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Payments for Environmental Services Within the Context of the Green Economy

Stakeholders Consultation From Payment of Environmental Externalities to Remuneration of Positive Externalities in the Agriculture and Food Sector FAO, Rome, 27-28 September 2010







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    Document
    Relevance of OECD Agri-Environmental Measures for Remuneration of Positive Externalities / Payments for Environmental Services
    Stakeholders Consultation From Payment of Environmental Externalities to Remuneration of Positive Externalities in the Agriculture and Food Sector FAO, Rome, 27-28 September 2010
    2010
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    This paper reviews the development of agri-environmental policies in the European Union and other OECD countries, both in historical terms and in terms of the characteristics and challenges of different approaches. The process of reforming the EU’s Common Agricultural Policy, and in particular the likely increased emphasis on payment for public goods (positive externalities and environmental services), is also reviewed. Key issues from the OECD experience are highlighted, including: the problem of indentifying the level of provision of public goods and the resulting focus on payment of prescriptions not outputs; the issue of cost-effectiveness of schemes and the balance between targeted schemes and schemes based on land-use systems; and the need for other policy measures, including research and training, to provide a base and supportive framework on which RPE/PES schemes can be built. The experience with private-sector or market-led solutions is also reviewed. Finally, some key points for the development of schemes elsewhere are identified.
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    Policy Brief 8. Payment for environmental services
    Policy Briefs on the management of natural resources and institutional strengthening for disaster risk reduction in the context of climate change
    2010
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    Two institutional mechanisms for managing watersheds have been increasingly adopted worldwide: Payments for Environmental Services (PES) and Compensation for Environmental Services (CES). Their adoption is based on the increasing awareness that upstream activities determine the quality and quantity of the environment downstream. Their rationale is the need to provide incentives to help guarantee the provision of these services. The creation of such incentives needs, however, to avoid the risk of transforming them, and water in particular into a commodity, to the point where emerging private rights may be detrimental to the basic rights and livelihood opportunities of the rural populations. On the contrary, these financial schemes could play a leading role in the improvement of livelihoods of upstream smallholders, whenever they attract financial resources for an appropriate management of local watershed resources. In the tropical Andes, for centuries, the farmers have developed their o wn adaptive strategies to climate variability, thus making valuable contributions to the sustainable management of natural resources. Recognizing these contributions, some of these modern financial schemes prefer to be casted as “compensations” instead of “payments”.
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    Book (stand-alone)
    Putting Payments for Environmental Services in the Context of Economic Development 2006
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    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.

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