<p>Payments for ecosystem services (PES) from tropical forests have high potential for sustainable forest management (SFM) and conservation, through giving greater value to forests than less sustainable land uses. However, PES will only succeed with fair property rights, good governance and supportive policies from outside the forestry sector. <br /><br />Research by Forest Trends, USA, supported by FRR, a division of theIDLgroup in the UK, has been assessing the potential of PES schemes in tropical forests.</p><p>Ecosystem services from forests include:</p><ul><li>climate change mitigation through carbon storage and sequestration (the removal and long-term storage of carbon dioxide from the atmosphere)</li><li>watershed and hydrological services, such as improved water quality and reduced soil erosion</li><li>the conservation of biodiversity and landscape beauty.</li></ul><p>PES mechanisms involve voluntary, conditional agreements between one or more sellers and buyers of these services. Currently, the focus is on carbon trading, through which organisations in industrial countries that emit greenhouses gases (such as carbon dioxide) can partially offset their emissions. They can do this by paying forest managers in developing countries (including communities) for carbon stored in natural forests (avoided deforestation) or sequestered from the atmosphere by planted trees.</p><p>Regulatory forest carbon trading is complex, both technically and politically, and avoided deforestation has been excluded from the Kyoto Protocol. The impetus for inclusion of avoided deforestation or Reduced Emissions from Deforestation and forest Degradation (REDD) in the Protocol has grown since the Stern Review in 2006 highlighted its importance. The challenge for the United Nations Framework Convention on Climate Change is to develop a workable and politically acceptable REDD mechanism for the post-Kyoto regime from 2013. But there is great controversy over how to achieve REDD and many challenges to overcome. </p><p>Meanwhile, voluntary carbon markets have increased rapidly. These are more flexible in terms of forest carbon trading and have greater potential to benefit poor people. Mexico’s ‘Plan Vivo’ model is one of several initiatives and is now being applied in several African countries.</p><p>PES are developing rapidly, but significant challenges remain:</p><ul><li>Payments may benefit rich people more than poor. For example, potential developers and degraders of forests are more likely to benefit from avoided deforestation than communities that conserve forests.</li><li>REDD programmes will create important pro-poor opportunities, but much will depend on how governments decide to reduce deforestation.</li><li>Powerful groups with vested interests can dominate new opportunities by taking advantage of poor governance and weak property rights for communities.</li><li>The transaction costs of entering PES markets are very high for poor communities.</li></ul><p>The researchers conclude:</p><ul><li>PES should be integrated into holistic approaches to SFM and conservation that include improved governance, secure property rights for ecosystem service suppliers and effective regulation and monitoring.</li><li>Early PES experiences show that improved tenure security, social capital and local empowerment tend to be the main benefits for the poor, even if these are indirect benefits.</li><li>REDD has most potential, due to the international commitment to tackling climate change, but faces major technical, political and equity challenges.</li><li>Appropriate support from governments, donors and non-governmental organisations will continue to be vital to ensure effective and equitable outcomes from PES mechanisms.</li></ul><p> </p>