Agriculture and Human Values

, Volume 31, Issue 3, pp 397–408 | Cite as

Payments for ecosystem services in relation to US and UK agri-environmental policy: disruptive neoliberal innovation or hybrid policy adaptation?



This paper draws on ideas about policy innovation and adaptation to assess the extent to which ‘payments for ecosystem services’ (PES) can be seen as a challenge to traditionally more bureaucratic, state-centered ways of paying for the provisioning of environmental goods from agricultural landscapes through agri environmental policy (AEP). Focussing on recent experience in the United States and the UK, the paper documents the extent to which PES is now an established term of reference in AEP research and debate in both countries and postulates that this may usher in a new discourse of environmental provisioning in agriculture. The PES landscape is, however, currently highly fragmented and largely experimental, with ‘PES-like’ approaches being piloted in the field through partnerships between state agencies and localized private and charitable interests. State-supported AEP programs remain substantially intact, and rather than any displacement of state action, there appears to be a more gradual insertion of PES approaches and metrics into standard AEP operating procedures. This institutional stickiness is partly due to the continuing difficulty of agreeing the metrics necessary for measuring outcomes but may also be due to the politically well defended nature of traditional AEP entitlements and associated policy networks. We conclude by suggesting a need for further research to better understand these specifically political constraints and sources of resistance to PES and the ambiguous consequences for institutions, policy networks, rural communities and environment.


Payments for ecosystem services Agri-environmental policy Neoliberalization 



Agri-Environmental Policy


Common Agricultural Policy


Conservation Reserve Program


Environmental Benefits Index


Department of Environment, Food and Rural Affairs


Non-Governmental Organization


Office of Environmental Markets


Payments for ecosystem services


United States Department of Agriculture


World Trade Organization


There is growing agreement that new forms of state intervention are required to roll-out more neoliberal modes of environmental governance. Scholarly interest is growing in the hybrid institutional forms that are emerging as state action interacts with market processes (Allaire and Wolf 2004; Castree 2008; Bakker 2010). Taking a pragmatic line, Hodge and Adams (2012), for instance, see state-market convergence as largely desirable, subject to the condition that collaborations between state agencies and private sector organisations are as transparent and accountable as possible. Others, arguably more critical of neoliberal impulses, have seen the re-entry of the state as necessary if socially disruptive neoliberal reforms are not to conflict with higher level democratic ideals (see, for instance, Bakker 2010; Mansfield 2008; Bonnano 1998). These commentators recognize various sources of resistance to neoliberalisation and the difficulties these impediments create for those attempting to roll it out (Dibden et al. 2009). For instance, there is now a growing literature on challenges from rural actors to the imposition of markets from outside and above. Higgins et al. (2012) focus on the agency of local farmers in pushing back against the introduction of market governance into Australian agri-environmental policy and making effective use of the available room to manoeuvre.

Less widely considered are the ways in which the historically embedded discourses, rationalities and administrative relations of extant rural policy communities could constrain the roll out of what are presented as market-inspired institutional innovations. While neoliberal imperatives have a certain power, they may still be resisted because of the challenge they pose to entrenched institutions and existing cognitive (i.e., justifications, knowledge) and structural (i.e., law, professional practices, political economic relations) resources of governance. As beneficiaries and incumbents, policy communities of various sorts are resourceful and capable of defending their interests. Going beyond Primmer et al.’s (2013) emphasis on normative and cultural sources of inertia in policy communities, we suggest here that policy actors and beneficiaries are not passive in the face of neoliberal discourse and pressures. Specifically, processes of resistance and co-optation by members of policy communities deserve to be more closely studied in order to understand the underlying nature of neoliberal transitions.

This paper draws on ideas about policy innovation and adaptation to assess the extent to which ‘payments for ecosystem services’ (PES), in origin a neoliberal idea that has been widely promoted in conservation circles in recent years, can be seen as a challenge to traditionally more bureaucratic, state-centered ways of paying for the provisioning of environmental goods from agricultural landscapes. Policy scholars have for some time recognized a complex interaction between discourses, knowledge and outcomes in the policy process (see, for instance, Hall 1993). Our contention in this paper is that the insertion of an apparently neoliberal institutional innovation like PES into an established policy field like agri-environmental policy (AEP) needs to be better understood in these terms. This includes analysing how ‘PES-talk’ is entering the policy discourse and framing new options, but also extends to recognizing the extent to which a PES approach could displace or disrupt standard practices and redistribute benefits. These could in turn generate resistance to its wider implementation. Within this analysis of policy dynamics, attention to scale is important. There is a need to pay attention to the emergence of new framing discourses and policy transitions at the national level, as well as to the translation, experimentation and piloting of new policy ideas taking place in site-specific biophysical and organizational settings. We argue here that policy entrepreneurship organized around the potentially disruptive idea of PES will likely entail an interweaving of ideas and actor networks at national and local levels. Accordingly, our analysis addresses cross-scale interactions, theoretically and empirically.

