This paper sets out the economic framework and key design principles for payments for ecosystem services.
Approaches such as payments for ecosystem services offer the potential for improving environmental performance while also providing benefits for business and stimulating the development of creative solutions, so minimising any unnecessary burdens on the wider economy.
This is part of a wider programme of work within Defra looking at available policy levers and the mix of instruments to deliver environmental outcomes more cost effectively. The overall aim of this paper is to explore in more depth how PES can be used to achieve environmental objectives by reviewing existing theory and analysis in this area and considering its application to the domestic context in England. This will help develop our thinking, identify key opportunities and challenges, and consider the role of government and other key stakeholders.