Investing in Nature: Exploring the Benefits and Potential of Payments for Ecosystem Services (PES)

Payments for Ecosystem Services (PES) are one of the most commonly used mechanisms to generate market-based revenue for biodiversity conservation. PES aims to benefit landowners and land users who preserve ecosystem services (ES). The recognition of and valuation of the ES also works to disincentivise land use which degrades the land, such as deforestation. Land users are incentivised through monetary payments to conserve and manage their natural environment properly to ensure ecosystem services flow (Pagiola and Platais, 2002). 

Through PES, beneficiaries of ecosystem services, i.e., consumers, pay for the conservation and sustainable use of the ecosystems they benefit from. The concept arises from the idea that ecosystems provide society with valuable services — such as water, air, and land — and that valuable resources are reusable or regenerated. PES can allow an ecosystem to be reused or regenerated via natural processes and social efforts such as water purification, carbon sequestration, soil conservation, and biodiversity preservation. 

The PES scheme involves service providers, service users, and intermediaries. Service providers are individuals or organisations that own, manage or conserve natural resources. Service users are beneficiaries who value and utilise the ecosystem services provided by the service providers. Finally, intermediaries are organisations or individuals facilitating the transaction between the service providers and users. 

The payment mechanism in PES is designed to encourage landowners and other stakeholders to internalise and realise true costs and to adopt practices that conserve natural resources and reduce negative externalities. It affirms (through investment or payment) that there is value in caring for the environment and its health. 

PES has several benefits, including:

Conservation and management of natural resources

PES incentivises landowners and other stakeholders to conserve and manage natural resources. By placing an economic value on ecosystem services, PES encourages stakeholders to adopt sustainable practices that benefit the environment and society.

Economic benefits

PES benefits service providers, especially those in developing countries. The payment for ecosystem services provides an additional source of income for the service providers, which can help alleviate poverty and improve livelihoods.

Climate change mitigation

PES can help to mitigate climate change by incentivising the conservation and restoration of forests and other carbon sinks. Greenhouse gas emissions, contributing to climate change, can be mitigated by conserving forests and other natural resources.

Improved water quality

PES can help enhance water quality by encouraging practices that reduce water pollution. For example, payment for preserving wetlands can reduce nutrient runoff and improve water quality downstream.

Despite the benefits, PES faces several challenges, including:

Monitoring and evaluation

PES requires a robust monitoring and evaluation system to ensure service providers deliver the agreed-upon ecosystem services. The lack of a proper monitoring and evaluation system can result in a varied understanding of what PES should be, the misuse of funds, and the failure to achieve the desired conservation outcomes.


PES can exacerbate inequalities if the scheme’s benefits are not distributed equitably. For example, large landowners may receive a larger share of the payment, while small landowners may receive very little or no payment. If PES is not a tool towards equity, then it is not a tool for sustainability. 

Transaction costs

PES involves transaction costs such as setting up the scheme, negotiating contracts, and monitoring and evaluating the outcomes. The transaction costs can be a barrier to implementing PES, especially in developing countries where the capacity to manage PES schemes may be limited.


PES requires that the ecosystem services provided are supplementary to what would have occurred in the absence of the scheme. Ecosystems constantly change and have natural positive and negative feedback loops that act on long-term time scales. Verifying the additionality requirement is challenging, especially if the baseline scenario is unclear or unknown. 

Last Forest’s work with PES

Honey marketed by Last Forest is from the Giant Rock Bee (Apis Dorsata), which plays an unquantifiably important role in the ecosystems of many forests of South Asia. Bees pollinate many species of tropical forests, enabling cycles of nature. The forests of the Nilgiris, where we work, are known for their rich biodiversity and high concentration of endemic species–plants and animals, which can only be found here. Many springs and streams emerge from these mountain forest areas and provide water for the rest of the planet–enabling the survival of all life forms. 

When consumers buy honey and beeswax products that have taken care of these forests in their production, they support the symbiotic relationship between themselves and nature. The value of this is internalised into the value of a product.

