In this payment for ecosystem service (PES) modality, PES schemes are identified, structured and implemented directly between buyers and sellers. In this case, PES arrangements can be made between a specific company or organisation, sometimes representing many individuals donor via crowdfunding. This is often the model applied for voluntary carbon markets, whereby a company or individuals can offset their residual carbon emissions by supporting a PES scheme that can verify its carbon reduction impact, usually via a standards body.

Instrument category

Payment for ecosystem services (PES)

Implementation status

Low - limited evidence available

Enabling conditions and success factors
  • The combination of livelihood improvement with the provision of a critical resource (such as forest, mangroves or water) is an important driver of a scheme’s success.
  • A long timeframe or 10 to 30 years is much more effective than a short timeframe.
  • Payment via non-monetary goods and services, such as building materials or education, is preferable to direct cash payments. Such alternative payments help to avoid corruption and unfair distribution of benefits.
Instrument benefits
  • PES enables local communities to become stewards of critical environmental assets that can play both carbon sequestration and a resilience role.
  • PES can stimulate local economic development and environmental protection, helping local inhabitants gain a regular income, which can be invested in other businesses or development needs such as education or improved housing.
Challenges and risks to implementation
  • PES schemes which threaten existing power structures or land rights arrangements are often likely to fail.

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