9. Introduction to Innovative Financing: The Role of Payments for Ecosystem Services in Poverty Reduction

The goal of balancing biodiversity conservation with poverty reduction has challenged conservationists and development practitioners for years (Adams et al. 2004). Efforts such as Community Based Conservation, Integrated Conservation and Development Programs, and sustainable forest management have all attempted to do this, but the linkages between conservation and economic benefits for communities have often been too indirect or vague for these approaches to achieve both goals. Furthermore, in many of these cases, the tradeoffs among conservation and poverty reduction have often outweighed the synergies (Wunder 2007). For these reasons, innovative financial mechanisms, such as Payments for Ecosystem Services (PES), have emerged as a more efficient, and direct way to balance conservation and development (Ferraro and Kiss 2002). While many functioning PES programs have been implemented in developed countries, the idea of PES has become attractive in poor, rural areas of tropical counties, where there are high concentrations of biodiversity that support a range of ecosystem services and where payments may help reduce poverty of poor rural ecosystem service managers. However, there are few examples and analyses of the enabling conditions needed to establish PES programs in developing countries and what their success has been for supporting livelihoods and conservation. Thus, it is difficult to judge if these mechanisms are as promising as they seem to be for achieving both conservation and poverty reduction.