The Devil in the Detail: A Practical Guide on Designing Payments for Environmental Services

Posted: 9 Jan 2016

See all articles by Stefanie Engel

Stefanie Engel

Institute for Environmental Systems Research, University of Osnabrueck

Date Written: October 30, 2015

Abstract

Payments for environmental services (PES) have become a popular approach to address environmental degradation. However, evidence on its effectiveness is mixed. PES is not a panacea, but there are many cases where PES can be a promising tool. Yet poor PES design translates into poor performance of the instrument. PES design is a complex task; the devil is in the detail of a number of PES design features. The purpose of this article is to provide guidance in dealing with this complexity through a comprehensive review on PES design that is accessible to both academics and practitioners. Practitioner guidelines on deciding whether PES is the best approach and for selecting among alternative design features are presented. PES design has to start from a careful understanding of the specific ecological and socio-economic context. We have learned much about which design features are best suited to which context. It is time to put these insights into practice.

Keywords: PES, payments, environmental services, ecosystem services, policy design

JEL Classification: Q00, Q38

Suggested Citation

Engel, Stefanie, The Devil in the Detail: A Practical Guide on Designing Payments for Environmental Services (October 30, 2015). Available at SSRN: https://ssrn.com/abstract=2712376 or http://dx.doi.org/10.2139/ssrn.2712376

Stefanie Engel (Contact Author)

Institute for Environmental Systems Research, University of Osnabrueck ( email )

Barbarastr. 12
Osnabrueck, 49076
Germany

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