Researchers should consider the recent work in development economics for guidance on executing field experiments that might provide more credible evidence (Banerjee and Duflo, 2011; Casey et al., 2012; Karlan and Appel, 2012).
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