“Marketing” Environmental Services: Lessons Learned in German Development Cooperation

Paper presented at the Tenth Biennial Conference of the International Association for the Study of Common Property (IASCP) in Oaxaca, México, 9 – 13 August 2004

The logic behind payments for environmental services is not new. For decades farm subsidies have been justified by real or perceived environmental benefits from agriculture. Development agencies have provided subsidies to farmers for afforestation or similar projects. What is new is the explicit use of the concept of payments for environmental services (PES) in developing countries, particularly in Latin America. The increasing recognition of the environmental functions of forests, and the services their owners provide to the public at the local, national and global level, has led to great expectations. At the same time scarce resources have increased pressure to fine-tune PES for improved efficiency and effectiveness. In German Development Co-operation, funded by the Federal Ministry for Economic Development and Cooperation (BMZ) and implemented by both the German Development Bank KfW and GTZ, the German Agency for technical Co-operation, a number of such programs have been operational in Latin America since the mid-1990s. In this paper, we will be looking at experiences with this programme portfolio in the forest and water sectors and will be discussing a set of issues that seem to be determining success and/or failure in this kind of programme.