Payment for and Management of Ecosystem Services

Issues and Options in the Nordic Context

image of Payment for and Management of Ecosystem Services

Payment for ecosystem services (PES) is a type of environmental policy instrument that gives the owner of a natural resource direct incentives to manage it in society's best interest. The report provides an overview of current theory and experiences from the use of PES. Several examples of PES already exist in the Nordic countries, most of which aim to preserve biodiversity or reduce nutrient runoff. The report shows that there is scope both to improve and expand the use of PES in the Nordic countries. Targeted and differentiated payments, for example by using competitive tendering where land owners have to reveal their compensation levels and ecosystem services they can offer, is a promising approach. The use of PES may also be expanded, for example into areas where regulation traditionally is perceived as very negative by land owners, or used in combination with existing regulation. The report was commissioned by the Working Group on Environment and Economics under the Nordic Council of Ministers



PES in the Nordic context: Issues, options and future directions

PES is a fairly novel way of managing natural resources socially more optimally. Although it functions similarly to a targeted subsidy, it offers new ways of addressing market failures and it provides a different way of looking for solutions to reduce an under provision of demanded ES. In this section, we briefly flag out how PES works differently from other natural resource management policies, what is the scope for PES to manage different ES, and when is PES suitable to use.


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