Policy Brief 8. Payment for environmental services
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Two institutional mechanisms for managing watersheds have been increasingly adopted worldwide: Payments for Environmental Services (PES) and Compensation for Environmental Services (CES). Their adoption is based on the increasing awareness that upstream activities determine the quality and quantity of the environment downstream. Their rationale is the need to provide incentives to help guarantee the provision of these services. The creation of such incentives needs, however, to avoid the risk of transforming them, and water in particular into a commodity, to the point where emerging private rights may be detrimental to the basic rights and livelihood opportunities of the rural populations. On the contrary, these financial schemes could play a leading role in the improvement of livelihoods of upstream smallholders, whenever they attract financial resources for an appropriate management of local watershed resources. In the tropical Andes, for centuries, the farmers have developed their o wn adaptive strategies to climate variability, thus making valuable contributions to the sustainable management of natural resources. Recognizing these contributions, some of these modern financial schemes prefer to be casted as “compensations” instead of “payments”.