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When could payments for environmental services benefit the poor?

  • DOI:
  • Published online: 01 June 2008

Since modification of agricultural production choices in developing countries often provides positive environmental externalities to people in developed countries, payment for environmental services (PES) has become an important topic in the context of economic development and poverty reduction. We consider two broad categories of PES programs, land-diversion programs, where lands are diverted from agriculture to other uses, and working-land programs, where agricultural production activities are modified to achieve environmental objectives. PES programs are generally good for landowners. The distribution of land and land quality is critical in determining poverty impacts. Where ES and agricultural productivity are negatively correlated and the poor own lands of low agricultural quality, they stand to gain from PES programs. Consumers and wage laborers may lose where food supply is inelastic and programs reduce labor demand. Working-land programs may have better distributional effects than diversion programs.

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B.A. Babcock , P.G. Lakshminarayan , J. Wu , and D. Zilberman 1997, ‘Targeting tools for the purchase of environmental amenities’, Land Economics 73: 325339.

R.E. Just and D. Zilberman 1988, ‘The effects of agricultural development policies on income distribution and technological change in agriculture’, Journal of Development Economics 28: 193216.

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S. Pagiola , A. Arcenas , and G. Platais 2005, ‘Can payments for environmental services help reduce poverty? An exploration of the issues and the evidence to date from Latin America’, World Development 33: 237253.

J. Wu , D. Zilberman , and B. Babcock 2001, ‘Environmental and distributional impacts of conservation targeting strategies’, Journal of Environmental Economics and Management 41: 333350.

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Environment and Development Economics
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