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User financing in a national payments for environmental services program: Costa Rican hydropower

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  • Blackman, Allen
  • Woodward, Richard T.

Abstract

National government-funded payments for environmental services (PES) programs often lack sustainable financing and fail to target payments to providers of important environmental services. In principle, these problems can be mitigated by supplementing government financing with contributions from leading environmental service users. We use original survey data and official statistics to analyze user financing in Costa Rica's renowned national PES program, focusing on the amounts and sources of user financing, the drivers of contributions, and contributors' perceptions of the PES program. We find that user financing has supported less than 3% of the acres enrolled in the program and that hydroelectric plants are the largest private sector contributors. Large hydroelectric plants tend to contribute while small ones do not. The weight of evidence suggests that in addition to ensuring the provision of forest environmental services, hydroelectric plants' motives for contributing to the PES program include improving relations with local communities and government regulators--common drivers of participation in all manner of voluntary environmental programs. These findings raise questions about the potential of user financing to improve the efficiency and financial sustainability of national PES programs.

Suggested Citation

  • Blackman, Allen & Woodward, Richard T., 2010. "User financing in a national payments for environmental services program: Costa Rican hydropower," Ecological Economics, Elsevier, vol. 69(8), pages 1626-1638, June.
    • Handle: RePEc:eee:ecolec:v:69:y:2010:i:8:p:1626-1638
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    More about this item

    Keywords

    Payments for environmental services Voluntary regulation Hydroelectricity Costa Rica;

    JEL classification:

    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
    • Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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