Payment for Ecosystem Services, sometimes also known as Payment for Environmental Services (PES), refers to the practice where farmers or landowners receive remuneration or compensation in return for offering different ecological or environmental services depending on the type of the property they own. Ecological services,on the other hand, do not have a precise definition, but are usually understood as the various ways in which society can benefit from nature. Generally, PES is a voluntary transaction and therefore cooperation between landowners and communities is crucial for the success of any PES initiative.
PES gained popularity in the last couple of years, as several PES projects in the Nordic countries were successfully implemented. However, the practice of paying farmers for environmental services is by no means a new idea; the US Conservation Reserve Programme (CRP), which is considered to be the world’s largest payment scheme for environmental services, started functioning as early as 1985. Under the CRP, landowners receive annual payments in return for adopting agricultural practices aimed at reducing water runoff and sedimentation. The integration of environmental requirements from EU farmers and landowners in the Common Agricultural Policy (CAP) may also be counted as a form of PES. This practice will be further enhanced by the new green measures recently proposed by the European Commission, namely, reserving 30% of direct CAP payments specifically for farmers and landowners who adopt practices for protecting the environment, such as landscape preservation.
Applying of PES to the forestry sector is also causing an increased amount of interest due to the numerous environmental benefits of forests such as carbon sequestration, water and air purification, etc. Countries such as Mexico and Costa Rica are developing strategies to implement PES in the forestry sector, as a measure to reduce deforestation and protect the interests of indigenous communities dependent on forest ecosystems.
One of the most popular examples for a successful PES program in the forestry sector is the Finnish METSO programme. In short, the programme operates on the basis of agreements between the state and owners of timberland, who submit tenders, which are assessed on the basis of their ability to deliver a given ecosystem service at a competitive price. According to the Nordic Council, the programme will run until 2016, and Finland will have invested 180 million by 2012. Read the full story