Friday, April 25, 2008

Food prices and payment for ecosystem services (PES)

Payments for ecosystems services (PES) and farmers are closely linked (see here). It is common knowledge that food prices are rising (see here). Rising food prices increases incentives for farmers to produce (see here).
What is not mentioned often is this situation increases the opportunity cost for farmers to provide ecosystems services. In other words, the private gains from farming may continue to exceed that of PES flows. 

The above would hold if input costs to farming activities do not rise in the same or higher proportions then income, and if demand for ecosystem services do not raise as well.  Farm input prices certainly rises with rising prices of oil and fertilizers, and demand for ecosystems services are also expected to rise (see report from IIED).  

Another delicate trade-off in the making. Any case studies to support or refute this?A 2007 FAO report on PES and farming does in passing mention the possible impact of PES on rising food prices, but did not present an analysis on the impacts of rising food prices on the market for ecosystem services.

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