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Can payments for environmental services help reduce poverty? An exploration of the issues and the evidence to date from Latin America

Recent years have seen considerable interest in using Payments for Environmental Services (PES) as an incentive to enhance conservation efforts. Latin America has been particularly receptive to this approach with programmes in operation in Costa Rica, Columbia, Ecuador and Mexico, amongst others. This paper examines the possible linkages between PES programmes and poverty, drawing on the experience of the main on-going PES programmes in Latin America.

Although PES programmes are not designed for poverty reduction, there can be important synergies when program design is well thought out and local conditions are favourable. As such, the impact of PES programmes on the lives of poor participants remains a critical dimension and one that has been largely under-researched. 

The authors observe that the extent of impact the programme has on poverty within the area depends on:

  • the level of poverty amongst participants
  • the poor’s ability to participate in the programme
  • the monetary amounts paid out.

The paper asserts that a broader understanding of the potential linkages between PES and poverty leads to specific policy questions:

  • How can PES programmes be designed to maximise poverty reduction and minimize possible negative effects (for example, PES-promoted land use practices are much less labour intensive which could result in a loss of jobs for farmers)
  • What are the trade-offs between generating environmental services as efficiently as possible and meeting poverty reduction objectives?

The authors argue that it is too early to arrive at conclusive results on the likely poverty impacts of PES programmes. They conclude that whilst making poverty reduction objectives predominate is undoubtedly attractive, it would ultimately prove self-defeating. Subordinating the objective of generating services to that of poverty reduction risks failing to deliver on the services which are being paid for, and thus undermines the very basis of the program. Once service users cease paying, neither poverty reduction nor resource management objectives will be reached.