United Kingdom: Paying for Ecosystem Services in the Public and Private Sectors

Natural capital delivers a wide range of ecosystem services, the majority of which are “public goods,” in that no one can be excluded from enjoying their benefits, and use by one individual does not reduce availability to others. While these characteristics can make such public goods of great value, they also mean that private companies find it difficult or indeed impossible to make money from such goods, and as they are often costly to produce (either directly or because it means other profitable activities have to be forgone) they are commonly underprovided. Here we show how the introduction of payments for ecosystem services (PES) can incentivize private businesses to provide public goods. We present three case studies from the United Kingdom illustrating the flexibility of PES schemes. The first two of these provide, in turn, a national level and then catchment level application of the more common form of PES scheme where private providers are funded by the public sector. The third and final case study again operates at the catchment level but now presents a more unusual variant of PES scheme funded by the private sector in a situation where the production of public benefits is a (welcome) byproduct of the production of private benefits for the funder. Together these form a matrix of funding-source and decision-level exemplars that provide wide applicability to a variety of contexts.