At Last Forest, the following activities receive vital support from PES:

  • Increasing bee habitats and colonies by planting specific tree species
  • Promoting Community-based beekeeping 
  • Preserving traditional values and sustainable harvesting methods by training and promoting knowledge exchange among the younger generations of Adivasis. 
  • Undertake Ecological monitoring in these forests with barefoot ecologists. 

The premium is a notional figure used to gauge willingness to pay rather than estimate the true value of the ecosystem services bees provide. Although the value of all encompassed in the caretaking of nature cannot be monetarily quantified, what is quantifiable is an investment to support the caretaking of the forests. 

PES Across the Globe

PES has grown exponentially over the past two decades, with over 550 legally registered active programmes in every part of the world.

However, there is currently a shortage of global feedback data due to the lack of an internationally accepted reporting or implementation standard for PES.

Last Forest — along with its sister organisations Keystone Foundation, Nilgiri Natural History Society, and Aadhimalai Pazhangudiyinar Producer Company — is an active player in the global community of PES. During its earlier years of operation, Last Forest took on the initiative of implementing PES in the markets. As a result, last Forest introduced a special edition of honey with a special label carrying the message of PES. This PES edition was shelved exclusively in the Green Shops in the Nilgiris and saw a good reception from customers. 

Through Last Forest’s new branding, the message of PES has become more robust. The introduction of the PES logo is a step that distinctly shows that products are part of a system that pays for conserving forest resources by using sustainable methods. Prioritising these networks in branding — the first impression customers will see — spreads conscious and subconscious awareness of programs like PES. Consumers begin to realise that there is a world of options that exists. This message has reached Last Forest’s stakeholders, who are becoming more aware of the message that the PES logo and system aim to develop. 

What will PES do for you? 

Pay for Ecosystem Services (PES) is a promising solution for environmental conservation that can provide economic incentives for sustainable management of natural resources. PES has the potential to address environmental challenges while also promoting social and economic development. However, PES also faces challenges and limitations that need to be addressed–by each organisation, the global PES community, and consumers–to ensure its effectiveness and sustainability.

As a consumer, beneficiary or business, and user of resources like water and air, PES offers a regenerative path forward for you. PES is principled yet flexible — how could you fit PES into your spaces? 

About the Organisation

Based in Kotagiri in the heart of the Nilgiri mountains, Last Forest has been a market
facilitator for wild forest produce that is harvested by Indigenous communities since 1995.
These communities are value-adding forest and agriculture products, which are natural, wild
and local. We believe that the spirit of the forest is about growth that is meaningful, balanced
and contributing.

By pioneering sustainable living choices by connecting communities and markets, and
providing aesthetic and socially responsible solutions, Last Forest is a sustainable
that provides eco-friendly, thoughtful and meaningful options that directly
involves communities. Last Forest’s vision is to make each of its stakeholders a custodian of
the Earth!


Madhu Ravishankar is Head of Communications at Last Forest. Originally
from the town of Coonoor, he belongs to the hills–and so finds home in Last Forest’s
commitment to valuing the Nilgiris people, traditions, landscapes, and all that they
encompass. Prior to managing Last Forest’s Communications, his work in Last Forest’s
procurement and supplies since 2014 has given him key insight into the inner workings of
producer groups and fair trade. Madhu’s favourite Last Forest honey is the raw Nilgiri black
pepper honey.

Isabel Tadmiri is an Oberlin Shansi fellow with Last Forest and the Keystone Foundation.
Isabel is interested in problem-solving that involves community, science, and food—and is
excited by Last Forest’s investment in Indigenous sustainable livelihoods as a long-time
climate resilience tool. Prior to joining Last Forest, her work was in environmental justice
research and organizing. She is originally from New York, NY, and a graduate of Oberlin
College with a Bachelors in Neuroscience and minors in Politics and Environmental Studies.
Isabel’s favourite Last Forest honey is the wild Jamun berry honey.

Published by ecoHQ

ecoHQ is a platform advocating for sustainability and conscious consumerism in India. At ecoHQ, we help Indians make educated choices about sustainable practices through awareness, advocacy and accountability. We spread awareness about sustainable development, advocate conscious growth and help brands be accountable for responsible solutions. Our ultimate goal is educating you to make the right choices for our people and planet.

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