Designing Payments for Ecosystem Services schemes based on contextual factors and desired impacts

Abstract

Payments for Ecosystem Services (PES) lately received increasing interest as an incentive-based policy to overcome the difference between private and social benefits of ecosystem services flows. Recent studies have indicated the importance of considering the interaction between broader economic, social and political contextual factors on the one hand and the design of PES on the other hand when assessing PES schemes. This paper attempts to actually quantify existing relationships between contextual factors, PES design variables and PES impacts in order to support PES design. An extensive dataset containing PES case studies from different continents regarding different ecosystem services is put together. Furthermore, based on existing literature on PES, indicators for (i) contextual factors (political, socio-economic, environmental and legal), (ii) PES design variables (e.g. type of payments, service demanded, mechanism for price determination, geographical scale of the scheme and supplier and buyer information) and (iii) PES outcome (equity, efficiency and environmental effectiveness) have been identified. Applying multivariate techniques enables us identify clusters of indicators regarding (i) and (ii). In a next step relations between these clusters and PES outcomes are identified and analyzed in order to explain variations in PES impacts with regards to contextual factors and design variables. Preliminary results indicate the existence of underlying key factors and strong relationships between these factors and PES outcomes. Also, the results seem to confirm the existence of substantial trade-offs between effectiveness, efficiency and equity objectives implying that choices need to be made when designing for PES schemes. As a result this analysis could strongly support the adoption of decision tools that takes into account a limited set of key contextual factors to allow for context-specific PES design and furthermore would allow for desired PES outcomes to be achieved.