Connecting Knowledge and People
Palm Oil plantations in Indonesia (Source: Wikipedia)
In 1997, Constanza and colleagues (1997) described ecosystem goods and services as “the benefits’ human populations derive, directly or indirectly, from ecosystem functions” (Constanza et al., 1997: 253) and estimated that their world value was $33 trillion US dollars (Constanza et al., 1997). More recently, the Millennium Ecosystem Assessment classified those services in four categories, namely provisioning services, which include water or timber; regulating services, such as regulation of floods; cultural services, like recreation; and supporting services, such as pollination and soil formation (MEA, 2005).
This classification of nature has led to many discussions. On the one hand, some ecologists and economists argue that some of these services are impossible to substitute, thus advocate for an ecosystem services (ES) approach to preserve them (e.g. Daily, 1997). On the other hand, ecological economists highlight the trade-offs of this instrumentalisation, and instead recommend an internalisation of ES in the economy (Dempsey and Robertson, 2012). These trade-offs are divided by Rodriguez and others (2006) between time, place or reversibility, and are the result of the management choices that humans make in order to prioritize certain services. Therefore, enhancing a service in one area can have negative consequences in another (e.g. the run-off of intensive fertiliser use), or a short-term decision can have negative impacts in the future (e.g. increased coastal salt water intrusion due to deforestation), especially due to the time lag often shown between a decision and its impact in natural processes (Rodriguez et al., 2006). Moreover, it is widely asserted that ecosystems may not have linear responses, and the surpassing of an unknown threshold might lead to a collapse and loss of these services (Rockström et al., 2009).
Several strategies are being used to take ecosystem services into account in economies and policies, such as the creation of new markets, the implementation of taxes, or payment for ecosystem services (TEEB, 2008). Payment for ecosystem services (PES) has become widely analysed and used in the past two decades, with more than 80% of the scientific literature referring to it being written during the last ten years (POS, 2013). PES can be defined as a “voluntary transaction where a well-defined ES […] is being ‘bought’ by a […] ES buyer from a […] ES provider if and only if ES provision is secured” (Wunder, 2005: 280). Since these services taken from nature are not captured in current markets or economic system they have little weight in policy decisions, thus compromising their sustainability and ultimately threatening humanity (Constanza et al., 1997). Therefore, it is believed that PES can create the market and demand necessary to preserve biodiversity, thus promoting sustainable development (TEEB, 2008). In economic terms, the PES approach is correcting market failures that derived from environmental externalities, supporting the creation of procedures to internalise those and generate private benefits (van Hecken & Bastiaensen, 2010).
Since its conception however, PES schemes have received criticism from many different perspectives, pointing out different weaknesses of this framework (e.g. van Hecken & Bastiaensen, 2010; Kosoy & Corbera, 2010; Robertson, 2003; Muradian et al., 2013; Dempsey & Robertson, 2012).
Critiques to payment for ecosystem services scheme
Kosoy and Corbera (2010) in their work, describe PES as ‘commodity fetishism’, and highlight three of its weaknesses, including simplification, valuation and embedded inequalities. Commodity fetishism as a term, was defined by Karl Marx in Capital (1867) to describe how the capitalist society masks the social relations behind goods production and how the capitalist system appropriates the surplus value between the creation of a product and its exchange in the market, thus perpetuating this fetishism by asymmetry of power (Kosoy & Corbera, 2010). The first dimension of PES as a commodity fetishism is simplification. Assigning value to a concrete ecosystem service entails establishing boundaries within the ecosystem, which are nearly impossible to draw, thus neglecting the interconnectedness and dependency of nature and its ecosystems (Ibid). The second dimension is the requirement of assigning an exchange value to the ES. This hides the fact that multiple valuation conceptions can be found, that price is not the same as value (Kosoy & Corbera, 2010; Robertson & Mainwright, 2013), and relies on ecological science to define a trade unit, which may be very controversial (Robertson, 2003). Such marketisation of nature is referred to as “selling nature to save it”, the idea that the current world is only composed by commodities that are exchanged (McAfee, 1999; Robertson & Mainwright, 2013). Finally, the last dimension of PES as commodity fetishism are the inequalities that confine it. These inequalities can be found through price establishing, or in the access to the payments, which is normally defined by property rights or institutions (Kosoy & Corbera, 2010). Therefore, sometimes power might define the distribution of payments, since more influential groups can take part in its definition, leading to a very political outcome (Muradian et al., 2013).
