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Payments for Environmental Services (PES) in the public policy landscape: “Mandatory” spices in the Indonesian recipe

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  • Pirard, Romain

Abstract

The underlying principle of Payments for Environmental Services (PES) is based on contractual payments to users of a natural resource, such payments being subject to the condition that PES maintain a pre-defined environmental service. They can be viewed as a way for private stakeholders to bypass public policies by contracting outside the policy framework, as long as the instrument is viewed as an application of the Coase theorem. For instance, some PES enable local users to be rewarded for abandoning illegal practices in place of law enforcement. But high transaction costs, institutional requirements for action, or the need to upscale the scheme tend to bring public bodies back into play. This can materialise in the issuance of regulations, the establishment of ad hoc entities to implement PES, the negotiation of contracts with resource users, and many other effects. In theory and according to the classical definition of the instrument, PES apply a “beneficiary pays principle”. With the policy framework potentially playing a central role in their future development, PES may be interpreted as a way to complement the “polluter pays principle” under the control of public bodies. Indeed, in contexts where those degrading an environmental service (“polluters”) are not eligible to be considered as payers, e.g. insolvent rural populations in developing countries that cannot afford to pay for their negative impacts, PES may eventually represent the vehicle to justify and finance public action. This analysis, built on a case study in Indonesia, downplays the statements presenting PES as market-based mechanisms aimed at filling the regulatory gap — i.e. the lack of prescriptive regulations for the environment – and enlarging the funding sources for conservation. We note also the promising emergence of a specific type of PES that relies on mandatory financial contributions by service beneficiaries, while keeping payments to service providers on a voluntary basis through contracts.

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  • Pirard, Romain, 2012. "Payments for Environmental Services (PES) in the public policy landscape: “Mandatory” spices in the Indonesian recipe," Forest Policy and Economics, Elsevier, vol. 18(C), pages 23-29.
  • Handle: RePEc:eee:forpol:v:18:y:2012:i:c:p:23-29
    DOI: 10.1016/j.forpol.2011.09.002
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    References listed on IDEAS

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    Cited by:

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    2. Fauzi, Akhmad & Anna, Zuzy, 2013. "The complexity of the institution of payment for environmental services: A case study of two Indonesian PES schemes," Ecosystem Services, Elsevier, vol. 6(C), pages 54-63.
    3. Tatyana Deryugina & Frances C. Moore & Richard S.J. Tol, 2020. "Applications of the Coase Theorem," Working Paper Series 0820, Department of Economics, University of Sussex Business School.
    4. Zanella, Matheus A. & Schleyer, Christian & Speelman, Stijn, 2014. "Why do farmers join Payments for Ecosystem Services (PES) schemes? An Assessment of PES water scheme participation in Brazil," Ecological Economics, Elsevier, vol. 105(C), pages 166-176.
    5. Diswandi, Diswandi, 2017. "A hybrid Coasean and Pigouvian approach to Payment for Ecosystem Services Program in West Lombok: Does it contribute to poverty alleviation?," Ecosystem Services, Elsevier, vol. 23(C), pages 138-145.
    6. Kim, Yeon-Su & Latifah, Sitti & Afifi, Mansur & Mulligan, Mark & Burke, Sophia & Fisher, Larry & Siwicka, Ewa & Remoundou, Kyriaki & Christie, Michael & Masek Lopez, Sharon & Jenness, Jeff, 2018. "Managing forests for global and local ecosystem services: A case study of carbon, water and livelihoods from eastern Indonesia," Ecosystem Services, Elsevier, vol. 31(PA), pages 153-168.
    7. Leander Raes & Nikolay Aguirre & Marijke D’Haese & Guido Huylenbroeck, 2014. "Analysis of the cost-effectiveness for ecosystem service provision and rural income generation: a comparison of three different programs in Southern Ecuador," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 16(3), pages 471-498, June.
    8. Jaung, Wanggi & Putzel, Louis & Bull, Gary Q. & Kozak, Robert & Markum,, 2016. "Certification of forest watershed services: A Q methodology analysis of opportunities and challenges in Lombok, Indonesia," Ecosystem Services, Elsevier, vol. 22(PA), pages 51-59.
    9. Kim, Yeon-Su & Bae, Jae Soo & Fisher, Larry A. & Latifah, Sitti & Afifi, Mansur & Lee, Soo Min & Kim, In-Ae, 2016. "Indonesia's Forest Management Units: Effective intermediaries in REDD+ implementation?," Forest Policy and Economics, Elsevier, vol. 62(C), pages 69-77.
    10. Alessandra Solazzo & Aled Jones & Nigel Cooper, 2015. "Revising Payment for Ecosystem Services in the Light of Stewardship: The Need for a Legal Framework," Sustainability, MDPI, vol. 7(11), pages 1-15, November.
    11. Yonariza, & Andini, Bevi Astika & Mahdi, & Maynard, Simone, 2019. "Addressing knowledge gaps between stakeholders in payments for watershed services: Case of Koto Panjang hydropower plant catchment area, Sumatra, Indonesia," Ecosystem Services, Elsevier, vol. 39(C).
    12. Dmuchowski, Wojciech & Baczewska-Dąbrowska, Aneta H. & Gworek, Barbara, 2024. "The role of temperate agroforestry in mitigating climate change: A review," Forest Policy and Economics, Elsevier, vol. 159(C).
    13. Watts, John D. & Tacconi, Luca & Irawan, Silvia & Wijaya, Aklan H., 2019. "Village transfers for the environment: Lessons from community-based development programs and the village fund," Forest Policy and Economics, Elsevier, vol. 108(C), pages 1-1.
    14. Hao Wang & Sander Meijerink & Erwin van der Krabben, 2020. "Institutional Design and Performance of Markets for Watershed Ecosystem Services: A Systematic Literature Review," Sustainability, MDPI, vol. 12(16), pages 1-26, August.
    15. Wanggi Jaung & Louis Putzel & Gary Q. Bull & Diswandi Diswandi & Witardi & Markum, 2019. "Temporal Reliability of Willingness to Pay for Payments for Environmental Services: Lessons from Lombok, Indonesia," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 5(04), pages 1-22, October.
    16. Raes, Leander & Loft, Lasse & Le Coq, Jean François & Van Huylenbroeck, Guido & Van Damme, Patrick, 2016. "Towards market- or command-based governance? The evolution of payments for environmental service schemes in Andean and Mesoamerican countries," Ecosystem Services, Elsevier, vol. 18(C), pages 20-32.

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