Payments for Ecosystem Services: Getting Started. A Primer - UNEP

Section 3: A Step-by-Step Approach to Developing PES Deals
ecosystem service certifi ed to be designed continues to be provided. The contract
may also specify a periodic re-verifi cation of the service provision as the project
progresses, thus giving the buyer certainty that the service is being obtained.
Sellers must never forget that, no matter how much work goes into the project,
payment only comes when verifi able results are delivered (note however that
sometimes the contract is for land management, which includes monitoring, and
the buyer only verifi es that the land management practice agreed to is being
accomplished). This is why third-party, independent verifi ers and experienced
environmental auditors are so critical to the success of PES projects. (For ideas on
service provides, please see earlier box on “Business and Technical Support Services
for Project Implementation” or inquire locally for national entities that carry out
verifi cation.)
Prior to inspection, the buyer, seller, and verifi er should discuss and agree upon
monitoring standards and implementation methodology. Is the focus, for example, on
whether an agreed-upon land management practice is being undertaken, or is it on
monitoring the actual delivery of service?
When negotiating the design of monitoring, inspection, and methodology, you should
take the following into account:
• the process and frequency of the internal auditing program
• the scale and impact of the organization’s activities on the environment
• how much control the organization has over this impact
• the cost of the verifi cation program
• past verifi cation results
Analysis of the verifi cation report will identify the shortcomings of the monitoring and
evaluation scheme and yield insight into the effectiveness of the PES project.
Verifi cation results should be made available to buyers, intermediary institutions, and
the public to increase transparency and legitimacy, as well as to facilitate adaptive
management processes.
What issues should be considered in
monitoring and evaluating the deal?
Implementation of an accurate monitoring and evaluation (M&E) plan will indicate
whether or not the PES deal is meeting its objectives. It will also provide information
as to how sellers can improve their management.
It is essential to be clear on who undertakes M&E activities throughout the life of a
PES agreement. The role can be undertaken by community members, an external /
third party entity, the buyer (or a designated proxy of the buyer), a government agency,
or another entity. The key is to be clear on where the responsibility for M&E lies.
The importance of this element means that M&E programs should be well-planned
prior to implementation. The M&E plan should be developed with the input of all key
stakeholders to ensure all parties are satisfi ed with the parameters that are being
monitored. In addition, the plan should be evaluated and modifi ed over time as the
project progresses, ideally with the input of all stakeholders throughout.
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