What Peru teaches us about paying nature its due

Peru’s Cañete River Basin is a great example of the benefits and challenges of payments for ecosystem services (PES). Downstream, farmers depend on the river for irrigation; further upstream rafting operators, shrimp farmers, and a hydropower company all use the river to make money. But those living far uphill, where the water comes from, had few options for earning a living. They were custodians of the whole watershed, but had no incentive to protect it. The high-altitude grasslands and wetlands were being used to graze cattle; trees were being cleared to open up new agricultural land. That affected the flow of water in the river, putting the watershed – and those who depend on it – at risk. It’s exactly the kind of situation where a PES scheme can help: water users downhill could pay a charge to compensate those uphill – to help conserve the “service” of water flowing in the river. But PES schemes are renowned for their complexity: exactly who should pay and how much? How should the money be collected? How should it be spent? I’ve seen how failure to answer questions like these can halt PES schemes in their tracks, despite the best intentions. Given that we urgently need to incentivize more sustainable and equitable land-use, this needs to change. In Latin America, Peru is showing what the future could look like. In 2014, following a pilot project in Cañete and several other areas, the country passed a law concerning Compensation Mechanisms for Ecosystem Services (MRSE). No other country in the region had gone so far in setting out the role of the public and private sectors in investing in ecosystem services, and the minimum requirements for establishing PES schemes that are robust and transparent. Peru also recognized that sustainable water management benefits all sectors – from agriculture to manufacturing and beyond. That made it a shared goal that unites the country around healthy ecosystems and the role they play in many aspects of daily life. It was literally a watershed moment. But to ensure success, we need to go further. We need much more scientific evidence of the environmental and socioeconomic impacts of ecosystem services, to help policymakers, scientists, and academicians raise awareness. That means documenting the role of PES schemes, but also showing how environmental management can help achieve broader objectives, from contributing to food security and increasing resilience to climate change, to bringing opportunities for tourism, recreation and more. We also need an international vision: as developing countries exploit their natural resources, the benefits often leave the country – timber is exported; water “embedded” in agricultural products leaves too. Recipient countries often don’t reinvest to ensure the long-term viability of those supply chains. We need to find ways to close this loop so that different sectors see environmental investment as essential to their own future. It’s enormously encouraging to know that we are already starting to move along this path: Colombia is currently considering a similar law to help unlock public and private investment in ecosystem services. But we need more people to join us, from more governments, countries, and industries. It would mean that instead of being fearful of a future of environmental degradation, we can edge closer to a sustainable future that we feel proud to be a part of.