The concept of ecosystem services broadens perspectives on nature to include not only intrinsic value but also the utilitarian value it provides to society. Viewing nature through this lens informs our understanding of how particular ecological processes benefit different actors. In this research, I examine how water utilities in the United States are beginning to recognize the economic value of functioning ecosystems that were previously ignored or taken for granted. In an effort to protect or restore valuable ecosystem services, many utilities are now developing payments for ecosystem services (PES) programs to link water customers to conservation efforts upstream through direct financial investments. Despite the increasing number of water utility PES programs, there is a lack of information regarding how these programs work, the social and environmental conditions necessary for their emergence, and how they fit into the context of their larger social-ecological systems (SES). This research addresses this gap.
To characterize the diversity of water utility PES programs, I developed a working typology highlighting similarities and differences among 37 identified programs covering source water protection, fire risk mitigation, point source pollution offsets, voluntary customer offsets, and hydropower mitigation. Results from my research also show that the concept of PES has largely been promoted as a market-like approach to conservation that emphasizes economic efficiency through reduced transaction costs, perfect information, and the minimization of the role of state actors. While this framing of PES is widely shared, I argue that it does not capture the diversity of social and environmental settings in which PES programs are embedded. Instead, I demonstrate that PES initiatives often emerge in response to a variety of institutional needs, poorly understood environmental drivers, and involve a diversity of public and private actors. As a result, I argue that PES is better viewed through a broader “collective action” lens and suggest that those developing PES initiatives should expand from a focus on the market logic of efficiency to approaches that promote social capital and the collaborative capacity of community groups in the implementation of PES programs.
I also argue that a more integrative conceptualization of PES—through synthesis with the SES framework—is necessary to take into account the broader social and ecological landscapes in which PES initiatives are embedded. The SES framework can provide insight into the multitude of factors that influence PES and facilitate the integration of knowledge from diverse disciplinary perspectives by providing a common language and consistency in the variables considered in analyses. To this end, I present an initial effort in the development of a taxonomy of core variables relevant to analyzing and understanding PES. I feel this adapted SES framework will help scholars move beyond academic debates and towards a shared understanding of the potential and limitations of PES as a policy mechanism for addressing complex ecosystem service management problems in diverse SESs.