Payments for environmental services
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PES is but one of many different instruments that can complement and stimulate an enabling policy environment for sustainable agricultural development. Currently the role of PES programmes in supporting sustainable agricultural development is quite limited. Recent surveys of the literature documenting PES experiences highlight three main features of such programmes as they are currently being implemented: (1) most do not demonstrate additionality and suffer from a lack of appropriate targeting; (2) most are designed with multiple objectives; and (3) most remain primarily or entirely funded by the public sector. In this paper, we argue that a public-sector-driven process of building PES programme readiness, which includes building partnerships with the private sector, is key to realizing the potential of this policy instrument to support sustainable agricultural development. Our analysis indicates three important areas where public-sector involvement could improve the capacity of PES pr ogrammes to support sustainable agricultural development: (1) reducing transaction costs and fostering replication; (2) providing an enabling policy environment; and (3) ensuring equity and capturing multiple benefits. While there is considerable potential for changes within agricultural production systems to generate environmental services, to realize their benefits, in most cases, PES programmes will need to be implemented across large numbers of producers and areas to realize economies of sca le in transaction costs and risk management. At the same time they must be designed to support flexibility required in livelihoods and equity issues in rural communities.