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Putting Payments for Environmental Services in the Context of Economic Development

Year of publication 2006

Author David Zilberman, Leslie Lipper and Nancy McCarthy;Agriculture and Economic Development Analysis Division

Product type Book (stand-alone)

Series title FAO Agricultural Economics Working Paper

Edition 1

Synopsis (short abstract) Paying for the provision of environmental services is a recent policy innovation that is attracting much attention in both developed and developing countries. The innovation involves a move away from command and control environmental policies, harnessing market forces to obtain more efficient environmental outcomes. Linking payments for environmental services (PES) to economic development and poverty reduction is an issue of importance since they may represent a new source of finance to developi ng countries, and developing countries are potentially important suppliers of global environmental services. The objective of this paper is to apply economic concepts, particularly those from natural resource and environmental economics, to a wide range of issues associated with the introduction of ES programs in the context of economic development. We introduce a typology of ES based upon economic reasoning, showing that payments for ES provide a solution to externalities and public good proble ms within the bounds of political economic constraints. Secondly, we focus on the problem of who should pay for ES: to what extent are payments likely to be covered within a global framework rather within a national or regional framework? Third, we will turn to issues of program design. We present some answers to the questions of how to target payments to achieve their objectives efficiently, and what the implications of alternative design schemes are. In particular, we focus upon the equity imp lications of ES programs and how can they affect poverty alleviation. The final section addresses issues of monitoring and enforcement of ES contracts, and we summarize the key findings in the conclusion.

Language English

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