Food and Agriculture Organization of the United Nations- FAO
Payments for Environmental Services (PES) from Agricultural Landscapes
The Millennium Ecosystem Assessment(1), an international assessment of the consequences of ecosystem change for human well-being, found that ecosystems have experienced greater change over just the past fifty years than at any other time in human history and currently 70% of the regulating services section, such as climate regulation and water and air quality regulation are in decline.
Ecosystem services are defined as all benefits that humans receive from ecosystems (2). These benefits can be direct (e.g. food production) or indirect, through the functioning of ecosystem processes that produce the direct services. The Millennium Assessment classified these ecosystem services in four categories (supporting, provisioning, regulating, and cultural) (see figure 1.1).
Figure 1.1 - Ecosystem services categories(3)

For example, a forest at the source of a river will provide more than fruits or timber. It will also play a role in water quality protection (filtering the water as it flows through roots and soil), flood control (reducing runoff and erosion), carbon storage and sequestration (in the form of additional biomass), biodiversity conservation (providing habitat for plants or animals living in the woods) and landscape aesthetics (4).
One of the main findings of the Millennium Ecosystem Assessment was that ecosystems have experienced greater change over just the past fifty years than at any other time in human history. Over 60% of the total services (15 out of 24) were in decline while only four were improving (three of these four improving services were all are related to an increase in food production). This decline affects 70% of the regulating services, such as climate regulation and water and air quality regulation, on which food production relies heavily and human life depends upon(5).
Modern agriculture has been very successful at providing the ecosystem services for which markets exist - crops, livestock, fish, fibre and wood - in ever greater quantities. But producing these 'provisioning' services has often come at a cost to the other regulating, supporting and cultural services that are not directly covered by markets see next section for more on ecosystem services, externalities and public goods.
(1)Millennium Ecosystem Assessment (MA), 2005. Ecosystems and human well-being: current state and trends. Washington, D.C., Island Press.
(2)Daily, G., (1997). Introduction: What are ecosystem services? In: Nature's Services: Societal Dependence on Natural Ecosystems, G. C. Daily (ed.), Island Press, Washington DC.
(3)FAO. 2007. The State of Food and Agriculture 2007. Part I: Paying farmers for environmental services. Rome, adapted from Ecosystems and Human well-being: a framework for assessment by the Millenium Ecosystem Assessment. Copyright © 2003 World Resources Institute. Reproduced by permission of Island Press, Washington, DC..
(4)FAO.2007. The State of Food and Agriculture 2007. Part I: Paying farmers for environmental services. Rome.
(5) see table 1, page 7 in Millennium Ecosystem Assessment (MA), (2005). Ecosystems and human well-being: synthesis. Washington, D.C., Island Press