aying people in developing countries to sustainably manage their natural resources is seen by some as a means to protect the environment while reducing poverty.

But what exactly are Payments for Environmental Services (PES)? Is it a feasible concept? And how successful are they so far?

CIFOR has recently been researching PES activities in Bolivia and the findings are cause for cautious optimism.

With support from the Swiss Development Agency (SDC), CIFOR researcher Sven Wunder and his locally based partner Nina Robertson recently examined different initiatives involving payments for environmental protection in Bolivia.

The aim of the research was to review what kind of PES schemes exist in Bolivia, including their achievements and the obstacles they face. Latin America has been the most advanced region in terms of experimenting with PES schemes.

According to the definition adopted by the two researchers, a PES scheme is an arrangement where a well-defined environmental service, or a resource-use likely to provide the service, is “bought” by one or more external service buyers from one or more local service providers - and does so only if the service provider continues to supply that service over an agreed period of time - the contingency.

For example, a city council living downstream of a river that is a major source of drinking water may pay people living upstream not to cut down the trees near the river so that water quality is maintained or improved. In effect, the payment reimburses the environmental service providers for not using the land and the forest in ways that jeopardize the environmental service.

The concept is fairly simple and straightforward, according to Wunder. “But when we looked closer at these types of schemes in Bolivia, we found that none of them actually conformed fully to the definition. None of them were based on a direct, contingent, service-related payment. What we did find were a lot of initiatives where some but not all of the definition’s conditions were met.” After examining a number of activities, the researchers found that these partial PES activities conformed to one or more of the following four scenarios:

The environmental service users paid the environmental service providers, but through an integrated conservation and development project (ICDP), and not in a contingent manner

Direct payments were made, but not in a way that depended exclusively on the environmental service, but which included other services, such as providing tourism services

A direct, contingent payment was made to the environmental service providers, but paid for by external donors, not by the intended service users

A payment mechanism is in place but has so far not been linked explicitly to environmental service provision

The problem, according to Wunder, is not so much that the concept of payments for environmental services is  not promising, “ . . . rather, what we found is that the principle as described in the theoretical PES literature has not been tried out properly in Bolivia.” “I suspect part of the problem is that this is still a very new idea. Because people have taken environmental services for granted, the notion of suddenly paying for them is hard to swallow. It takes mutual trust between the buyer and the provider to set up a PES schemes. But often there's just no institutional framework or an intermediary to facilitate that.” Wunder said.

There are other obstacles to PES too. Donors paying for global services like biodiversity conservation may be politically sensitive about being seen to be paying people for what may appear to be “doing nothing”. And many people are generally skeptical about market-based incentives. “Some see PES as part of a larger neo-liberal economic paradigm that is being implemented in developing countries, to their disadvantage. In Bolivia, for instance, carbon schemes are often met with the judgment that they are designed to ‘sell oxygen to the gringos’ to the ultimate detriment of forest owners. Also, the idea of paying for the protection of watersheds, is sometimes equated with water privatization,” Robertson said.

Nevertheless, the two researchers are optimistic about the future of payments for environmental services. With some more initiative among development and conservation donors to experiment with new tools, and more awareness-building among the potential service buyers and sellers, it may be possible to show how PES schemes can be a win-win for both sides. As with most new concepts, it will require trial and error to find the right payment design for any specific environmental service context. GC, SW. A full report on the Bolivia PES work will be available in English and Spanish in early 2005. To obtain a hard or soft copy from CIFOR, orders can be made through: n.sabarniati@cgiar.org