Air, water and beauty: For sale?

One of the most intriguing developments in sustainable development and natural resources management is the idea that “users” should pay for the ecosystems services they enjoy and utilize. These include such services, for example, as watershed protection to ensure continuous flow of water, climate regulation by forests, and even landscape and seascape beauty.

The fundamental idea is to let some form of market operate so that “producers” of ecosystems services are compensated by those who “consume” them. According to the Ecosystems Marketplace, payments for ecosystem services (PES) refers to the entire suite of economic arrangements used to reward the conservation of ecosystems services.


Part of the argument is that ecosystems services are currently undervalued. Thus, consumers are not paying the true cost of producing and maintaining these services. Take water, for example. The price we pay for tap water is just a fraction of what it takes to “produce” water. Our water supply comes from watersheds and underground aquifers. These watersheds are inhabited by millions of people, mostly smallholder farmers whose land cultivation practices determine the ability of those areas to produce water. Through some form of PES, watershed dwellers can be incentivized to practice sustainable land management practices that ensure steady water supply.

PES is more than theory. A global assessment reported in the journal Nature Sustainability last year showed that about $36 billion are invested annually in PES schemes involving governments, businesses and civil society. These programs cover ecosystems services such as carbon capture (for climate change mitigation), water filtration and biodiversity conservation.


In the Philippines, we are slowly beginning to quantify the benefits we get from natural ecosystems. For instance, a study under the Wealth Accounting and the Valuation of Ecosystem Services (WAVES) project of the World Bank revealed that one hectare of mangroves in the country provides on average more than $3,200 per year of direct flood reduction benefits. In addition, there are a number of pilot scale projects that have explored the use of PES to protect water supply.

For example, the Bukidnon Environment and Natural Resources office has been implementing a PES scheme for a number of years now. It is able to generate funds that support the conservation of Mt. Kitanglad and Mt. Kalatungan. In addition, the National Power Corp. in the province has expanded its PES program so that it now covers more than 1,000 hectares, benefiting about 700 farmer households. Through this program, the company is able to promote sound farming practices in the watersheds where it draws water from.

The science underpinning PES is growing, but there are issues that still need to be resolved. For example, valuation techniques for ecosystems services need to be refined while our understanding of how our ecosystems function improves. The lack of a standard accounting unit is another major valuation challenge. Similarly, policymakers are grappling with how we can integrate PES into national development plans and programs without hurting the poor. At the base of this is the fact that the capacity of and demand on our ecosystems are already under severe pressure. Thus, we may need to regulate the flow of benefits that come from the services they provide.

The country’s leaders should enhance our citizens’ appreciation of the value of natural ecosystems to our daily lives. If we are to develop sustainably, we have no choice but to conserve our natural capital and the services they provide, no matter the cost.

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Rodel Lasco is an author of several IPCC reports, including the forthcoming sixth assessment report. He is the executive director of The OML Center, a foundation devoted to discovering climate change adaptation solutions (http://www.omlopezcenter.org/)

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TAGS: Inquirer Commentary, natural resources management, payment for ecosystem services, PES, Rodel D. Lasco, sustainable development
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