Table Of ContentCSR, Sustainability, Ethics & Governance
Series Editors: Samuel O. Idowu · René Schmidpeter
Philipp Aerni
The Sustainable
Provision of
Environmental
Services
From Regulation to Innovation
CSR, Sustainability, Ethics & Governance
Series Editors
SamuelO.Idowu,LondonMetropolitanUniversity,UnitedKingdom
Rene´ Schmidpeter,CologneBusinessSchool,Germany
More information about this series at
http://www.springer.com/series/11565
Philipp Aerni
The Sustainable Provision of
Environmental Services
From Regulation to Innovation
PhilippAerni
CenterforCorporateResponsibility
andSustainability(CCRS)
UniversityofZurich
Zurich
Switzerland
ISSN2196-7075 ISSN2196-7083 (electronic)
CSR,Sustainability,Ethics&Governance
ISBN978-3-319-19344-1 ISBN978-3-319-19345-8 (eBook)
DOI10.1007/978-3-319-19345-8
LibraryofCongressControlNumber:2015945024
SpringerChamHeidelbergNewYorkDordrechtLondon
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Acknowledgements
ThisbookstartedasaseriesofworkingpapersdraftedduringmytimeattheFood
and Agriculture Organization of the United Nations (FAO) in Rome, Italy, from
May 2012 to September 2013. At that time, I was coordinating a project titled
‘Remuneration of Positive Externalities/Payments for Ecosystem Services
(RPE/PES)intheFoodandAgriculturalSectors’.
WhileIwasbasedinRome,IcontinuedtoobtainmysalaryfromETHZurich,
whichwasaskedtobytheSwissFederalOfficeofAgriculture (FOAG),themain
donoroftheproject,toheadtheprojectcoordinationteamundertheguidanceofan
FAOSteeringCommitteeandthesupervisionoftheformerFAONaturalResources
ManagementandEnvironmentDepartment.
IstartedtheprojectbyhavingseveralbilateralmeetingswithFAO-basedexperts
onPES.IwasquitefamiliarwiththeRPE/PESsysteminSwitzerland,whichwas
based on the conceptofmultifunctionalagriculturein which the government pro-
videsfarmerswithgeneroussubsidiesinreturnforprovidingpositiveexternalities
to society and the environment—assuming that markets would not be willing to
remunerate such externalities. However,I was notsure how such aconceptcould
possibly work in less affluent tropical countries. When I heard from many FAO
expertsthatthereisnotmuchevidencethatPESactuallydoesworkindeveloping
countries, I decided to visit a developing country where such PES projects have
been introduced on a large and small scale by various government and
non-government institutions. I selected Kenya because it is widely considered to
be a pioneer in the promotion of incentives for the provision of environmental
servicesinagriculture.Thefieldexperienceaswellasthenumerousinterviewsin
Kenyaconfirmedmyviewthatpositiveexternalitiesinthesecountriesarelargely
generated as by-products of localentrepreneurship and innovation. Whereas most
of the PES projects I visited lacked a concrete business case because they rely
almost entirely on external funding, such projects bring together local actors who
havenotpreviouslyinteracted.Theseactorswereoriginallyassignedasbuyersand
sellers ofenvironmental services in the project, butthey saw few business oppor-
tunitiesintheratherpassiveroletheyweresupposedtoplay.So,manyoftheactors
v
vi Acknowledgements
becameentrepreneursontheirownbehalfandstartedtocreatetheirownbilateral
local business deals for the sustainable provision of environmental services and
their innovative practices eventually led to new local markets for environmental
goodsthatalsoprovedtobefinanciallysustainable.
Even though these insights were confirmed by the numerous critical experts’
comments in the FAO online Forum on Food Security and Nutrition, where we
launched a discussion on the theory and practice of PES in March 2013 (http://
www.fao.org/fsnforum/forum/discussions/pes), many of these trends have gener-
allygoneunnoticedintheacademicliteratureonthetheoryandpracticeofPES.
MygoalthenwastodrawattentiontothisgapbyselectingPEScasesinwhich
public–privatepartnershipsenabledlocalentrepreneurshipandinnovationandthus
ensured the financial sustainability of the provision of environmental services in
countries where there was no government funding to compensate farmers for the
positiveexternalitiesofsustainableagriculture.
AllthesecasestudieswerepresentedinamultistakeholderdialogueatFAOon
September 12 and 13, 2013 (http://www.fao.org/nr/aboutnr/incentives-for-ecosys
tem-services/case-studies/en/).
SinceIassumedthepositionofDirectoroftheCenterforCorporateResponsi-
bilityattheUniversityofZurichinOctober2013,Iwasunabletocontinuemywork
asprojectcoordinator.
