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Payments for environmental services (PES) represent a new, more direct way to promote conservation. They explicitly recognize the need to address difficult trade-offs by bridging the interests of landowners and external actors through compensations. Theoretical assessments praise the advantages of PES over indirect approaches, but in the tropics PES application has remained incipient. Here I aim to demystify PES and clarify its scope for application as a tool for tropical conservation. I focus on the supply side of PES (i.e., how to convert PES funding into effective conservation on the ground), which until now has been widely neglected. I reviewed the PES literature for developing countries and combined these findings with observations from my own field studies in Latin America and Asia. A PES scheme, simply stated, is a voluntary, conditional agreement between at least one \"seller\" and one \"buyer\" over a well-defined environmental service-or a land use presumed to produce that service. Major obstacles to effective PES include demand-side limitations and a lack of supply-side know-how regarding implementation. The design of PES programs can be improved by explicitly outlining baselines, calculating conservation opportunity costs, customizing payment modalities, and targeting agents with credible land claims and threats to conservation. Expansion of PES can occur if schemes can demonstrate clear additionality (i.e., incremental conservation effects vis-à-vis predefined baselines), if PES recipients' livelihood dynamics are better understood, and if efficiency goals are balanced with considerations of fairness. PES are arguably best suited to scenarios of moderate conservation opportunity costs on marginal lands and in settings with emerging, not-yet realized threats. Actors who represent credible threats to the environment will more likely receive PES than those already living in harmony with nature. A PES scheme can thus benefit both buyers and sellers while improving the resource base, but it is unlikely to fully replace other conservation instruments.

Based on observations from all three tropical continents, there is good reason to believe that poor service providers can broadly gain access to payment for environmental services (PES) schemes, and generally become better off from that participation, in both income and non-income terms. However, poverty effects need to be analysed in a conceptual framework looking not only at poor service providers, but also at poor service users and non-participants. Effects on service users are positive if environmental goals are achieved, while those on non-participants can be positive or negative. The various participation filters of a PES scheme contain both pro-poor and anti-poor selection biases. Quantitative welfare effects are bound to remain small-scale, compared to national poverty-alleviation goals. Some pro-poor interventions are possible, but increasing regulations excessively could curb PES efficiency and implementation scale, which could eventually harm the poor. Prime focus of PES should thus remain on the environment, not on poverty.

Over the past several decades, significant donor funding has been directed to sustainable forest management in the tropics, in the hope of combining forest conservation with economic gains through sustainable use. To date, this approach has produced only modest results in terms of changed silvicultural and land-use practices in this area. Direct payments for environmental services (PES) have been suggested as a promising alternative but still remain widely untested in the tropics. This paper first provides a conceptual assessment of PES, comparing the main features of this practice with those of other conservation instruments. Second, the paper discusses a series of critical questions that have been raised about both the environmental and livelihood impacts of PES. It is concluded that some ex ante judgments about the effects of PES may have been overly critical, and that, based on preliminary assessments, there is good reason to continue experimental PES implementation for purposes of consolidating our knowledge.

Assessing global tendencies and impacts of conditional payments for environmental services (PES) programs is challenging because of their heterogeneity, and scarcity of comparative studies. This meta-study systematizes 55 PES schemes worldwide in a quantitative database. Using categorical principal component analysis to highlight clustering patterns, we reconfirm frequently hypothesized differences between public and private PES schemes, but also identify diverging patterns between commercial and non-commercial private PES vis-à-vis their service focus, area size, and market orientation. When do these PES schemes likely achieve significant environmental additionality? Using binary logistical regression, we find additionality to be positively influenced by three theoretically recommended PES 'best design' features: spatial targeting, payment differentiation, and strong conditionality, alongside some contextual controls (activity paid for and implementation time elapsed). Our results thus stress the preeminence of customized design over operational characteristics when assessing what determines the outcomes of PES implementation.

We estimate the effects of Peru's oldest watershed payments for environmental services (PES) initiative in Moyobamba (Andes-Amazon transition zone) and disentangle the complex intervention into its two main forest conservation treatments. First, a state-managed protected area (PA) was established, allowing sustainable use but drastically limiting de facto land use and land rights of households in the upper watershed through command-and-control interventions. Second, a subset of those environmentally regulated households also received incentives: PES-like voluntary contracts with conditional in-kind rewards, combined with access to participation in sustainable income-generating activities of the integrated conservation and development project (ICDP) type. To evaluate impacts, we perform matching procedures and adjustment regressions to obtain the average treatment effect on the treated (ATT) of each intervention. We investigate impacts on plot-level forest cover and household welfare for the period 2010-2016. We find that both treatments-command-and-control restrictions and the incentive package-modestly but significantly mitigated primary forest loss. Incentive-induced conservation gains came at elevated per-hectare implementation costs. We also find positive effects on incentive-treated households' incomes and assets; however, their self-perceived wellbeing counterintuitively declined. We hypothesise that locally frustrated beneficiary expectations vis-a-vis the ambitiously designed PES-cum-ICDP intervention help explain this surprising finding. We finalise with some recommendations for watershed incentives and policy mix design in Moyobamba and beyond.

