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Payment For Ecosystem Services:
Structural and Practical Barriers to Success
by
Jason R. Cornell
A Thesis
Submitted in partial fulfillment
of the requirements for the degree
Master of Environmental Studies
The Evergreen State College
December 2013
i
© 2013 by Jason R. Cornell. All rights reserved
ii
This Thesis for the Master of Environmental Studies Degree
by
Jason R. Cornell
has been approved for
The Evergreen State College
by
Martha L. Henderson, Ph.D.
Member of the Faculty
Date
iii
ABSTRACT
Payment for Ecosystem Services:
Structural and Practical Barriers to Success
Jason R. Cornell
Payment for Ecosystem Services (PES) represents a conservation tool that compensates
landowners for management practices that maintain or enhance production of desired
ecosystem services. Unlike regulatory approaches, PES incentivizes rather than penalizes
landowners to achieve desired environmental results. Scrutiny of PES programs
effectiveness and success is purported by academia, practitioners and associated
literature. Defining successful PES programs may be compromised due to inherent
structural and practical barriers associated with such programs. Through implementation
of interviews, surveys, literature review, and case study analysis, this research identifies,
categorizes and analyzes structural, theoretical and practical concerns reported in
academia and related journals with goals of deciphering barriers to success. Four
categories of economic, environmental, political and social provide a lens for broad
analysis, while looking at program type identify specific barriers. Results indicate
barriers do exist making definition and operation of successful PES programs difficult.
Table of Contents
List of Figures
List of Tables
Acknowledgements
v
vi
vii
Chapter 1
Introduction and background
1
Chapter 2
Literature review and methodology
Literature review
Methodologies
Survey setup
11
Chapter 3
Results and analysis
Individual results and analysis
Analysis by PES program type
34
Chapter 4
Discussion
56
Chapter 5
Conclusion
64
Bibliography
viii
iv
List of Figures
Figure 1
Figure 2
Figure 3
Figure 4
Figure 5
Figure 6
Example of PES programs focusing on
water quality and delivery
5
Concern level with potential barriers to
PES programs in the USA
41
Dissatisfaction level with practical program
components of surveyed PES program
managers
48
Prioritized goals of surveyed PES programs
operating in the USA
57
Concern level with structural components
by discipline
57
Satisfaction with practical PES components
by disciplinary category
59
v
List of Tables
Table 1
Survey questions of potential barriers
associated with PES
29, 30
Identified practical components of PES programs
used as questions during surveying PES programs
operating in the USA
30, 31
Table 3
Table of qualifying PES survey questions
32
Table 4
Table of additional PES survey questions
32
Table 5
Table of open ended survey questions
33
Table 2
vi
Acknowledgements
Without support of many invested individuals, this thesis would not have been possible.
Lorrain Cornell, my wife and patient ally deserves primary recognition for living with me
throughout the thesis process. Martha Henderson provided necessary guidance, support
and patience as a reader to allow for a comprehensive and readable final product. Nahal
Ghoghaie and Craig Partridge of the Washington State Department of Natural Resources
for their inclusion and access to data and information on developing PES programs in
Washington State. Sara Vickerman, Brett Golden, Carrie Sanneman, and Claire Harper
for interviews and an in depth look at their respective PES programs. Gail Wooten,
Jerilyn Walley and the entire MES Cohort of 2012 provided constant moral and
education backing. The Cornell, the Hendrickson and Parke families endlessly supported
my academic and life journey.
vii
Chapter One: Introduction
Growing concern over environmental degradation leading to disruption of vital
ecosystem services that provide benefits to society is prompting many governments,
environmental groups, and stakeholders involved with natural resource management to
look for different approaches to environmental governance. Environmental regulations
and social responsibility do not adequately protect ecosystems providing clean air, clean
water, carbon sequestration, and maintaining biodiversity. Payment for Ecosystem
Services, or PES, is promoted as a novel and efficient approach to environmental
governance, with many international and local programs in operation. Paying
landowners to partake in management practices that increase desired ecosystem services
seems straight forward; however, linking land management practices to environmental
outcomes can be difficult. With their recent surge in popularity, concerns have been
raised regarding PES programs effectiveness in obtaining their stated goals and missions.
Combinations of economic, political, scientific, and social goals make measuring and
defining success difficult.
The purpose of this research is twofold: to create a literature review that identifies
barriers contributing to the difficulties in operating successful PES programs, and second;
to assess if acknowledged barriers constitute high concern to current PES practitioners
operating within the United States. Aggregating prominent concerns in the literature and
academia will prove useful to current and future PES program stakeholders as program
managers and policy makers are provided with one location to access a prioritized list of
current PES issues containing explanations of concepts, current standing within journal
publications, and a comparison of how program managers operating in the US perceive
1
these issues. Furthermore, investigation into practical and operational components of
PES programs, and current program managers’ satisfaction with these components,
provides pertinent information in assessing successfulness of PES programs individually
and as a whole.
A survey encompassing perceived success of PES programs in relation to their
stated mission, satisfaction levels with individual program components, and level of
concern associated with potential barriers to establishing, operating, and accurately
identifying successful PES programs provides means for comparison between accepted
barriers in literature and real life PES applications. Derived from the literature are
sixteen structural and theoretical concerns that may pose barriers to operating and
defining successful PES program. To be successful, a PES program must collectively
address environmental, economic, political, and social concerns, creating a program
which provides more of the desired ecosystem service while satisfying the needs of all
the stakeholders involved. Through initial literature reviews, two interviews with
existing PES programs, and consulting with the Washington State Department of Natural
Resources, a list of twenty-three potential practical application barriers was accumulated.
Based on these acknowledged barriers, a sixty-seven point survey was constructed and
delivered to forty-three PES programs operating within the US, with thirty surveys
returned. Finally, six interviews with PES program directors from distinctively different
programs goals provide additional qualitative data.
Results indicate structural and practical barriers to defining successful programs
do exist, with highest concerns revolving around economic and political issues.
Considering only practical barriers, program managers were dissatisfied with transaction
2
costs, availability of willing buyers, funding for transactions, implementing adaptive
management, working with elected officials involved, and motivation of buyers.
Validated structural barriers comprise of economic tradeoffs, commodification of
nature’s services and up-priced resources, working within a collaboration framework,
implementing adaptive management, trade-offs due to targeting individual ecosystem
services, leakage, adhering to multiple goals, crowding out socially responsible behavior
and proving additionally.
This paper continues with an explanation and definitions of PES, laying out
historical, theoretical, and background information necessary to understand foundational
reasoning. Following, a literature review will provide insight into current structural,
theoretical and practical components of PES, detailing each issue with explanations and
thought behind concerns. Next, descriptions of methodologies employed in research
clarify intent, followed by results, and allowing for discussion and analysis of results on
an individual, aggregate, and program specific level. Conclusions and future
recommendations close the paper.
Background
Ecosystem services can be defined as benefits that natural ecosystems provide
society, such as clean air, clean water, flood mitigation, carbon storage, harboring
biodiversity, and recreation. Without benefits of ecosystem services, life would not be
possible for human and non-human animals. With an understanding of ecosystem
services, PES broadest definition can be comprehended. Ronald Muradian provides the
most accepted definition, conceiving PES as “a transfer of resources between social
actors, which aims to create incentives to align individual and/or collective land-use
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decisions with the social interests in the management of natural resources.” (Muradian,
Corbera, Pascual, Kosoy, & May, 2010, p. 1205). PES offers a framework allowing for
exchange of payment, cash or in-kind, to producers of ecosystem services to maintain or
enhance production of desired services with payment costs bore by recipients of services,
or provided by government or non-government organization grants.
To exemplify a typical PES program, consider an average city’s water utility. A
utilities obligation comprises of delivery of clean, potable water to their customers, with
water sources typically sourced locally, such as a river, stream or aquifer. To filter water,
a city may invest in a water treatment plant, invest in natural capabilities of upland
ecosystems for filtration, or most often a combination of both. For this scenario, assume
upstream land is working forestlands. If forest owners undertake practices such as clear
cutting or selling land for development, a decrease in water quality develops downstream
as these land practices increase sediments and pollutants, resulting in increased filtration
costs for water utilities. A compromise may be paying forest owners to change
management practices protecting riparian and sensitive areas, consequently maintaining
or increasing water quality and other desired ecosystem services. Forest owners will
appreciate payment to offset harvest loss, and utilities can reduce infrastructure and
filtration costs. This very basic analogy encompasses most PES programs. The
following diagram illustrates PES in context to water quality issues.
4
Figure 1 Example of PES programs focusing on water quality and delivery
Diagram courtesy of Foresttrends
Theory and background
PES schemes are centered on Coasean economics, established by Ronald Coase in
1960, with his Nobel Prize winning work, The Problem of Social Cost. Coase theorizes
that negative externalities, such as environmental degradation, can be alleviated through
the powers of markets and posits that externalities become a problem with lack of
property rights. The Coase Theorem, as it has become to be known, states “if private
property rights are clearly defined by enforceable contracts, then generators and
recipients of externalities can, through voluntary exchange, reach an agreement that
maximizes human welfare” (Coase, 1960, p. 3). By definition, externalities consist of un5
priced mechanisms within markets. Although many ecosystem products, such as timber,
are priced within markets, many ecosystem services, such as water filtration and delivery,
are not. Distinguishing the difference lies in the definition of ecosystem goods versus
ecosystem services. Low transaction costs and absence of wealth effects must be present
to ensure Pareto optimal outcomes, consisting of a condition whereas no actor’s situation
can be improved without detriment to other actors involved. Coasean theory provides
economic framework for PES schemes, however, very few programs are shown to fit
within this framework and achieve Pareto optimal results.
Coinciding with the Coase theorem, Garrett Hardin’s 1968 article The Tragedy of
the Commons, featured in Science, speaks to problems associated with public ownership
of resources. Hardin concedes that human self-interest creates situations where publicly
owned resources inevitably degrade from overuse or exploitation (Hardin, 1968).
Employing public grazing as a metaphor for this tragedy, Hardin explains how adding
one cow to an individual’s herd may increase that particular individual’s wealth, albeit at
expense of other herders’ ability to use resources taken by additional cattle. Hardin
argues each herder will act in self-interest, adding cattle before the next, leading to a
collapse of the field’s abilities to sustain pressure from overgrazing and produce hay for
further grazing. Overutilization induces a condition where fields cannot sustain
continued pressure of cattle grazing, necessitating a reduction in herd levels, leading to
smaller herds and more environmental degradation for all cattle herders involved.
