Pablo Gutman: Markets and ecosystem services

Posted on 26 May 2010    
Pablo Gutman speaks about Payments for Ecosystem Services in Bulgaria.
Pablo Gutman speaks about Payments for Ecosystem Services in Bulgaria.
© WWF DCP BG Archive
Ecosystem services are the multiple benefits that people receive from nature, such as water purification and flood control by wetlands. Payments for Ecosystem Services schemes (PES) reward those whose lands provide these services with subsidies or market payments from those who benefit.

This could mean, for example, that a bottling company uses water purified by an upstream forest. In order to maintain this service – pure water – the company pays the forest managers a certain amount of money to ensure they keep the forest well managed.

The concept of payments for ecosystem services has been gaining traction with many in the conservation and development movement touting PES schemes as the key to improve rural conservation and rural livelihoods, as well as to transform harmful production subsidies into helpful payments for ecosystem services.

The new project - implemented by WWF with the financial support of the UNEP GEF and the European Commission - seeks to develop experience and learning on the role and contribution of PES to rural development and conservation in general.

Pablo Gutman, a senior economist at WWF, who visited Bulgaria and Romania at the start of the project, explains what PES schemes can do for us.

What are your first impressions? What PES schemes would work well in the Danube basin? Both in Bulgaria and Romania

I would suggest that PES schemes in the Danube basin should try to match a variety of demands and supplies for ecosystem services, including:
  • Directing EU rural payments to support PES schemes;
  • Focusing on ecosystem services for markets that have capacity to pay for them, like (a) the energy sector; (b) nature related tourism and recreational activities; (c) water-related users; (d) certified nature friendly rural products; and (e) carbon sequestration; (f) biodiversity offsets.
How do you price an ecosystem service?

As in any other case, the price of an ecosystem service is somewhere between what the demand is willing to pay - the ceiling - and the supplier costs (or opportunity costs) the floor. Let me add that a large part of WWF and the conservation movement work could be understood as an effort to “pushup” the ceiling, that is to convince society that it is in our own interest to pay for the protection of nature.

How are you going to get people to pay for services which, to them, have no value because they are currently free?

It is surely a challenge but there are several ways - (a) for business we could point to their balance sheet, showing them that it is good business to pay for ecosystem services that could reduce their costs or increase their markets; (b) with people we could point to their health (a healthy environment improves peoples’ health) or to their heart; (c) with governments we could point that spending on PES can reduce budgetary costs in other areas (e.g. less flood damages, less infrastructure repair) and has usually high support among voters.

Can you give examples of successful PES schemes around the world?

There are good PES examples…

  • In Europe with Perrier and Vitel paying farmers to protect water quality;
  • In the US where there is a growing biodiversity offset market;
  • In Africa with community conservancies – rural communities making money from preserving wildlife as a touristic attraction (e.g. Namibia conservancies);
  • In Latin America with watershed conservation PES schemes where city water companies pay farmers to protect the upper watershed (e.g. Quito, Ecuador) or with payments for forest conservation in private lands (Costa Rica, Mexico).
How do you see the field of ecosystem services evolving in the coming decade or two? What do you think needs to be done to move research and implementation forward?

Putting up a successful PES scheme is anything but simple. It takes a long time - 5 to 10 years, and a lot of effort. In 10 to 20 years we may see several breakthroughs related to (a) PES to reduce rural emissions and increase sequestration of global warming gases (REDD+ and LULCF); and (b) from the increase in the market for certified rural products

Do you believe that in the end the market will save our forests?

I believe that in the end people will save the forests. Markets could surely help, but many other approaches and instruments will be need too; including educating society on the values of nature, changing consumption patterns to reduce human footprint in nature; greening public procurement and more.
Pablo Gutman speaks about Payments for Ecosystem Services in Bulgaria.
Pablo Gutman speaks about Payments for Ecosystem Services in Bulgaria.
© WWF DCP BG Archive Enlarge

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