Focussing on recent developments in the US and the UK, we draw on insights from the literature on policy paradigm change in order to theorize the possible significance of what some PES advocates see as a new way to incentivise environmental provisioning from agriculture. AEP in the US and UK offer suitable cases for comparative analysis because their construction and informing politics have responded in similar ways to an earlier environmental critique of agriculture. The rationale and principal mode of contemporary state engagement with environmental conservation in agriculture crystallized in both countries in the mid-1980s. As a result, the policies and administrative practices put in place at that time, along with their supporting policy coalitions, have strong parallels and have endured more or less intact up to the present. Moreover, exposure to macro-structural forces, including public sector retrenchment and liberalization impulses, globalization, and the development of environmental sciences and sustainability movements, has been rather consistent from the perspective of the evolution of public policy. We recognize obvious differences, such as the extent to which UK agriculture policy is powerfully shaped by its status as a European Union (EU) Member State. However, strong parallels in these matched national cases provide a useful basis for triangulation on the general question of the nature and extent of any institutional collision between ostensibly state- and market-centered modes of governance.

We begin by setting the recent emergence of the PES model of conservation payments against the much longer (over 30 year) evolution of AEP as an established policy domain. In offering an analysis of attempts to install the PES model within an established domain, we recognize a growing, relevant literature, much of it devoted to reconciling the theory and practice of designing effective payments for the provision of environmental goods. Despite recent contributions pointing to the need to situate PES measures within the institutional settings in which they are being implemented (see, for instance, Muradian et al. 2010; Van Henken and Bastianensen 2010), there is still a tendency to see PES as a disembodied set of transactional arrangements. We interpret this tendency to be a hangover of the origins of PES. This emerged out of interactions among environmental economists and applied ecologists, neither of whom, for all their strengths, can be characterized as being particularly sensitive to institutional history. By exploring efforts to integrate PES principles into the already established policy field of AEP, this paper contributes to these broader debates about implementation in practice. Based on a comparative review of the still largely separate literatures surrounding PES and AEP, the paper draws the attention of PES analysts and advocates to what we see as the hitherto disregarded complex political economy of AEP and a need to understand all green payment schemes as situated, embedded practices.

We begin by reviewing long simmering debates around how agri-environmental schemes can be better designed to elicit conservation benefits from agriculture. This enables us to identify a growing band of PES advocates who argue that the wider adoption of PES principles within AEP will improve performance and yield greater conservation benefits. We find evidence from the policy literature that such ‘PES-talk’ is now widespread within the AEP policy communities in the US and UK and we reflect on prospects for a ‘paradigm revolution’ in environmental provisioning in agriculture (Oliver and Pemberton 2004). To achieve this, we examine the current status of AEP in the US and UK, analyze examples of what are being presented as PES-like initiatives, and assess how far these can be seen as alternatives to, rather than merely extensions of, AEP. The paper concludes by identifying a pattern of convergence, or at least loss of some distinguishing elements, between state bureaucratic- and market-oriented modes of governance of rural environments. Over time, the state bureaucratic approach to AEP has responded to criticisms focused on economic efficiency through incorporation of elements of market calculus. Reciprocally, advocates of a PES approach to agri-environmental provisioning have begun to recognize the need to work with the grain of inherited policy models in this field. Nevertheless, we argue that important differences remain between still evolving traditions and practices of AEP and PES. Differences in rationalities, knowledge requirements and administrative logics suggest a need for further work to understand these interactions and the scope for PES to have longer term disruptive potential.

In order to make this analysis we have examined a wide range of scholarly and other published material. Specifically, we have undertaken a search of references to PES within the scholarly AEP literature and in policy documents and position papers and statement published by government agencies and AEP lobby groups over the last 5 years. The paper further draws on a review of a broad range of contemporary place-based pilot programs and experimental initiatives publicized and promoted by public agencies and non-governmental organizations in order to assess the current state of PES implementation. These activities are on the margin of AEP, and they are unfolding at this time. For this reason, our empirical base consists of press releases and the grey literature, as well as a small number of policy documents from state agencies.

The invention of PES versus the long evolution of AEP

Policy scientists have long been interested in the role of ideas, social framings and mental paradigms within the policy process. There has been increasing recognition of the way certain (‘historical constructions of understanding’) can frame and stabilise a policy field, often for long periods, but also mounting scholarly interest in the scope for new ideas to emerge as recruiting devices for policy change and even wholesale reform (Hall 1993; Heclo 1994; Oliver and Pemberton 2004). Following Baumgartner (2006), it is increasingly recognized that policy development can follow a path of ‘punctuated equilibrium’ rather than steady, accumulative change. Policy evolution can be characterized by long periods of stability interrupted by the emergence of new policy challenges and the sudden redirection of policy. These transitions can give rise to new and potentially long-lasting equilibriums. According to theories of policy learning, internal pressures resulting from continuing policy failure may often be as important as external events in triggering the search for new ideas. Policy entrepreneurs play a key role at this point, either translating ideas across from other domains or creating forums for communication and debate about new approaches and policy designs (Kingdom 2003). Success depends on the uptake and subsequent advocacy of their agendas by powerful interest groups within the policy network. But effective policy reform may also require institutional opportunities for change being available within the policy cycle. Rarely will a new idea result in a change to the framing assumptions which define a policy field and supply the dominant policy community with its legitimacy and authority. Indeed, a measure of the success of the ruling coalition is its ability to absorb new policy challenges without abandoning these ‘deep core beliefs’ (Weible and Sabatier 2007). While recognizing that resilience can be supported by a capacity to absorb critiques and novelty, the process of internalizing new ideas may still result in shifts in the locus of authority over policy and a broadening of the policy network (Oliver and Pemberton 2004).

