Can Payments for Environmental Services Help Reduce Poverty? An Exploration of the Issues and the Evidence to Date from Latin America

This paper examines the main ways in which Payments for Environmental Services (PES) might affect poverty. PES may reduce poverty mainly by making payments to poor natural resource managers in upper watersheds. The extent of the impact depends on how many PES participants are in fact poor, on the poor's ability to participate, and on the amounts paid. Although PES programs are not designed for poverty reduction, there can be important synergies when program design is well thought out and local conditions are favorable. Possible adverse effects can occur where property rights are insecure or if PES programs encourage less labor-intensive practices.