Environment and Development Economics

Research Article

Payments for ecosystem services and poverty reduction: concepts, issues, and empirical perspectives

ERWIN H. BULTEa1, LESLIE LIPPERa2, RANDY STRINGERa3 and DAVID ZILBERMANa4

a1 Development Economics Group, Wageningen University, and Department of Economics, Tilburg University, Box 8130, 6700 EW Wageningen, Netherlands. Email: Erwin.bulte@wur.nl

a2 Agricultural and Development Economics Division, United Nations Food and Agriculture Organization, Rome, Italy. Email: leslie.lipper@fao.org

a3 School of Agriculture, Food and Wine, University of Adelaide, Adelaide, Australia. Email: randy.stringer@adelaide.edu.au

a4 Department of Agricultural & Resource Economics, University of California at Berkeley, USA, and the Giannini Foundation. Email: zilber@are.berkeley.edu

Paying for the provision of environmental services is a recent policy innovation attracting much attention in both developed and developing countries. This innovation, referred to as ‘payments for ecosystem services’ (when the emphasis is on enhancing ‘nature’ services) or ‘payments for environmental services’ (when amenities provided by the built environment are also included) is referred to here as PES. PES programs aim to harness market forces to obtain more efficient environmental outcomes. Since so many opportunities for PES programs could involve farmers in poor regions, international aid agencies and private donors, looking for a double dividend, increasingly consider using PES programs as a potential way of meeting both social and environmental objectives.