Mysuccessor didnotfurtherpursuetheideathatentrepreneurshipandinnova-
tion can be a source of positive externalities in PES schemes. This gave me the
opportunitytocontinuewiththeworkonapersonalbasis.Ithenfinallydecidedin
summer 2014 to write a book mostly based on the draft working papers that had
already been favourably reviewed by members of the steering committee of the
projectatFAO.IamthereforeverygratefultomycolleaguesatFAOwhoprovided
me with valuable feedback on the working papers, especially Tomas Lindeman,
Rao Matta, Julien Custot, Alexander Mueller, Daniela Ottaviani, Leslie Lipper,
Cassandra DeYoung, Alberto Sandoval, Pierre Gerber, Bernadette Neves and
Ste´phane Jost. I am also very thankful to all the PES experts I met in Kenya (see
alsoAnnex).
InSwitzerland,IwouldlikethankHans-J€orgLehmannfromtheSwissFederal
Office of Agriculture and Michel Dumondel from ETH Zurich for supporting me
during my time as project leader at FAO, and Susan Kaplan and Isabelle Schluep
forhervaluableassistancewiththepreparationofthefinalmanuscript.
Finally, my thanks go to Johannes Glaeser from Springer Publishing and the
reviewersoftheSeriesonCSR,Sustainability,EthicsandGovernance.
PhilippAerni
CenterofCorporateResponsibilityandSustainability
UniversityofZurich
Testimonials
Thisbookisarefreshingchallengetoconventional
approachestopaymentsforenvironmentalservices.Itoffers
amorerealisticframeworkthataccountsforhuman
creativityandinnovationinenvironmentalmanagement.
ProfessorCalestousJuma,HarvardKennedySchool,
Cambridge,MA,USA(Authorofthe“TheNewHarvest:
AgriculturalInnovationinAfrica”,OxfordUniversityPress
2011)
PhilippAernioffersamostusefulcriticalassessmentofthe
theoryandpracticeofpaymentsforecosystemservices.His
bookhelpsusunderstandwhysuchpaymentssometimesfail
toreachtheirobjectives,andwhatcouldbedoneaboutit,
particularlyinlessdevelopedcountries.
ProfessorThomasBernauer,ETHZurich,Switzerland
DrawingonlessonslearnedfromcasestudiesinKenya,
thisimportantbookshowswhatisneededtoimprove
environmentalservicesandsustainabilityinthedeveloping
world.
PaulSlovic,President,DecisionResearchandProfessor,
UniversityofOregon,Eugene,OR,USA
ThisbookvividlyassessestheuseandimpactofPES
(PaymentsofEnvironmentalServices)inagriculture.
AddressingthegapbetweenPEStheoryandpracticeinthe
historicalcontext,valuablelessonsarelearnedfromcase
studiesinKenya.Theyassistinrefiningfuturepolicies,
linkingPEStonewbusinessopportunities.Thebookis
essentialreadinginthequestforsquaringincreasingfood
productionandsustainabledevelopmentandforthedesign
offuturerulesoftheinternationaltradingsystem.
ThomasCottier,ProfessorofLaw,WorldTradeInstitute,
UniversityofBern
vii
ThiSisaFMBlankPage
Executive Summary
In2012,theRio+20conferenceconcludedthatsustainablelandusesystemsplaya
crucialroleinenablingaglobalgreeneconomy.Thesesystemsmustcopewiththe
double challenge of increasing the production of primary commodities for a
growing and more affluent world population while halting the continuous loss of
vitalecosystemservicesasaresultofunsustainablepractices.Thegrowingglobal
demand for fuel, fibre, feed and food must therefore be met through sustainable
intensification techniques that enable production to be increased without further
impairingtheprovisionofvaluableenvironmentalservices.
Thisbookmakesthecasethatcurrentenvironmentalpolicyinstruments,suchas
Payments for Environmental Services (PES), may not be able to cope adequately
with this doubly challenge because they are primarily focused on regulating
unsustainable change in developed countries but may actually hamper efforts to
facilitate sustainable change in developing countries. These policy instruments,
derivedfromneoclassicalwelfareeconomics,arebasedontheimplicitassumption
that there is a trade-off between economic development through technological
change (increasing provisioning services of ecosystems) and the conservation of
naturalresources(protectingthesupportingandregulatingservicesofecosystems).
This framing of the global environmental challenge shaped the research focus as
well as the conclusions of the Millennium Ecosystem Assessment published in
2005(MEA2005).ThefinalreportoftheMEAadvocatedPESasaneffectiveway
tointernalizetheenvironmentalcostsofeconomicactivities.
Emerging economies that must cope with the many social and environmental
challengesofeconomicgrowthareundoubtedlychallengedbytrade-offsbetween
economicdevelopmentandtheconservationofnaturalresources.Buttheyinvestas
much in technological change as they experiment with different types of PES
approaches to cope with the challenges. In developed countries, PES schemes
have been built into national agricultural and environmental policies, but the
generouspaymentshaveoftenunderminedincentivestoactivelyinvestininnova-
tionthatimprovesthequalityofenvironmentalserviceswhilebeingeconomically
viable.BuildingPESschemesintonationalpolicieshasprovedtobechallengingin
least developed countries where governments cannot afford to dispense generous
ix
