2.4.
1 Concept of PES
Payments for ecosystem services (PES), also known
as payments for environmental services (or benefits),
are incentives offered to farmers or landowners in
exchange for managing their land to provide some sort
of ecological service. PES promote the conservation of
natural resources in the market place.
Some PES programs involve contracts between
consumers of ecosystem services and the suppliers of
these services. However, the majority of the PES
programs are funded by governments and involve
intermediaries, such as non-government organizations.
Contd…
The party supplying the environmental services
normally holds the property rights over an
environmental good that provides a flow of benefits
to the demanding party in return for compensation.
In the case of private contracts, the beneficiaries of
the ecosystem services are willing to pay a price
that can be expected to be lower than their welfare
gain due to the services. The providers of the
ecosystem services can be expected to be willing to
accept a payment that is greater than the cost of
providing the services.
2.4.2 Meaning and Definitions
“Payment for environmental service is voluntary
transaction were a service provider is paid by or on
behalf of service beneficiaries for environmental
resource management practice that are expected to
result in continued or improved service provision
beyond what would have been provided without a
payment.” - FAO, 2011
Payment for environmental services is “A voluntary
transaction where a well defined environmental service
is being bought by a environmental services buyer from
a environmental services provider and secure
environmental services provision or conditionality.”
– Wonder, 2005
2.4.3 History of PES
Costa-Rica pioneered the use of payments for
environmental/ecosystem services approach of
developing countries by establishing formal country-
wise programs of payments mechanism to charge the
users of environmental services.
In 1999, the Chinese central government announced an
even more expensive project under its $ 43 billion
Grain for Green program, by which it offers farmers
grain in exchange for not clearing forested slopes for
farming, thereby reducing erosion and saving the
streams and rivers below from the associated deluge of
sedimentation.
Contd…
Notably, some sources quote the cost of the entire
program at $95 billion. Many less extensive
nationally funded PES projects which bear
similarities to the American and Chinese land set-
aside programs exist around the world, including
programs in Canada, the EU, Japan and Switzerland.
Example:
In Hondurus, the Cumes River is the town’s main
source of clean water. Coffee producers were
dumping their waste into the river upstream,
polluting the source and directly affecting the
consumers downstream.
To solve this problem, the local Council for
Administration of Water and Sewage Disposal created
a payment program to benefit coffee producers
upstream and the town’s inhabitants who lived
downstream. The farmers benefitted with guidelines,
such as construction of irrigation ditches, proper
management of waste, and use of organic fertilizers.
Contd…
In Nepal, Departments of National Parks and Wildlife
Conservation (DNPWC) manages benefits for the park
adjoining community people by providing park
resources freely and certain percentage of park’s
revenue for local development.
Types of Eco-system Services (ES)
Providing Regulating Cultural Services
Products obtained Benefits obtained from Non-material
from eco-system regulation of eco-system benefits obtained
processes from
-Food -Climate regulation -Spatial and religious
-Fresh Water -Disease Regulation recreation and eco-
-Fuel Wood tourism
-Fiber -Water regulation -Aesthetic inspirational,
-Bio-chemicals -Water purification Educational
-Genetic -Pollination -Sense of Place
-Resources Cultural heritage
Supporting Services
Services necessary for the production of all other eco-system services
- Soil Formation - Nutrient Cycling - Primary Productions
Source: MEA (Millennium Ecosystem Assessment), 2005
Payment Schemes for Environmental Services
A. Direct payment scheme
Such as President Chure Conservation Scheme of
Nepal from which the people of Terai region are directly
benefitted.
B. Product based payment scheme
Such as organic productions promotion,
Afforestation/Reforestation etc.
