Protection: Payment for Environmental Services

Acknowledging the financial value of nature

Forests provide us with a range of essential goods and services. From our most basic needs - shelter, food, clean water, oxygen and medicines - to cultural, spiritual and recreational joys.

Vital environmental services that forests provide include preventing severe water run-off and regulating climate.

Vital goods and services with no price?
Often, ecosystem goods and services are taken for granted. While the economic value of certain natural products such as timber is reflected through global trade, this often isn't the case for other environmental goods and services provided by forests.

Such environmental goods and services are largely perceived to be free of charge, although their roles are often critical to productive and life-sustaining processes.

The free for all effect
As a result, forest goods and services are often not responsibly managed, with devastating economic effects on societies in addition to the negative biodiversity consequences. What is more, the associated costs are often unequally borne by the poorest and most marginalized groups of these societies.

Sierra de las Minas' natural gift
For example, the cloud forests of Guatemala's Sierra de las Minas Biosphere Reserve and 63 permanent rivers provide essential freshwater resources to surrounding communities for domestic consumption as well as to a range of industrial, agricultural, service sector and hydro-electric users located downstream, along the Motagua and Polochic river valleys.

However, threats including deforestation and forest fires are damaging local forest and freshwater ecosystems, as well as downstream marine biodiversity in the Mesoamerican Reef.

» Find out more about how WWF is using PES to protect the Reserve's ecosystem's services

Creating markets for nature's services
The perception that forest goods and services are 'free' have prevented the development of markets for them in the past.

Where PES comes in
This, however, is changing with an innovative scheme known as Payment for Environmental Services or PES, which is being implemented in various locations around the world. The scheme ensures that those who benefit from environmental goods and services pay those who provide these services.

This could mean, for example, that downstream users of water cleansed by an upstream forest, such as bottling companies or townfolk who extract drinking water from the river, pay those who manage these upstream forests to ensure a sustainable flow of this service into the future.

Paying to protect the forest
Charging for the benefits provided by forests and other natural ecosystems is a way to recognize their value and ensure that these benefits go well beyond present generations. This involves managing resources in a manner that ensures they continue to generate the environmental services.

Shared benefits
In addition to benefiting biodiversity, such schemes also have the potential to benefit poor landowners who manage these environmental services.

PES schemes therefore require an assessment of the economic value of the forest benefits to the different stakeholders. Based on this value, a fair market fee is derived as payment by the beneficiaries to compensate those who help to protect the forests so the forests can continue providing their environmental services.

PES applied
WWF is working with other international organizations such as CARE and IIED (International Institute for Environment and Development) as well as a number of local partner organizations on introducing PES schemes in several places.

The most advanced PES scheme to date has been developed on the island of Lombok, Indonesia, where WWF is working to conserve the forests of Mt Rinjani The forests here are vital to the $50 million per year agricultural sector of the region, and supply domestic water worth $14 million. They also bring tourist dollars into the economy, as well as water for local industry.

In Lombok
WWF is working with local partners, authorities and the major water company to introduce the payment scheme here. A WWF study indicated that nearly all 43,000 households in the area would agree to pay up to US$0.60 per month in special charges. The idea behind the PES scheme is that the funds collected will help pay for conserving the watershed forests at the head of the Segara River and improving social conditions in neighbouring communities.

PES schemes bring great hope for sustaining the protection and management of many forests for the benefit of people and for nature. In particular, PES schemes help mobilize sustainable financing for conservation, including the management of protected areas.