Payments for environmental services

The Near East and North Africa (NEN) division Director, Nadim Khouri discusses the theme of Payment for environmental services:

What are payments for environmental services?

At its best, agriculture is both productive and environmental. In many situations, and particularly in dry areas, using agricultural land provides soils with moisture and a vegetative cover, provides a refuge for animals and a "sink" to store carbon and contributes to the mitigation of climate change. While this has been true since the start of agriculture (in Syria in about 10,000 BC), it is only in the last 15 years or so that these beneficial outcomes of agriculture have been quantified and given, where possible, a monetary value. Payment for Environmental Services (PES) implies that farmers and landholders could actually be paid compensation for doing things that are good for the environment.

Why is PES important?

PES is an excellent source of funds for development projects, especially at the community level. Theoretically, direct users of environmental services could be willing to pay for the services. There are examples, mainly in Latin America, of such arrangements. The most classic example relates to linkages between the upper and lower parts of a watershed: water quality downstream is affected by land use upstream. If a shift to less intensive agriculture upstream produces cleaner water downstream (for example because of using less fertilizer), a downstream agro-industry could be willing to pay for at least part of this shift and continue its payments as long as the water is clean. While this model describes a system that could very well happen between private entities, only a small fraction of payments follow a true "market system", even in the most advanced cases of PES application worldwide (for example Costa Rica ). Governments and international outfits have to mediate for the market and provide the very large majority of payments.

PES and the NENA Region (Near East, North Africa, Central Europe and newly independent states)

Research at the International Center for Agricultural Research in the Dry Areas (ICARDA) looked at the region's mostly arid rangelands and found that well-managed rangelands produce definite services and benefits at the global level (for example biodiversity conservation), national level (for example wind erosion control) and local level (for example increased water productivity). However, potential PES schemes extend beyond rangelands; intriguing possible applications of PES in NENA are summarized below. Any follow-up is entirely at the discretion and initiative of country programme managers and their counterparts in the countries.

  • Rangelands in Syria or Jordan: Seek possible additional sources of funding for local communities for range management through:

    • global PES with respect to carbon capture (or "sequestration") – either through the "Kyoto Protocol" or through voluntary, pilot markets – and other global common goods.

    • national PES by rationalizing assistance and payments to land users (mainly Bedouin communities) under various public programmes.

    • considering payments for "adaptation" to climate change because carbon sequestration and other activities are part of the "mitigation" agenda of climate change.

  • Hillside farming in Morocco, Tunisia:  Make use of the linkage between upper and lower watersheds to request payments for maintaining sustainable land in the upper watershed which leads to good water quality in the lower watershed.

  • Shifting to sustainable/conservation agriculture in Yemen, Lebanon, Central, Eastern Europe and the Newly Independent States (CEN) countries:  Public-private partnerships could provide the source (and rationale) for financing for good stewardship of natural resources (for example decreased water use, increased vegetative cover on land, integrated pest management) leading to decreased use of pesticides).

These are just examples. NENA may want to start by exploring two options:

  • Opportunities for going to the global carbon market

  • Opportunities for "voluntary" private-public funding at the national and local levels of PES linked to agriculture and the use of sustainable natural resources.

These options and others will require sustained and significant interest and preparatory work, but that seems fully justified in view of the possible returns.