The emergence of PES as a potential successor policy model to the state-bureaucratic domain of AEP appears to have capacity to be a radically disruptive policy innovation.1 PES first came to global prominence over a decade ago, when large donor organisations like the World Bank, the United Nations Development Programme and conservation NGOs such as IUCN, the World Wildlife Fund and Birdlife International began to set up voluntary projects in developing countries designed to offer payments to local farmers, foresters and catchment managers to protect forests, prevent soil erosion and maintain biodiversity (McElwee 2011). The broad ecosystem services approach from which PES derives has roots in ecological science and a set of ideas that have been used metaphorically by conservation scientists to stress societal dependence on ecosystem functioning (Gomez-Baggethun et al. 2009; Norgaard 2010). By the late 1990s, however, the concept had begun to find its way into policy debates, in the process taking on a much more neoliberal complexion.

Neo-classical environmental economists have long argued for attaching money values to natural capital stocks and service flows, making it possible to imagine the marketing of a new class of commodities (e.g., Anderson and Leal 1991). As Spash (2008) describes it, economists have been joined by applied ecologists who have become convinced that a pragmatic approach to the protection of nature requires the invocation of monetary values. Regulators and capitalists began to find ways to ‘wrangle’ nature into a form that can be sold, governed and bear value (Robertson 2012, p. 389). This more abstracted idea of ‘paying for ecosystem services’ is strongly informed by (a partial misreading of) Ronald Coase, who argued that environmental problems could be solved through bargaining or quasi-bargaining if rights are clearly defined and transaction costs are sufficiently low (Coase 1960). The Coase Theorem predicts that sufferers from pollution or potential beneficiaries of a stream of services may extract a net benefit even after making a monetary transfer to those who, by virtue of possessing the property rights, are in a position to reduce pollution or provide those services. Based on this logic, PES has been defined in its purest form by Wunder (2005) as a voluntary, conditional transaction between at least one buyer and one seller for a well-defined environmental service. As various commentators have argued (see, for instance, Boisvert et al. 2013), this essentially transactional understanding of PES belies the more complicated reality of implementing PES in practice. Muradian et al. (2010), for example, recognize a broad spectrum of approaches, ranging from direct transfers from users to providers to payment systems that are heavily overseen by, if not fully funded through, governments. The idea of PES as entailing a pure market transaction between buyers and sellers nevertheless persists, with Van Hecken and Bastianensen (2010), for instance, emphasising its neoclassical provenance within a positive externalities framework. This is implicitly acknowledged even by Muradian et al. (2010), who identify a ‘sheerly market transactional’ benchmark that has: (1) an emphasis on use of an economic incentives to change land use decisions; (2) a preference for effecting direct monetary transfer from users of ecosystem services to providers, and (3) an ability to measure and define the services themselves as tradable commodities. As Brockington (2011 p. 367) comments, this latter condition appears to confirm the concept’s neoliberal ambitions, “PES (being) a form of commodification, of creating new things out of nature that can be sold.”

By contrast, the institutional evolution of AEP has been much less driven by academic debate but rather by the uneven political economy of industrialised country agriculture. Specifically, the idea of the state funding green payments to farmers emerged out of a series of political bargains brokered between farming and conservation interests over 30 years ago. Policy scientists have long been fascinated by industrialised country agriculture and the apparent ability of agricultural policy networks to resist reform in these neoliberal times (Winders 2009). As Potter and Lobley (2004) observe, regimes such as the European Union’s Common Agricultural Policy (CAP) and federal US farm policies continue to be legitimised by taken for granted notions about the nature and constitution of the agricultural industry and the privileged status of farmers in supplying public goods such as food security and environmental quality. The resulting state assistance paradigm asserts a large role for governments in subsidising agricultural production (Coleman et al. 1996; Sheingate 2000). Within this framing, AEP can be traced to the early 1980s and a time when the state project for agricultural modernization in industrialized countries was coming under attack from critics of the heavy domestic budgetary costs of farm support. Pressures toward budgetary retrenchment and market liberalization coincided with the emergence of an environmental and social critique of modern agriculture (Sheingate 2000). While explicitly critical of the state’s role in subsidising agricultural production and trade, sustainability advocates bolstered support for continued state assistance by arguing for a redirection of, rather than a net reduction in, budgetary allocations to agriculture, albeit in favour of rural development and agri-environmental policy objectives. This was attractive to farm interests anxious to maintain overall levels of state support and made possible a new and, in retrospect, durable consensus between farming, conservation and state bureaucracies.

The resulting agri-environmental policy and rural development programs profoundly reflect the historical-institutional context in which they were made (Sheingate 2000; Potter 1998). Payments exclusively target farmers as providers of environmental services, and remuneration is usually presented as compensation for the additional costs and lost income incurred by induced changes in land use practices (Plieninger et al. 2012). Indeed, as Wynne-Jones (2013) points out, in the case of EU AEP schemes, the offering of payments calculated on the basis of the ecosystem services provided is expressly prohibited under EU Regulation 1783/03. Still a major source of funding for environmental management on private lands, AEP payments thus stand as classic examples of the second-best, politically compromised arrangements that policymakers and those who lobby them invent in order to address a range of policy problems. In the agricultural policy case these center on tackling rural environmental degradation, supporting farmers’ incomes and controlling the overproduction of agricultural commodities. Indeed, from the beginning, agri-environmental payments to farmers have served purposes other than conservation and their wide scope and the trade-offs they embody are important explanations of their durability.2 For example, the US Conservation Reserve Program (CRP), the most expensive federal AEP, serves both environmental conservation and supply control goals while contributing $2 billion annually to farm incomes by making lease payments to farmers on over 10 % of all US cropland (Reichelderfer and Boggess 1988; Batie 2009).

