Can payments solve the problem of undersupply of ecosystem services?

Harnessing the climate mitigation, conservation and poverty alleviation potential of seagrasses: prospects for developing blue carbon initiatives and payment for ecosystem service programmes

“…Cooley and Olander (2012) recognize three forms of stacking, namely: horizontal (whereby individual management practices performed on spatially distinct areas each receive a payment); vertical (where a single management practice employed on spatially overlapping areas receives multiple payments) and temporal (essentially a vertical form of stacking where payments are disbursed over time according to the production of different ES). Advantages of stacking: (i) delivers management that provides multiple services from programs concerned with specific services; (ii) potentially increases programme uptake rates and therefore ES provision, (iii) encourages large-scale projects that could not operate through single payments e.g., wetland restoration, (iv) may increase buyer diversification, and (v) incrementally stacking payments in an optimum way for a particular project can help raise necessary funds (Bianco, 2009;Cooley and Olander, 2012;Robert and Stenger, 2013). Disadvantages of stacking: (i) stacking can make it difficult to demonstrate how ES delivered by mitigation projects have abated environmental impacts allowed through offset sales; (ii) stacking may undermine project "additionality" e.g., if payments are more than that required to initiate a project, or are for an activity that would have occurred in the absence of the project, and (iii) stacking indirectly encourages "double counting"-paying twice for (in essence) the same service where similar services overlap e.g., water quality credits and wetland mitigation credits (Bianco, 2009;Cooley and Olander, 2012).…”

“…In the case of bundling, single payments are received for the provision of multiple ES from an individual parcel-importantly payment amounts are not (generally speaking) based on the summation of the individual values of each ES (Cooley and Olander, 2012). Advantages of bundling: (i) recognizes the interconnectedness of ES processes and production; (ii) is beneficial for biodiversity and conservation (where broad conservation outcomes are sought); (iii) may increase the overall provision of individual ES from a parcel; (iv) can reduce administrative and transaction costs and raise price premiums, and (v) may reduce the degree of infrastructure needed to support a functioning market (Greenhalgh, 2008;Wendland et al, 2010;Deal et al, 2012;Robert and Stenger, 2013). Disadvantages of bundling: (i) optimizing multiple ES is difficult and given the uncertainty regarding quantification may lead to unintended trade-offs; (ii) limited knowledge concerning ES provision means accurately modeling ES spatial delivery and distribution is highly complex; (iii) regulatory requirements may mean that it is necessary to "unbundle" specific services from the broader set; (iv) it can be difficult to demonstrate additionality and mitigate against double counting, and (v) performance related payments can be difficult to manage as ES bundle provision varies with time (Greenhalgh, 2008;Wendland et al, 2010;Deal et al, 2012;Robert and Stenger, 2013).…”

Enhancing the Social and Natural Capital of Canadian Agro-Ecosystems through Incentive-Based “Alternative Land Use Services” (ALUS) Programs: Recurring Themes and Emerging Lessons

“…Although there can be little doubt that marginal land taken out of agriculture has positive environmental benefits for water quality and wildlife habitat, there was an immediate inference of multi-functionalism in providing numerous ES. This problem is not unique to ALUS and is symptomatic of a recurring attempt to simplify ecosystem functions by many different programs that use market-based instruments of applying economic value to ES (Burgin, 2008;Walker et al, 2009;Robert & Stenger, 2013). Whereas ES such as native pollinators or enhancement of game species may be quick and easy to assess, other ES could take far longer to establish and gauge.…”

“…The literature is reasonably clear that credit and banking style restoration may not provide the same ES as those lost in the area being developed (Robert & Stenger, 2013). However, the strategy does provide opportunity to mitigate and allow economic development while encouraging the production of ES in agricultural landscapes which may already be highly disturbed, such as those in the peri-urban intreface.…”

Implications of Economic Theory for Bioenergy Policy Design

“…and 177ff.). For positive biodiversity externalities, the use of subsidies has been recommended, for example, through payment for ecosystem services schemes (Robert and Stenger 2013;see Ikkatai 2013 for an overview). Of course, in a first-best scenario externalities should not only be internalised if they arise from the use of fossil fuels or nuclear power, but also if they are caused by the use of bioenergy and other RES.…”