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A price tag on the environment? That will be $125 trillion a year

Research from Indonesia shows money isn't everything for local communities.
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A new study is challenging the logic of PES (payments for ecosystem services) suggesting that cash rewards are only one of several factors affecting conservation outcomes. wikicommons
A new study is challenging the logic of PES (payments for ecosystem services) suggesting that cash rewards are only one of several factors affecting conservation outcomes. wikicommons

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BOGOR, Indonesia — Although not a particularly romantic idea, putting a price tag on the natural world is something conservation scientists have sought to do for decades.

The latest of these environmental audits has put the net worth of ecological services — be they carbon sequestration, regulation of the water cycle, or protecting biodiversity, among countless others — at $125 trillion a year.

And working with the logic of these attempts at valuation, payments for ecosystem services (PES) is one model by which the protection of these “assets” is financially incentivized.

Too much emphasis has been placed on hard economic transactions in understanding human behavior in this regard

Romain Pirard

But challenging the logic of PES is a new study conducted by the Center for International Forestry Research (CIFOR) and the Institute for Sustainable Development and International Relations (IDDRI), which suggests that cash rewards are only one of several factors affecting conservation outcomes.

“Too much emphasis has been placed on hard economic transactions in understanding human behavior in this regard. The forces of the market are over emphasized,” says Romain Pirard, a CIFOR scientist and one of the authors of the study.

The researchers case study focuses on the Cidanau watershed in Banten, West Java, where decreasing forest cover has led to land erosion and lower river-water quality.

In response to the problem, a local water company that sources from the river was prepared to finance a PES scheme — intermediated and monitored by multiple stakeholders, including local NGOs and community leaders — to pay local farmers not to further reduce forest coverage.

But rather than finding a straightforward “causal pathway” between the offer of money and improved land management, Pirard and colleagues found that the picture was more convoluted — with many farmers not properly understanding the contracts by which they would be bound, and ultimately for what they were being paid.

This study challenges the view that these incentive-based instruments can fulfill environmental goals on their own, and shows that there are more complex realities on the ground

Romain Pirard

There are several reasons for this, according to Pirard.

“The orchestration and payouts were all mediated through village leaders, many of whom weren’t very transparent about the nature of the deal, and fairly sporadic in paying,” he says.

“Many farmers in Indonesia are not very well-educated and so there’s a lot of delegation to group leaders. Once its been decided that the village will abide by the scheme then that in turn puts social pressure on everyone to conform.

“Many of the farmers went along with the scheme, even though there wasn’t this clear link between action and financial payoff — so they were acting on motivations and pressures other than just financial gain.”

While the cash payments were cited by 39 percent of the study’s 270 survey respondents as the principal reason for their involvement, social motivations (mostly in the form of social pressure) were almost as high, with 35 percent citing them as their primary motivation.

Furthermore, a striking 85 percent of households could not say much about the amount and timing of payments, although the contract is very clear in this regard.

“This study challenges the view that these incentive-based instruments can fulfill environmental goals on their own, and shows that there are more complex realities on the ground,” Pirard says.

PARTICIPATION AND MOTIVATION

The finding on the importance of social factors is consistent with other recent research on participation and motivation in various PES schemes around the world.

In Central America, research has found that community values and perceptions are critical for environmental projects.

Similar findings have been made of projects in the Colombian Andes, and in Namibia, where one participant of a community based natural resources management program said simply: “How could I live here and not be a member?”

Romain Pirard says that skeptics of PES and other market-based instruments point to the rise of consumerism and market economics as primary drivers of environmental damage, and that they see the further commodification of environmental services as a wrong-headed response.

“Often people are, by ideology, against these instruments because they mix conservation and nature with trading and economics,” he says.

“Specifically within the PES movement there is this debate about whether financial incentives have a negative impact by crowding out other motivations towards conservation.

“Some say that the extrinsic motivations of financial gain can crowd out more intrinsic motivations, and lead to a lesser appreciation of the benefits of the forest.”

LOOKING MACRO

Based on his findings, Pirard is skeptical about efficacy of PES and the conservation results that may be yielded, particularly on a macro-level.

But he does not believe that PES is harmful, and notes that it can even entail unintended positive effects.

“Perhaps ironically it seems that the scheme actually managed to foster the dialogue that was needed to educate local people about the benefit of forests, which has been acted on, independent of any financial incentive,” Pirard says.

According to the study, 81 percent of participants said they would keep the trees even if the program came to an end, with 88 percent saying they would use the forests for fruits and timber, and 51 percent recognizing that trees were a good long-term investment.

“So, in spite of the ‘hard’ economic theory, the scheme actually worked as a vehicle for education — even though this was incidental to the PES concept,” Pirard says.

For further information about CIFOR’s work PES please contact Romain Pirard at r.pirard@cgiar.org

This research was funded by the ERA-Net BiodivERsA, with the French national funder Agence Nationale de la Recherche.

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