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Über dieses Buch

This book addresses the ability of market-based instruments to improve the sustainable provision of environmental services. The author combines field research and insights from the multi-stakeholder dialogue at the FAO to analyze the gap between the predictions provided by theory and the corresponding outcomes in practice. In particular, the author challenges the theory behind Payments for Environmental Services (PES), a concept derived from neoclassical welfare economics, by demonstrating that PES projects often lack financial sustainability unless local entrepreneurs make use of the resulting new networks to create innovative markets for environmental goods. The author calls for a shift of focus from regulation to innovation in projects and policies designed to improve the provision of environmental services. Its spotlight on the positive social impacts of companies that engage in hybrid PES schemes will make the book appealing to practitioners and policymakers alike.



Chapter 1. The Historical Context of Payments for Environmental Services: A Trend Towards Public–Private Partnerships

This chapter discusses the history of PES in developed and developing countries and illustrates its challenges and opportunities by means of concrete cases. The cases include projects designed to provide different environmental services (clean water, carbon sequestration, biodiversity preservation, etc.) applying different public PES schemes as well as public private partnerships. The experience indicates that the lack of financial sustainability of PES projects is a major reason for the reversibility of environmental improvements once external funding stops. Long-term financial sustainability can however be achieved, if PES projects allow for the creation of markets for environmental goods driven by innovative local entrepreneurs. Such hybrid PES schemes may be especially adequate for developing countries that face financial constraints on different levels.

Philipp Aerni

Chapter 2. Payments for Environmental Services: Revisiting the Theoretical Baseline Assumptions

The concept of payments for environmental services (PES) has its theoretical roots in neoclassical welfare economics. The concept suggests that the degradation of environmental resources is linked to the fact that these resources are considered to be for free. By assigning a monetary value to environmental services, sufficient incentives for market players would be created to protect, trade and invest in the provision of environmental services. The implicit assumption that once you assign such a value, a market would automatically evolve with buyers and sellers of the environmental service does however hardly work in practice because it is based on a comparative-static rather than a dynamic understanding of sustainability. This chapter illustrates that a flourishing market of environmental goods and services cannot be merely designed and funded by an external agent. It requires instead active local entrepreneurs that generate revenues through innovation.

Philipp Aerni

Chapter 3. The Practical Perspective of Environmental Services Management: Field Studies on Innovation and the Remuneration of Positive Externalities in Agriculture in Kenya

The chapter illustrates the experience with different types of PES projects in Kenya. It starts with the Kenya Agricultural Carbon Project (KACP), a PES project designed to make use of voluntary carbon market to compensate farmers for carbon sequestration. Subsequently, the experiences with small-scale and large-scale watershed PES projects are discussed. Finally, the potential of entrepreneurship and innovation to create markets for environmental goods in Kenya is explored by means of selected case studies (Maassai-owned slaughterhouse, microinsurance for farmers and flower exports). All the case studies illustrate that the presence of the private sector is crucial in making use of PES as a vehicle to create a market for environmental goods.

Philipp Aerni

Chapter 4. Conclusions

The chapter summarizes the insights of the previous chapter. It shows that market-based instruments in general and PES in particular only work if they encourage local entrepreneurship and innovation, if they are well-embedded into existing macro- and meso-economic institutions, if they take into account the level of economic development and the specific ownership structure. The chapter concludes by arguing that the real success of PES and other market-based institutions may be rooted in its capacity to serve as a vehicle for the creation of local markets for environmental goods that not only improve the environmental sustainability of agricultural practices but also stimulate local economic development.

Philipp Aerni


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