Principles for Fairness and Efficiency in Enhancing Environmental Services in Asia: Payments, Compensation, or Co-Investment?

Abstract

"The term payments for environmental services (PES) has rapidly gained popularity, with its focus on market-based mechanisms for enhancing environmental services (ES). Current use of the term, however, covers a broad spectrum of interactions between ES suppliers and beneficiaries. A broader class of mechanisms pursues ES enhancement through compensation or rewards. Such mechanisms can be analyzed on the basis of how they meet four conditions: realistic, conditional, voluntary, and pro-poor. Based on our action research in Asia in the Rewarding Upland Poor for Environmental Services (RUPES) program since 2002, we examine three paradigms: commoditized ES (CES), compensation for opportunities skipped (COS), and co-investment in (environmental) stewardship (CIS). Among the RUPES action research sites, there are several examples of CIS with a focus on assets (natural + human + social capital) that can be expected to provide future flows of ES. CES, equivalent to a strict definition of PES, may represent an abstraction rather than a current reality. COS is a challenge when the legality of opportunities to reduce ES is contested. The primary difference between CES, COS, and CIS is the way in which conditionality is achieved, with additional variation in the scale (individual, household, or community) at which the voluntary principle takes shape. CIS approaches have the greatest opportunity to be pro-poor, as both CES and COS presuppose property rights that the rural poor often do not have. CIS requires and reinforces trust building after initial conflicts over the consequences of resource use on ES have been clarified and a realistic joint appraisal is obtained. CIS will often be part of a multiscale approach to the regeneration and survival of natural capital, alongside respect and appreciation for the guardians and stewards of landscapes."