A group of white and brown cattle stand together, looking toward the camera curiously. Behind them, rolling green grassy hills fill the background.
Cattle grazing in a rural landscape in Panama.

Payments for Ecosystem Services to Limit Deforestation

25 Years of Evidence Reveals Promise and Limitations
By David Miller
In Uganda’s Northern Albertine Rift landscape, local households have been clearing land to expand their crop production area. The Chimpanzee Sanctuary and Wildlife Conservation Trust offered households annual payments to refrain from cutting trees and preserving the benefits these forests provide to people and nature. Do programs like this work? Are they sustainable? What makes them succeed?
Forest protection plays a critical role in maintaining the world’s biodiversity, mitigating climate change, and supporting global economic growth. Over the past several decades, international donors, private-sector actors, and governments have increasingly turned to a “payments for ecosystem services” (PES) approach to stop, limit, or reverse damage to forests.
Payments for ecosystem services are voluntary monetary contributions made by buyers to incentivize people who use and manage natural resources to modify their practices so they maintain or enhance specific ecosystem services.
To help international development professionals more effectively use the PES approach to limit deforestation, the USAID Productive Landscapes (ProLand) project synthesized findings from 25 years of experience to produce “What do Experience and Research Tell Us About Using PES to Limit Deforestation?” This paper illustrates recommended practices for locating and designing PES programs through case studies from the tropical forests of Uganda and the ranchlands of Colombia.
Contexts in which PES works best
The PES approach will not be successful everywhere. Certain conditions are necessary for a PES program to achieve its goals and be cost-effective. These include:
Payment recipients have clearly defined property rights. The managers of natural resources, such as farmers and ranchers, must clearly hold the rights necessary to modify the practices they agree to adopt to avoid dispute or ambiguity.
Costs and payments acceptable to participants can be agreed upon. To attract natural resource manager participation, buyers must value the desired ecosystem service more than it costs natural resource managers to adopt agreed upon practices.
Stakeholder communities are cohesive. Discord over payments or the adoption of new practices may test the commitment of buyers and payment recipients. Non-participating members of their communities may also complain. Social solidarity, based on relationships, shared identity, common goals and other characteristics of the community beyond PES stakeholders themselves, can be critical to maintaining the commitment of participants.
Essential design elements in using PES
In addition to siting considerations, certain design elements influence the success of PES programs addressing deforestation:
Take equity into account. Payment conditions may bias participants already engaging in target practices and favor wealthy participants predisposed to adopt them. Programs require careful design and transparent communication to equitably and cost-effectively generate ecosystem services.
Effective payment systems. Decisions regarding the level and duration of payments, and the selection of recipients all influence PES success. The payment delivery mechanism influences the cost of the program, and the basis for payments—for example, whether payments are made for adopting a new practice or upon verification of impacts from new practices on ecosystem services—influences both the cost and the effectiveness of the program.
Adequate monitoring and verification. Because actors respond unpredictably to the payments in PES programs, monitoring and verification systems require stakeholder input and must be transparent as well as effective. This will prevent efforts to undermine the system for personal gain.
Selective targeting of sites and participants. Designers should determine whether environmental threats vary sufficiently across the program landscape to warrant the expense of identifying and targeting specific zones and/or participants within that area.
Balanced cost, complexity, and impact. Practitioners who design PES programs may include highly refined versions of components such as monitoring and verification systems and payment schemes. While increased complexity may result in greater program cost-effectiveness, the more complex the PES program, the more difficult it will be to manage, and the more costly it will be to administer.
Properly designed and implemented, PES can reduce deforestation. The examples from Uganda and Colombia presented in the ProLand case study highlight some of the challenging decisions to be made in siting, designing and implementing PES programs to produce durable improvements in ecosystem services. PES programming can be complicated and demanding, and it must be carefully adapted to the context. Nevertheless, PES has the potential to become a key tool in the battle to protect our world’s forests. Getting it right is an important objective for the 2020s.
Strategic Objective
Emissions, Low Emission Development, Land Use, Mitigation, Sustainable Landscapes
Africa, Global
David Miller headshot

David Miller

Dr. David Miller has over 30 years of experience contributing to the fields of international agricultural development, natural resources management, and environment. From 2013 to 2020, Dr. Miller served as the Senior Climate Change Advisor to ACDI/VOCA, and the Sustainable Agriculture Intensification Specialist on the USAID ProLand project. As Technical Advisor to the African and Latin American Resilience to Climate Change (ARCC) program from 2012 to 2015, Dr. Miller led teams of experts in the implementation of over 20 climate change vulnerability assessments. Previously, as an international development consultant, Dr. Miller served as a technical expert on numerous programs for food security, livelihoods improvement, and natural resource management in developing communities worldwide.

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