 "Carefully targeted payments to farmers could serve as an
approach to protect the environment and to address growing
concerns about climate change, biodiversity loss and water
supply," said Gerald Nelson, who co-authored the
report that is part of the FAO's annual publication, The
State of Food and Agriculture 2007.
"However, payments for environmental services are not the
best solution in all situations. And, if and when used,
significant implementation challenges remain."
Environmental services by farmers could include such things
as water purification and climate change mitigation. Farmers are
not generally paid for these services and no market exists for
them.
"These services generate a benefit to somebody other than the
person who produces them, but no compensation takes place for
their provision, so they tend to be under-provided," he
explained.
Farmers can take three types of action to increase the amount
of environmental services they provide. First, they can change
their current production practices. Second, they can change the
way they use the land, changing to uses that provide more
environmental services.
"Third, farmers can choose not to make a change
motivated by market forces," he said. "For example, they can
choose not to convert forested uplands to annual crop
production.
"There is no one best way to increase the amount of
environmental services farmers supply -- it depends very much on
the specific circumstances facing each farmer."
Farmers can provide better environmental outcomes, but they
need incentives to do so, according to Nelson's report.
"Payments for environmental services represent one way of
increasing incentives to adopt improved agricultural practices
-- and even to offset pollution generated in other sectors," he
noted.
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One potential downside to such a policy would be adverse effects on
poverty and food security in the developing world if the payments
result in a reduction in demand for agricultural employment or lead
to increases in food prices.
Nelson said payments can take a variety of forms, including
voluntary transactions involving farmers, communities, taxpayers,
consumers, corporations and governments.
"They could also be direct payments by governments to producers
or indirect transfers, such as a consumer paying extra for a cup of
shade-grown coffee beans," he said. "Hundreds of payment programs
for environmental services are currently being implemented around
the world, mainly as part of forest conservation initiatives.
"Relatively few programs for environmental services, however,
have targeted farmers and agricultural lands in developing
countries."
Properly designed payment programs for environmental services
might also aid many of the more than 1 billion poor people in
developing countries who live in fragile ecosystems, he added.
[Text from file received from
the University of
Illinois Extension]
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