User Financing in a National Payments for Environmental Services Program: Costa Rican Hydropower

41 Pages Posted: 21 Feb 2009 Last revised: 16 Mar 2010

See all articles by Allen Blackman

Allen Blackman

Inter-American Development Bank (IDB)

Richard T. Woodward

Texas A&M University - Department of Agricultural Economics

Date Written: March 12, 2010

Abstract

National government-funded payments for environmental services (PES) programs often lack sustainable financing and fail to target payments to providers of important environmental services. In principle, these problems can be mitigated by supplementing government financing with contributions from leading environmental service users. We use original survey data and official statistics to analyze user financing in Costa Rica’s renowned national PES program, focusing on the amounts and sources of user financing, the drivers of contributions, and contributors’ perceptions of the PES program. We find that user financing has supported less than three percent of the acres enrolled in the program and that hydroelectric plants are the largest private sector contributors. Large hydroelectric plants tend to contribute while small ones do not. The weight of evidence suggests that in addition to ensuring the provision of forest environmental services, hydroelectric plants’ motives for contributing to the PES program include improving relations with local communities and government regulators — common drivers of participation in all manner of voluntary environmental programs. These findings raise questions about the potential of user financing to improve the efficiency and financial sustainability of national PES programs.

Keywords: payments for environmental services, voluntary regulation, hydroelectricity, Costa Rica

JEL Classification: Q23, Q24, Q28

Suggested Citation

Blackman, Allen and Woodward, Richard T., User Financing in a National Payments for Environmental Services Program: Costa Rican Hydropower (March 12, 2010). RFF Discussion Paper No. 09-04-REV. Available at SSRN: https://ssrn.com/abstract=1345932 or http://dx.doi.org/10.2139/ssrn.1345932

Allen Blackman (Contact Author)

Inter-American Development Bank (IDB) ( email )

1300 New York Avenue NW
Washington, DC 20577
United States

Richard T. Woodward

Texas A&M University - Department of Agricultural Economics ( email )

College Station, TX 77843-4218
United States
(409) 845-5864 (Phone)

Register to save articles to
your library

Register

Paper statistics

Downloads
76
Abstract Views
609
rank
317,334
PlumX Metrics