Through a global review of 129 PES programs, complemented by a case study in Guatemala, this report examines how IPs and LCs have participated in and benefited from PES programs – both monetarily and in-kind – and identifies the systemic and programmatic barriers that prevent them from accessing and benefiting more equitably from PES. It outlines the types of actions, and the social actors involved, in addressing the barriers and increasing IPs and LCs benefits from PES and climate action. The insights from the analysis can inform the future design of PES and other incentives-based climate finance mechanisms that depend on IPs and LCs lands and resources.

Indigenous peoples and local communities (IPs and LCs) play pivotal roles in safeguarding nature and the ecosystems services that nature provides. It is estimated that each year, at least US$1.16 trillion of value in ecosystem services (ES) is derived from IP and LC lands. Yet, IPs and LCs are not meaningfully participating and benefiting from payments for ecosystem services (PES) and other climate solutions that rely on their lands. For example, less than 1% percent of development assistance directed to forests, biodiversity, and climate between 2011-2020 went to securing IPs and LC’s land tenure and role in forest management.

Key Findings:

  • PES programs provide IPs and LCs multiple opportunities to preserve native ecosystems, clarify and strengthen land and resource rights, improve land governance and institutional capacity, enhance livelihood resilience, and invest in community infrastructure.
  • However, direct payments to IPs and LCs fall short of fairly compensating their efforts—some are as low as US$0.33 per household per year, while others cover less than 25% of opportunity costs.
  • IPs and LCs face multiple barriers to equitable access to PES programs. Structural and institutional obstacles include lack of formal land rights and inadequate enabling policy and regulatory frameworks. At the community-level, challenges range from weak local governance capacity to scarce resources for upfront investments required for program participation.
  • Programmatic barriers span from bias in program design and implementation priorities (e.g., focusing on near-term success), exclusionary enrollment requirements (e.g., minimum land size), and top-down program governance limiting IP and LC participation in decision-making.
  • Improving equitable outcomes for IPs and LCs in PES requires short-, medium-, and long-term actions by different actors across three interconnected areas: rights recognition and governance, participation and representation, and benefits and financing mechanisms. Short-term actions include recognizing customary land tenure and supporting formal land rights recognition, adopting a co-creation approach in PES program design, and preparing for financial volatility in program budgets.
  • In the medium-term, priority actions include strengthening and empowering local community institutions and members, investing in relationships between PES programs, intermediaries and communities, and adopting an integrated approach that aligns the benefits of PES with local needs and community contexts.
  • Finally, long-term and systemic actions include accelerating policy and legal reforms to secure IP and LC land and resource rights and regulatory coordination across all levels, advancing the leadership of IPs and LCs in high-level agenda setting bodies relevant to PES and climate action, and expanding and improving ecosystem markets to ensure long-term stability and financial flows.