Understanding the Social and Ecological Outcomes of PES Projects: A Review and an Analysis

Market-based approaches to environmental management, such as payments for ecosystem services (PES), have attracted unprecedented attention during the past decade. In this article, we review 26 case studies on PES from 11 countries in Asia and Latin America to help improve the understanding of the factors affecting PES schemes at the local level. We assess outcomes of the PES interventions in relation to four outcomes: equity, participation, livelihood, and environmental sustainability. Although we consider economic efficiency of these schemes to be crucial for informing policy debates, assessing it was not under the scope of this review. Our analysis shows the importance of property rights and tenure security, transaction costs, household and community characteristics, effective communication about the intervention, and the availability of PES-related information with regard to the sustainability of ecosystem service markets. The review suggests that PES schemes could target improvements in more than one outcome dimension. Focusing on the above five areas can lead to the continued provision of ecosystem services and improvements of the well-being of local inhabitants.