Show Me the Money: Do Payments Supply Environmental Services in Developing Countries?

Subhrendu Pattanayak, Sven Wunder and Paul Ferraro

Review of Environmental Economics and Policy, 2010, vol. 4, issue 2, 254-274

Abstract: Many of the services supplied by nature are externalities. Economic theory suggests that some form of subsidy or contracting between the beneficiaries and the providers could result in an optimal supply of environmental services. Moreover, if the poor own resources that give them a comparative advantage in the supply of environmental services, then payments for environmental services (PES) can improve environmental and poverty outcomes. While the theory is relatively straightforward, the practice is not, particularly in developing countries where institutions are weak. This article reviews the empirical literature on PES additionality by asking, "Do payments deliver environmental services, everything else being equal, or, at least, the land-use changes believed to generate environmental services?" We examine both qualitative case studies and rigorous econometric quasi-experimental analyses. We find that government-coordinated PES have caused modest or no reversal of deforestation. Case studies of smaller-scale, user-financed PES schemes claim more substantial impacts, but few of these studies eliminate rival explanations for the positive effects. We conclude by discussing how the dearth of evidence about PES impacts, and unanswered questions about institutional preconditions and motivational "crowding out," limit the prospects for using international carbon payments to reduce emissions from deforestation and degradation. Copyright 2010, Oxford University Press.

Date: 2010
References: Add references at CitEc
Citations: View citations in EconPapers (222)

Downloads: (external link)
http://hdl.handle.net/10.1093/reep/req006 (application/pdf)
Access to full text is restricted to subscribers.

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

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:renvpo:v:4:y:2010:i:2:p:254-274

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

Review of Environmental Economics and Policy is currently edited by Robert Stavins

More articles in Review of Environmental Economics and Policy from Association of Environmental and Resource Economists Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK. Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().