Food and Agriculture Organization of the United Nations- FAO
Payments for Environmental Services (PES) from Agricultural Landscapes
Financial sustainability
Investment in environmental services is a long-term affair. Long-term financial resilience is still a major difficulty for current PES schemes: Once start up funds (usually from government programmes or international cooperation agencies) run out, the scheme’s developers find it very difficult to raise enough funds from the beneficiaries to cover payment commitments to farmers and the scheme’s own running costs.
Long-term contributions
In most current PES schemes, the land management options fostered require continuous payments to land managers(20). If the contributions from the beneficiaries stop, incentives for environmental services-inducing management options will also end- threats to the ecosystems will return and possibly even undermine previous investment.
It is crucial that a PES scheme manages to strike strong and binding deals with buyers. Apart from a few cases where contribution commitments are easily enforceable, most contributions from private buyers have so far been voluntary and often without clear periodical commitments. Similarly, public schemes are also vulnerable to changes in budget allocations.
While it is a security measure for the buyer to have the chance to assess whether his or her investment is being worthwhile, it also generates insecurity in the scheme’s investment and may prevent it from delivering results in due course. A balanced between both must be feasible from the start - buyers must agree to some degree of commitment to allow the scheme to take off.
In the long run it is vital that buyers are kept well informed of performance and are assured of the scheme’s monitoring capacity and the contingency of payments to providers - for more see contingency and accountability(20) This happens mainly in “Conservation PES schemes”, where the new land use, or land use changes, result in a reduction in the farmer’s benefits, thus requiring a continuous compensation for this loss. “Agro-development” PES schemes deals aim to increase farmers' benefits on their own, and do not require more than support with adoption costs. For more on this see "win-win"-strategies for PES programme development.