By acting in self-interest, ranchers’ unsustainable land use prompts personal
financial loss and massive degradation to public pastures. Like Coase, Hardin prescribes
establishing well-defined, enforceable, and preferably private property rights are
6
necessary for conservation of environmental resources. With property rights, private right
holders can decide whether to use a resource and exclude others or transfer their resource
rights to other parties and profit economically, creating a win-win situation for both the
environment and the economy (Kosoy & Corbera, 2010).
Coase and Hardin’s pioneering work allows for theorizing about ecosystem
service’s value and their inclusion into markets. With economic and social frameworks
set, PES attempts to apply the Coase theorem in practice. Conceptualizing ecosystem
services began in the late 1970’s, with utilitarian framing of beneficial ecosystem
functions as services with goals to increase public awareness about biodiversity
conservation (Westman, 1977) (de Groot, 1987). Connecting ideas that ecosystem
services provide real and tangible benefits to human society represented overall goals.
Additional work to the concept of ecosystem services includes utilizing economic
theory to establish methods of applying economic value to ecosystem services. Robert
Constanza et al. pioneered this work with their stirring article, The value of the world's
ecosystem services and natural capital, released in 1997 in the reputable science journal
Nature. Constanza’s report fully engaged public, political, and scientific worlds by
estimating the value services by ecosystems worldwide provide, ranging between US
sixteen trillion dollars to fifty-four trillion dollars, with an average of thirty-three trillion
dollars. Gross global national product was around eighteen trillion US dollars in 1997,
showing the stark reality that world economic vitality relies heavily on unpriced
ecosystem services. Questions surfaced regarding research methods and quality of work,
however, one thing is certain: their report represented a catalyst for payment of
ecosystem services markets and payment schemes.
7
Constanza’s argument for environmental economics and ecological valuation can
be summarized by the following excerpt, “Neoclassical economics typically overlook
economic contributions of nature’s stock by restricting its scope of analysis to those
ecosystem goods and services that bear a price. Therefore, systematic undervaluation of
ecological dimensions in decision making could be explained given that services
provided by natural capital are not adequately quantified in terms comparable with
economic services and manufacturing.” (Constanza, et al., 1997, p. 254).
Millennium Ecosystem Assessment (MEA) reports followed in 2003 and 2005,
consisting of 1400 scientists working in a worldwide concerted effort to work within
ecosystem services framework. Ecologists conducted their research within this
framework with goals of developing stronger theory and empirical documentation how
stocks in nature deliver flow of services. The MEA concluded two-thirds of ecosystem
services worldwide were declining. Also noted were effects on developing countries and
their abilities to pursue economic interests due to undervaluing of their ecosystem
services (Millennium Ecosystem Assessment, 2005). Coase, Hardin, Constanza, and the
MEA set groundwork for inception and promotion of PES as an environmental
governance option, with programs developing at an exponential pace.
With concepts of ecosystem services and their valuation understood, establishing
and defining market-based applications for ecosystem services represented the next
challenge. Sven Wunder was first to supply a general accepted definition of PES,
concentrating on a purely economic approach, defining payment for ecosystem services
with five points:
1. A voluntary transaction where
2. A well-defined environmental service (or a land use likely to secure that service
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3. Is being “bought” by a (minimum one) service buyer
4. From a (minimum one) service provider
5. If and only if the service provider secures service provision (conditionality)
(Wunder, 2005)
Many working within PES frameworks question inclusiveness of Wunder’s
definition, (Farley, 2012) (Gowdy & Erickson, 2005) (Gomez-Baggethun, de Groot,
Lomas, & Montes, 2012) (Muradian & Rival, 2012) (Norgaard, 2010), possessing
specific concerns regarding voluntary mechanisms and conditionality requirement.
Ronald Muradian defines PES as: “a transfer of resources between social actors, which
aims to create incentives to align individual and/or collective land-use decisions with the
social interests in the management of natural resources.” (Muradian, Corbera, Pascual,
Kosoy, & May, 2010). By broadening PES’s scope, Muradian allows for
conceptualization of PES that encompasses many more conservation activities and
programs. Do complications with defining PES represent a barrier in establishing
successful programs? Understanding and agreeing on definitions across disciplines and
in environmental conservation communities signifies an important task. When
practitioners and academia can agree on a uniform definition of PES, further analysis
concerning PES framework can be identified and combatted. With so much discussion
and little agreement revolving around definitions of PES, a universal protocol for
defining success in PES programs will be difficult, with each program’s individuality
lending further complication.
Paying for ecosystem services concept in the United States dates began with the
Soil Conservation Act, signed by Franklin D. Roosevelt on April 27, 1935 in response to
the great Dust Bowl. Farmers were paid subsidies to change their land use practices such
9
as planting native grasses or implementing less intensive farming practices to reduce
erosion. Within three years, erosion was down sixty-five percent, in large part due to the
Soil Conservation Act. Although government acted as a willing buyer, a transaction
occurs loosely fitting PES’s definitions.
According to latest assessments one hundred sixty-seven programs within the
United States are identified as PES (Wunder, Engel, & Pagiola, 2008) (Stanton,
Echavarria, Hamilton, & Ott, 2010)(www.naturemarketplace.org, 2013). Of these,
ninety-eight are conservations banks, which do not directly connect buyers and sellers,
and cannot be considered a PES program given Wunder’s definition. Many of these
programs, approximately half, are in pilot phases or for demonstrative purposes only,
leaving less than fifty programs fitting PES’s definition operating within the United
States.
Conceptualizing PES as a viable option for environmental governance is intuitive;
however, many internal structural and practical components of PES programs provide
potential barriers to success. Recognizing and alleviating these barriers stands paramount
to achieving desired outcomes for PES programs. Full understanding of PES operations
allows programs to possess information necessary to obtain maximum efficiency. The
following section outlines potential barriers to successful PES definitions and operations
as purported by academia and PES practitioners.
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Chapter Two: Literature review
Initial reviews of literature associated with PES unveil structural, theoretical and
practical concerns, fitting neatly into categories of economic, political, scientific, and
social, and was reviewed with the following leading question in mind; “Could this issue
constitute a potential barrier to defining and operating successful PES programs in the
United States?” Many authors in peer reviewed journals and non-journal publications
provide insight for establishing PES programs. Components to establishing successful
PES programs are outlined, but from a practical standpoint, often leaving much
uninvestigated. (Bennett, Carroll, & Hamilton, 2013), (Eugene Water and Electric Board,
2001) (Evergreen Funding Consultants, January 27, 2009) (Greenwalt & McGrath, 2009)
(Institute for Natural Resources, April 2012) (Land, 2011) (Majanen, Friedman, &
Milder, 2011) (Patterson & Coelho, 2009) (The Oregon Sustainability Board, December
2010) (Ribaudo, Greene, Hansen, & Hellerstein, 2010) (Stanton, Echavarria, Hamilton, &
Ott, 2010) (The Trust for Public Land, 2004) (Willamette Parnership, 2012). Other
journals discuss PES in context with disciplines they represent, creating uniquely
different perspectives. Issues are discussed by category, and their setting within the
literature identified and prioritized in rank order by proportion of mention.
Economic
Prominent economic structural concerns include concepts of trade-offs, leakage,
non-excludability and property rights, and stock and flow properties of ecosystem
services. Economic trade-offs speak to the concept of opportunity costs. Many
researchers are worried payments or incentives offered to sellers do not compensate
adequately to offset gains from other management practices, consequently not covering
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opportunity costs of other land use actions (Alpizar, Blackman, & Pfaff, 2007) (Gowdy &
Erickson, 2005) (Kemkes, Farley, & Koliba, 2010) (Peterson, Hall, Feldpaush-Parker, &
Peterson, 2010) (Van Hecken & Bastiaensen, 2010). Consider a small forestland owner
as an example. Small forestland owners utilize timber resources as their main source of
income, leaving multiple management options ranging from sustainable practices to
clear-cutting. Known that clear cutting provide substantial and immediate income, PES
would have trouble competing with payments from this activity. Development represents
another option, permanently altering the ecosystem, but providing highest revenues to
landowners. Curtailing development comprises a main goal of PES programs dealing
with forestland owners. Given most PES programs cannot compete financially with
opportunity costs, program managers are forced to rely on altruistic behavior and
environmental commitment amongst landowners as additional incentive to convince
landowners to agree to contracts.
The concept of leakage posits destructive environmental practices alleviated by
PES programs in one area will simply resume in unregulated areas, making net
environmental gains nullified (Houdet, Trommetter, & Weber, 2012). PES programs
prioritize environmental outcomes, specifically at levels of operations or holdings, and
leakage can occur when environmentally damaging practices are merely displaced, not
reduced (Wunder, Engel, & Pagiola, 2008). Creating a problem at multiple scales,
leakage is only relevant when the spatial scope of intervention is lower than that of
desired services, and directly affects PES programs dealing with water related issues at
local levels unless all land within the watershed are included. For example, a large forest
owner may accept payment to reduce logging activities in a watershed desiring to reduce
12
sedimentation, only to move land clearing operations to areas not under contract.
Depending on locations of these holdings, leakage may transpire at local watershed
levels, defeating the PES programs purpose, or at neighborhood and global levels.
Concerns with leakage are foremost with global carbon sequestration programs, where
tracking can be more difficult (Alpizar, Blackman, & Pfaff, 2007). Given global carbon
markets sheer size, leakage is difficult to quantify or even detect. At local levels
detecting leakage is possible, but as projects scope increase, detection becomes a
problem.
Lacking ability to assign property rights, or non-excludability, considers issues
with free riding and difficulties assigning property rights, especially when dealing with
ecosystem services. Lack of property rights, or being unable to exclude users, can alter
ecosystem services functioning in the marketplace (Farley, 2012). As mentioned in
discussion of Coase and Hardin’s work, lack of property rights makes a situation where
non-excludability exists. In an economic sense, non-excludability points to
complications with charging all users for ecosystem services provided. PES programs
based on carbon sequestration supply a perfect example of non-excludability, since only
few pay for the ecosystem service of carbon sequestration, yet the entire world reaps
benefits, making most citizens free riders.
Concerns over the stock and flow commodities arise from inabilities to store
certain ecosystem services. Unlike typical commodities traded within markets,
ecosystem services lack storability and may not be available during times of need,
perpetuating a paradox changing how markets can be formed and operated (Brouwer,
Tesfaye, & Pauw, 2011). Many traditional natural resources, such as timber, fit tidily
13
within traditional economics, as they are tangible products with the ability to be
stockpiled and delivered when conditions are optimal, whereas many ecosystem services
do not. For example, stream temperature reduction might be a desired ecosystem service
for means of improving habitat for fish species, yet stream temperature reductions cannot
be saved or transferred to another location. Other than carbon sequestration, most PES
programs goals associate with ecosystem services that cannot be stocked.
