Environmental services and poverty alleviation: either, or, or both?

Ben Groom and Charles Palmer

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Payments for environmental services (PES) schemes in developing countries face trade-offs between environmental and development objectives. This tension is inherent in cost effective direct PES since, by their very nature, they limit transfers to recipients. However, where recipients of PES are subject to market constraints (e.g. credit rationing, input constraints etc.), we show that indirect payments which relax constraints can be cost effective and achieve both environmental and poverty alleviation objectives. Contrary to where markets are perfect, cost effectiveness is dependent on the nature of the recipient’s production and the severity of constraints. An empirical example from Madagascar illustrates that it is unlikely these dual objectives will be achieved in the case of forest honey production, despite a severe technology constraint. Yet indirect PES schemes are shown to be cost effective where production is more closely linked to land use, such as in agriculture and forestry. This accords with recent work on agri-environmental schemes, which achieved poverty alleviation and environmental objectives by relaxing household constraints. This highlights the need to understand the market conditions, institutional context and production processes of PES recipients.

Keywords: payments for environmental services; cost effectiveness; market constraints; poverty alleviation (search for similar items in EconPapers)
JEL-codes: Q12 Q56 Q57 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2009
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Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Environmental Services and Poverty Alleviation: Either, or, or both? (2009)
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