Abstract:

Developed countries have already established a number of mechanisms to implement environmental transfers either within their own country, or towards other countries, including developing nations. The present review looks at a number such of mechanisms with a common matrix of analysis and tries to draw lessons for the design of RUPES mechanisms in Asia. All these mechanisms have been designed to provide reward to farmers for environmental services, and the priority is put on the ones which were clearly targeting upland farmers. Not all these schemes had poverty alleviation as their objective, but many did have a clear social orientation, and in all cases we tried to look at whether these schemes could be targeted to reach poor upland communities.

There are three main conclusions to this review.

1. The path leading to effective implementation of RUPES mechanisms is very narrow. All the mechanism reviewed here require a fair amount of institutional development, and hence need funding for capacity building, if they have to actually reach the poor and effectively promote environmental conservation. This is bad news since the funds available for such projects are very limited when compared to the needs.

2. Market-based mechanisms seem to have a much larger potential in terms of funding available and that they can be effective RUPES whenever they are implemented by the private sector in cooperation with NGO or other institutions enabling the involvement of all stakeholders. Market-based mechanisms are defined here as the ones which are the most efficient at internalizing the social environmental costs or benefits of a particular practice. The involvement of private companies often result in a greater efficiency, under the condition that their activities is closely monitored and complemented by NGOs representing all stakeholders, and ensuring that the benefits of these mechanisms actually reach the poor.

3. The last and first lesson of this review is that these mechanisms in most cases have little chance to be of use because their potential impact is contradicted by a number of perverse incentives running against the upland poor and against environmentally-friendly practices. Identifying and trying to remove these penalties should be the first step before starting to design and implement RUPES mechanisms. The effectiveness of removing them rather than try to implement complicated RUPES mechanisms with limited resources need to be assessed. In many cases, it is likely that removing the penalties will provide a more effective way of meeting environmental conservation and poverty alleviation objectives than any RUPES mechanism.