Economic practical concerns identified during research consider four integral
components of PES programs, buyers, sellers, transactions involved and funding. Issues
with buyers include availability of willing buyers and their motivation. Some PES
programs have secured startup funding through government or non-profit grants, easing
immediate necessity for willing buyers, however, for PES programs to operate into
perpetuity, a diverse and willing group of buyers for the desired ecosystem service must
exist. Motivation of buyers is often questioned, given buyers of specified ecosystem
services often do not participate in capacities necessary to ensure the PES program is
funded and functioning efficiently. A healthy contingent of motivated buyers allows PES
to act as a viable solution to environmental governance.
Producers or sellers of ecosystem services should be willing to participate and
contractually comply with PES programs. Motivations may vary by program goals and
individual seller’s needs, and degrees of importance of financial, regulatory,
environmental, or other seller goals may affect overall success or programs structure.
Producers of targeted ecosystems must comply with contracts and management practices
incited by PES programs protocol, yet many programs rely on faith, since ensuring
14
compliance requires monitoring, adding further expenses. Without ecosystem service
producers’ compliance, assessing successful PES programs is impossible.
Transactions occur when buyers and sellers agree to participate, and clear
transaction mechanisms with low transaction costs are desirable. Transaction
mechanisms questions what processes take place in order to procure PES transactions.
Increasing parties involved in transactions between buyer and supplier increases costs,
compromising efficiency, and possibly confusing participants. Maintaining efficient,
simple, and clear processes understandable to all parties involved increases PES
programs success.
Transaction costs refer to the funding necessary to produce payment for
ecosystem service providers. Costs such as monitoring, ensuring compliance, research
and development, and overall program operations consume resources, consequently
lowering payments for provided ecosystem services, rendering payments so small they
lack competiveness. Funding for transactions and research development are often low,
particularly during PES programs inception, however, enough money needs to be
allocated to research chosen ecosystems for development of PES protocols and programs.
Social
Social issues should not be overlooked when assessing successful PES programs.
Social structural and theoretical issues with PES programs identified include
apprehensions with commodification of nature’s services and un-priced resources,
concern that payments may crowd out socially responsible behavior, that PES programs’
structure may incite perverse incentives, and assuring equitable distribution of resources
and ecosystem services.
15
Substantial attention is paid to commodification of nature in the literature, mainly
concerning programs operating in developing countries. In regards to ecosystem
services, processes of commodification, defined as transforming goods and services to
objects meant for trading, involves three steps: first, ecological functioning needs to be
narrowed down to the level of an ecosystem service, therefore separating the ecosystem
service from the ecosystem as a whole. Second, a single exchange value is assigned to the
service, and then third, it links “sellers” and “buyers” of these services in a market or
market like exchange (Kosoy & Corbera, 2010). Recent popularity of PES and markets
for ecosystem service has spurred many authors to challenge their logic, taking a critical
look at consequences, and identifying whose interests pricing and markets serve, and why
money and monetary valuation are considered so useful and persuasive as a sign of
ultimate worth (Liverman, 2004) (Nelson, 2001) (O'Neill, 2007). Elaborating further,
one author peers into power relations and remains concerned that the idea of “selling
nature to save it” legitimizes behavior of those who framed policy for their own direct
benefit, and advocating for markets is the best strategy to strike a balance between nature
conservation and the expansion of capitalism (Farley, 2012). Commodification of nature
rests in a value laden world. Obvious are concerns of distribution, power, and the social
context of conservation¸ noting environmental conservation as the primary goal. Will the
commodification of nature ultimately exclude individuals unable to pay for the ecosystem
services of fresh air and water? (Gomez-Baggethun & Ruiz-Perez, 2011) (Liverman,
2004) (Mariola, 2011).
The theory of crowding out socially responsible behavior concerns many
researchers, questioning if individuals need payment to partake in environmentally
16
responsible land management may change the dynamics of human land relationships.
(Ariely, Bracha, & Meier, 2009) (Bowles, 2008) (Frey & Oberholzer-Gee, 1997)
Originating from work by Richard M. Titmuss, who argues blood donors are not
motivated by money but by moral concerns, and adding monetary compensation for
donating blood would’ crowd out’ its supply (Titmuss, 1970). Other studies back up his
findings, proposing that using financial incentives can contravene or undermines civic
duty (Bowles, 2008) (Frey & Oberholzer-Gee, 1997) (Ariely, Bracha, & Meier, 2009).
PES’s framework implies incentives will coerce land owners to partake in sustainable
land management practices producing an increase in ecosystem services targeted. Do
landowners need payment to partake in environmentally sustainable practices? Some
authors suggest that by creating economic incentives, conservation market-based
mechanisms can induce logic of individualism and competition in societies previously
structured upon community and reciprocity values (Clements, John, Nielsen, Dara, Setha,
& Milner-Gulland, 2010) (Vatn, 2010). By superseding human’s altruistic tendencies
with self-interest, involved parties, and public perception, may change the logic from
doing what is considered appropriate and start thinking what is individually best to do.
Perverse incentives create situations where irrational behavior may take place.
PES schemes generally target individual or limited ecosystem services, and perverse
incentives become a problem because payments may tempt some participants to cheat.
By incentivizing certain land management activities, mainly restoration projects, land
owners may be inclined to partake in destructive activities in order to qualify for
restoration payments (Ariely, Bracha, & Meier, 2009). Programs with direct
additionality requirements are exceptionally at risk of creating perverse incentives, given
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payments are offered only when clear threats of degradation exist, therefore potential
applicants may be induced to create such threats (Pagiola & Platais, 2007). Perverse
incentives represent the larger problem of cheating, as whenever rules are enacted, or
markets available, possibilities for cheating and rule breaking exists. Perverse incentives
are well documented in the carbon sequestration markets in developing countries, as
some land managers are clear cutting rainforest for wood products producing immediate
income, only to be compensated for planting eucalyptus or other non-native species as
means of carbon capture. The growth rate of eucalyptus is high, hence the carbon
capturing abiltiy, but eucalyptus is very flamable, lending potential to destivistating fires.
Equitable distribution of wealth and services associated with PES concern many,
particularly for programs operating in developing countries, since equitable distribution
of ecosystem services and payments may preclude marginal populations from
participation. A central goal for PES programs operating in developing countries is
reducing poverty as well as improving environmental conditions (Porrass, Grieg-Gran,
Neves, & N., 2008) (Corbera, Kosoy, & Martinez-Tuna, 2007) (Martinez-Alier, 2002).
The millennium assessment furthered discussions around maximizing social equity,
maintaining environmental governance, and needs for developing countries to harbor the
value of their natural resources without destroying them, and PES was envisioned the
solution to these topics. Many articles discuss PES’s ability to achieve dual goals of
poverty reduction and environmental conservation (Kosoy & Corbera, 2010) (Nelson,
2001) (Potschin & Haines-Young, 2011), however, Corbera et al. make a salient point,
conceding excessive focus on economic efficiency make PES “blunt instruments with
respect to issues such as procedural fairness and equitable distribution of project
18
outcomes”, which can undermine conservation and environmental stewardship (Corbera,
Kosoy, & Martinez-Tuna, 2007, p. 366), The following quote sums up problems with
equitable distribution and PES, “distribution of costs and benefits from PES systems need
to be carefully considered. Systems should be designed to ensure inclusion of the poor,
since they are more dependent on common property assets like ecosystem services.
Wealthier nations should be prevented from free riding, and instead pay for services they
receive from biodiversity and ecologically productive ecosystems in less developed
countries.” (Farley & Constanza, 2010, p. 2064). Difficulties with distribution, and
inabilities to measure and assess effects could signify a barrier to successful PES
programs.
Social related practical components of PES programs include anticipated duration
of program operations, community education and outreach, and positive leadership.
Anticipated duration of programs can present barriers to long term environmental goals,
given many PES programs operate in shorter time frames, 3-5 years, often associating
with grant funding. While these programs aid in short term relief, establishing PES
programs into perpetuity, therefore locking selected holdings into an environmentally
positive management protocol, provides long term solutions to environmental governance
and stewardship. Community education and outreach gives stakeholders and the public
access to educate themselves about PES programs, their environmental advantages, and
individual benefits. Stakeholder and public “buy in” are crucial to for long term success
of PES programs. Positive and stable leadership within the PES programs is necessary
for success, specifically when dealing with a diverse set of stakeholders, allowing PES
programs to operate cohesively.
19
Political
Political and policy implications are inherent with PES, given most programs
receive some government aid, operate within confines of current environmental
regulations, and often work directly with government agencies. Policy and political
related issues representing possible barriers to success of PES programs include; working
within collaboration frameworks, implementing adaptive management, possessing
multiple goals, establishing conditionality, and policy coherence and overlap.
Collaborating with multiple stakeholders possessing numerous goals and
backgrounds can make establishing a unified mission difficult. Primary issues include
reaching consensus, building trust, representation of all stakeholders involved, and
achieving solutions which rectify original goals and missions (Chaffin, Mahler,
Wulfhorst, & Shafi, 2012) (Duraiappah, 2006) (Fiorino & O'Leary, 2004) (Muradian,
Corbera, Pascual, Kosoy, & May, 2010). Although not required, collaboration
frameworks are implemented in PES programs given their structure, consisting of
stakeholders representing sellers, buyers, government agencies, non-government
organizations, the public and program’s implementers. Some consider collaboration
frameworks all talk and no action, as a review of collaborative estuary conservation
programs shows no difference in cooperation between programs operated within
collaboration frameworks and those under a command and control protocol (Lubell,
2004). Regardless, collaboration between stakeholders allow for compromises necessary
to construct successful PES programs.
Adaptive management refers to the ability to change goals and procedures during
operations of PES programs. Operating PES programs alter ecosystem performance, and
20
when considering data and results associated with specific land practices are ever
changing, abilities to adapt programs to new information allows programs to achieve
their greatest efficacy (Muradian, Corbera, Pascual, Kosoy, & May, 2010). Adaptive
management protocols are not required for PES programs, but are required for many
government agency operated programs. Complaints associated with adaptive
management protocols are complying with changing targets and working within
collaboration frameworks, making consensus challenging. Continually involving all
actors involved with PES program decision making in order to adapt can be cumbersome
and unlikely. Adaptive management supplies a framework for continual positive
evolution of program operations, however, some stakeholders may not be comfortable
with this protocol, as standards, practices and contractual agreements are changing,
making business operations difficult.
