Effectiveness of payment for ecosystem services after loss and uncertainty of compensation

Payment for ecosystem services (PES) programmes seek to promote conservation via payments for desired resource-use behaviours. While PES has been found to produce some ecological and livelihood benefits, an understudied concern is what happens when payments stop. We assess how households’ land-use behaviours changed in response to a temporary gap in payments and subsequent payment uncertainty in a programme in Ecuador, which paid communities to reduce their grazing on their communal lands. In 2015, after six years in operation, the programme lost funds and stopped payments. These resumed in 2017, but participants were only partially repaid retroactively, and future payments remained uncertain due to funding instability. Using a difference-in-difference modelling approach, we compare household grazing behaviour between communities in the programme and a set of control communities over ten years before PES payments, during PES payments and after the gap in payments in a period where participants were still owed at least one past payment and future payments were uncertain (n = 871 households). We find that grazing was significantly reduced by almost 20% over the ten-year period and that households continued to refrain from grazing even after experiencing payment loss. Our results demonstrate the importance of aligning programme objectives with community conservation and livelihood goals. Our discussion suggests how these conditions may interact with PES to prompt sustained behavioural change.