Making Space for Water Conference
Payments for Ecosystem Services in practice: opportunities and challenges
23 April 2015, University of Manchester, Renold Building
Colin Smith
Defra
Payments for Ecosystem Services in practice: opportunities and challenges
Overview of payments for ecosystem services
As understanding of ecosystem services grows, there is growing interest in the concept of Payments for Ecosystem Services (PES) to create new sources of income and investment for nature. PES is a simple concept based on the beneficiary pays principle which involves payments by beneficiaries (e.g. water companies) to land managers /others to undertake actions that increase or protect the quantity or quality of desired ecosystem services. In practice, developing PES is challenging and takes time.
Defra didn’t invent the concept, but in recent years has sought to promote and pilot such approaches in a range of contexts, recognising that government has a role in building capacity for innovation, testing what works and spreading good practice. A Best Practice Guide was published in 2013. Water companies are the most likely potential “buyers”.
PES is a voluntary approach and only one of a range of tools for protecting and enhancing the natural environment. PES can be considered in both public and private financing contexts (e.g. agri-environment; water utilities), although our focus has been more on private-funded PES.
Lessons from Defra’s PES research pilot programme
Since 2012, Defra has funded 15 pilots to research and test the feasibility of PES approaches in different contexts. A review of the first ten pilots was published in October 2014. There have been some successes, but progress takes time and a range of barriers have been identified.
Developing PES opportunities in a multi-benefit natural flood management context can be hampered by lack of clear evidence of reduced risk to final beneficiaries, limited numbers of beneficiaries and local corporate investors.
The Woodland Carbon Code, Peatland Code and Visitor Giving approaches are key tools for PES and can be alternative means of identifying co-benefits (carbon, recreation, biodiversity) and sources of income in natural flood management contexts. Flood risk benefits if not quantified can nevertheless strengthen the business case where the primary benefit is water quality.
Key challenges for PES approaches are to (i) develop robust metrics that demonstrate the link between action and benefit; (ii) build trusted partnerships with potential investors, suppliers and other interested parties; (iii) ensure there are clear incentives for beneficiaries to invest. This requires a range of skills and expertise.