1. Payments for Ecosystem Services: Motivating Buyers
Ivo Mulder, Kerry ten Kate, Sara Scherr

2. Why is it important to focus on buyers?
If beneficiary/user doesn’t pay….
no disincentive for damaging behaviour and incentive for conservation
no market unless there’s demand as well as supply
potential scale of PES limited
If only government payment….
private sector not engaged
just shuffling existing public money – no additionality
PES may not be most efficient/effective way to protect ecosystem services

3. Kinds of buyers Public: Central to local government Private:
Institutional – i.e. companies
Retail - i.e. consumers / private households

4. Private Sector Payments
Scope of “private PES”
Private entity pays for clear ES for business motivation.
Payments made on behalf of the consumers / households (eg higher water prices)
Payments for an ecosystem good (eg NTFP, genetic resources);offsets;
indirect payments/ conservation (eg shade-grown coffee)
“Narrow” definition private sector payment
“Narrow” definition ecosystem service
“Broad” definition ecosystem service
“Broad” definition private sector payment
Private Sector Payments
Ecosystem Services 1 3 2 4
Figure …: Schematic overview of differentiation in private payments for ecosystem services.

5. The private PES study Phase I: existing buyers
Assess the scale and nature of private PES of four kinds: carbon, water, biodiversity, landscape beauty
Discuss with private buyers their motivation, experience and appetite for PES
Phase II: potential buyers
Assess the potential scale and nature of private PES
Assess prerequisites for private PES to take off

6. Motivations of buyers Regulatory compliance
Treaties (Kyoto/CDM and carbon; CBD and genetic resources)
Cap-and-trade system
Benefits related to core business functions
Business opportunity: new markets (carbon offsets) or marketing/“green” branding
Access to raw materials: secure, sustain or reduce costs of key natural resource inputs (eg uncontaminated water for bottling, “Charismatic” macrofauna for ecotourism)
License to operate: better relations with regulators and local communities
Value: Enhance or maintain the financial value of land, forest or other assets belonging to the company
Employees: staff pride and morale, recruitment and retention.
Benefits related to philanthropy/charity
Community relations, good PR.
Different budgets from core business, less reliable

7. What are buyers looking for?
Clarity on the services.
Clarity on the business case.
“What are we paying for and why?”
Defined property rights.
Policy support for markets.
Something they don’t get for free already.
Low transaction costs.
Reliable and informed partners.

8. Can you help us? Do you know examples of private PES?
Do you have opinions on the scope and definition of private PES?
Do you have views on the potential for private PES?

9. Conclusions There’s no market without demand.
PES research is dominated by supply-side analyses.
There is inadequate information on the existing and potential demand for PES, particularly from private buyers.
Work in this area would help countries establish their strategy and expectations for PES.

10. Thank you Ivo Mulder Ivo.Mulder@wur.nl
Kerry ten Kate
Sara Scherr