Some argue that the reason for such compartmentalization and valuation of nature is not casual, but an attempt to expand the capitalist social relations, known as neoliberalism, thus proportioning new areas for capital accumulation (Smith, 2007; Robertson & Mainwright, 2013). However, Dempsey and Robertson (2012) in their analysis of the relationship between neoliberalism and ES, argue that despite the neoclassical frame, PES takes many different forms, sometimes exceeding the neoliberal versions, allowing debate about value and measurement, the implementation of the payment or even the definition of ES as such, developing critiques from inside and outside the PES science (Dempsey & Robertson, 2012).
Forests in Ecuador (Source: Profafor)
When putting PES into practice it becomes evident that every implementation varies greatly and is dependent on the context and local circumstances. Therefore, many different reasons can be found to describe why this structure has the desirable outcome or not (Muradian et al., 2010).
To begin, the REDD+ framework has been described as the world’s largest PES (Corbera, 2012). The acronym stands for reducing emissions from deforestation and forest degradation, and promotes the conservation and sustainability of forests by economically valuing the carbon sequestered in carbon sinks (Corbera & Schroeder, 2011). Butler and colleagues (2009) assess the possibility of avoiding the enormous deforestation occurring in Indonesia due to oil palm plantations by incentivizing forest conservation through the REDD+ programme. In their results however, they explain that converting forest to palm oil plantations is still more profitable than the price that carbon markets are able to pay, thus breaking the compensation logic that PES encourages (Butler et al., 2009), and significantly failing to preserve the biodiversity of those forests (Koh & Wilcove, 2008; Fitzherbert et al., 2008).
Another interesting case is the one described by Granda (2005) in peasant communities of Ecuador. Under the PES scheme, a Dutch company promoted the establishment of tree plantations to fix carbon dioxide, hiring communities to maintain such plantations between 15 and 30 years, which resulted in a social and ecological disaster. First of all, the incentives provided by the company were not sufficient to complete the plantations, and the communities started devoting their own productive activities to the service of this Dutch enterprise, displacing their culture and economy. In terms of the environment, the majority of the trees planted were exotic species, which degraded the soils, threatened native ecosystems and made them more vulnerable to fire. The author concludes by highlighting how cheap carbon could be sold by this company thanks to social and environmental carelessness, further exacerbating the North’s footprint in the South (Granda, 2005).
Many more examples can be found in the literature showing controversies and problems when implementing PES schemes. specifically, concerning monetary issues or the source of money for the payments (Butler et al., 2009; Wunder et al., 2008), related to social or environmental concerns (Granda, 2005), or linked with more abstract concepts such as equity (Porras, 2010) and justice (Martin et al., 2013). Muradian and colleagues (2013) argue that despite the complexity of this framework and its sometimes negative outcomes, it is still being widely used because it has momentum. Policy-makers and donors feel attracted by the possibility of a “win-win” solution, which in the end is based on broad assumptions and very little evidence (Muradian et al., 2013). This very much resembles what Molle (2008) calls a Nirvana concept, an ideal image of the world we want, most likely unreachable, but that can set a common ground of understanding between stakeholders.
Hence, payments for ecosystem services schemes are not good or bad per se. Their correct design and implementation however, needs to take into account many different aspects that are not only economic or ecological, but that surpass materiality and encounter dilemmas related to social relations, perpetuation of power, equity or justice. Despite their marketization and instrumentalisation of nature, a thorough approach may promote the conservation of biodiversity and nature, but many improvements have yet to come.
© Anna Pérez Català
Suggested citing: Pérez-Català, A., 2014. Commodifying nature? reflections around PES scheme. [Online]. Available at: https://climate-exchange.org/2014/02/17/commodifying-nature-reflections-around-pes-scheme/ [accessed + date when the website was accessed].