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Payments for environmental services: introduction to feasibility, supplier characteristics and poverty issues

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As Payments for Environmental Services (PES) is in its early stages of development and implementation, there are many questions to address regarding its features and functions. In this overview paper, we take a look at three themes relevant to practitioners’ work - the environmental and economic feasibility of PES schemes, the characteristics of environmental service providers, and the relationship between PES and poverty. The first section on environmental and economic feasibility discusses how to develop performance-based (conditional) mechanisms built on real cause-effect relations between land use and envi- ronmental services that are economically viable for environmen- tal service (ES) providers and beneficiaries (realistic). The sec- ond section on the ES providers discusses the characteristics of many ES providers and the issues facing them, including whether the incentives are sufficient to engage providers on a voluntary basis and whether schemes are adaptive and reflect the voices of and within communities. Finally, the third section discusses the relationship between PES and poverty, namely the opportunities and risks in reducing poverty, and the pos- sible effects of a pro-poor focus on the viability and effective- ness of PES. This synthesis paper gives a conceptual overview of the various issues that will be further explored in the rest of the publication through case studies

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