Food and Agriculture Organization of the United Nations- FAO
Payments for Environmental Services (PES) from Agricultural Landscapes
Targeting providers and accomplishing additionality
Targeting the most efficient providers and making sure that the scheme does result in an improvement in the ecosystem service provision remains the greatest challenge.
The best providers
Payment for Environmental Services (PES) Programmes are directed to the protection or improved management of a particular land area that has the highest potential to protect or enhance specific environmental services (see figure 4.1). Priority areas, for example may include:
• important water infiltration areas contributing to groundwater reservoirs recharge
• restoration of riparian strip vegetation to trap pollutants and silt, reducing pollution and sediment load in water courses
• natural vegetation islands in farmland providing important habitat for local or migrant fauna
• areas of forest under threat of deforestation
• degraded lands suitable for reforestation
Figure 4.1. Potential for Environmental Service Provision in Costa Rica(2) partial view of original map, click on it for full view at its original source
| Within the environmental priority area, some land managers will be in a position to provide greater improvements in the provision of environmental benefits than others, in relation to: |
| • what they are providing now, i.e. those currently using less environmentally friendly techniques |
| • the current or future threat to their provision: to ensure that the investment made by the PES programme does provide additional environmental services benefits - a key issue for many programs -, the suppliers selected must also be those that are less likely to protect or improve the environmental values in their land (without the PES incentive) - see section "Rewarding Bad Behaviour" |
| • the degree to which they can be differently affected by outside influences that would render the PES programme unnecessary. E.g. due to new legislation or changes in market forces, the lower price of a particular agriculture commodity would reduce pressure on the expansion of the agriculture frontier for example- see table 4.1 below. |
Table 4.1. Comparing the potential for environmental service delivery with level of opportunity costs
|
LOW opportunity costs |
HIGH opportunity costs |
HIGH potential for environmental services (ES) delivery |
• providers requiring low compensation • and in a position to provide high ES value • PES approach a competitive option compete and can get best value for money |
• Providers requiring high payments • but in a position to provide high ES value • hardest for PES to compete despite high value • supporting environmental regulation may be necessary to reduce the level of payment required (i.e. the provider sees in PES a flexible way of complying with newly introduced limits to his/her activity) |
LOW potential for environmental services (ES) delivery |
• Providers requiring low payments • but not in a position to provide valuable ES • PES approach over large groups of producers and associated with high co-benefits a good option |
• Providers requiring high payments • and not in a position to provide valuable ES • difficult for PES to compete and not worth the ES value to be generated - not worth pursuing |
From the most promising providers identified in the previous stage, some will require higher payments (higher compensation) than others. This depends on the returns they draw from their current activity, in comparison with the costs of adoption of the new management measures, or on the forgone benefits if they comply with the resource use limitations brought in from participating in the scheme (opportunity costs of participation).
This selection process will probably single out several groups of participants, with different combinations of levels of compensation for differentiated levels of potential environmental services delivery. This will identify the best "value for money" providers and exclude others, either because their potential to provide environmental services is low, or despite it being high, it would require a very high investment. This happens in cases where returns to current unsustainable activities are high and improved environmental services would cause a reduction in profit (e.g. by changing land use altogether or setting larger land areas aside). Here the level of compensation required may well be higher than the buyer's willingness to pay- see figure 4.2 below for examples.
Fig. 4.2 Examples of levels of carbon payments required to provide incentives for reducing emissions by avoided deforestation(3) click on the picture to enlarge
On the contrary, when the environmental benefit would be very valuable (e.g. avoiding conversion of old growth tropical forest), a push from newly introduced regulation might just make the PES approach an attractive soft mechanism for the farmer to comply with the new legal limitations (that e.g. render deforestation illegal and actively enforce it).
In cases where high benefits can be achieved with little reduction (or even a gain) in agricultural production and income, even low payments can raise interest among farmers. Those are the two PES programme cases scenarios that can present "win-win" opportunities for the development of PES schemes, and are explained in the next section.
(2)adapted from Map "Servicios Ambientales, 2001 Fuente: ICE, 2000; Lucke y Ramírez, 1980; ICT 2000; MINAE, 2000" Sistema de Información de Recursos Forestales (SIReFOR)
(3)FAO.2007.The State of Food and Agriculture 2007. Part I: Paying farmers for environmental services. Rome (fig. 10)
