Science, Environment and Development Group

Institutional Design of Payments for Ecosystem Services

This project seeks to understand how recent innovations in the governance of natural resource systems can be modified so as to promote outcomes that are not just effective and efficient, but also equitable. The central governance challenge for all such systems is that extraction of resources by individual users (e.g., farmers, fishers, forest users) can impose externalities on the larger society (e.g., decreased protection from floods, erosion, pollution and other so-called "environmental services"). Governments therefore intervene to restrict or regulate users' options in order to increase overall efficiency with which the resource system is utilized. The equity dimensions of such efficiency-enhancing governance interventions are frequently overlooked. In cases where the primary resource extractors tend to be poor, stateless, or otherwise under-empowered, and the beneficiaries of environmental services related to those resources are relatively rich and powerful, the common result is that overall efficiency is achieved at the cost of accentuating rather than mitigating inequalities. The project focuses on the innovative governance experiments in "payments for environmental services" that are being introduced around the world as an alternative to the regulatory approaches. Through a comparative analysis of cases from a variety of national settings, we will attempt to understand how variation in the equity of outcomes resulting from such "payments for services" arrangements are shaped by the particular institutions and procedures employed in their governance. The project is supported by the Ash Institute for Democratic Governance and Innovation, the A. Alfred Taubman Center for State and Local Government, and the Center for International Development at Harvard University.

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