As a policy field, AEP is state-centered and characterized by formal bureaucratic procedures, but it has been maintained politically by a diverse set of non-state actors who have contributed to the renegotiation of policies and administrative practices in response to changing external and internal policy conditions. Closely interconnected agri-environmental policy networks have developed in these countries. Actors such as the National Farmers’ Union in the UK and the American Farm Bureau Federation in the US have worked with commodity groups, environmental NGOs and rural advocacy organizations to shape the creation and evolution of AEP. Subsequent adjustments and policy redesigns have been the result of negotiations by this relatively stable and closed set of elites. Although the ideational and political foundations structuring AEP policy over the past 25 years have exhibited tremendous stability, there have been changes in specific policy aims and administrative arrangements.

Over time, new ecological risks and new frames for articulating the public interest in agriculture and rural landscapes have entered the picture. The tendency has been to move up in scale from field-level conservation objectives (i.e., soil erosion control) to incorporate whole farm (e.g., water quality) and landscape-level management (e.g., biodiversity). These reforms have added new layers of justifications and administrative controls onto the existing state-centered framework without destabilising the basic institutional arrangements and political constellations. As a result, AEP has become ever more deeply embedded in a set of core bureaucratic principles. These are: (1) voluntarism (bringing farmers and their land into schemes through the offer of payments on a ‘steward gets paid’ basis rather than coercing them through regulation), (2) standardisation (the use of payment schedules for adoption of codified ‘Best Management Practices’ rather than performance-based subsidies that reward outputs), and (3) solidarity (emphasising the need for agreement rather than competition between farmers, environmentalists and the state bureaucracies charged with regulating the agriculture-environment interface).

Defending AEP as a state-bureaucratic domain

While proving remarkably resilient, this voluntaristic, input-based model has not escaped criticism. Until now the policy community has consistently found effective ways to deflect criticism and minimise challenges to the core assumptions on which the policy is based—notably the privileged position of farmers as key providers and property right holders, and the need to subsidise their participation in conservation programs through state payments.3 In the US, for instance, there has been a long-standing debate about the poor targeting of conservation payments, with program payments being spread widely to maximise the income transfer benefits rather than focussed more narrowly to improve their environmental effectiveness (Claassen et al. 2007). As a result, the early years of the CRP saw the enrolment of eligible land on a first come, first served basis rather than with reference to ecological concerns (Reichelderfer and Boggess 1988). Science in the service of bureaucracy has been the standard adaptive response to critiques waged on the basis of (economic) inefficiency and (ecological) ineffectiveness. For example, institutional innovations such as the CRP Environmental Benefits Index (EBI) have been developed to better target program resources and improve the productivity of state investments.4 Attempts have also been made to introduce more market discipline into CRP through a tendering process that seeks to bring rents paid to farmers in line with local land rental rates and to enhance the productivity of public investments by introducing more competition into the bidding process (Batie 2009). These performances of rationalization have been informed by environmental science and economics (Busch 2007). Yet, historically embedded relations and commitments within the existing policy community, rather than these scientific disciplines, have shaped the evolution of such hybrid administrative routines.

The limited environmental effectiveness of many European AEP schemes has also attracted criticism. Burton and Schwarz’s (2013) review of a series of field-based assessments, for instance, suggests that outcomes both in terms of targeted species protection and general biodiversity have been poor. Critics often attribute this to the ‘action-oriented’ nature of AEP schemes, designed as they are to subsidise management inputs rather than directly rewarding environmental outputs (see also Swartz et al. 2008). The peculiarly European emphasis on maintaining agro-biodiversity and traditional farmed landscapes has meant that policymakers have been able to defend this stance and the emphasis on standard payments that flow from it on the grounds that such payments have prevented undesirable farming changes that would otherwise take place. This has been a difficult argument to join given the lack of agreement on what the counterfactual would be in the absence of the policy (see, for instance, Hodge 2000). As in the US, the UK knowledge base for AEP cannot be said to be strongly anchored in scientific research.5 Techniques of conservation and the codified administrative procedures of AEP have co-evolved with the design of schemes and the payment options with which they are associated. Despite a variety of small scale field and farm based studies there have been few scientifically rigorous assessments of the effectiveness of these practices in delivering environmental quality improvements. For example, a review of monitoring and assessment procedures in several EU member states concluded that the evidence to assess biodiversity impacts was often missing (Kleijn and Sutherland 2003). The scientific consensus since this 2003 paper was published is that AEP measures have provided only moderate biodiversity gains (Davey et al. 2010). Despite major investment in schemes across the EU, populations of farmland birds have continued to decline (e.g., Whittingham 2011), leading the European Parliament to call for “proper economic incentives for farmers to optimise the delivery of ecosystem services” (Burton and Schwarz 2013). With heightened demand to make state subsidies more conditional on improved environmental performance, there is now pressure in the UK to rationalise AEP and make it more effective in delivering biodiversity gains. If paying farmers for the production of public environmental goods seems a more sustainable justification for long term state support, then such payments need to be more efficient than they have been in procuring improved soil conservation, water quality and habitat conservation outcomes (Cooper et al. 2009).

