March 7, 2023
Smart Prosperity Institute is thrilled to welcome Gillian Kerr as our newest Senior Research Associate. Gillian has worked in Canada’s environment community for almost 30 years as an environmental policy analyst, ecological economist, and champion of understanding the value of nature. We caught up with Gillian as she hits the ground running here at SPI, to learn more about her exciting new work on payment for ecosystem services (PES).
I consider myself an ecological economist. Over the past 20 years I have been interested in and researched nature’s benefits. A primary interest is working on revealing the multiple values we receive from nature and the impacts of decisions in which nature is left as an externality. I couple that with understanding human behaviour.
My PhD focused on revealing why market-based instruments appear so popular and accepted, and yet weren’t implemented in Alberta. During my postdoc work at McGill, I was part of the NSERC ResNet team; a Canada-wide research network focused on monitoring, modelling, and managing ecosystem services in working landscapes. My team focused on the development of decision-support systems for the governance of ecosystem services projects.
Simply put, ecosystem services (ES), sometimes called environmental services, are the benefits that humans get from nature. This includes clean air and water, climate regulation, flood protection, outdoor recreation, and even the food we grow and eat.
The reason ecosystem services are so important to focus on is that most of our policy and governance decisions do not currently recognise and incorporate these benefits. This can result in decisions that negatively impact ecosystems, leading to inefficient outcomes. Replacing a service that nature was providing for free with man-made alternatives, such as flood protection, is ultimately much more costly.
While I was with ResNet, our 2021 paper Ecosystem services decision support tools: exploring the implementation gap in Canada revealed that while the term “ecosystem services” is found in documentation across different levels of government, Canadian governments are not using these values for actual policy analysis and decision-making. Issues of conceptual understanding, path dependency, a lack of regulatory mandate, lost staff expertise, and competition with overlapping conceptual approaches were identified as key barriers to ES uptake.
There is no one definition for a PES, but rather a number of definitions out there made up of distinct features. It is believed that the origin of the PES term is from a World Bank report in 2000, describing a new policy framework in Costa Rica called ‘‘pagos por servicios ambientales’’ (PSA). In English, this translated into “payments for environmental services’’.
PES programs fall into a suite of policy tools called market-based instruments (MBIs). MBIs use financial incentives (markets, price, and other economic variables) to reduce environmental externalities, such as biodiversity loss, pollution, and ecosystem degradation.
A PES program has a financial payment incentive to deliver a land use or behavioural change to enhance an ecosystem or environmental benefit(s), collectively called ecosystem services. (PES) tools allow the private or public sector to fund environmental and conservation initiatives that go above that which is required by law or regulation.
In Canada we have PES payments that pay for creating riparian buffer zones that provide critical wildlife habitat and improve water quality, or to enhance or restore wetlands that improve water quality and can protect communities against flooding and offset the effects of drought.
Offsetting schemes can be quite similar to PES schemes, except that they are generally driven by regulatory or voluntary caps on environmental degradation. Depending on how these MBI programs are set up they can be more or less similar. In offsetting, the buyers invest in projects that maintain a standard or limit. However offset programs can be modified to set more stringent standards over time.
It is time to take the heaps of research, theory, and pilots and use these to develop decision-support systems that account for the benefits of nature.
We do not have time to play at the edges anymore. Our ecological, economic, and social systems are at a crisis point. We must acknowledge both our dependence upon and degradation of ecosystems. We also need to recognise the various direct and indirect values we associate with our natural systems, such as their contributions to our well-being and community resilience. Once we have exposed our dependence on nature, we must account for it; taking a whole-of-society approach to the future management of these systems.
I am excited to work more broadly at SPI on conservation finance and PES as a part of the larger environmental policy toolbox. We are looking forward to collaborating with some very interested partners to take global learnings and develop a made-in-Canada approach.
Understanding behaviour is key to incent real change from a policy practice perspective. I think we can have significant impact at the nexus of behavioural change and the values of nature. This work can be applied at all scales, from a small coastal town conserving and using its natural assets to manage sea level rise, to developing national conservation finance products that allow people to put their money where their values are.
The world is finally waking up to the climate crisis we are in. There is an urgency that continues to grow with this work. While there are many mechanisms and approaches to conserve or restore nature, we operate in an economy in which value is proxied by prices or financial signals.
While there is still a debate about the efficacy and ethics of ‘putting a price on nature’, there is substantial evidence to support the effectiveness of a well-designed MBI to modify behaviour toward a collective societal good.
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