Payments for Environmental Services (PES) can encourage projects that enhance restoration, production, and rural development. When projects promote differentiated systems by paying farmers for the provision of services, the application of PES requires evaluation of the environmental services provided by each system. We present evaluations of carbon stocks and biodiversity in pure and mixed native tree plantations in Costa Rica. To illustrate how monetary values can be assigned, we discuss a project that awarded PES to silvopastoral systems in Costa Rica, Nicaragua, and Colombia based on carbon stocks and biodiversity. PES can promote positive environmental attitudes in farmers. Currently this project is being scaled up in Colombia based on their positive experiences with PES as a tool to promote adoption. Compared to PES systems that include only one environmental service, systems that incorporate bundling or layering of multiple services can make sustainable land uses more attractive to farmers and reduce perverse incentives.
Payments for Environmental Services in Latin America as a Tool for Restoration and Rural Development
Summary
The paper discusses Payment for Ecosystem Services (PES) systems established in Costa Rica, Nicaragua, and Colombia, which have successfully encouraged restoration and rural development. It provides a review of public and private PES initiatives and their operational pricing. Additionally, the paper details the quantification methodology used by the GEF-founded Regional Integrated Silvopastoral Approaches to Ecosystem Management Project in Costa Rica, Nicaragua, and Colombia.
Results
PES is predominately an input-based scheme, meaning it compensates landholders for ‘‘inputs’’ such as trees planted, rather than for true ‘‘outputs’’ of environmental services such as increased biodiversity. In light of this, tree coverage serves as the the main indicator of the quantification method, or the Environmental Services Index, used by the GEF in the Regional Integrated Silvopastoral Approaches to Ecosystem Management Project. The Environmental Services Index evaluates and compares the environmental benefits yielded by various land use types. It allocates points to each land use category based on its capacity to deliver crucial ecosystem services, particularly carbon sequestration and biodiversity conservation. Native forests, with 80% tree cover, were attributed the highest scores for both carbon sequestration and biodiversity (1 point each, totaling 2 points), while other land use types such as mature secondary forests and degraded pastures were assessed based on their carbon sequestration potential and ecological attributes. For instance, mature secondary forests were estimated to sequester 10 tons of carbon per hectare annually, equating to 1 environmental service point for every 10 tons sequestered. The quantified results are tracked throughout years and serve as the baseline for determining payments to participating farmers. In Colombia, farmers were paid US$10 per baseline point and US$75 per additional point each year. The paper points out that while several pricing mechanisms exist, such as willingness to pay, comparable market price, price for replacement, the often-used methods in PES to compensate landowners are provision cost and opportunity costs.
Method
Literature review and case study.
Limitations
The paper provides a strong explanation and discussion of PES, its use cases, and ecosystem services quantification. However, it assumes that native trees are the principal indicator of biodiversity. In cases without biodiversity credits, pegging biodiversity to input-based PES might be a practical solution. However, this landscape might have evolved, and more indicators may need consideration.
Relevance
The paper provides a comprehensive overview of input-based PES, which is useful for readers to delineate its similarities and differences with result-based financing mechanisms such as biodiversity credits.