For the past 20 years, US and UK advocates for improved ecological and economic efficiency have promoted movement to “green payments” as a way of remedying flaws embedded in a deeply institutionalized AEP. Yet the policy designs and distributional implications of the grand bargain struck in the mid-1980s are, by and large, still with us. Taken together with continuing WTO compatibility concerns (Dibden et al. 2009), mounting budgetary pressures and an urbanizing population increasingly disconnected from production agriculture, many political interest groups perceive new opportunities to redesign policies so that they more efficiently reward producers of ecosystem services and return increased value to tax payers. While AEP has maintained its core features over the past decades it may yet prove vulnerable to the neoliberal pressures that have had such impact in other policy domains.

PES Talk and PES Practice in Relation to AEP

The rise of ‘PES talk’ among members of the AEP policy community in recent years can be interpreted as a response to what neoliberal advocates such as Plieninger et al. (2012) see as inherent weaknesses of a state-bureaucratic approach [but also see Burton and Schwarz (2013) for a more pragmatic justification for adopting the PES model based on payments for results]. Our argument here is that a proliferation of references to PES in recent years marks a significant change in the debate about AEP and the way payments are designed and justified. Our desk-based review of recent references to PES in policy documents, position statements of environmental NGOs, media reports and review papers suggests that the PES model is an already well-established part of contemporary discourse, even if the range of meanings actors attach to the introduction of market logic into AEP remains quite broad. The UK Defra’s Ecosystem Approach Action Plan, for instance, launched in 2007 (Defra 2007) sets out a framework of analysis but commits government to further experimentation and facilitation of results-orientated payment schemes. This idea has been enthusiastically received by farming groups and environmental NGOs, with the Country Landowners and Business Association, an influential lobby group representing farmers and landowners, hailing the PES approach as ‘the best way forward for ensuring farmers deliver public environmental goods’ (CLA 2010). Our review has identified a large and growing number of references to PES and ‘PES-type’ approaches in the AEP literature. In the UK, for instance, there have been a series of supportive reviews, appraisals and calls for translational research (RSPB 2010; CLA 2010; Natural England 2010). One consequence is that it is now conventional to speak about PES in relation to agriculture, forestry and land use. Commentators such as Woods (2009, p. 12), for instance, apparently regard it as the best available framework through which to ensure that ‘the value of ecosystem services is fully reflected in policy and decision making’. This is reflected both in expert analysis and emerging policy commitments. For instance, the UK Government’s White Paper on the natural environment (Defra 2010), an important statement of the principles that will guide future policy, is saturated in the language of PES, committing Defra to establishing an Ecosystem Markets Task Force to review the opportunities for greater business involvement in service commissioning and promising increased funding for pilot schemes designed to serve a ‘proof of concept’ role.

In the US, there has been a similar insertion of market-based language and terms of art into debates surrounding conservation in agricultural landscapes (Batie 2009). Again, our review has revealed an increased frequency of PES references linked, for example, to programs of research, policy design and advocacy organized around a call to “Pay-for-Performance” (Winsten and Hunter 2011). The emphasis here has been on designing payment schemes that directly reward conservation outputs at the farm level. Beyond appeals to efficiency and effectiveness, this reform effort has allowed a coalition of policy entrepreneurs to gain some purchase because their proposals largely mesh with the contours of the traditional relationship between USDA and farmers. Potentially more far reaching, the USDA’s Office of Environmental Markets (OEM) has emerged as a leading advocate and vector of marketization. Created in 2008, the OEM’s mission is to fill “a unique role in the Federal government’s efforts to develop uniform standards and market infrastructure that will facilitate market-based approaches to agriculture, forest, and rangeland conservation. OEM is bringing experts and stakeholders together with government agencies to build a robust, accessible, and scientifically credible market system that will protect and enhance America’s natural capital into the future.”6 While momentum for creation of ecosystem service markets waned markedly after Congress failed to act on GHG cap-and-trade legislation (eliminating the principle driver of private sector demand for GHG offsets from sectors such as agriculture), the recently enacted California Global Warming Solutions Act (AB 32) has introduced new possibilities for farmers to vend public goods.

These institutional innovations and statements of intent suggest that there has been a change in the way many stakeholders are talking about how to incentivise conservation practice on working lands. What is widely regarded as the PES preference for results-orientated payments, for instance, is widely referenced in policy documents such as the Defra White Paper and as a policy principle also has the strong support of the European Network for Rural Development. Commentators such as Woods (2009) go further, suggesting that a wider range of land managers beyond farmers should be tasked in the future with the supply of ecosystem services through enrolment in such performance-based schemes. If adopted, such proposals would arguably not only change the justification for payment but would also challenge the key AEP principle that farmers should be regarded as providers of first resort.

