Decentralized payments for environmental services: The cases of Pimampiro and PROFAFOR in Ecuador

Abstract

Few payment for environmental services (PES) schemes in developing countries operate outside of the central state's umbrella, and are at the same time old enough to allow for a meaningful evaluation. Ecuador has two such decentralised, consolidated experiences: the five-year old Pimampiro municipal watershed-protection scheme and the twelve-year old PROFAFOR carbon-sequestration programme. We describe and compare the two cases, using a common PES definition and methodology, drawing on both primary interview-based information and secondary data. We find that both schemes have been relatively effective in reaching their environmental objectives, in terms of having probably high additionality levels and low leakage effects. A strong focus on the targeted environmental service and a strong degree of conditionality seem to be two key factors explaining these achievements. Although neither scheme has targeted poverty alleviation or other side objectives, both are likely to have improved PES recipients' welfare, mostly through higher incomes. We highlight several observations with more generalised relevance and lessons for the design of PES schemes.

Introduction

In Ecuador, several payments for environmental services (PES) or ‘PES-like’ initiatives have been developed, such as the funds for watershed conservation in Cuenca (Echavarría et al., 2004) and Quito (Echavarría, 2002), and compensation schemes in the Celica and El Chaco municipalities (Yaguache et al., 2005). Unlike in Costa Rica where a central PES implementing authority exists, the Ecuadorian schemes are all decentralized, i.e. self-organised without central state coordination. We define PES as voluntary and conditional transactions over well-defined environmental services (or land uses likely to produce the services) between at least one supplier and one user (Wunder, 2005). We describe sequentially the two Ecuadorian experiences that are closest to this theoretical PES concept, analysing in particular the common topics pre-identified for this Special Issue. First, the five-year old watershed scheme in Pimampiro has become a model for small municipalities protecting their watersheds (Section 2). Second, the Forests Absorbing Carbon-dioxide Emissions Forestation Program (PROFAFOR) has for 13 years established carbon-fixing plantations, mainly in the highland region (Section 3). We discuss comparative issues and main lessons in Section 4, and provide broader perspectives in Section 5.

For this article, we conducted interviews and community workshops in Quito, Pimampiro, and in the communities of Nueva América, Totorillas, Galte Laime and 5 de Abril in 2005–06 (Fig. 1a,b). We also used data gathered by the second author in 2002–03 for a study of socioeconomic PES impacts by the International Institute for Environment and Development (IIED) in Pimampiro and in the PROFAFOR communities of Chuchuqui, Galte Laime, Totoras, Chochaloma Totorillas, and Ashingua (Fig. 1a). In Pimampiro, we interviewed “sellers” (service-protecting households that receive payments) and “buyers” (water consumers in Pimampiro town). For PROFAFOR, we had access to the PROFAFOR database and gathered primary information from six community plantation contracts through community workshops and household interviews.