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User Financing in a National Payments for Environmental Services Program: Costa Rican Hydropower

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  • Blackman, Allen

    ()
    (Resources for the Future)

  • Woodward, Richard T.

Abstract

National government-funded payments for environmental services (PES) programs often lack sustainable financing and fail to target payments to providers of important environmental services. In principle, these problems can be mitigated by supplementing government financing with contributions from leading environmental service users. We use original survey data and official statistics to analyze user financing in Costa Rica’s renowned national PES program, focusing on the amounts and sources of user financing, the drivers of contributions, and contributors’ perceptions of the PES program. We find that user financing has supported less than three percent of the acres enrolled in the program and that hydroelectric plants are the largest private sector contributors. Large hydroelectric plants tend to contribute while small ones do not. The weight of evidence suggests that in addition to ensuring the provision of forest environmental services, hydroelectric plants’ motives for contributing to the PES program include improving relations with local communities and government regulators—common drivers of participation in all manner of voluntary environmental programs. These findings raise questions about the potential of user financing to improve the efficiency and financial sustainability of national PES programs.

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Bibliographic Info

Paper provided by Resources For the Future in its series Discussion Papers with number dp-09-04.

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Date of creation: 18 Feb 2009
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Handle: RePEc:rff:dpaper:dp-09-04

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Keywords: payments for environmental services; voluntary regulation; hydroelectricity; Costa Rica;

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Citations

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Cited by:
  1. Coria, Jessica & Calfucura, Enrique, 2011. "Ecotourism and the Development of Indigenous Communities: the Good, the Bad, and the Ugly," Working Papers in Economics 489, University of Gothenburg, Department of Economics.
  2. Ina, Porras & Bruce, Alyward & Jeff, Dengel, 2013. "Monitoring payments for watershed services schemes in developing countries," MPRA Paper 47185, University Library of Munich, Germany.
  3. Lewis, Kate & Porras, Ina & Miranda, Miriam & Barton, David & Chacon, Adriana, 2012. "De Rio a Rio+ Lecciones de 20 años de experiencia en servicios ambientales en Costa Rica
    [From Rio to Rio + Lessons from 20 years of experience in environmental services in Costa Rica]
    ," MPRA Paper 43649, University Library of Munich, Germany.
  4. Dale Whittington & Stefano Pagiola, 2012. "Using Contingent Valuation in the Design of Payments for Environmental Services Mechanisms: A Review and Assessment," World Bank Research Observer, World Bank Group, vol. 27(2), pages 261-287, August.

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