Payments for Ecosystem Services: Past, Present and Future

Abstract

Recent decades have witnessed a considerable increase in Payments for Ecosystem Services (PES) — programs that exchange value for land management practices intended to provide or ensure ecosystem services — with over 550 active programs around the globe and an estimated US$36-42 billion in annual transactions. PES represent a recent policy instrument with often very different programs operating at local, regional and national levels. Despite the growth of these programs, comprehensive and reliable data have proven difficult to find. This essay expands our analysis published in Nature Sustainability. It provides an assessment of the trends and current status of PES mechanisms — user-financed, government-financed and compliance — across the domains of water, biodiversity, and forest and land-use carbon around the world. We report the various dimensions of growth over the past decade (number of programs, geographical spread, dollar value) to understand better the range of PES mechanisms over time and to examine which factors have contributed to or hindered growth. Four key features stand out for scaling up PES: motivated buyers, motivated sellers, metrics and low-transaction-cost institutions.

Keywords: environmental law, natural resources law, law and economics, international environmental law, and international law