According to its advocates, a PES approach is likely to be increasingly attractive to policymakers and program managers under pressure to improve the productivity of their environmental investments (Batie and Schweikhardt 2007). At the same time, the impulse toward PES constitutes a response to a long standing neoliberal concern to ‘decouple’ the green payments governments make to their farmers in order to minimise their trade distorting effects (Potter and Tilzey 2005; Dibden et al. 2009). Fletcher and Breitling (2012). Others detect elements of the New Public Management thinking described by Valbo (2009) in PES discourse which they argue may prove challenging to established AEP operating procedures and interests (Wolf 2014). The substitution of non-state sources of finance for government funding, and more competition amongst both service commissioners and providers, are hallmarks of these alternative institutional arrangements. These developments would have potentially dramatic implications for the traditionally close relationships between government agriculture departments, technical service providers and farmers that are a defining feature of AEP. Heightened competition among agents soliciting conservation has the potential to break the monopoly that government departments currently enjoy as contractors of AEP services. Similarly, bringing a range of private sector, non-farm land managers into the pool of potential ecosystem service providers implies extracting significantly greater efficiencies from farmers through market discipline. Moreover, the entrepreneurialism implicit in PES could present a significant challenge to the welfarist underpinnings of AEP that have been discussed above. The PES-talk now widespread in the US and UK policy communities appears to invite farmers and other land managers to redefine the competitiveness of their enterprises and their professional identities in terms of efficient and effective provision of public goods (Wolf 2014). In a world in which AEP is organized around PES principles, buyers would ostensibly be willing and able to hold to account the parties with whom they contract. Such a world would be far removed from the voluntarism, standardization and solidarity of AEP as it has been conceived and practiced over the past 25 years.

In practice, very little of this has come to pass. Our review of current PES type initiatives in the US and UK reveals a fragmented landscape of pilot projects and small scale voluntary programs that, for the moment at least, are far from substituting for state programs in any significant sense. In the US, for instance, the ‘Farm of the Future’ project aims to highlight efforts to develop credible means of paying private landowners for production of water quality, wetlands conservation, wildlife habitat and carbon benefits outwith federal government programs. This series of place-based pilot initiatives explores alternative farm enterprise models involving farmers, regulators and a range of commercial partners. Evaluations of these case studies have been presented by OEM as proof of concept demonstrations of the wider viability of a PES-based approach to environmental management but they have yet to be adopted more widely by USDA (USDA 2014b). At the same time, many of USDA’s Conservation Innovation Grants (CIG) have funded projects aiming to develop proof of concept of metrics and contracting schemes to support PES-like approaches to conservation, and many of these pilot programs emphasize private sector agents as prospective buyers of ecosystem services. For example, the portfolio of CIGs (USDA-NRCS 2011) include efforts to design a “market-based program for enhancing environmental services on Florida ranchland” and “facilitate the quantification, aggregation and marketing of CO2 emissions offset credits resulting from soil conservation practices.”

Comparable examples from the UK would include the Dartmoor Farming Futures and Working Wetlands projects, the former a grassroots attempt to connect farmers to a broader range of funding streams for their services with water catchment management and carbon sequestration particularly in mind, the latter an initiative set up by a private water company, South West Water, to offer payments to farmers for catchment restoration and management. Commercial interests have emerged as key players elsewhere in the UK but typically in partnership with an environmental NGO or government agency. The ‘Sustainable Catchment Management Programme (SCaMP)',7 for instance, is a scheme through which United Utilities and the Royal Society for the Protection of Birds (RSPB) have pooled resources and expertise to create output-assessed payments for catchment restoration. While these and other initiatives are referred to approvingly in policy documents such as the natural environment White Paper, and are seen as part of a wider program of field-testing to which Defra is now committed (Defra 2011), they are still far from being policy-ready in a broader sense.

Meanwhile, core PES principles identified by Muradian et al. (2010) such as payment from beneficiaries for results achieved have made few inroads into the domain of AEP itself. In the UK, the Glastir scheme in Wales is one of very few current schemes that have attempted to integrate performance-based payments into conventional AEP. As Wynne-Jones (2013) observes, however, the Welsh Government has faced a series of practical and political barriers in rolling out the scheme. The former includes an inability to link particular management specifications to the delivery of measurable ecosystem outputs (see further discussion below), but there has also been resistance from farmers and their representatives to Glastir being rolled out as a performance-based, and hence PES-like, scheme. Elsewhere in England and Scotland, the authorities seem content to regard results-oriented payments as an ultimate goal, with PES as a complement to AEP rather than a replacement for it. Any new PES-like initiatives are thus presented as part of a necessary diversification of mechanisms for improving biodiversity on farmland (see, for instance, Dunn 2011). In the larger context of a rural land use policy still firmly centered on farm policy, PES accomplishments to date seem fragile. The state remains by far the major purchaser of ecosystem services in both jurisdictions. UK programs such as Environmental Stewardship and the EU funding streams from which they are part-financed have emerged more or less intact from the recent round of budget cuts (Baldock et al. 2010). Indeed, recent reforms to the CAP enable member states like the UK to ‘modulate’ up to 15 % of total farm spending on agri-environmental schemes. Reformers may express frustration at the slow pace of CAP reform, but 30 years after the first moves towards a greener CAP, UK lobbyists and advocates remain preoccupied with shifting more resources into so-called ‘Pillar 2’ objectives rather than in dethroning the dominant policy model of the CAP itself.8

Similarly, in the US, policy debates about ecosystem services are heavily framed by successive Farm Bills and the opportunities these present for recalibrating government-funded green payments programs (Batie 2009; Lehrer and Becker 2010). While groups such as the American Farmland Trust and the World Resources Institute continue to campaign for a more rapid move toward performance-based payments, Farm Bill debates continue to center on funding levels rather than targeting and rationalizing the conservation spend in any more thoroughgoing sense. The advocacy coalition for rationalizing AEP has a toe-hold in the policy network, but there is little evidence to suggest we are on the cusp of a radical shift in policy design and in relationships between those paying for and those supplying conservation benefits.

