Incentives for a Sustained Flow of Forest Ecosystem Services

03 Jun, 2021

‘Strengthening alternative tools for managing Forest Ecosystem Services’

By: Satyan Chauhan, Technical Expert, GIZ | Aashima Negi, Junior Communication Expert, GIZ

Payment for Ecosystem Services (PES) is applied as an incentive-based mechanism (IBM) to translate values of ecosystems into incentives for local actors for aiding in its improved flow and management. These can involve cash or in-kind payment for service provider. The process is similar as buying any other product or service. The buyer is identified, the market conditions understood, and the service provider legally and institutionally recognized.

Widely integrating a variety of IBMs will act a means of motivating protection and restoration of other services. In India, the state of Himachal Pradesh leads the development of a policy for PES. This was formulated in 2013, a first for the country, and a step towards recognising and acknowledging the role of communities as custodians of forest ecosystem services and incentivising conservation and sustainable use of forest resources in the state. The Himachal Pradesh Forest Ecosystem Services (HP-FES) Project partnered with the Himachal Pradesh (HP) Forest Department (2016-2020) in a bid to contribute towards implementing the policy and its operationalisation. The project undertook development and refinement of PES models at two project sites in the state: Alha (District Chamba) and Bohal (District Kangra). While a new PES model for improving water availability, was proposed for Alha (Figure 1), aimed to benefit 5000 people directly, for Bohal an improvisation to the existing setup for the management of a water catchment was made. It suggested that the amount given to Bohal Village Forest Development Society (VFDS) be increased almost threefold and provided by the Municipal Corporation. The catchment of this spring shed was also treated to strengthen the sustainability of this initiative.

Figure 1: PES Model for Alha Catchment Forest

The lessons learnt from the development and implementation of PES at these sites feed into the refinement of PES Operational Guidelines that in turn would aid the operationalisation of the HP-PES policy. It sends out a clear message that resource users need to take responsibility for the resources that sustain them.

A shift in the state policy from curative and reactive to preventive, and from exclusive to participatory forms of governance has been observed. Incorporating the learnings of IBMs from HP-FES, the Sustainable Management of Forest Ecosystem Services in the Western Himalayas’ (HIMFES) Project (2021-2023), which is being implemented in partnership with the Ministry of Environment, Forest and Climate Change (MoEF&CC), Himachal Pradesh and Uttarakhand Forest Departments is working towards upscaling and implementing IBM models focusing on improved water availability in the Western Himalayas. The emphasis here is on innovation of new IBMs for FES management in cooperation with participation of actors from the private and public sectors.

The project is an initiative towards developing a system of incentives, in the context of well-defined social benefits associated with biodiversity conservation. The right incentive mechanisms can encourage changes in land-use patterns that achieve biodiversity conservation at a lower cost. The multiple benefits from the PES mechanisms will contribute to reduction in soil erosion, generation of income opportunities from ecotourism and/or other by-products (e.g., medicinal plants), regulation of climate, improving water quality and reduction in risk of forest fire.

The conservation of intrinsic values associated with FES management will require the cooperation of private landowners, with participation enhanced through incentive mechanisms, contributing to providing a solution in improving water availability in the Western Himalayas, which is what the project is aiming at.

Dalhousie water catchment ©GIZ/Joachim Schmerbeck

Bohal Water Source ©GIZ/Aashima Negi

Alha water catchment ©GIZ/Joachim Schmerbeck

For further details: Click here


  • Models for Ecosystem Services, IORA Ecological solutions, 2020
  • Incentives for Biodiversity Conservation: An Ecological and Economic Assessment, 2006)
  • Climate Resilient Practices: Typology and guiding material for climate risk screening, FAO (2021)

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