Many authors concede including multiple goals for PES programs, such as
combining social and economic agendas, ultimately degrades environmental missions
(Deal, Cochran, & LaRocco, 2012) (Pagiola & Platais, 2007), as policies implemented to
solve multiple goals can often lose sight of their original intentions (Fiorino & O'Leary,
2004) (McGrory Klyza & Sousa, 2008). PES programs containing multiple goals may
lose efficiency.
A key criterion to defining successful PES programs, establishing conditionality,
or proving payments are indeed promoting land use change and enhancing ecosystem
services, stands paramount to PES’s ability to claim success (Claassen, Cattaneo, &
Johansson, 2008). Establishing conditionality questions “Are payments truly producing
more of the desired ecosystem service?” and proving its existence necessitates multiple
21
practical components, such as possessing accurate performance measures, assessing
contractual compliance, access to baseline data, metrics or quantification of the desired
service, and adequate funding.
Lack of policy coherence and overlap induces confusion amongst landowners,
especially when conforming to current policies and regulations and can create situations
where PES programs and environmental regulation in place are at odds (Norgaard, 2010)
(Fiorino & O'Leary, 2004). Landowners must be assured that by participating in a PES
program they will still conform to existing and preferably future governmental
regulations. Ensuring compatibility between PES and environmental regulation will ease
apprehensions of landowners to participate and increase possibilities of success.
Practical political based components of PES representing possible barriers to
success include agency partnerships and relationships and working with elected officials.
Many PES programs work in tangent with local, state, and federal agencies, such as the
EPA, state natural resource departments, and local municipalities’ development branches.
These partnerships must be fluid, transparent and collaborative to achieve high levels of
environmental success. Agencies can provide land owners assurance of compliance with
current and future environmental regulations, bolstering value of PES propositions.
Relationships with applicable regulatory agencies should be positive and collaborative to
reach goals of both regulatory agencies and PES programs. Elected officials are often
involved in PES programs, specifically in advocating for their inception. Answering the
question of “Are PES program managers and participants generally satisfied with the role
of elected officials?” will determine if they perpetuate a barrier for successful PES
operations.
22
Scientific
Goals of most PES programs comprise of conservation and enhancement of
selected ecosystem services. Scientific and environmental potential barriers to achieving
these goals receive the most attention within literature reviewed, and include targeting
individual ecosystem services and the tradeoffs associated, proving additional levels of
desired ecosystem services result from PES protocols, connecting land practices to
environmental outcomes, and difficulties in establishing performance measures and
adequate monitoring.
Environmental impacts of targeting individual or limited ecosystem services are
that other ecosystem functioning and services may be altered or degraded given targeting
one service will impede or cause unknown consequences to production of other
ecosystem services, perpetuated by uncertainties associated with overall ecosystem
functioning (Engel, Pagiola, & Wunder, 2008) (Brouwer, Tesfaye, & Pauw, 2011).
Many authors have displayed concern around targeting, specifically with the lack of
monitoring associated with non-target ecosystem services (Kemkes, Farley, & Koliba,
2010) (Alpizar, Blackman, & Pfaff, 2007).
Additionality, or lack of, refers to ensuring more desired ecosystem service is
being produced due to PES programs, with authors questioning, “Does the inception of a
PES program truly increase delivery of desired ecosystem service?” (Ferraro &
Pattanayak, 2006). Worries that in some cases, payments for adoption of practices occur
that would have happened anyway, known as “money for nothing” (Ferraro &
Pattanayak, 2006), is exemplified in financial efficiencies of the program, whereas if
goals include securing more desired ecosystem services, unmerited payments reduce
23
funds available to induce efficient land use change elsewhere (Engel, Pagiola, & Wunder,
2008). Combinations of leakage, trade-offs, and policy overlap can make additionality
difficult to prove, and an in-depth look at existing policies and governance, landowners’
intent, and ecological structure is essential to deciphering levels of additionality, all
requiring information and data, adding to transaction and operation costs. Proving
additionality can represent a barrier to defining successful PES program as it essentially
defines success.
Definitively connecting land management practices to increases or maintenance
of desired ecosystem services is difficult, with many practitioners making broad
assumptions about beneficial land management activities. (Brouwer, Tesfaye, & Pauw,
2011) A key component of PES programs is relating degrees to which land practices
affect specific ecosystem services since PES is based on ideas that specific land
management practices can increase or decrease specified ecosystem outcomes. Paying
for land practices allows for an easily definable unit of measurement, however, much
debate revolves around the scientific validity of land practices affecting ecological
outcomes (Maille & Collins, 2012) (Schoenen, 2012) (Fox, 2012) (Wunsher, Engel, &
Wunder, 2008).
Regarding issues of ecological conductivity, some authors posit ecosystems
properties evolve from interplay of behavioral, biological, physical, and social
interactions, which in turn suggests that human managerial interventions like PES can
affect ecosystems in both predictable and unpredictable ways, (Kosoy & Corbera, 2010).
Others consider that environmental services are frequently not fully defined, and PES
implementation proceeds without establishing a clear cut causal relationship between
24
land-use practices and expected enhancement of targeted environmental services, leading
to difficulty in demonstrating efficiency and success (Munoz-Pina, Guevara, Torres, &
Brana, 2008). Further concerns point out knowledge about functioning of one type of
ecosystem is not transposable to another similar ecosystem, and both human actions and
differences in key variables like climate or soil affect structure and delivery of
ecosystems services delivered, making modeling future programs after existing protocols
cumbersome (Norgaard, 2010).
Some question if PES is warranted at all, given lack of knowledge around
ecological processes and outcomes, benefits, and given ecosystem services can be
considered social constructs (Farley, 2012). Connecting land practices to environmental
outcomes are exemplified at forested watershed levels, as long-standing assumptions that
riparian buffers, and overall vegetative cover increase watershed functioning; specifically
temperature, filtration, sedimentation and delivery, yet studies have brought this
assumption into question in the Pacific Northwest areas of the United States (Grant,
Lewis, Swanson, Cissel, & McDonnell, 2008) (Pollock, Beechie, Liermann, & Bigley,
2008).
Accurately measuring and monitoring ecosystem performance under PES
management represents a real problem to many programs and is repeatedly tied to lack of
funding. Monitoring inherently takes resources from other program components,
specifically concerning is erosion of payments to providers of ecosystem services
(Brouwer, Tesfaye, & Pauw, 2011), and must take place in order to ensure provision of
services is indeed happening (additionality and conditionality of payments) (Engel,
Pagiola, & Wunder, 2008). To satisfy conditionality and additionality requires
25
understanding causal pathways, (processes), recognizing spatial extent and distribution,
(patterns), developing proxies or indicators for easy recognition and monitoring, and
simple, yet accurate and validated measures of environmental services provided (Tomich,
Thomas, & van Noordwijk, 2004). Monitoring must be present in performance-based
PES programs because without adequate and reliable monitoring, how can successful
PES programs be defined?
Possessing necessary scientific and environmental tools and information permits
PES programs to operate truthfully and efficiently. Concerns with access to information
and knowledge include availability of scientific knowledge of targeted ecosystems,
understanding ecosystem services provided, access to baseline data and access to PES
related information. Understanding ecosystem services provided, the working
components, and interconnectivity of a given ecosystem constitutes a potential barrier to
PES programs. If particular ecosystem services are preferred, understanding how
ecosystems produce these services and what management manipulation will increase
production is critical. Availability of scientific knowledge refers to sheer quantities and
availability of resources and knowledge needed to establish working management plans.
Access to PES related information questions if enough PES related information exist to
guide creation of new or operating PES programs and if is information readily available.
Issues with access to baseline data question current and historical production levels of
chosen ecosystem services is available and accessible because without previous baseline
data to compare are successes of PES programs and their associated management
practices justified? Accurate means of measurement and monitoring for ecosystem
services, the end value product, must be in place to ensure validity, assess if PES
26
programs are achieving their goals, and deciphering other effects programs have on
ecosystem workings, and varying metrics and quantification of services make identifying
successful PES programs difficult (Chaffin, Mahler, Wulfhorst, & Shafi, 2012).
Methodology and research setup
Clearly potential barriers to successful implementation and operation of PES
programs exist and are well discussed throughout the literature. These documented
potential barriers provide individual aspects for PES programs to compare and assess
success, which this research attempts to achieve. Below details methodologies used to
allow for comparison between documented potential barriers and real life PES
applications.
Methodologies implemented during research include case study analysis,
literature review, survey, and interviews. A three tiered system, where results collected
from one tier inform the next, allow for a robust data set. Tier I encompasses a thorough
literature review of journal articles, trade and government publications, and gray
literature providing necessary information to establish potential structural, theoretical,
and practical barriers to defining success in PES programs, a major component of this
research. Four distinct categories for potential barriers became clear; economic, political,
social, and scientific, and all potential barriers were identified, categorized and prioritized
by record of mention. In addition to literature review, interviews with one PES program
manager and with developers of a pilot payment for watershed services program helped
identify practical barriers.
With information obtained from literature review and initial interviews, a survey
was constructed to represent Tier II. A questionnaire was administered to determine if
respondents’ programs fit broadly within the parameters of PES, assess their programs
27
goals and missions, and to assess their perceived success of their program in achieving its
goals and missions. Seventeen survey questions address program manager’s concern
level in regards to each prospective structural and theoretical barrier identified. Twentythree components were selected as potential practical barriers to successful PES
programs, and managers were asked to assess their satisfaction level with each
component. Four optional open ended questions about individual program operations
conclude the survey.
Tier III includes selecting five programs for additional interviews, each with
distinct program goals of increasing biodiversity, water quality, water quantity, fire risk
mitigation, and nutrient reduction. Interviewee’s took advantage of opportunities to
elaborate and considerable insight emerged due to the open ended nature of interviewing.
Participants were selected based on geography, within the continental United
States, ability of their program to fall under PES’s definition, and must be considered a
program manager or director. Prospective participants were emailed invitations to
contribute and after obtaining permission, either agreed to an online survey, interview, or
both. All respondents were speaking within their professional capacity with agreement of
anonymity. Forty-three groups were targeted with thirty returning surveys. Five surveys
were found inapplicable to this research, culminating in twenty-five qualifying surveys.
Two additional participants were selected for a trial run with their data excluded from
analysis, and considering their feedback the survey was reworked to allow for
intuitiveness. Surveyed programs represented five subsets of PES, with overarching
goals associated with water quantity, water quality, nutrient reduction, fire risk
28
mitigation, and biodiversity. Survey responses were coded and entered into Excel for
anonymity and analysis.
