Payments for environmental services in Indonesia: What if economic signals were lost in translation?

• Published in: Land use policy Vol. 46; pp. 283 - 291
• Main Authors: Lapeyre, Renaud, Pirard, Romain, Leimona, Beria
• Format: Journal Article
• Language: English
• Published: Elsevier Ltd 01-07-2015
• Subjects: Economic incentives; Environment; Farmers; Households; Indonesia; Land; Land utilization; Market-based instruments; Motivations; Payment; Payments for environmental services; Watershed services; Watersheds; Payments for environmental services; Watershed services; Motivations; Economic incentives; Indonesia; Market-based instruments
• ISSN: 0264-8377; 1873-5754
• DOI: 10.1016/j.landusepol.2015.03.004

•We discuss in depth a payment scheme for watershed services in Indonesia, analysing results from a structured household survey of 270 out of 382 total PES participants.•Building on the scheme's theory of change we show a mismatch between the standard theory of PES and local implementation.•Targeting farmers participating in the PES scheme is based on social networks and a willingness to showcase progress and reduce costs; however this limits environmental effectiveness.•Farmers do not respond to PES as alleged by standard theory: they display social rather than economic motivations to enroll in the scheme and modify their behaviours; this might explain the limited change in behaviours and land-uses when introducing payments.•Local farmers have a low level of information and understanding of the PES scheme; this limits their behavioural responses to economic incentives.
This article provides an analysis of a payment for environmental services (PES) scheme in the Cidanau watershed, Indonesia. It contributes to the debate on the alleged effectiveness of such economic incentives to actually change decisions among land users. Building on the standard PES theory of change, one would assume that farmers respond to payments and change their land use decisions accordingly for the delivery of environmental services. However, at the project level the impacts of economic incentives depend on how the signal is transmitted to decision-makers. An extensive household survey was undertaken among 270 participating farmers in order to investigate these assumptions. Results indicate that farmers join the scheme for intrinsic motivations rather than because of economic incentives. Besides, the scheme does not target farmers whose decisions could be changed for the sake of service provision. Finally, farmer group leaders display disproportionate power of decision while individual farmers have a low level of understanding of the PES programme. As a consequence, land use patterns might not depend on the economic incentive only; rather they are likely to be determined by the local social context, traditions and economic dependency on forests. This in turn casts some doubts on the strong (yet contested) economic assumptions that underlie the emergence of PES schemes and on their modus operandi in developing countries.