PES design and policy issues: Part I


J. Kerr; R. Jindal

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This presentation discusses: – Types of payments/rewards – Individual vs. group payments/rewards – Conditionality – Monitoring and measurement issues – Transaction costs

Abstract: PES programs take many forms and are not always practical – conditionality and overcoming transaction costs are major tests. Many programs are still too new to evaluate. To date, payments have been mainly for watershed services, carbon sequestration, biodiversity conservation, and scenic beauty. Payments have been in cash, in-kind services such as training, conditional land-tenure security, and support such as job opportunities. Individual contracts are simple conceptually, but they have high transaction costs if agreements must be reached with many small-scale property owners. Group contracts transfer costs to the members but may benefit only the elite. Conditionality is a key to successful PES: Is there actual evidence of the service being provided and of land use being changed? Is a new management plan in place? Other issues are whether environmental damage is being shifted from one place to another. Best results follow when payments are made on a regular basis, rather than one time only; and are directly proportional to the level of service provided.

Additional Bibliographic Information

Presented at the USAID PES policy seminar: Pro-Poor Payments for Ecosystem Services, Virginia Tech Northern VA Center, Falls Church, Virginia, 4 October 2007

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