Survey setup
Survey and interview processes asked participants to rate their concern level with
each identified potential barrier within context of their program. Below lists these
potential barriers by category of discipline and offers a brief explanation for context,
providing an excellent quick reference guide for the reader, program manager, or PES
stakeholders.
Category
Economic
Potential barrier to
successful PES programs
Leakage
Explanation
Economic
Trade-offs
Economic
Stock and flow
Economic
Non-excludability or lack of
property rights
Troubles in assigning property rights and
inabilities to exclude individuals from
consuming services for free.
Political
Multiple goals
Political
Establishing conditionality
Political
Collaboration framework
Political
Adaptive management
Scientific
Connecting land practices to
environmental outcomes
Scientific
Additionality
Multiple environmental, economic, social
and political goals dilute original intentions
of PES programs.
Conditionality requires a system ensuring
payments are truly producing the desired
ecosystem services.
Working with multiple stakeholders and
their goals.
Ability to reactively change program
structure given new information or
changing conditions.
Does causality exist between land
management practice and environmental
performance?
Ensuring more desired service is produced
as a result of payment for specific land
management practices.
Land owners may be compensated to
conserve certain areas, only to displace
destructive practices to other holdings.
Payments for ecosystem services may not
cover opportunity costs of other land use
options.
Many ecosystem services cannot be stored,
skewing traditional operations of markets.
29
Scientific
Performance measures and
monitoring
The ability to accurately measure and
monitor the desired ecosystem service.
Scientific
Targeting and trade-offs
Social
Equitable distribution
Targeting one ecosystem service may
negatively affect the production of other
ecosystem services.
Are incentives and ecosystem services
excluded to some users?
Social
“Crowding Out” voluntary
socially responsible behavior
Social
Commodification of nature's
services
Social
Perverse incentives
Will payments become expected for actions
previously done because of social norms
and responsibilities?
Should natures services be priced or a
human right?
An incentive that has an undesirable result,
which is contrary to the interests of the
incentive makers.
Table 1 Survey questions of potential barriers associated with PES
Twenty-three practical program components were identified as potential barriers
to successful PES programs through literature review, consulting with the Washington
state department of natural resources, as they are designing and implementing two PES
programs, and an interview with an active PES program. Participants were asked to rate
their satisfaction level with each of these components. The following presents PES
program components assessed during surveying, categorized by discipline and offering a
brief explanation, and provide a reference point for PES stakeholders, identifying
potential practical barriers to successful operations.
Category
Economic
Practical components of
PES representing
potential barrier to
successful PES
programs
Sellers compliance
Economic
Economic
Motivation of sellers
Transaction mechanisms
Economic
Availability of willing
sellers
Explanation
Are producers of ecosystem services complying
with contractual agreements?
Are producers eager and willing to participate?
Means and methods of establishing a transaction
between seller and buyer.
Do enough willing sellers exist to fulfill PES
program goals?
30
Economic
Funding for transaction
Does funding exist to pay transactions at
appropriate amounts?
Economic
Availability of willing
buyers
Do enough willing buyers exist to fulfill PES
program goals?
Economic
Economic
Motivation of buyers
Transaction costs
Are buyers eager and willing to participate?
Do transaction costs erode compensation to the
producers/sellers?
Political
Agency partnerships
Do partnerships with government agencies
enhance program operations?
Political
Relationship with
applicable regulatory
agencies
Stakeholder collaboration
Is working relationships with corresponding
government agencies acceptable?
Political
Implementing adaptive
management
Flexibility to react and adapt program structure
given new information.
Political
Elected officials involved
Scientific
Understanding of
ecosystem services
Do elected officials enhance PES programs
operation?
Understanding of how ecosystem services are
produced or enhanced?
Scientific
Metrics and
quantification of service
Can ecosystem services provided be measured
and do they include a unit of measurement?
Scientific
Scientific knowledge of
targeted ecosystem
Is scientific knowledge available for the
ecosystem under PES program management?
Scientific
Access to PES related
information
Access to baseline data
Ease of access to PES information for guiding
program development.
Ease of access to baseline data regarding
ecosystem functioning, social demographics, land
use, and environmental measurements.
Ability to monitor environmental changes
perpetuated by PES protocol.
Political
Scientific
Scientific
Social
Monitoring of
environmental
performance
Anticipated duration of
the program
Social
Education and outreach
Social
Leadership
Does stakeholder collaboration enhance or detract
from overall PES goals?
Does PES program's duration solve long term
environmental goals?
Does education and outreach allow for perceptive
decision making?
Is leadership adequate to achieve PES goals and
missions?
Table 2 Identified practical components of PES programs used as survey questions for
PES programs operating in the USA
31
Qualifying questions were administered determining whether participant’s PES
programs fit under PES’s definition. Programs must be voluntary, provide cash or in
kind incentives, and monitor for contractual compliance to be included in the survey.
The following questions were used for assessment.
Qualifying PES Survey Questions
Is your program voluntary?
How would you define your incentives?
Do you monitor for contractual compliance?
Do you currently monitor environmental performance of the specified ecosystem service in your
program?
Table 3 Table of qualifying PES survey questions
Additional questions ensure each program possess recognizable goals to compare
their perceived success against, ranks importance of economic, political,
scientific/environmental and social to program goals, and additional information for
analysis. Below outlines the remaining survey questions.
Further PES Survey Questions
Do you currently serve in a leadership position?
Does your program have a recognized goal or mission?
If your program has a recognized goal or mission, please describe. (Open ended)
Please rate how successful your feel your PES program is, or has been, at accomplishing the
intended goal or mission.
Please rank the following themes in relation to your programs goals and missions. (Open ended)
Please identify any goals specific to the above themes. (Economic, Environmental,
Political/Policy, and Social. (Open ended)
Do the goals of your program overlap with other environmental regulations or governance?
Do you have access to quantitative baseline or monitoring data of your desired ecosystem
services?
Do you monitor or observe non-targeted ecosystem services?
Do you use qualitative data in your analysis of success?
Please describe how you measure your programs success? (Open ended)
Would you be willing to share quantitative data associated with your program?
Would you be willing to participate in an on phone interview or remain in contact?
Table 4 Table of qualifying PES survey questions
32
Concluding the survey, four optional open ended questions were present with
desires of enticing new information or insight from participants, although most opted out.
Open ended PES Survey Questions
Please describe components within your program you feel need improvement and how you would
anticipate improving them.
Please describe individual program components strengths and why you feel they work.
Please describe your position towards using Payment for Ecosystem Services as a policy tool. As
a conservation tool?
Please provide any additional comments or feedback regarding your PES program, PES in
general, or this survey. Thank you.
Table 5 Table of open ended survey questions
33
Chapter Three: Results and analysis
Goals for analysis of participant responses consist of isolating barriers to defining
successful PES programs, and estimating institutional similarities between structural,
theoretical, and practical components, and comparing PES managers’ concern level and
satisfaction with program components to their perceived success of their PES application
as whole. To be included in analysis, PES programs must be voluntary, provide
incentives, monetary or in-kind, for a change in behavior resulting in delivery of desired
ecosystem services, and possess stated goals or mission. Twenty-five out of thirty
respondents fit this definition and were included in analysis. All programs possessed
clearly describe goals or missions to compare their perceived success against, and results
indicate all PES managers view their programs as successful.
With a firm grasp of PES’s concept and origin, investigations into potential
barriers to implementation and operation of successful PES programs are possible by
asking the question “Do issues exist within the PES framework that can impede the
definition and operation of successful programs?” Each participant is asked to identify
their concern level for seventeen potential structural and theoretical barriers in
comparison with their program. Potential barriers are categorized by discipline
perspectives of economic, political, scientific, social, and practical. The following
sections outlines survey results regarding concern levels of potential structural and
theoretical barriers, and are discussed from highest to lowest concern.
1. Economic trade-offs represents high concern for programs surveyed, with only one
program reporting no concern. PES managers understand their programs cannot offer
competitive prices in comparison to other options available. Practical issues with funding
34
for transactions, securing indefinite funding, and availability of willing buyers confound
problems associated with economic trade-offs.
2. Commodification of nature constitutes a barrier to defining successful PES programs
and also questions the intent of PES, including nature’s valuation. Two-thirds of
respondents expressed concern over commodification of nature with majority of
programs dealing with water quality issues. One water quality based program
commented, stating “One of the biggest barriers to advancing PES”. Given PES’s
economic premise, finding commodification of nature as a primary concern is surprising.
Commodification of nature emerges represents the primary social concern throughout the
literature, corresponding well with survey results.
3. Ranked highest concerning politically related potential barrier, working within
collaboration frameworks clearly represents an issue. Can’t we all just get along?
Wording of this question does not allow for indication whether respondents are
concerned with working within collaborative frameworks and its inherent problems, or
concern over not implementing a collaboration protocol. Working within collaboration
frameworks represents a universal problem in most environmental regulation or
governance programs, and PES programs are no different. With over fifty percent of
respondents claiming concern, working within the confines of collaboration frameworks
signifies a barrier to defining successful PES programs, specifically with reference to
program development and implementation.
4. Issues revolving around targeting and tradeoffs specific ecosystem services represent
the highest scientific concern, with forty-three and a half percent of programs showing
concern. Consequently, eighty percent of PES program managers surveyed indicate they
35
monitor for environmental performance of their targeted ecosystem service or services,
however, only twenty-nine percent indicate monitoring for non-targeted ecosystem
services. Without full monitoring of all ecosystem services associated with a selected
PES program, understanding if targeting specific ecosystem services promotes a decline
in others cannot be fully evaluated, nor can environmental effects of PES programs,
meriting high concern levels of participants. Targeting for specific ecosystem services is
a potential barrier to successful PES programs.
5. Forty-three percent of respondents indicate concern with adaptive management,
making it a probable barrier to defining successful PES programs. Comments from
interviewed PES programs identified their main concerns, consisting of constantly
moving environmental targets and difficulties relaying changes to stakeholders.
6. Thirty-nine percent of respondents were concerned with proving additionality with
most programs associated with water rights. Additionality is difficult to prove with water
rights, as they may be purchased, but proving purchased water is returning to the system
is arduous if not impossible. An assortment of natural variables makes it difficult to
isolate sources of additions and losses of water.
7. Crowding out socially responsible behavior signifies a mid-level concern to survey
participants, with over forty percent concerned response. Eight out of nine concerned
responses were registered by PES programs aiming to improve water quality through
nutrient reduction programs, dealing mostly with farming communities.
8.
Possessing multiple goals is concerning to PES managers focusing on water
quality. Looking at the five types of programs surveyed, this may be understandable, as
36
programs associated with fire risk mitigation, water quantity, biodiversity, and nutrient
reduction have singular goals.
