17 January 2013: The World Agroforestry Centre (ICRAF) has released working paper no. 161, titled “Payments for ecosystem services schemes: project-level insights on benefits for ecosystems and the rural poor.” The paper examines 36 payments for ecosystem services (PES) projects in which beneficiaries of ecosystem services make direct financial transfers to land owners and users in order to secure management practices that will conserve the identified services.

The paper examines three types of ecosystem services namely, carbon sequestration and storage, biodiversity protection and watershed protection to reveal that the biggest challenge faced by PES projects is financial – as a result of low values placed on ecosystem services.

Overall, the paper concludes that financial incentives are critical to changing management practices, however compensation for every ecosystem service that is protected is not necessarily required. Furthermore, PES can be particularly effective when applied at a large scale (to reduce transaction costs) and in combination with legislation or disincentives to avoid degradation and destruction. The paper also identifies a number of additional benefits from PES such as encouraging land tenure clarification.

Finally, the paper concludes that market mechanisms for pricing ecosystem services are not accurate and, therefore, both national governments implementing PES programmes as well as donor funding are of key importance. [Publication: Payments for ecosystem services schemes: project-level insights on benefits for ecosystems and the rural poor] [ICRAF]