New EFI policy brief explores payments for environmental services

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Stimulating forest owners to improve forest management has become ever more important given the double global crisis of climate change and biodiversity loss. Economic incentives like payments for environmental (or ‘ecosystem’) services could help to better align supply and demand for forest services like watershed protection or carbon storage. 

PES schemes have been around for a few decades, but have expanded much during this millennium. In Europe, agri-environmental schemes (eg for increasing on-farm biodiversity) have been the primary channel; globally, PES have been used primarily to incentivize forest conservation, paying forest owners to deforest less. 

What lessons have been learned so far? A new policy brief from EFI explores what it takes to put a functional PES scheme into place, and once working, how we can design and implement PES to achieve the best impacts.

Recommendations include differentiating payments (rather than paying the same per hectare, household or village), paying for environmental results (eg increased biodiversity) rather than actions (eg changed forest management), and ensuring provider compliance.

Author Sven Wunder, Principal Scientist at EFI said: “Paying for enviromental services is a tool where economists have been in their creative solution-seeking corner. The principle sounds simple, but over the last couple of decades, I have learned that for doing PES, the devil is in the details. This policy brief aims to boil down this accumulated applied knowledge into a two-pager.”


Wunder, S. 2024. How can we make Payments for Environmental Services work? Policy Brief 8. European Forest Institute.