9. The concept of leakage ranked is the second highest concerning economic potential
barriers. PES programs showing concern with leakage are associated with water quality,
quantity, and biodiversity and consequently controlled the largest land holdings.
10. All programs dealing with water rights showed concern with policy coherence and
overlap, as well programs associated with biodiversity, water quality, and nutrient
reduction, with over thirty-six percent responding concerned. One program associated
with returning irrigation water for in-stream uses elaborated on their concern, stating
“The myriad of archaic water laws and codes make leasing and transactions difficult.”
Insight through an interview with a PES program dealing with water quantity and flow
suggested federal policy does not recognize returning water for in-stream use as a viable
making it difficult to convince land owners to give up their water rights.
11. Even though ranking as a low policy related priority, establishing conditionality is
still a reputable concern to program managers, as over one third of respondents show
concern, with programs associated with biodiversity, water quality and quantity showing
the most. Nutrient reduction programs contain fairly standard protocols for assessing
total daily maximum loads of nutrients and tracking to sources of pollution, making
establishing conditionality an easier proposition.
12. Connecting land practices with environmental outcomes continually surfaced as an
issue to successfully operating PES programs throughout the literature and represent a
mid-level concern to PES program managers surveyed with twenty-seven percent.
Specific problems were detailed in water rights programs, suggesting although water may
37
be returned for in stream uses, un-irrigated fields left behind become infested with
invasive weed species, mainly scotch broom, leading to less water in the system and
heightened water quality issues. Inclusion of a restoration program coinciding with water
rights programs would help alleviate this problem. Lack of scientific knowledge and
ecological processes and inabilities to quantify individual ecosystem services purports a
major concern to practitioners and academia, and is considered a barrier to defining
successful PES programs dealing with water issues.
13. Just over fifteen percent of surveyed PES program managers are concerned with
perverse incentives. A broad spectrum of programs were concerned, including
biodiversity, water flow and rights, and water quality programs were all represented
equally. One comment by a manager dealing with water rights and returning irrigation
water to instream uses provided a salient insight to the problem, stating “Incentives are in
place to use as much of the water as possible, pay for pipe, bigger project, use as much
water as before.” Issues with water rights and returning water for in stream uses can be
challenging with the myriad of archaic water rules which helped define westward
expansion, essentially making it difficult for land owners to return their water, with its
“use it or lose it” format.
14. Non-excludability and lack of property rights concerns are low. As mentioned
previously in discussions of Coase and Hardin, troubles associated with lack of property
rights create a situation where non-excludability exists. Non-excludability in an
economic sense, points to difficulties charging all users for ecosystem services provided.
PES programs based on carbon sequestration supply a perfect example, as though only
few may pay for ecosystem services of carbon sequestration, the entire world will reaps
38
benefits. Five program managers consider non-excludability concerning, with nutrient
reduction, water quality and water flow as their program goals. All programs surveyed
work at watershed levels, producing what economists refer to as a “club good”. A club
good may be excludable to participants outside of the watershed, but free riding can still
be a problem.
15. Performance measure and represents the lowest structural scientific and
environmental concern, with only five programs concerned, just over twenty percent.
Lack of monitoring can be associated with lack of funding and high transaction costs.
Given difficulties regarding lack of knowledge and connecting land practices with
environmental outcomes, one may assume monitoring to be a top priority, however, data
from this survey indicates program managers have a grasp on performance measures and
monitoring, and cannot be considered a potential barrier to most surveyed programs.
16. The lowest social potential barrier to PES program managers is distribution of
resources and ecosystem services, with four respondents expressing concern. Looking at
this question closer, identifying if respondents are concerned with distribution of
payments or services would add clarity. All programs surveyed operate at a limited scale,
mostly watershed levels, with well-defined stakeholders. Three of the four programs
goals consisted of nutrient reduction programs based on changing farming habits to
reduce runoff. Many have conceded nutrient reduction programs targeting larger farming
operations already battling with environmental concerns, making a situation where
polluters are compensated for changing their actions. Also, some argue land stewardship
is eroded by offering payments for what should be done in the first place (Ariely, Bracha,
& Meier, 2009). Distribution issues as discussed above, are typically based on programs
39
at a national or international level, and often exist in developing countries. Given the
smaller scope of the surveyed programs, distribution should not be a mitigating factor in
defining successful PES programs in the United States, and data supports this assessment.
17. Issues with stock and flow properties of ecosystem services ranks as the lowest
overall concern to operating PES programs in the United States. Concerned respondent’s
programs associate with water rights issues, or buying water rights for returning water for
in-stream uses. Unless a dam is present, bringing on its own environmental concerns,
water flows cannot be controlled.
Many documented potential barriers to successful PES operations are concerning
to the survey PES program managers. The following graph illustrates concern levels with
structural and theoretical components of surveyed PES programs detailing in rank order
numbers of concerned responses compared to overall responses with each component
categorized by disciplinary concern. Please refer to Table 1 for a quick reference and
explanation of concepts and terms.
40
Figure 2 Concern level with potential barriers to PES programs in the USA
41
Practical barriers to successful PES programs are identified by literature review,
specifically non-journal publications assessing current PES programs, and interviews of
two PES program managers. Twenty-three survey questions contemplate practical
components associated with operating and defining successful PES programs.
Considering satisfaction levels of individual practical components of PES programs can
aid in adapting programs to achieve success. Economic components of PES program
deal with funding and actors working within proposed markets, showing distinct trends of
dissatisfaction with several components. Political and policy related components
consider collaboration between programs and government entities, and satisfaction levels
were mixed. PES practitioners showed general satisfaction with scientific,
environmental, and social components. The following section briefly outlines
satisfaction level with individual practical components of PES programs in rank order,
with highest levels of dissatisfaction listed first.
1. Transaction costs are the number one source of dissatisfaction for PES managers
surveyed, with over fifty-two percent unsatisfied. High transaction costs erode funds
available for payments to land owners, leading to problems with economic trade-offs,
duration of program operations, and leakage. Programs commented on difficulties
reaching economies of scale since many are small operations, however, some newly
formed programs felt transaction costs will go down with program development
completed. Initially high internal startup costs, such as equipment, research and
development, and program layout will reduce over time. A theme of lack of funding is
emerging, as the need for other sources of money other than grants is representing a real
problem. Unsatisfied programs commented on having difficulty transferring funding
42
responsibility to the local utilities. Often utilities need to authorize rate increases to
procure funding for PES programs, which can be difficult to justify to the public.
2. Dissatisfaction with availability of willing buyers was high, mostly with programs
holding multiple goals of water quality, such as flood mitigation, nutrient reduction,
biological contamination reduction, sedimentation reduction, and water filtration. Many
of these programs operate off of government grants, and without a pool of willing buyers,
programs cannot operate beyond the grants duration. Willing buyers could include local
water utilities, electric utilities associated with dam power production, the public with tax
money, and non-governmental organizations. Inabilities to align willing buyers with PES
programs constitute a barrier to success for many programs, and willing buyers should be
solidified during planning.
3. Six programs were somewhat unsatisfied with implementing adaptive management,
comprising of biodiversity and large water quality programs. Results indicate
biodiversity related PES programs are having difficulties with multiple practical
components as well as water quality programs affecting large land holdings, possibly due
to a larger pool of stakeholders involved in decisionmaking. Stakeholder trust must be
established for adaptive management to succeed. One program manager associated with
nutrient reduction and water quality quoted “ Farmer’s distrust new methods initially.”,
showing application complications with an adaptive management protocol.
4. Coinciding with transaction costs, funding for transactions represents the fourth
highest source of dissatisfaction for survey PES program managers, with four programs
somewhat unsatisfied, and two programs unsatisfied. Funding related issues pose real
problems and represent a barrier to successful PES programs.
43
5. Only four programs were satisfied with elected officials involved, with five programs
unsatisfied, although none elaborated. Given the sensitive nature of politics, most
participants declined to answer, which may be justified. Elected officials may present a
barrier to successful PES programs, especially when considering they represent
constituents.
6. Buyer’s motivation comprises an issue for over twenty percent of the programs, with
the same programs showing dissatisfaction with funding for transactions. Two of these
programs were created to reduce sedimentation and nutrient content as means to reduce
water filtration costs for local utilities, and both are extremely unsatisfied with utilities
motivation to engage in monetary transactions, given they only have grant funding for a 3
year trial. Program managers expect utilities to begin negotiations once grant money has
expired. On a positive note, one program expressed being very satisfied with local
utilities, stating “The city is motivated to address nitrogen sources for its wells, rather
than investing in treatment.” showing collaboration and local funding can and does
happen.
7. Transaction mechanisms represent processes and parties involved for transactions to
occur. Mechanisms can include establishing a contractual agreement, implementing
compliance, and working through a verification process. Four respondents were
somewhat unsatisfied, with one unsatisfied manager concerned with all components
associated with funding and buyers.
8. Four programs were somewhat unsatisfied with availability of willing sellers, with
these programs covering large areas with multiple goals of water quality. A minimum
level of willing sellers is necessary to ensure enough land is under PES program
44
management to increase production of desired ecosystem services. Given only four
programs were somewhat unsatisfied, the availability of willing sellers cannot be
considered a barrier to PES programs surveyed.
9. Of the four programs were somewhat unsatisfied with stakeholder collaboration, all
were dissatisified with other components relating to stakeholder collaboration such as;
implementing adapative management, relationship with regulatory agencies, and
availability of willing buyers.
10. Four programs were somewhat unsatisfied with their relationship with applicable
regulatory agencies and all commented why. Two programs are concerned with
differences in work culture, specifically when dealing with time frames associated with
federal and local agencies. One program had a history of adverserial relationships
between potential sellers and the presiding regulatory agency, and finally one program
seemed more than somewhat unsatisfied, stating “ It’s hard to work on complex programs
when staff turnover is high, the topic complex, and the resources to support staff are so
very limited, and well almost always say that decision is “Above my pay grade”, but no
apparent leader is there to support decisions.”
11. Funding for research and development had few unsatisfied respondents. Three
programs were somewhat unsatisfied, consisting of biodiversity and water quality
programs. Most research and development occurs at inception of PES programs when
grant moneys are readily available. Given high satisfaction for this component, it cannot
be considered a practical barrier to defining successful PES programs.
45
12. Agency partnerships were generally seen as positive. One of the three somewhat
unsatisfied respondents suggested another name for agency partnerships. “Not really a
partnership, more like a forced family relationship.”
