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Payments for Ecosystem Services: Green is the New Grey

This piece was originally posted on the Ecosystem Services for Policy Alleviation website, and was written with WRI intern Julie Edmonds.

In these times of budget constraints, municipal authorities, donors and development NGOs are increasingly looking to services provided by nature as a less costly alternative to building expensive man-made infrastructure.

Such services, also known as ecosystem services, are the positive externalities that ecosystems such as forests, floodplains and wetlands provide for communities around them. Payments for ecosystem services (PES) represent a tiny but growing market for these environmental benefits; a market with the potential to produce many benefits not only for local populations, but also the environment more broadly.

In Oregon, for example, when a wastewater plant needed to cool its water temperature, rather than installing refrigeration systems, which would have cost over $60 million, they paid farmers upstream to plant trees to shade the water. This not only slashed the cost to a mere $6 million but it also benefited local farmers and wildlife, and saved the energy that a refrigeration system would have used.

There are many other examples around the world. In Venezuela, the operators of the Guri hydroelectric dam pay to help conserve the nearby Canaima National Park because deforestation would increase erosion leading to sedimentation of the dam’s reservoir. On the Ga-Selati River in South Africa, landowners downstream pay their upstream neighbours to reduce sediment on their property and increase the river flow. In northern Tanzania, tourist companies pay the local villages to conserve wildlife viewing areas.

One highly promising PES is reduced emissions from deforestation and degradation (REDD) which pays developing countries to help protect the climate by maintaining their forests and reducing their greenhouse gas emissions. In all these ways, and more, payments for ecosystems services can help the rural poor.

There are hurdles to overcome in using PES as a poverty reduction tool, however. People may not be compensated for protecting or enhancing ecosystem services if they don’t have legal tenure. Some PES programmes require people taking part to have a minimum amount of land. Corruption may also play a role in preventing poor people from receiving due benefits. If these barriers can be overcome, many more poor people in natural resource-rich developing countries will be able to benefit from working with nature's bounty.

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