Values, Payments and Institutions for Ecosystem Management

Values, Payments and Institutions for Ecosystem Management

A Developing Country Perspective

Edited by Pushpam Kumar and Ibrahim Thiaw

Using a selection of authoritative and original contributions, this timely book explores the uncertainty surrounding the impact of decisions undertaken to manage ecosystem services worldwide. Invariably, the policies designed and implemented to manage forests, wetlands, and marine and coastal environments often involve conflicts of interest between various stakeholders. This has added an additional layer of complexity in the context of developing countries where institutions and governance are weak or absent. Economic valuation and the subsequent design of innovative response tools such as payment for ecosystem services (PES) have the potential to offer far greater transparency. In the case of LDCs, the identification of suitable institutions for executing these tools is also of vital importance.

Chapter 2: Making payments for ecosystem services work

Rodrigo Arriagada and Charles Perrings

Subjects: development studies, development economics, economics and finance, development economics, environmental economics, environment, ecological economics, environmental economics, management natural resources, valuation


For over 50 years economists have developed instruments to address the market failures behind the collapse of ecosystem services noted by the Millennium Ecosystem Assessment (2005; MA). Such instruments include taxes, subsidies, user charges, access fees, penalties for non-compliance and the like (Tietenberg 2006). More recently, instruments of this kind have been linked explicitly to the provision of specific ecosystem services through the concept of payments for ecosystem services (PES) (Ferraro and Kiss 2002; Hardner and Rice 2002; Niesten and Rice 2004; Scherr et al.2004; Wunder 2007; Arriagada and Perrings 2011; Ferraro 2011; Kinzig et al. 2011). PES schemes differ from earlier approaches to the management of ecosystems such as Integrated Conservation and Development Projects or Community-Based Natural Resource Management in three respects: their focus on ecosystem services (the benefits provided by ecosystems), their use of positive financial incentives to achieve the production of additional services and the conditionality of those incentives on some measure of performance (Sanchez-Azofeifa et al. 2007; Swallow et al. 2007; Pagiola 2008; Wunder et al. 2008).

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