13. Only two water quality programs have concern with sellers motivation. Overall
responses show a general satisfaction with the motivation of the sellers, with one
manager of a water quality program stating “Producers want to be good neighbors and
understand that helping the City also benefits their own private wells.”
14. Access to baseline data seems readily available except for two somewhat unsatisfied
programs, a privately funded program and a program dealing with biodiversity.
Obtaining baseline data for biodiversity is difficult, given the labor intensive data
collection method of observation. Access to baseline data is not a mitigating factor in
determining the success of PES programs surveyed.
15. Quantifying biodiversity’s ecosystem service into a metric conducive to PES
programs proves to be a barrier as both somewhat unsatisfied programs primary goal is
conserving biodiversity. All other programs displayed satisfaction with metrics, and
looking closer at program types, metrics were easy to identify. Examples include total
daily maximum load (TDML) for nutrient reduction programs, cubic feet of water
returned for water quantity programs, turbidity for sediment issues, and temperature and
oxygen levels in water, etc.
16. Two programs were somewhat unsatisfied with education and outreach and both
programs express dissatisfaction with most practical components.
17. Leadership is strong in all but one program surveyed.
46
18. One program displayed dissatisfaction with seller’s compliance, comprising of a
program to reduce nitrates from farm run-off.
19. Access to PES related information seems readily available, as only one program was
somewhat unsatisfied. This particular program is privately funded, possibly indicating a
lack of governmental support.
20.
Only one program dealing with biodiversity had issues with availability of
scientific knowledge. A trend is developing with programs associated with biodiversity
goals, and will be elaborated upon in case reviews.
21.
One program dealing with water quality had issues with monitoring for
environmental performance, stating “Inspections by state personnel is VERY slow and hit
and miss.”
22.
Satisfaction was high for understanding ecosystem services provided.
23.
No objections to the anticipated duration of the program were shown.
A clear trend of dissatisfaciton with economic and politically related components
of surveyed PES programs is shown. Funding and collaboration with stakeholders as a
whole encompass the top thirteen sources of dissatisfaction. The following graph
illustrates dissatisfaction levels with practical PES component ranked from highest to
lowest dissatisfaction.
47
Figure 3 Dissatisfaction level with practical program components for surveyed PES
program managers
48
Analysis by PES program type
Analysis by PES program type illuminates concerns and dissatisfaction with
programs associated with specific environmental goals, and provides useful insight for
program managers operating or implementing these specific types of PES programs.
Surveyed programs encompassed five general goals for their programs as follows; water
quality, water quantity, fire risk mitigation, nutrient reduction and biodiversity. Below
outlines each program by type, describing their individual goals and program structure,
followed by program specific trends and analysis.
Water quality
PES programs categorized under water quality include a combination of
environmental goals such as sedimentation reduction, nutrient reduction, fire risk
mitigation, flood mitigation, biological contaminant reduction, increased water flow,
habitat conservation and restoration, carbon sequestration, and recreation. Fourteen
programs are categorized as water quality related PES programs, all possessing at least
two or more afore mentioned goals.
A clear trend is expressed when looking at satisfaction levels of practical
components for PES programs associated with water quality. All concerns fall under the
economic and policy categories, with issues regarding funding holding six out seven
highest rankings. Potential barriers to defining successful water quality related PES
programs in the United States listed by level of dissatisfaction, highest to lowest, include
transaction costs, availability of willing buyers, implementing adaptive management,
motivation of buyers, availability of willing sellers, funding for transactions, and
stakeholder collaboration.
49
Intuitively, funding and working with stakeholders represents true barriers to
defining and operating successful water quality related PES programs surveyed.
Problems with funding may arise because most PES programs are started with grant
money, with ideas that buyers and sellers will enroll once program structures are
established. Grant money characteristically has a limited timeframe, putting pressure on
programs to secure buyers to continue beyond grant funding. Without a pool of buyers,
payouts to producers diminish and programs often fail.
Transaction costs and availability of willing buyers represent the only two
categories with over fifty percent of respondents unsatisfied. Transactions costs
constitute a well-documented concern for program managers and survey data supports
this. Transaction costs erode payments rendered to producers of desired ecosystem
services, making it difficult to cover opportunity costs. If payments are not adequate,
producers will not enroll in the program, providing a sure barrier to the implementation
and success of PES programs. Interestingly, all programs having problems with the
availability of willing buyers also are dissatisfied with transaction costs. Given the
documentation, data supplied, and confirmation through survey and interview, these two
practical components are linked, with transaction costs being the causal variable.
Without comparable payments to opportunity costs, buyers will not enroll in PES
programs. Left unaddressed, transaction costs and availability of willing buyers represent
a barrier to successful water quality related PES programs.
Interconnection between availability of buyers, motivation of buyers, and funding
for transactions is evident, considering that program managers who showed
50
dissatisfaction with one were unsatisfied with all, and can be considered probable barriers
to success for PES programs associated with water quality.
Many water quality programs were dissatisfied with collaboration and adaptive
management, and given multiple goals and large stakeholder pools, this is
understandable. Collaboration must happen in order for adaptive management to work
since protocols are constantly changing. Concern levels with structural and theoretical
components for PES program managers of water quality based programs mirrored overall
survey results, expressing high concern with commodification of nature, economic
tradeoffs (opportunity costs), and targeting and tradeoffs. Economic trade-offs could also
point to the problem of transaction costs and the availability of willing buyers as
discussed above.
Water quantity
Four programs surveyed contain goals of increasing water quantity with missions
of returning water for irrigation or damming to in-stream uses. All programs were
satisfied with practical components except one, showing dissatisfaction with economic
and policy related component, conceding difficulties in procuring water rights for uses
other than irrigation, working with regulatory agencies, and the lack of willing buyers as
primary concerns. Interviewing this program manager uncovered complaints about
turnaround time of applications, typically 6 months, and difficulties in transaction
mechanisms and policy coherence and overlap. Returning irrigation water for in-stream
uses is not considered a beneficial use of state and federal water rights, and ensuring
farmers that transferring their rights will not negate irrigation rights is critical for
program’s success, and will alleviate these barriers.
51
Structural and theoretical concerns ran high with PES programs associated with
water quantity and represent probable barriers to success for these programs. Connecting
management practices to environmental outcomes ranked first. Managers noted the lack
of restoration happening when water is diverted from irrigating fields and back to instream uses. Un-irrigated fields are often left fallow, resulting in weed infested fields.
Incorporating restoration into these programs will help goals of conserving and restoring
riparian habitat.
Concerns with economic trade-offs is warranted, given payments associated with
returning water for in-stream use does not compete with selling water rights outright or
continuing irrigated farming. Regarding leakage, two respondents were concerned and
spoke to difficulties assessing where water is coming from since water rights may be
procured, but deciphering how much water is actually being returned to the system is
difficult. Managers can assess overall increases in water volume, but pinpointing
contributing locations requires in depth monitoring and is unlikely given financial
constraints. Concerns with conditionality can also be explained by this.
Three out of four programs were concerned with the commodification of nature,
showing the paradoxical nature of working within PES frameworks for environmental
gain.
Fire risk mitigation
Fire risk mitigation is questionable if it fits PES’s parameters of being voluntary
as these programs are funded by utility charges to customers. In both cases reviewed
programs were approved by voter referendum, making them technically voluntary,
although some may have voted no. Regardless, these type of programs merit
52
investigation. Goals of fire risk mitigation programs are to reduce chances of
catastrophic fire, resulting in a mass sedimentation. If a fire eliminates forest cover,
barren land is exposed, and with precipitation will erode quickly, leading to copious
amounts of turbidity and sedimentation in water sources. Water utilities are extremely
concerned with this scenario, given difficulties and costs associated with filtering
sedimentation. A catastrophic fire, and resulting sedimentation, renders local water
source useless until problem are rectified with new filtration plants.
Neither respondent were unsatisfied with practical components of their programs.
Fire risk mitigation programs are straight forward, with funding secured through
payments by customers, and land management practices easily definable and understood.
Some issues did come to light during interviewing, specifically dealing with applicable
regulatory agencies. Concerns around work cultures associated with agencies and their
“lack of timeliness” turning around reports and essential collaboration represents an issue
worth noting. Other concerns were limited, with one program showing concern with
performance measures, economic trade-offs, multiple goals and collaboration.
Nutrient reduction
Nutrient reduction PES programs involve working with farmers to change
fertilizing and drainage practices to reduce amounts of nutrient flow into watersheds and
subsequent water supplies. Nitrogen, phosphorous, and fecal coliform are targeted, with
well understood management practices producing predictable results.
Four programs surveyed fell under nutrient reduction, and typical funding related
dissatisfactions emerging, with half of the programs unsatisfied at some level with
transaction costs, transaction mechanisms, funding for transaction, availability of willing
53
buyers and motivation of the buyers. Adaptive management related issues were also
prominent. In talking with one program manager, difficulties in implementing adaptive
management lies with fear that farmer’s will not comply with federal regulations, and the
succeeding cost and time associated with changing management practices. Farmers are
more comfortable with static, predictable land management protocols allowing for
changes to be made without concern of future moving targets.
Biodiversity
Two programs with biodiversity goals were included in the data set with missions
of maintaining biodiversity integrity on selected sites. Maintaining and increasing
biodiversity protects habitat, makes ecosystems more resilient, maintains working
ecosystems, and protects species which may be of use to humankind in the future. Both
programs were unsatisfied with multiple practical components of their program. Issues
with funding emerged, as program managers were unsatisfied with transaction costs and
mechanisms, availability of willing sellers, and funding for research and development.
Working with regulatory agencies and elected officials also represented concern to both
programs and interviews revealed lack of interest or concern for biodiversity by these
agencies and officials. Relating the importance of biodiversity, and justifying
conservation costs is a barrier to success for these programs.
Concerns with connecting land practices to environmental outcomes and
performance measures were apparent. Scaling up program scope represented the top
concern. Given such a large metric for success as biodiversity, collecting data and
observations is extremely difficult, time consuming, and prone to inaccuracies. Secondly,
other than leaving a site as is, land practices inevitably have effects on biodiversity.
54
Overall PES programs associated with biodiversity possessed larger percentages
of dissatisfaction with practical and structural components and concern theoretical
concepts, and given the format of these programs, this is understandable.
Results from individual and program specific components of PES programs show
distinguishable trends of concern and dissatisfaction with structural, theoretical and
practical components of PES programs. Lack of adequate funding and collaboration
mark the most understood barriers to successful PES programs, which represent universal
problems for government or private programs of any type. Concerns specific to PES are
also prolific, and are discussed in the following section.
