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Designing and Implementing Payments for Ecosystem Services Programs: What Lessons Can Be Learned from China’s Experience of Restoring Degraded Cropland? Runsheng Yin,‡,†,* Minjuan Zhao,‡ and Shunbo Yao‡ †
College of Economics and Management, Northwest A&F University, Yangling 712100, China Department of Forestry, Michigan State University, East Lansing, Michigan 48824, United States phasing-out schedule of payments can reduce the program uncertainty and give farmers more confidence in their active participation.3 For these and other reasons, adequate piloting, demonstration, and planning are vital steps before scaling up a program. Further, the restoration success is judged ultimately against the improved provision of ecosystem services, most, if not all, of which are beneficial to users at multiple levels. It is prudent not to focus on any particular one of the multiple services and direct more attention toward the program conf iguration and impacts at the landscape level. Selecting sites and evaluating outcomes should thus be based on knowledge of what ecosystem services should take priority, what might be the trade-offs or synergies between them, and whether and how they can be ranked to obtain an environmental benefit index for site selection and implementation monitoring.4 The opportunity costs of retiring cropland and the operational costs of restoring it vary with a plethora of farming practices as well as natural conditions. So, it is worthwhile to have competitive participation selections and dif ferentiated payment mechanisms. Uniform standards for subsidies raise concerns
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P
ayments for Ecosystem Services (PES) programs have witnessed tremendous expansion.1 Here we argue that despite their growing popularity, careful analysis of how to properly design and implement these programs is needed.2 For that purpose, we draw some important lessons from China’s experience of restoring degraded cropland under the Sloping Land Conversion Program (SLCP)the largest of its kind in developing countriesover the past decade.1,3 These lessons are presented from the intertwined ecological, socioeconomic, and institutional perspectives (see Figure 1). Before a large restoration program is construed, it is crucial to identify local ecological conditions as well as human needs so that suitable solutions can be found. It is essential, for instance, to know the soil fertility and moisture conditions of the targeted cropland, the preferable tree/grass species and density, the necessary maintenance work, and the time span for the recovered ecosystem to function properly.3 Moreover, because there can be unpredictable interactions and outcomes between humans and ecosystems as they evolve together, it is advantageous to adopt an adaptive management strategy that incorporates feedback and f lexibility. Policymakers ought to recognize that it is more effective to introduce a learning process than imposing final solutions.4 When the basic capability and infrastructure are not ready, rushing to launch a PES program can cause confusion and waste. Also, it appears that starting with a longer but gradually © 2013 American Chemical Society
Figure 1. The Sloping Land Conversion Program in Northwest Chinadegraded cropland on slope is converted to forest and grass covers (photo taken by Shunbo Yao in Wuqi County of Shaanxi, 2007).
Received: Revised: Accepted: Published: 19
November 12, 2013 December 8, 2013 December 16, 2013 December 23, 2013 dx.doi.org/10.1021/es405028n | Environ. Sci. Technol. 2014, 48, 19−20
Environmental Science & Technology
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external monitoring. A sound internal monitoring and assessing system ought to be built into the PES program.
about, in addition to equity, efficiency of the program, given the actual overcompensation and the broad need for retiring more marginal fields and retaining those that have been retired. A reverse auction of PES contracts can induce the cost-effective allocation of service generation and efficiency gain relative to a command-and-control approach, and facilitate identifying what works and what does not.2 Since collecting and processing local information entails high transaction costs, however, a compensation scheme may be established according to the average revenues of typical subregional plots.3 Targeting disadvantaged communities and individuals deserves serious emphasis. Despite the great aggregate changes induced by the SLCP, certain households have not been much engaged in off-farm activities and continued their reliance on farming for livelihoods. It is more likely for these poor families to reconvert some of the set-aside plots once the program expires. To sustain their interest and effort, whenever possible, the participants should be allowed to incorporate their own preferences and take ownership of the program and its outcome. This calls into questions the dominant mindset that permits very limited commercial use of reforested lands.3 Also, in view of the constraints of public agencies, the notion of private and public joint production and partnership becomes appealing. The lack of local organizations and their interactions with those at larger scales indicates a symptom of farmers’ passive participation and the dearth of effective community-level actions. Also, the distinction between provision and production of public goods implies that public agencies do not have to directly engage in the production of ecosystem services, much of which can be contracted to private or community organizations. These considerations suggest that the top-down, mass mobilization approach may work in the short term, but it will not last; even if it works, the inef f iciency can be massive. While significant progress has been made in reforming forest tenure in China, some of the land-use rights have remained subject to restriction.5 What species farmers prefer to grow and how they manage and cut the trees may deviate from the forestry regulations, causing them to lose interest in and commitment to the program. The incentive structures manifested at the policy level must be coherent and well aligned with those at the operational level. Often, program performance depends not only on its own rules, but also on other related policies. For example, policy changes concerning land and labor markets can alter the opportunity cost of land use and influence the incentives of farmers’ participation and the likelihood of reconversion.5 Actions targeting both land and labor allocation decisions can be more effective in increasing participation or reducing expected compensation. Recognizing the induced shifts in land use, employment, and income, agencies should facilitate credit availability, technical training, and capacity building in support of the program implementation. Moreover, there is often missing or inaccurate information about the actions taken by local actors, the linkages of actions to outcomes, and the actual benefits for locals. These phenomena can generate perverse incentives, and it becomes even worse if local knowledge and entrepreneurship are not incorporated. Thus, information issues confounding participants’ lack of interest in the production of public good must be addressed. Finally, the effectiveness of external monitoring and sanctioning is doubtful because these activities tend to be short-lived. Enabling locals to monitor and communicate outcomes will tap into local knowledge and reduce the need for and cost of
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AUTHOR INFORMATION
Corresponding Author
*Phone: (517) 432-3352; e-mail:
[email protected]. Notes
The authors declare no competing financial interest.
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ACKNOWLEDGMENTS This study was funded by the U.S. National Science Foundation, the Northwest A University of China, and the AgBioResearch of Michigan State University. The authors are grateful for the comments and suggestions made by Professors Tom Dietz of the Environmental Science and Policy Program at Michigan State University and participants of the New Frontiers of Forest Economics conference in Zurich during June 26−30, 2012.
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REFERENCES
(1) Daily, G. C.; Matson, P. A. Ecosystem services: From theory to implementation. Proc. Natl. Acad. Sci. U.S.A. 2008, 105, 9455−9456. (2) Jack, B. K.; Kousky, C.; Sims, K. R. E. Designing payments for ecosystem services: lessons from previous experience with incentivebased mechanisms. Proc. Natl. Acad. Sci. U.S.A. 2008, 105, 9465−9470. (3) Yin, R. S. An Integrated Assessment of China’s Ecological Restoration Programs; Springer: Dordrecht, The Netherlands, 2009. (4) Kinzig, A. P.; Perrings, C.; Capin, F. S., III; Polasky, S.; Smith, V. K.; Tilman, D.; Turner, B. L., II Paying for ecosystem services Promises and peril. Science 2011, 334, 603−604. (5) Yin, R. S.; Yin, G. P. China’s primary programs of terrestrial ecosystem restoration: Initiation, implementation, and challenges. Environ. Manage. 2010, 45, 429−441.
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