Indeed, there are technical and political reasons to doubt that a PES-based approach will displace AEP to any significant extent for the foreseeable future. First, knowledge barriers to wider adoption of PES remain considerable. Despite a recurring emphasis on greater cost effectiveness, accountability and transparency in recent Farm Bill debates in the US, knowledge gaps and the methodological challenges of linking payments to outcomes have prevented the adoption of performance-based standards in AEP. Conditioning payment on value added is an essential ingredient of the PES approach and one of the main reasons for its appeal. Technical barriers have impeded the efficient design of state-funded green payment programs in the past (Batie 2009; Swartz et al. 2008), and they are, if anything, more constraining to the implementation of PES. For example, to contract with a farmer for enhancing water quality by reducing pollution resulting from their use of nitrogen fertiliser in corn production under an outcome-based approach, it would be necessary not only to measure their baseline level of pollution but also to take subsequent measurements following any management change in order to calculate payment. The costs of such data-intensive approaches are prohibitive, and the focus is now very much on modelling outcomes based on a richer set of contextual biophysical and agronomic information. The ability of the pilots to demonstrate persuasive low-cost ways of incentivising and accounting for outputs will be a significant determinant of their ability to catalyze national-level policy changes.

Further ahead, the decoupling of environmental payments from the support of farmers’ incomes implied by PES is likely to be fiercely resisted by current AEP beneficiaries. After more than 25 years of operation, AEP program benefits are factored into the business plans and expectations of large numbers of farm businesses. In the US, for instance, the distributional pattern of federal conservation payments has long been capitalised into land values that underpin and act as collateral for business expansion (Wu and Lin 2010). The networks of influence and lobbying that have grown up around these policy entitlements in their current geographical distribution will not be easily checked by advocates of next generation tools for AEP management. At the same time, the USDA seems far from eager to contemplate the political fallout of subjecting farmers to greater accountability pressures. With respect to prospects for significant demand from private firms for ecosystem services from agricultural landscapes, there appears to be little appetite for the increased regulation of large point source polluters that would give them an incentive to purchase environmental offsets from farmers for water quality and biodiversity improvements.

The UK, meanwhile, continues to operate within the framework of a CAP that retains a commitment to a ‘working lands’ model of agriculture. This approach treats the continuation of farming as a precondition for the protection of landscapes and habitats (Potter and Lobley 2004). A powerful advocacy coalition continues to resist the idea, implicit in a PES approach, that environmental payments should be decoupled from farming. The result is that, for the moment at least, the traditional AEP governance principles of voluntarism, standardised payments and solidarity between policy makers and farmers remain intact.


The analysis of PES presented in this paper comes at an important moment in the wider scholarly debate about its significance and potential future development as a neoliberal policy idea. By identifying the potentially transformative nature of its application to agriculture, while also acknowledging barriers to its wider adoption in practice within the context of AEP, we have sought to corroborate an emerging view of PES as a set of situated, embedded practices. Our starting point has been to interpret PES principles as being leveraged into AEP, which we understand to be a policy domain of some distinctiveness. This emerged during the 1980s out of a grand political bargain and evolving ever since through a series of adaptations against a backdrop of fiscal retrenchment, expanding scientific knowledge and institutional change. While we observe substantial convergence and degrees of compatibility between the logics of AEP and PES, attempts to portray AEP as merely ‘another form of PES’ disregard the origins and political economy of both AEP and PES. This error leads to an under appreciation of a continuing gap in outlook and approach between the two models. Even when the modified, post-Coasean definition of PES now circulating in the literature is set against an undeniable expansion of market logic within AEP over the past two decades, important differences are observed in the way payments are structured and justified under the two approaches. The wider application of PES principles to agricultural landscapes would entail a major overhaul of the way public goods provision has been structured in agriculture in both the US and UK over the past 25 years. Indeed, we hypothesised at the beginning of this paper that the discourses, policy instruments and the inter-organizational networks that structure AEP could all be transformed by such a PES revolution. The probability of radical institutional change is increased by additional pressures for policy change, including fiscal retrenchment, critiques of the science base on which traditional agri-environmental policy is premised, and a diminishing public willingness to pay for large scale, expensive and often weakly transparent government programs.

While we find abundant evidence of ‘PES talk’ throughout the AEP policy community, however, it is far from clear that such a revolution is in progress at this time. As Boisvert et al. (2013) have commented, the performance of PES—in the sense of the tendency of advocates to rebrand almost any incentive-based scheme as a PES-may reflect a neoliberal desire to reframe the debate by persuading actors of the merits of the approach as an ideal policy type. An emerging community of interest involving academic, environmental, business and financial interests clearly regard PES as the most effective and efficient way to incentivise carbon management, alongside other more conventional AEP goals such as the provision of biodiversity, erosion control and water quality. PES principles appeal to some of these actors because they offer a means of levering-in new funding streams at a time of public budgetary constraint; it also promises to usher in the performance standards and results-oriented payment that have long eluded state bureaucracies. While this discourse tends to push the costs of conservation onto private firms, win–win justifications are prominent. For example, multinational food and beverage conglomerates are being encouraged to regard payments to farmers to reduce GHG emissions as part of enlightened supply chain management that insures against future destabilization of commerce and erosion of their right to operate.

