Sustainable Mountain Development No. 56, ICIMOD, Winter 2009
Payment for Environmental
Services – an approach to
enhancing water storage capacity
Bhaskar Singh Karky, Sustainable Livelihoods and Poverty Reduction, ICIMOD, bkarky@icimod.org
Laxman Joshi, ICRAF SE-Asia Regional Research Programme, L.JOSHI@CGIAR.ORG
P
ayment for environmental services (PES) is their environmental services for the benefi t of the wider
an emerging paradigm in the management population. In other words, people are rewarded
of environmental resources. Rather than for providing environmental services on the basis of
governments relying on regulatory instruments such negotiated contracts. The incentive-based mechanisms
as prohibitions and standards, PES relies on adopting stimulated by PES help primarily to realign private and
innovative mechanisms that are tied to incentives, social costs and benefi ts by accounting for externalities.
and are fl exible, voluntary, and contextualise the In economic language this ‘corrects market failure’ and
socioeconomic reality. The basic rationale of PES is to increases the welfare of society by valuing environmental
provide incentives and benefi ts for people agreeing services and avoiding the uncompensated exploitation
to utilise ecosystems in ways that protect or enhance of resources.
Fish enclosures in the Kulekhani reservoir, a way for poor upland farmers to generate income
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