Annual forest loss in the Brazilian Amazon had in 2012 declined to less than 5,000 sqkm, from over 27,000 in 2004. Mounting empirical evidence suggests that changes in Brazilian law enforcement strategy and the related governance system may account for a large share of the overall success in curbing deforestation rates. At the same time, Brazil is experimenting with alternative approaches to compensate farmers for conservation actions through economic incentives, such as payments for environmental services, at various administrative levels. We develop a spatially explicit simulation model for deforestation decisions in response to policy incentives and disincentives. The model builds on elements of optimal enforcement theory and introduces the notion of imperfect payment contract enforcement in the context of avoided deforestation. We implement the simulations using official deforestation statistics and data collected from field-based forest law enforcement operations in the Amazon region. We show that a large-scale integration of payments with the existing regulatory enforcement strategy involves a tradeoff between the cost-effectiveness of forest conservation and landholder incomes. Introducing payments as a complementary policy measure increases policy implementation cost, reduces income losses for those hit hardest by law enforcement, and can provide additional income to some land users. The magnitude of the tradeoff varies in space, depending on deforestation patterns, conservation opportunity and enforcement costs. Enforcement effectiveness becomes a key determinant of efficiency in the overall policy mix.

We develop a theory of change for payments for environmental services (PES) to review their imminent strengths and weaknesses in light of a growing body of impact evaluation studies. We show that PES are probably at least as environmentally additional as other conservation tools, based on the limited evidence. The original vision of PES as being direct, flexible, and potentially effective remains valid, but PES design and implementation have to be upgraded in their economic functioning to better realize this potential. Adverse self-selection, inadequate administrative targeting, and ill-enforced conditionality constitute three key obstacles that may considerably hamper PES success. Policies such as spatial targeting to service density, threat and cost levels, and payment differentiation can alleviate the design challenges. PES site selection needs to further move into high-threat areas. Making adequate PES design choices also requires the political will to boost environmental effects.

The EU's Green Deal, a comprehensive policy package for sustainability transition in Europe, was launched in 2019 with the ambition to demonstrate global environmental leadership. It has been successful in establishing new EU environmental policy instruments, with a strong focus on sustainable land use and conservation, such as the EU Nature Restoration Law or the EU Deforestation Regulation. Recently, however, the Green Deal has lost political traction, and its sustainable land use and conservation‐oriented policy instruments are under pressure or have already been cut back. In this paper, we undertake a multidisciplinary assessment of the Green Deal, presenting four theoretical perspectives (policy analysis, international relations, political economy/macroeconomics, and political ecology). These perspectives provide a so far missing comprehensive analysis of the strategic situation of EU land use and conservation policy, rooted in complementary explanations for the emergence, evolution, and faltering of the Green Deal. We move on to present two pathways for future EU land use and conservation policy—one assuming a continuation of currently visible patterns of deterioration in environmental ambitions; the other arguing for the possibility of reinvigorating the policy as what may be labeled as a new, Social Green Deal.

Ecosystems services have become a key concept in understanding the way humans benefit from ecosystems. In Costa Rica, a pioneer national scheme of payment provides compensation for forest conservation that is assumed to jointly produce services related to biodiversity conservation, carbon storage, water and scenic beauty, but little is known about the spatial correlations among these services. A spatial assessment, at national scale and with fine resolution, identified the spatial congruence between these services, by considering the biophysical potential of service provision and socioeconomic demand. Services have different spatial distributions but are positively correlated. Spatial synergies exist between current policies (national parks and the payment scheme) and the conservation of ecosystem services: national parks and areas receiving payments provide more services than other areas. Biodiversity hotspots have the highest co-benefits for other services, while carbon hotspots have the lowest. This finding calls for cautiousness in relation to expectations that forest-based mitigation initiatives such as REDD (reducing emissions from deforestation and forest degradation) can automatically maximize bundled co-benefits for biodiversity and local ecosystem services.

Payments for ecosystem services are becoming popular components in strategies to conserve ecosystems and biodiversity, but their effectiveness remains poorly documented. Here we present counterfactual-based evidence on the conservation outcomes of the pilot stage of Peru's National Forest Conservation Program (NFCP). The NFCP provides direct payments to indigenous communities in the Amazon, conditional on avoided deforestation and the adoption of sustainable production systems. Using a spatially explicit quasi-experimental evaluation design, we show that the payment scheme has achieved only small conservation impacts, in terms of avoided deforestation. Counter-intuitively, these materialized largely on land not enrolled for conservation, due to spillover effects. Conservation effects on contracted land were negligible because communities were not chosen according to high deforestation threats, and they self-enrolled low-pressure forest areas for conservation. Occasional non-sanctioned contract incompliance contributed to these outcomes. We highlight implications for the design and implementation of up-scaled national conservation programs. Methodologically, we demonstrate the important role of choosing the appropriate spatial scale in evaluating area-based conservation measures.