In practice, though, the PES landscape itself remains fragmented, with state, commercial and charitable interests involved as advocates and brokers of largely pilot, small scale schemes. It remains unclear how far private commissioning of services will actually replace state subsidies. Rural scholars such as Lockie and Higgins (2007) have drawn attention to the efforts needed to make neoliberal projects of rule workable, and the hybrid range of current PES experiments and pilot projects identified above attests to this. Many of the essentially small scale efforts identified in this paper may yet play a role as proof of concept demonstrations for wider application. Cross-scale interactions, including national efforts to advance experimentation through funding local initiatives, and the efforts of policy entrepreneurs who use results of pilot projects to advance national reform agendas, merit attention as we explore innovation pathways. Further work is needed to understand and assess the significance of localized projects, the extent to which they succeed in drawing private funds into conservation management, and the degree to which they might emerge as alternatives rather than merely complements to the standard operating procedures of state policy. Looking to the future, we conclude that the PES ideal of payments by results funded by a diverse community of private as well as public agents is likely to establish itself only slowly within the framework of AEP.

Hailed as market-based by advocates, those PES experiments that actually exist remain largely state-sponsored enterprises patterned on the core political principles of voluntarism, standardized incentive payments and solidarity between farmers and the public agencies that have historically been associated with AEP. In this hybrid world, partnership, flexibility and mutual learning are as important referents as privatisation, standards and return on investment. The methodological challenges of establishing the metrics and equivalencies required to enable payments to be made conditional on outcomes across space and time and the transaction costs of searching, contracting and monitoring that confront new commissioners of services and potential providers raise important questions. Additionally, political concerns regarding how privatisation of environmental management could compromise the role of the state as a guardian of the public interest suggest that any future PES revolution in agriculture will be far from straightforward.

To conclude, we have sought in this paper to show how, despite attempts by PES advocates to conflate them as different versions of the same basic policy idea, AEP and PES have different origins and underlying justifications. These differences are a source of tensions and open questions in ongoing debates about the future of conservation policy in agriculture in the US and UK. At the same time, our analysis points to signs of convergence in more recent years. Over time, AEP in both concept and practice, has come to incorporate elements of market calculus. Concerns about productivity of investments in conservation have given rise to new tools and new rules that speak to efficiency as a criterion of evaluation. At the same time, there is an ongoing pragmatic reformulation of PES underway, as those who champion this way of paying for environmental goods and services are being forced to address gaps between theoretical ideals and functional reality. A retreat from an insistence on outcomes-based measures (and a parallel willingness to acknowledge the essential role of proxies and modelling), recognition of the state as the dominant purchaser and the need for a governmental role in establishing the rules and procedures for PES schemes to work are clear examples of the ongoing morphing of what constitutes PES. These evolutions confuse claims about tensions and incompatibility, but at the same time point to processes of adaptation and co-optation that emerge from differences.


  1. 1.

    We characterize AEP as a state-bureaucratic order to emphasize reliance on administrative rules and organizational controls as the core coordinating mechanism of governance. This mode of governance can be usefully contrasted with market governance and its emphasis on prices and property rights. In drawing this distinction we seek to draw on these ideal types to advance analysis and at the same time we want to avoid reification (see Hollingsworth and Boyer 1998).

  2. 2.

    The policy is also significant in budgetary terms. USDA conservation programme expenditures in are expected to total $5.8 billion in 2013, accounting for 17.6 % of total Farm Bill expenditures, excluding food assistance (Osteen et al. 2012).

  3. 3.

    In many cases the land operator is not the land owner, as tenancy in agriculture is widespread. Roughly half of the 3 million owners of farmland in the US are landlords. They do not farm, and they rent out their land to farmers. Our use of the word farmer is, in this sense, imprecise, as both land owners and land operators are beneficiaries of agri-environmental payments.

  4. 4.

    In the US case the EBI is a points-based scoring algorithm that aggregates a range of environmental objectives and cost factors to allow administrators to rank parcels as part of process of selecting land to be enrolled in the programme.

  5. 5.

    This argument is nicely illustrated by The Conservation Effectiveness Assessment Program (CEAP) in the USA. CEAP is an ongoing 10 year effort to “quantify the environmental effects of conservation practices and programs and develop the science base for managing the agricultural landscape for environmental quality” (USDA-NRCS 2014a). As such, it can be seen as an analytic project aiming to build the databases and models required to improve targeting and enhance the productivity of investments in conservation. It also should be seen as a political project to enhance the legitimacy of traditional knowledge claims, practices and relationships.

  6. 6.
  7. 7.
  8. 8.

    See, for instance, debates surrounding the EC’s October 2011 proposals to reform the CAP (Cooper et al. 2009).



We are grateful to Sandra Batie, Matthew Cranford, Jacqui Dibden, Vaughan Higgins and Sophie Wynne-Jones for helpful comments on an earlier draft of this paper.


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Copyright information

© Springer Science+Business Media Dordrecht 2014

Authors and Affiliations

  1. 1.Centre for Environmental PolicyImperial College LondonLondonUK
  2. 2.Department of Natural ResourcesCornell UniversityIthacaUSA

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