15, January, 2014

Payments for Environmental Services: A Market Mechanism Protecting Latin America’s Forests

In Latin America, payments for environmental services schemes are the preferred market mechanism for forest conservation and reforestation. Success stories from the region provide a range of valuable lessons for other countries still struggling to curb deforestation.

In 2008, the Millennium Ecosystem Assessment reported that 60% of the world’s environmental services are in a state of degradation. Of the various causes, deforestation is one of the most alarming and glaring. Curbing deforestation poses a serious challenge in developing countries where its drivers are closely linked to economic development; forests are cut down to develop new urban areas and industrial centres, for timber, energy, cash crops, and for livestock raising. For countries to develop truly green economies, they must preserve their forests and, in many cases, restore areas already lost. Over the last few decades developing regions have started working towards this goal. The market mechanism of choice in Latin America has been payments for environmental services (PES), which boasts success stories from countries such as Brazil, Costa Rica and Mexico where reforestation rates have risen remarkably in recent years. By analysing these experiences, this Brief identifies key enabling factors behind the success of PES in Latin America and provides a set of recommendations for PES design and implementation that will be useful for other regions interested in developing their own programmes.

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Key Lessons:

  • Long-term programme financing and competitive payment for environmental service providers are two core prerequisites for launching a PES programme.
  • Strong political commitment, institutional support and local ownership were key characteristics of successful, enduring PES programmes in Latin America.
  • Real results are achieved when participating communities create a local economy based on forest preservation and sustainable use of ecosystems, replacing previously unsustainable practices.
  • Local-level institutionalisation of PES programmes should be promoted whenever possible, cultivating a grassroots culture of conservation and administrative capacity in communities on the front lines of deforestation.

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