Payments for environmental services (PES) is a theoretical marvel. Experiences from around the world, however, suggest that PES can be an inappropriate strategy in many countries, and can lead practitioners into a series of intellectual and financial dead-ends.
PES—as do all Incentive-based conservation tools—starts from the broad principle that whoever is benefitting from an environmental service, should contribute to protecting the environment from where it comes. PES theoreticians, however, then make the (il)logical leap of asserting that in order to ensure such protection, users must quantify the value of the services being provided and the cost of providing them. In order to pay for a service, the argument goes; one must know exactly what is being provided. For example, when my car is being serviced, I can watch as 3 liters of oil are changed and 8 brake pads are replaced, and once I have verified that the service has been undertaken, I pay. But how many less liters of water would come after one hectare of a watershed is deforested? Despite the assertions that “quantification” is indispensable for PES, such precision is usually impossible (with perhaps the exception of carbon), invariably expensive, and in most cases, irrelevant and unsuited to local contexts and politics. Unlike when I pay to service my car, I do not have all the information/science available to calculate the probability and cost of a car accident this year. So instead of buying a service, I protect my car with insurance, just in case something bad happens. Once I pay my premium, I don’t need to run tests to assess the probability that my neighbor’s teenage son will drunkenly front end my car, and I don’t need to model (with really bad data), the probability of climate change inducing more trees to fall on my street, and I don’t need to calculate with precision the cost of having my radio stolen, all in order to calculate how much I am willing to pay for the “service” of having my car protected against such events. I just pay an insurance premium, and I am good to go. And if nothing bad happens—i.e. have no need of the insurance—I am a happy guy. In Bolivia, our version of incentive-based conservation works along similar lines. Andean Reciprocal Agreements for water (ARA)—piloted in Bolivia and now spread to Colombia, Ecuador and Peru—do not need intensive studies or analysis. Rather they use the precautionary principle to allow local water users to set up institutions that help upstream landowners benefit from alternative development projects, such as honey production, in return for a formal commitment to protect the watershed. Downstream waters users have volunteered to increase their water bills by up to 15%, in order to insure—through forest protection—against decreases in dry season stream flow Based on more than 20 successful ARAs, it appears that PES may not be the best sort of incentive-based conservation in the Andes. It might therefore be a good idea for donors to reduce their expensive investments in PES studies, investigations and diagnostics, and invest more of their funds in setting up small-scale insurance programs, such as ARA, that can quickly and cheaply achieve conservation and development. Differences between payments for environmental services (PES) and Andean reciprocal agreements (ARA) for watershed services
|Payments for watershed services ‐ PWS
||Andean Reciprocal Agreements for watershed services ‐ (ARA)
|Focus on economic efficiency. Intervention thus needs to precisely quantify willingness to pay, service value, and the opportunity costs of service provision.
||Focus on social contracts. The economically efficient or “correct” compensation is defined by stakeholders who decide the locally appropriate (fair) level of their contributions.
|Need to study and quantify all variables before implementation, implying costly, specialist and usually expensive studies.
||Agreements are based on the precautionary principle, so can be implemented based on community perceptions without extensive additional data collection.
|Modern, neo‐liberal, external, and often locally alien concept.
||Traditional risk sharing tool for watershed management throughout the Andes.
|Little experience in the Andes or elsewhere.
||Traditionally widespread, especially in drier areas, and increasingly common in its modern form as a conservation tool, for example, in Celica (Ecuador) and Los Negros (Bolivia).
|Expensive to implement because of the need for external inputs including analyses and monitoring.
||Low cost implementation, because intervention builds on existing institutions and beliefs, including risk sharing.
|Concept assumes that forests are not conserved because people do not know their value to society. Intervention is predicated on better quantifying the externalities of forest conservation in order to prove to stakeholders the logic of protection.
||Concept assumes that forests are only conserved if appropriate institutions are present. The tool focuses on creating/developing local institutions that internalize externalities.
This article was original published here