The Challenges of Pro-Poor PES

Despite the theoretical potential for PES programs to benefit the rural poor, many current programs present serious obstacles to the inclusion of poor households. This reflects the fact that PES programs were originally designed primarily to meet conservation goals rather than support the livelihoods of the poor. The Costa Rican program, for example, grew out of the Forestry Department, and its structure favored larger and wealthier landowners (Rosa et al. 2003:16-19). A survey in one Costa Rican watershed found that while all of the large landholders (owning more than 80 ha) were participating in the program, only one third of small landholders (owning less than 10 ha) had signed up (Miranda et al. 2003:21-22)

The obstacles to including the poor in PES programs mirror many of the problems holding them back from other forms of environmental income. The Costa Rican case, which has been one of the most thoroughly studied, has faced several of these:

Tenure and formal titles. Secure property rights are one of the foundations of a PES program. Land ownership is almost always used to identify who should rightfully receive payments. That leaves those without secure tenure—particularly the landless—unable to benefit unless some special provision is made, or unless benefits are distributed to larger community associations that can then attempt an equitable distribution. In Costa Rica’s original PES program, for example, only titled land holders could participate, which blocked many poor farmers. As PES programs mature and the market for environmental services builds, this may provide governments yet another incentive to improve tenure security for the rural poor. In the interim, however, a growing PES program could make things worse for the untenured poor if it makes rural lands more attractive to—and more liable to be snapped up by—large landowners.

Restrictions on land uses. PES guidelines may bar grazing or other traditional forest uses that seem to conflict with the environmental services that the program is paying for. Without access to these or other replacement activities, poor families will not be able to afford to participate in PES programs. Costa Rica’s program did not allow farmers to graze cattle or practice agroforestry on any lands enrolled in the program, yet the PES payments were not sufficient to serve as a primary income source. This left many small farmers no choice but to opt out. In 2002 the government amended its program to allow agroforestry activities (Rosa et al. 2003:20).

High transaction costs. The costs of applying for a PES program, drawing up a contract, and monitoring performance can become a considerable burden on poor families. Applicants for the Costa Rican PES program have reported spending large amounts of time and money obtaining and certifying documents, paying for land management studies, and having quarterly visits from a forest manager. The government has committed to reducing these costs substantially and has also moved to allow groups of small farmers to join the PES program collectively, thereby spreading the costs over a larger group (Miranda et al. 2003:29-32; Pagiola 2002:43-44).

Lack of credit and start-up funds. Changing farming and other land-use practices or reforesting pastures to comply with PES requirements often requires a significant investment in new material, training, and lost income during the transition period. Covering these costs is difficult for poor families, who typically lack credit and cash savings. Costa Rica has tried to address this by front-loading payments to farmers, sending half of the total payments (normally dispersed over five or ten years) within the first year of joining the program (Pagiola 2003:11).

In spite of these obstacles, there is considerable hope that PES programs can be modified to make them work for the poor. The policy attention around PES programs in many nations has shifted to identifying reforms needed to increase their potential for poverty reduction. Costa Rica, for example, has striven in the past few years to modify its program so that it serves the poor better. It is no coincidence that many of the governance changes advocated in this chapter as pro-poor, such as establishing secure tenure and promoting community-based institutions that can collectively bargain for and represent the interests of the poor, are the same governance changes necessary to make PES programs better at poverty reduction.

Even in their current imperfect form, PES programs have managed to deliver some important benefits to low-income participants. Many times these are related more to social organization and skills training than the monetary payment. For example, small farmers in Costa Rica’s PES program cite the technical training provided in the program as valuable enough to justify participation, even if the payments themselves are not large. The formation of local organizations to help small farmers take advantage of these schemes has also produced lasting gains in social capital, with the rural poor becoming more willing to demand compensation and ownership rights for natural resources (Rosa et al. 2003:23-26).

Participation in PES programs can also open doors to other sources of environmental income. The small farmers involved in the Scolel Té carbon sequestration scheme did not earn large sums from the environmental-service payments themselves. However, the project enabled farmers to penetrate markets in sustainable timber, organic coffee, and other agroforestry products (Rosa et al. 2003:27).

At their best, PES schemes offer a way to serve conservation goals while they add to the income profile of poor families and build social capital in poor communities. In contrast to the establishment of parks, which in many cases relies on excluding rural residents, the PES approach is more inclusive and based on a positive role for rural communities in ecosystem management (Rosa et al. 2003:13). Like other forms of environmental income, PES by itself is not likely to allow poor families to escape poverty, but it can become an important contributor to livelihood security due to the regularity of the payments and the incentive they provide to manage sustainably.