This project aimed to develop policy options for implementing 'payments for environmental services' (PES) in Lao PDR to increase smallholder livelihoods and improve environmental conditions through changed land management practices.
The Government of Lao PDR has acknowledged that paying local landholders to provide environmental services can achieve environmental management goals and improving the landholders' livelihoods. Hydro-electricity suppliers and mining companies also support PES schemes.
Researchers designed a 'virtual' PES scheme as a 'proof of concept', and established a draft set of guidelines for PES operation. The project developed PES policy options informed by the experience gained in two pilot PES schemes and the economic analysis of the data collected during those applications. The project considered the determination of the aggregate level of payments to be made under each scheme, the design of the mechanism to distribute the payments to environmental service producers, and the institutional structures under which PES schemes can operate.