Payment for Environmental Services: An economic alternative to compensate for private conservation costs


The Payment for Environmental or Ecosystem Services (PES) is a voluntary transaction in which a well-determined environmental service or a form of land use capable of providing this service is purchased by at least one buyer from at least one provider under the requirement that the last one ensures the provision of this service (Wunder, 2005). Brazil already has its law[1] on the subject, which seeks to promote acknowledgment of the different ecosystem services provided. It functions like this: the relevant benefits created in terms of

· maintaining, restoring, or improving environmental conditions by providing environmental goods or products used by human beings for consumption or sale, such as water, food, wood, fibers, and plant extracts, among others;

· support that preserves the continuity of life on Earth, such as nutrient cycling, waste decomposition, soil fertility production, maintenance, or renewal, pollination, seed dispersal, control of populations of potential pests and vectors of human diseases, protection against ultraviolet solar radiation, and preservation of biodiversity and genetic heritage; and

· regulation aiming to keep the stability of ecosystem processes, such as carbon sequestration, air purification, extreme climatic events mitigation, the balance of hydrological cycle maintenance, minimization of floods and droughts, and control of critical erosion and landslide processes.

makes up the added value of Brazilian rural properties, and the countries’ landowners have great potential to provide environmental services derived from ecosystem ones, not only for the climate agreement goals (i.e. reducing greenhouse gas emissions) but also for biodiversity goals. These benefits go beyond Brazil’s borders and have a worldwide impact.

However, there are still no clear guarantees required for that transaction due to the lack of a legal framework for its inclusion in the federal budget nor defined criteria for raising funds, monitoring ecosystem benefits, assessing the services provided, selecting ecosystem processes, and other minor issues.

Once the effects of the measures based on the Command and Control policies have been achieved, there is a consensus that other environmental policy instruments should be integrated into the productive assets of rural premises so that alternative land use is not an option. Environmental services such as capturing and retaining carbon, preserving biodiversity, protecting water resources, and maintaining landscape beauty are roles that farms and ranches already perform. The law requires our rural properties to keep their protected areas as Permanent Preservation Areas (APPs) and Legal Reserves (RLs), freezing their use by up to 80%. Responsible by definition for maintaining water resources, the landscape, geological stability, and biodiversity, thus facilitating the gene flow of fauna and flora, protecting the soil, and ensuring the well-being of human populations, these preserved areas are not eligible as providers of environmental services since they do not have the “additionality” requirement. APPs and RLs are only required in Brazil and do not aid the economic sustainability of properties.

To improve the quality of life for general society, rural premises have their exploitable area reduced. They are also in charge of safeguarding and maintaining these areas protected by law and are held criminally liable if failing to do so.

The Federal Constitution acknowledges the right to an ecologically balanced environment, and since this is an asset for the people’s common use and crucial to a healthy quality of life, it is only fair that those primarily responsible for preserving the environment should be paid for the relevant services they provide. Who else preserves the environment than rural landowners who have 20%, 35%, or 80% of their properties under the RLs designation, in addition to APPs?

The reasoning for preserving environmental assets runs counter to the direct use of natural resources. Comparing the value of different plots of land with similar features, vegetation-covered soils are cheaper than those already integrated into production processes, thus reaffirming the rationale that a standing forest is still worth less than a logged one.

In this context, valuing services provided by preserving environmental assets has emerged as an alternative to the model of exploitation of natural resources. The feasibility of rural premises based on the environmental, social, and economic pillars goes beyond their geographic limits, as it affects directly urban populations’ quality of life. So, we have indirect benefits, through the accumulation and stockpiling of carbon, for instance, and direct ones, such as producing water to supply its springs.

Understanding PES as a market segment ruled by demand and supply, Brazilian opportunities in it are immense. The average annual flow of rivers in Brazil is 179 thousand m³/s (roughly 12% of the world’s available water resources) and around 60% of the country is covered in original vegetation. Based on these examples, we therefore have a huge amount of environmental assets eligible for PES which, given the principle of common but different responsibilities, are not matched by developed countries unable to meet their commitments.

However, it is worth noting that there is still no specified (or recognized) methodology for directly determining the value of the majority of environmental goods and services, i.e., a common agreement on the valuation of an intangible and diffuse good is far from being set.

CNA is part of the process of regulating the legislation that will determine the payment procedures for the provided environmental services. The rules specify the environmental services provided by rural properties but do not solve two essential questions: where the funds for payment will come from and how the services provided will be assessed.

The crucial question is how to align the producers’ willingness to reduce their exploitable area to meet the additionality criterion with the willingness of buyers of environmental services to pay the market price, which must be fair and compensatory for producers.

[1] Available at: