Paying for Nature: How Ecosystem Services Become Real Economic Value
Biodiversity provides clean water, fertile soils, flood protection, pollination and carbon storage. Yet despite their importance, these ecosystem services rarely appear in financial systems. In BIO-CAPITAL’s Deep Dive #03, the AgroSolutions team — Romane Jubera, Gaëtan Leboucher, Gabrielle Gros-Chapelier and Lorette Lorand — explored how Payments for Ecosystem Services (PES) can help change that.
PES schemes financially reward land managers for practices that sustain or enhance ecosystem services: planting hedgerows, restoring grasslands, reducing pesticide use, or protecting forests and wetlands. The principle is simple: those who benefit from nature contribute to those who protect it. Funding can come from public actors such as water agencies and ministries, from private companies like food processors or utilities, or through hybrid models that combine both.
Europe-Wide Lessons From Real PES Schemes
Payments may be tied directly to the actions farmers take, or to measured ecological outcomes. In Europe, most schemes still focus on practices rather than results, largely because biodiversity is complex and costly to quantify in a precise and verifiable way.
AgroSolutions examined 20 PES schemes from France, Denmark, the UK and beyond. Although their goals varied, many focused on improving water quality, regenerating soils, restoring wetlands, safeguarding forests, or supporting agroecological transitions. Financing structures ranged from water taxes to regional funds and private sector contributions. Contract durations were typically three to five years — long enough to test practices while allowing renewal and adaptation. Some schemes even combined multiple goals, linking biodiversity outcomes to carbon storage or soil health.
Challenges on the Ground – and What Works Better
However, PES projects face common obstacles: administrative complexity, difficulties in securing long-term funding, high monitoring costs, and limited uptake when incentives are too low. Successful models tend to reduce transaction costs, work with local cooperatives or authorities to build trust, combine public and private finance, focus on a small number of clearly defined ecosystem services and use digital monitoring tools (such as sensors or satellite data) to make verification more efficient. Multi-year commitments also help give farmers confidence to change their practices.
Within BIO-CAPITAL, PES does not stand alone. It connects directly to other financial mechanisms. In Triple Capital Accounting , PES revenue can be recorded as an investment in natural capital. Paired with parametric insurance, which provides rapid payouts if disasters damage restored areas, PES becomes part of a broader financial safety net. Together, these instruments create a system in which protecting nature is not just ecologically beneficial — but economically viable, stable and investable.
