Payment for Ecosystem Services
Payment for Ecosystem Services, also called payments for environmental services is a generic term of variety of arrangements through which the beneficiaries of ecosystem services pay back the providers of those services. The ecosystem services can range from watershed protection, forest conservation, biodiversity conservation, carbon sequestration, landscape beauty in support of ecotourism and may be present at any scale, from local to national or international.
Creation of markets for ecosystem services can promote conservation and support local livelihoods since it rewards to the resource owners/ managers for their role as stewards in providing these services. Further, these markets can also increase the economic value of forest ecosystems. Market based approaches are increasingly applied to achieve conservation objectives all over the world. Compared to previous approaches to forest conservation, market based mechanisms promise increased efficiency and effectiveness at least in some situations. Around 300 such markets exist for ecosystem services across the world. Markets for forest ecosystem services are expected grow fast in both developing and developed countries.
There are currently apprehensions about emerging economic instruments, particularly PES, in India among various stakeholders in India partly due to limited understanding about their potential for contributing to conservation and human well being. As part of World Bank/WWF Alliance for forest conservation and sustainable use, a project ‘Economic Instruments for Managing Forest Ecosystem Services in India has been undertaken this year in collaboration with Institute of Economic Growth (IEG), Delhi to examine the scope and opportunities for introducing suitable economic instruments, including PES for forest conservation in India. Two economic instruments have been identified for Phase –I, (i) Net Present Value of Forest Land (NPV) and (ii) Payment for Ecosystem Services (PES), with a focus on urban water supply. Three sites have been identified for PES, viz, Gangtok (Sikkim), Shimla (Himachal Pradesh) and Munnar (Kerala). The outcomes of the Phase- I of this project would include fully documented case studies at the selected field sites, a national workshop for discussing the findings and the possibility of applying this to a broader range of sites and situations. Also a policy brief and a proposal for prospective follow up activities based on results of case study and workshop discussions with key stake holders is expected.
A National Workshop on PES has been scheduled on 27th February 2007 in New Delhi.
