Contact us:

Re: Payments for environmental services (PES) in theory and practice: Lessons learned and way forward

Andrew MacMillan Formerly FAO, Italy

Dear Friends,

While the idea of PES is at first sight conceptually attractive, It may simply provide an easy way out – a way of avoiding the inconvenient truth that most consumers of food are failing to pay for its full cost (the exception being those who support fair trade systems). In so doing, they are passing on to their children the costs of destroyed and polluted natural resources Felled forests, eroded and nutrient-depleted soils, depleted aquifers, reduced biodiversity etc) and of coping with accelerated climate change processes which are, to a large extent, being driven by the greenhouse gases emitted by the current systems of intensive crop and livestock production. Low food prices that fail to internalise these costs are usually justified on the grounds that, if  food prices rise, more people will be hungry – forgetting that, apart from causing environmental damage, low food prices encourage overconsumption and waste of food on a vast scale, and lead to appalling conditions of work for most people engaged in the food chain, especially small-scale farmers but also the people involved in harvesting, transport, processing and distribution.  And so, when people call for more investment in food production they should probably spend less effort in inventing various PES programmes but simply lend their weight to the idea that a gradual rise in food prices from consumer back to farm gate is a rather good thing from a food management perspective. It should include taxing the system at various levels to create mechanisms through which middle and high income consumers can start to foot the bill for the social and environmental damage that they are now creating and fund the shift to more sustainable systems.

An essential corollary for such a fundamental policy shift is the putting in place of social protection programmes, with transfer amounts indexed to local food prices, that enable all low income families to meet their essential food needs. It is far cheaper to do this that effectively subsidise the costs of food for all consumers by turning a blind eye to the negative externalities induced by conventional policies.

To some extent the rise in international food prices that has happened in the last 3-4 years has begun to address the problems caused by long-term low prices, but its effect on investment in expanding production has been muted by the undermining of confidence caused by speculation-driven price volatility. But rising prices alone, unless accompanied by policies to  protect food consumption by the poor and to support the shift to more socially and environmentally sustainable production and consumption systems, will do little to improve global food management systems – and could even exacerbate the fundamental problems that, if harnessed sensibly, they could resolve.