Economic analysis of the efficiency and equity impacts of Alternative PES scheme on well being of various groups using calculus and simulations.
Results/Conclusions
Alternative mechanisms of payment for ecological services may result in varying outcomes- in terms of environmental quality, cost and equity. Maximizing the environmental benefits given the available budget will require quantification of benefits at each location, and may lead to less purchased acreage compared to a land maximization policy or to avoiding payment for some of the most environmentally valuable assets because of cost consideration. Correlation between the distribution of environmental benefits and economic costs determine the performance differences between alternative targeting strategies. These and other correlations determine to what extent PES improve distribution of income among farmers of between members of various groups. When smaller farmers own lands with better environmental amenities there his higher likelihood that PES will have progressive effect on Income distribution. PESES that involve land diversion out of production have less favorable distributional effects than PES that modify production practices. We will illustrate our findings from various cases of agricultural PES.
