Agricultural production is often associated with significant negative environmental impacts (e.g., greenhouse gas emissions and soil, air and water pollution). On the other hand, agriculture can also provide important ecosystem services and help maintain species-rich habitats and the regulation of water flows.

Payments for ecosystem services (PES) have attracted increasing interest as a mechanism to translate external, non-market values of the environment into real financial incentives for local actors (e.g. land managers) to provide such services. PES essentially compensate land managers and others for undertaking actions that increase the quantity and quality of desired ecosystem services, which benefit specific or general users, often remotely.

PES can vary according to the number of ecosystem services targeted (single vs. multiple), financing arrangements (government vs. private) and the implemented payment approach: outcome-based payments, based on actual ecosystem or environmental services delivered, or action-based payments, based on the adoption of particular land uses or land management practices.

The brief examines the evidence on ecological results of outcome- and action-based environmental programmes – with the caveat that relatively few outcome-based PES have been developed within the EU Common Agricultural Policy (CAP) framework. It ends with a broader discussion of necessary shifts in agri-environmental programmes that would support broader implementation of outcome-based PES.

Download the background brief (PDF, 446kb)