55
Chapter Four: Discussion
When asked about successfulness in achieving PES program goals, all managers
felt their programs were succeeding, four claiming very successful programs and twentyone affirming somewhat successful programs. Given this percieved high succuss level,
one may expect an equally high satisfaction level with program components and low
concern with potential structural barriers, however, this is untrue for many PES program
managers, confirming structural, practical and theoretical barriers to defining successful
PES programs do exist. All structural and practical components surveyed could represent
a barrier to success for individual programs, but the aim of this research was to identify
components broadly accepted as barriers and look for general themes of concern and
dissatisfaction.
Survey participants were asked to prioritize economic, political/policy,
scientific/environmental, and social components of their program in relation goals and
missions. Scientific and environmental goals ranked as the highest priority for surveyed
program managers, with economic and policy related issues showing mid-level
precedence. Understanding environmental and scientific issues is key given most
programs seek to improve selected ecosystem services. High satisfaction level with
scientific components, primary ranking for environmental concerns and satisfaction with
their programs success makes sense. Social goals ranked lowest, with only two programs
prioritizing it higher than last. Even though managers typically defined social concerns
as low priority, when asked about their concern level of individual social issues in
comparison to their program, some concerns ran high. The following graph indicates
surveyed PES program managers’ priorities in relation to their program goals.
56
Total Responses
Surveyed PES program managers prioritized
goals.
25
20
15
10
5
0
Priority Priority Priority Priority
1
2
3
4
Environmental
21
3
0
1
Economic
3
14
5
3
Policy/ Political
0
7
9
8
Social
1
1
11
12
Figure 4 Prioritized goals of surveyed PES programs operating in the USA
Comparing differences between previously discussed prioritized goals and survey
results show concern with structural components of PES programs mirror that of
prioritized goals, with highest prioritized goals showing the least amount of overall
concern. Below indicates higher concern with political and social issues than economic
and scientific.
Concern with structural components of PES programs
by disciplinary catergory.
Concerned Responses
92
31
93
Environm
ental/
Scientific
(33.33%)
33
Economic
(35.87%)
89
Social
(37.08%)
33
Policy/
Political
(41.23%)
114
47
1
2
3
4
Figure 5 Concern level with structural components by discipline.
57
Overall dissatisfaction with practical components of surveyed PES programs is
considerably lower than concern levels with structural and theoretical components, but
potential barriers to success do exist. High levels of satisfaction were shown for
questions relating to scientific practical concerns of PES program components, with only
seven respondents showing any dissatisfaction. Problems with isolating and quantifying
ecosystem services such as monitoring, ecological understanding, proving additionality,
trade-offs, and difficulties in tying land practices to specific environmental outcomes
received much attention in the literature, however, surveyed PES managers have little
dissatisfaction with these components, indicating they are not potential barriers to
successful PES operations surveyed. Social issues comprised of three questions, with
only three total dissatisfied responses, making social practical components of duration of
program, leadership, and education and outreach a non-issue for surveyed programs.
The highest dissatisfaction was show with economic and political practical
components related to funding and collaboration as a whole, indicating these issues do
present barriers to defining and operating successful PES programs. Below details in
rank order unsatisfied responses by disciplinary category, clearly showing the marked
difference between categories.
58
Satisfaction with practical components of PES
programs by disciplinary category.
Somewhat Unsatisfied or Unsatisfied
Total Responses
217
143
122
22
Economic
(21.20%)
Policy/Political
(18.03%)
Environmental/
Scientific
(4.90%)
Social
(4.11%)
73
46
1
2
3
4
7
3
Figure 6 Satisfaction with practical PES components by disciplinary category
General satisfaction levels were high for surveyed PES program components, and
may be attributed to respondents percieved success of their program, all ranked either
very successful or somewhat successful, however potential economic barriers to success
still exist. Inherent to all PES programs are goals of achieving economic markets for
desirable ecosystem services. With markets established, a host of concerns emerge which
can lead to an inefficient market results for PES programs. Program managers indicate
securing dependable funding as first priority to ensure successful PES programs, and high
transaction costs erode funding available for payments and operations. Given the
relatively new nature of this market and the programs in general, high transaction costs
may be expected. Many managers felt their transaction costs will go down as programs
mature and more actors are involved. Economies of scale will help alleviate some of
these issues, however, high transaction costs take away from payments to service
providers and increase the price for potential ecosystem service buyers, making PES
59
programs unable to attract willing participants. High transaction costs continually
produce a barrier to successful PES programs.
Lack of willing and motivated buyers confounds problems with funding.
Managers explained their programs were initially funded by government grants or outside
sources as pilot projects to display the potential of PES as a mechanism to increase land
manager’s opportunities and income, while easing the strain on the environment. The
transition to finding real buyers willing to pay for these services has been difficult, with
the only tangible relationships typically coming between municipalities and upstream
land owners. PES programs must attract an adequate pool of willing and motivated
buyers to ensure success.
Most PES programs do not operate in isolation, and often coincide with
government regulations and agencies. Since PES essentially represents a policy decision
towards environmental governance, typical policy development problems arise, with
many programs frustrated with collaborating with all actors involved in PES programs,
specifically when trying to implement an adaptive management protocol. Collaboration
frameworks can work, but often result in policies or programs that miss their original
intention. Implementing adaptive management requires constant collaboration with all
stakeholders, informing them of new findings, new procedures and changing program
goals. Producers of the ecosystem services generally insist on some consistency of
practices and payment, and understandably so. Here lies the difficulty of introducing an
economic incentive for land stewardship. Landowners need to have concrete guidelines
and expectations for payment. Adaptive management, as the name indicates, allows for
adapting the original program in light of new technical information, ecosystem
60
performance, management performance, and available funding, often changing initial
contractual agreements. Positive and productive collaboration are necessary for
successful PES programs, specifically when adaptive management is implemented.
Many programs do not implement adaptive management to alleviate many of the
problems associated with collaboration, but all desired to do so, conceding program
results and efficiencies would be improved. Although general satisfaction with practical
components of PES programs is high, components associated with funding and
collaboration can provide barriers to success, and must be addressed during programs
inception.
Structural and theoretical concerns with PES programs do not show clear trends
of concern by disciplinary category, however components associated with funding,
collaboration, environmental targeting and trade-offs, and commodification of nature
clearly present potential barriers to the success of PES as a whole. Concerns with
funding and collaboration are similar to that of practical components, however, high
concern with commodification of nature and targeting for specific ecosystem services are
unique.
Commodification of nature questions one’s view of use of markets for
conservation purposes and provides a potential barrier to the PES concept as a whole.
Nonetheless, natural scientists are increasingly embracing pragmatic valuation and
market-based approach (Child, 2009) (Spash, 2008) explain “the reason for this is
probably the search for short-term policy action to halt ecosystem services loss where
traditional narratives for conservation have failed to influence economic decisionmaking. Because it fits in with the ideological and institutional economic structures in
61
place, market-based policy design has been in an advantage position to reach decisionmaking and to get policy proposals implemented (Gomez-Baggethun & Ruiz-Perez,
2011). Although PES constitutes an attractive alternative to command and control
environmental governance, concerns over the longevity and efficiency of programs are
warranted. Furthermore, and most concerning to academia, PES establishes markets for
ecosystem services, most of which have been available for free through history, allowing
for an easy visualization where these services will only be available to those willing to
pay, excluding marginal communities. Concern over the commodification of nature
raises the sensitivity of social and value judgments associated with PES, as many feel by
establishing these type of programs, inevitably ecosystem services will be priced and
only available to those with means to pay.
Targeting specific ecosystem services represents high concern to academia and
surveyed PES programs, given unknown effects of land management practices on other
ecosystem services. Only twenty-nine percent of programs surveyed indicate monitoring
for non-targeted ecosystem services, making a situation where most programs will not
know the overall effect of their management practices. A wealth of information could be
supplied to the scientific world if proper monitoring occurs; however, additional
monitoring requires additional funding, reducing payments for producers and raising
costs for buyers, making PES programs uncompetitive with other land management
activities.
The overarching goal of this paper is to identify and verify barriers to success for
PES programs as means to raise awareness of these issues for current and future
programs, allowing for programs to develop protocols to alleviate these barriers. Clearly
62
potential barriers exist, specifically with collaboration and funding. PES is becoming
exceedingly popular to policy makers because of its intuitive nature, breaking ecosystem
services down to simple monetary values. Many programs are brought forward in haste
without proper stakeholder analysis and vetting of programs structure, making programs
destined to fail. Success for PES programs can be increased with a complete evaluation
of all practical, structural and theoretical components associated prior to and during
program operations, and this paper supplies a great resource for identifying and verifying
these components.
63
Chapter Five: Conclusions
The crux with PES programs lies within inner conductivity of nature and
socioeconomic, socio-ecological, and sociopolitical interplay. Defining successful PES
programs implies managers delineate programs goals and missions, assess satisfaction
with individual program components, and understand their programs position in context
to PES definitions, practice and theory.
Practical barriers to successful definition and operation of PES programs in the
United States do exist, mainly categorized under economic and political disciplines. An
overall lack of funding perpetuated by high transaction costs and lack of willing and
motivated buyers and sellers represent major practical barriers, inducing many programs
to fail under economic pressure. Issues with collaboration at multiple levels, including
elected officials, regulatory agencies and PES stakeholders as a whole exhibits political
barriers to success. Working with multiple goals and issues with policy overlap and
confusion confound collaboration concerns.
Concerns with structural and theoretical components also provide potential
barriers to successful PES programs operating in the US. Economic and environmental
trade-offs, commodification of nature, implementing adaptive management and working
within a collaboration framework do not allow PES managers to fully assess their
programs success. Economic trade-offs illicit difficulties associated with funding, with
concerns revolving around problems with covering opportunity costs of ecosystem
service producers, whereas environmental trade-offs refers to concern targeting one
ecosystem service may hinder production of other ecosystem services. Implementing
adaptive management and working in collaboration frameworks again points to
64
overarching difficulties reaching consensus given numbers of stakeholders and their
goals, interpretations, and nuances. Heightened concern with commodification of nature
portrays the paradoxical nature of PES as PES frameworks establish potential markets to
be exploited. Yes barriers to successful PES program operations exist, but by taking a
close look at each component producing potential barriers and looking at
interconnections, ways to improve individual and overall efficiency with PES is possible.
This report supplies information to do so.
Future recommendations
Future recommendations include establishing a network of PES programs, where
program managers can consult other programs for advice, outline program structure,
identify working models in practice, and identify and rank concerns and dissatisfactions.
Allowing broader communication between programs will raise the overall effectiveness
of PES individually and as a whole.
65
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