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Payment systems

This research project focuses on implementing a payment system for environmental services, specifically linking the supply side with the demand side. The main research issue involves exploring institutional issues in the payment scheme, how services are provided and measured, and the effectiveness and efficiency of different institutional arrangements. The project includes a case study in Kenya and aims to address the lack of monitoring and comparison in payment systems for environmental services in developing countries. The outputs will include a literature review, conference presentations, and publications in scientific journals.

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Payment systems

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  1. Payment systems Gerdien Meijerink

  2. Main research issue (from KB1 proposal) • How to implement a scheme of payments for environmental services, which involves • linking the supply side - providing the environmental service - with the • demand side - paying for the environmental service – • institutional issues in the link - how services are provided, measured and paid for.

  3. Progress 2007/2008 • PhD supervisors: Erwin Bulte (Development Economics WUR) and Daan van Soest (Tilburg University) • Development of PhD proposal • Focus on different institutional arrangements for monitoring “If services are not delivered, people won’t pay” • Presentation paper at Conference European Association for Agricultural Economics in Montpellier on monitoring • Development of Case-study in Kenya: project “Green Water Credits” • How to establish a payment system to pay for soil and water conservation by many farmers • Which institutional arrangement is most effective (farmers implement required measures) and efficient (least transaction costs)

  4. Delays and problems • Due to implementation practicalities Kenya Case not possible: • No monitoring will be done • One payment system (no comparison possible) • Survey of alternative cases (in developing countries and Europe) raised similar problems: • Monitoring environmental services often non-existent in developing countries • One payment scheme used (no comparison possible) • Comparison different schemes difficult because of different environmental services involved

  5. Planned activities 2008 • Revise PhD proposal on payment systems for ecosystem services • Focus on link between supply and demand for ecosystem services • Link with KB1 project “How do people want to pay for ecosystem services” (Polman, de Blaey & Linderhof) • Literature review on different institutional arrangement for payment systems • Build on project “Innovative financing mechanisms for ecosystem services” (2007 for LNV) • Presentation paper EAAE August 2008 • “Green payment programs, asymmetric information and the role of fixed costs”

  6. Outputs 2008 • Literature review on institutional arrangements for payment systems ready • Proposal finalized and approved by SELS team and PhD supervisor (prof. Bulte) • 1 paper presented at scientific conference (EAAE) • 1 paper submitted to scientific journal (Journal for Agricultural Economics)

  7. International position in relation to this project • Sven Wunder (CIFOR) has identified two main problems of PES: • Too few service users are so confident about the mechanism that they are willing to pay — in some cases, because the link between land use and environmental services (ES) provision is insufficiently understood or ambiguous. • Poor knowledge on the institutional requirements entailing incentive and livelihood mechanisms which so far have received comparatively less attention. • Stefano Pagiola (WorldBank): first constraint is the “achilles heel” of PES • Project also fits well within work of IIED on markets for environmental goods and services

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