Meta-analysis of institutional-economic factors explaining the environmental performance of payments for watershed services

Payments for ecosystem services (PES) are a relatively new economic policy instrument, and the factors that drive and explain their environmental performance are poorly understood. Here a meta-analysis of causal relationships between the institutional design and environmental performance of 47 payments for watershed services (PWS) schemes worldwide showed a significant effect on environmental achievement of the terms and conditions of scheme participation, including the selection of service providers, community participation, the existence and monitoring of quantifiable objectives, and the number of intermediaries between service providers and buyers. Direct payments by downstream hydropower companies to upstream land owners for reduced sediment loads were identified as a successful PWS example. No other significant explanatory factors, such as specific type of watershed service, age or scale of implementation of the PWS scheme were detected. The results are highly dependent on the reliability of the input variables, in particular the measurement of the environmental performance variable. Despite efforts to find quantitative information on the environmental performance of existing PWS schemes, such empirical evidence is lacking in many of the schemes studied. International monitoring guidelines are needed to facilitate comparisons, identify success factors and support the future design of cost-effective PWS schemes.