Payments for environmental services in Indonesia: What if economic signals were lost in translation?

This article provides an analysis of a payment for environmental services (PES) scheme in the Cidanau watershed, Indonesia. It contributes to the debate on the alleged effectiveness of such economic incentives to actually change decisions among land users. Building on the standard PES theory of change, one would assume that farmers respond to payments and change their land use decisions accordingly for the delivery of environmental services. However, at the project level the impacts of economic incentives depend on how the signal is transmitted to decision-makers. An extensive household survey was undertaken among 270 participating farmers in order to investigate these assumptions. Results indicate that farmers join the scheme for intrinsic motivations rather than because of economic incentives. Besides, the scheme does not target farmers whose decisions could be changed for the sake of service provision. Finally, farmer group leaders display disproportionate power of decision while individual farmers have a low level of understanding of the PES programme. As a consequence, land use patterns might not depend on the economic incentive only; rather they are likely to be determined by the local social context, traditions and economic dependency on forests. This in turn casts some doubts on the strong (yet contested) economic assumptions that underlie the emergence of PES schemes and on their modus operandi in developing countries.