Description

Abstract: ‘Payment for environmental services’ (PES), or what we refer to in this paper as ‘rewards for environmental services’, is recognised as an innovative scheme to achieve the dual Goals of environmental conservation and poverty alleviation in developing countries. This concept has attracted attention since the turn of the century, with many initiatives implemented at pilot sites throughout Indonesia. The importance of the dual objectives in the Indonesian context means a PES scheme has to be adapted to local conditions. This paper will discuss the experiences and lessons learnt from implementing environmental service (ES) transfer benefit schemes developed in Indonesia.

Five pilot sites with schemes in different stages of development are discussed. Three sites deal with watershed functions, one site focuses on biodiversity and one site has bundled watershed functions and carbon sequestration together. The case studies show that having quantifiable environmental services to develop a PES scheme is not an easy task. In many cases, there is no clear link between the ES provision and land-use change. The ES provision is also more dependent on the condition of natural capital in the area concerned. ES providers in Indonesia are mostly poor communities who either protect the existing environment or rehabilitate degraded areas through their land-use practices. The assessment of ES buyers shows that, in Indonesia, a local approach through public funding schemes is easier than seeking international buyers. This takes account of the institutional readiness and transaction costs that might be involved in an ES reward transaction. Best management contract practices and land concessions are the best and most common rewards.

The lesson learned is that rewards are a synergy of natural, human and social capital, and that the rewards sit within a broader domain combining trust, planning and negotiated voluntary agreement; they are much less based on ES criteria and indicators (van Noordwijk in prep.). This statement shows that pushing a pure, market-based environmental service is not wise, given that developing countries are unprepared for such an approach, and given the necessity to fulfill certain criteria and indicators when such schemes are implemented. Therefore, testing how this mechanism can be best adapted to a certain situation before fulfilling other prerequisite conditions is a valid way to develop an ES benefit transfer scheme. In short, get started before you’re ready.