Environmentalists have come to recognize that to get rural people to manage their natural resources well, they often have to compensate them. So they have created schemes to reward resource managers for conserving biodiversity, providing carbon sinks, protecting watersheds, and maintaining scenic beauty.

’Compensation for Environmental Services and Rural Communities’ by Herman Rosa, Susan Kandel, and Leopoldo Dimas from PRISMA, a Salvadoran NGO, analyzes how such schemes in Brazil, Costa Rica, El Salvador, Mexico, and the United States have affected local communities. It also suggests ways communities can benefit more.

The state government of Acre in Brazil subsidizes the price of rubber to encourage small farmers that harvest rubber from natural forests to conserve it. That costs little per hectare and benefits over 6,000 families. In contrast, between 1997 and 2002, Costa Rica paid landowners over $80 million dollars to conserve, manage, and plant forests. However, only a very small portion of that went to low income farmers and indigenous people. Acre designed its scheme with low-income people in mind. Costa Rica did not.

New York City gets 90% of its water supply from the Delaware and Catskill watersheds. Rather than pay billions of dollars to construct a new filtration system, it funds a Watershed Agricultural Program to help farmers protect the watershed. The initial program only covered the more commercial farmers, but a new program specifically targets smaller farmers.

Communities are more likely to benefit from these schemes when they have secure tenure rights, but that alone is not enough. Mexico’s communities own most of the country’s forests, however, only the best organized communities with strong technical support have successfully gotten involved with carbon sinks, genetic resources, or ecotourism.

To make sure low income households benefit from environmental compensation schemes it is important that the rules about who is eligible and how the schemes operate take into account those households specific needs and characteristics. Poor households are more likely to benefit if the schemes support environmentally – friendly agricultural, forestry or tourism activities, rather than just pure conservation.

Direct payments are not always the best form of compensation. The level and types of compensation should be negotiated with local people and tailored to their specific needs. It should also be designed to build organizational capacity so the schemes can be maintained and improved over time.