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Putting payments for environmental services in the context of economic development

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  • Zilberman, David
  • Lipper, Leslie
  • McCarthy, Nancy

Abstract

Paying for the provision of environmental services is a recent policy innovation that is attracting much attention in both developed and developing countries. The innovation involves a move away from command and control environmental policies, harnessing market forces to obtain more efficient environmental outcomes. Linking payments for environmental services (PES) to economic development and poverty reduction is an issue of importance since they may represent a new source of finance to developing countries, and developing countries are potentially important suppliers of global environmental services. The objective of this paper is to apply economic concepts, particularly those from natural resource and environmental economics, to a wide range of issues associated with the introduction of ES programs in the context of economic development. We introduce a typology of ES based upon economic reasoning, showing that payments for ES provide a solution to externalities and public good problems within the bounds of political economic constraints. Secondly, we focus on the problem of who should pay for ES: to what extent are payments likely to be covered within a global framework rather within a national or regional framework? Third, we will turn to issues of program design. We present some answers to the questions of how to target payments to achieve their objectives efficiently, and what the implications of alternative design schemes are. In particular, we focus upon the equity implications of ES programs and how can they affect poverty alleviation. The final section addresses issues of monitoring and enforcement of ES contracts, and we summarize the key findings in the conclusion.

Suggested Citation

  • Zilberman, David & Lipper, Leslie & McCarthy, Nancy, 2006. "Putting payments for environmental services in the context of economic development," ESA Working Papers 289052, Food and Agriculture Organization of the United Nations, Agricultural Development Economics Division (ESA).
  • Handle: RePEc:ags:faoaes:289052
    DOI: 10.22004/ag.econ.289052
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    References listed on IDEAS

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    Cited by:

    1. Campanhão, Ligia Maria Barrios & Ranieri, Victor Eduardo Lima, 2019. "Guideline framework for effective targeting of payments for watershed services," Forest Policy and Economics, Elsevier, vol. 104(C), pages 93-109.
    2. Derissen, Sandra & Latacz-Lohmann, Uwe, 2013. "What are PES? A review of definitions and an extension," Ecosystem Services, Elsevier, vol. 6(C), pages 12-15.
    3. JACKSON Emerson Abraham, 2021. "Financing Sustainable Development: Alleviating Livelihoods In The Forest Sector With Sierra Leone As A Case Study," Management of Sustainable Development, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 13(2), pages 49-65, December.
    4. Leslie Lipper & Prabhu Pingali & Monika Zurek, 2006. "Less-Favoured Areas: Looking Beyond Agriculture Towards Ecosystem Services," Working Papers 06-08, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA).
    5. Wangchuk, Jigme & Choden, Kinley & Sears, Robin R. & Baral, Himlal & Yoezer, Dawa & Tamang, Kelly Tobden Dorji & Choden, Thinley & Wangdi, Norbu & Dorji, Shacha & Dukpa, Dorji & Tshering, Kaka & Thinl, 2021. "Community perception of ecosystem services from commercially managed forests in Bhutan," Ecosystem Services, Elsevier, vol. 50(C).

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    More about this item

    Keywords

    Environmental Economics and Policy;

    JEL classification:

    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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