Review Payments for ecosystem services: justified or not? A political view Gert Van Hecken *, Johan Bastiaensen Institute of Development Policy and Management, University of Antwerp, Prinsstraat 13, B-2000 Antwerp, Belgium 1. Introduction In the last decade, the concept of Payments for Ecosystem Services 1 (PES) has attracted growing attention among a wide audience of scholars as well as conservation and development practitioners. The main premise of this innovative conserva- tion approach is appealing: land users, who tend to be poorly, if at all, motivated to protect nature on their land, can be encouraged to do so through payments from ecosystem service (ES) buyers that at least cover the opportunity costs of more environmentally-sound land use (Pagiola et al., 2002; Wunder, 2005; Engel et al., 2008). The main theoretical underpinnings of this approach emanate from neoclassical environmental economics (Pearce and Turner, 1990; Perman et al., 1999), where environmental degradation is ascribed to the chronic failure of markets to internalise environmental externalities and to free-riding induced by the public-good nature of ecosystem services. Hence, the PES philosophy argues for the internalisation of environmental externalities through the creation of ES markets or quasi-markets (see below). Moreover, it is held that the market mechanism and direct incentives will lead to the most efficient allocation of scarce conservation funds (Ferraro and Simpson, 2002; Pagiola et al., 2002; Pearce, 2004). While the PES approach is attractive at first sight, further reflection on its theoretical foundations and practical con- sequences is warranted. This review article focuses on two issues: the hidden political ambiguities of the externality environmental science & policy 13 (2010) 785–792 article info Keywords: Payments for Ecosystem Services (PES) Agri-environmental policy Conservation policy Externalities Entitlements Regressive financing abstract In a context of continued environmental degradation of agricultural landscapes, the concept of Payments for Ecosystem Services (PES) has been attracting growing attention in both academic and policy circles. The main premise of this conservation approach is appealing: land users, who tend to be poorly, if at all, motivated to protect nature on their land, may be encouraged to do so through direct payments from ecosystem service buyers. The theoreti- cal underpinnings of PES emanate from an environmental externality framework, in which market failures are considered the root cause of environmental degradation. While the PES concept is attractive at first sight, this article discusses some weaknesses in its conceptual foundation. It focuses on two important aspects of the market-based PES concept: the hidden political ambiguities of the externality framework and the risk that PES, especially if user-funded, may perpetuate and deepen the regressive financing of global commons by poor local communities. # 2010 Elsevier Ltd. All rights reserved. * Corresponding author. Tel.: +32 0 3 265 57 70; fax: +32 0 3 265 57 71. E-mail address: Gert.vanhecken@ua.ac.be (G. Van Hecken). 1 Often also referred to as Payments for Environmental Services. In this article we use the terms environmental and ecosystem services interchangeably. For an overview of related terminology, see Wunder (2005) and Ravnborg et al. (2007). available at www.sciencedirect.com journal homepage: www.elsevier.com/locate/envsci 1462-9011/$ – see front matter # 2010 Elsevier Ltd. All rights reserved. doi:10.1016/j.envsci.2010.09.006