Putting Payments for Environmental Services in the Context of Economic Development

David Zilberman (), Leslie Lipper and Nancy McCarthy
Additional contact information
Leslie Lipper: Agricultural and Development Economics Division, Food and Agriculture Organization
Nancy McCarthy: International Food Policy Research Institute Washington, D. C.

No 06-15, Working Papers from Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA)

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 developing 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 problems 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 implications 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.

Keywords: Environmental Services; Agricultural Development; Poverty Reduction; Natural Resource Management. (search for similar items in EconPapers)
JEL-codes: Q01 Q24 O1 O13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr and nep-env
Date: 2006

Downloads: (external link)
ftp://ftp.fao.org/docrep/fao/009/ah633e/ah633e00.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Access Statistics for this paper

More papers in Working Papers from Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA)
Address: Agricultural Sector in Economic Development Service FAO Viale delle Terme di Caracalla 00100 Rome Italy
Contact information at EDIRC.
Series data maintained by Gustavo Anríquez ().