Payments for ecosystem services: We can't leave people out of the equation

What's next for schemes that pay communities to protect local ecosystems? This is what leading researchers and practitioners in the field came together to discuss at IIED's conference in Edinburgh last week.

Kate Wilson's picture
Insight by 
Kate Wilson
28 March 2014
Costa Rica's Peñas Blancas Reservoir is the focus of work involving payments for ecosystem services (Photo: Dr Ina Porras)

Costa Rica's Peñas Blancas Reservoir is the focus of work involving payments for ecosystem services (Photo: Copyright Dr Ina Porras)

The event gathered IIED partners from as far as Costa Rica, Uganda, Indonesia and Mexico, to share lessons about how to make payments for ecosystem services (PES) schemes fairer and more inclusive for small scale farmers and local communities.   

It was a showcase for both long standing and newer schemes, highlighting the enormous diversity of contexts in which they operate – from different ways of including local people in their design and planning, to ways of understanding payment preferences. 

Different funding models and ways of securing adequate finance for these schemes also featured in the day's discussions. But it wasn't all theory, and tips from several participants, including the Swedish carbon company U&WE brought insights on promoting private sector participation.

We heard real life examples of schemes that work directly with local communities — from a Mexican forest community that sells carbon credits to a project that protects chimpanzee habitat in Uganda. Delegates spoke about the barriers they face and how to assess if the schemes really work. 

Ina Porras, a senior researcher at IIED, shared lessons from nearly 20 years of payments for ecosystem services in Costa Rica. There, private landowners have been actively and successfully involved in conserving forests for many years.  In the Ugandan example, a randomised controlled trail is underway to find out if forest cover does actually increase when local farmers are paid to conserve it.

People at the heart

Despite the different contexts and countries in which PES schemes operate, something remains common to them all.  The message that really hit home to me is that while PES schemes are about economics and the environment we cannot and should not ignore the needs of local communities.

People are at the heart of productive ecosystems. They need to play central roles in the design and implementation of payment for ecosystem services. These schemes can alleviate poverty and conserve natural resources but only if designed properly and with the needs and preferences of local people at their core.  However, innovation requires taking risks and we must ensure schemes do not compromise local livelihoods under the banner of protecting the environment.

Managing ecosystems goes beyond individual decisions. Understanding how communities prefer to be rewarded — whether in cash or with other benefits such as food or training, for example — will be key to a scheme's success. Ugandan researchers Justine Namaalwa and Gorettie Nabanoga tackled this question by using a group-based choice experiment to understand the preferences of local people in four villages near the Ongo Community Forest. Beira Leimona showed us how ICRAF has used auctions in the context of watershed services in the Cidanau watershed in Indonesia.

Money, scale and next steps

In the final session of the day, our attention turned to money: how to secure funding and who will pay for ecosystem services? Questions were raised over how to scale up PES schemes. Dhanush Dinesh from Plan Vivo shared successful examples of how this can be done. The Trees for Global Benefits project in Uganda scaled up from 18 smallholders in 2003 to almost 2,500 in 2014.

Yet overall PES schemes remain on the margins, bringing only very local development benefits. Still missing are national PES systems and international markets for ecosystem services that enable rural communities to sell the benefits they bring to distant individuals, businesses or governments.

There are still big questions to answers, and areas to improve:

  • There are gaps in knowledge. We need a synthesis of pro-poor PES evidence that provides  stories of successful change
  • While schemes are more sophisticated about their business case, they still rely on grants for funding
  • PES schemes have been largely supply-driven to date, but as demand for them grows, it will be important to ensure that they apply throughout entire value chains.

Can PES schemes reduce poverty and conserve natural resources? The answer from the Edinburgh conference is "yes"… but that PES is not the only solution and will not work in the vacuum. There is still much work needed to ensure equity. Researchers and practitioners need to come up with practical solutions that benefit ecosystems and the local people who rely on them for their livelihoods.

Kate Wilson (kate.wilson@iied.orgis IIED's publications and marketing manager.