(This content was sourced from Land and Water Australia)

Ecosystem services

Although ecosystem services are essential for human survival, their importance is often overlooked in decision-making. This is because people have different understandings of their values and the ways they could be valued.

Consequently, the full costs or benefits of particular actions may not be considered in decision-making. For example, the benefits of wetlands in filtering nutrients and flood mitigation may be overlooked in adoption of a new agricultural approach.

(This content was sourced from Land and Water Australia)

Ecosystem services

Although ecosystem services are essential for human survival, their importance is often overlooked in decision-making. This is because people have different understandings of their values and the ways they could be valued.

Consequently, the full costs or benefits of particular actions may not be considered in decision-making. For example, the benefits of wetlands in filtering nutrients and flood mitigation may be overlooked in adoption of a new agricultural approach.

The increased understanding of ecosystem services has resulted in a growing recognition that the actions of landholders can either contribute to broader environmental and social benefits or degrade them.

Individual landholders may be managing their land in ways that not only provides them with benefits, but may also contribute to the broader public good through the provision of ecosystem services. For example, some farmers who fence off remnant vegetation in a water catchment area may be contributing to improved water filtration (public good) while improving stock control (private good).

Defining stewardship responsibilities is a useful way to clarify the roles and responsibilities of landholders. Clearly, land managers should all meet some basic level of environmental responsibility and be compliant with laws and regulations (i.e. they should adhere to a basic duty-of-care).

Equally, where society obtains environmental benefits from the actions of individual land managers some form of reward could be provided to those land managers (such as a rate rebate or tax incentive).

Stewardship payments provide a targeted way of rewarding land managers when they undertake agreed actions (in excess of their basic responsibilities) that provide longer-term environmental benefits to society. Put simply, stewardship payments are a voluntary mechanism for securing public benefits from private land managers, whereby a land manager receives payments in response to agreeing to manage land in a particular way. There are, however, risks associated with stewardship payments.

Risks associated with stewardship payments

Without careful design, there is a risk that stewardship payments could result in significant misallocation of resources. In particular, it is possible for payment mechanisms:

• to pay people to undertake things that they were already intending to do
• to erode common notions of environmental responsibility and create situations where landholders have an implicit right to hold the environment and other land managers to ransom
• to build bureaucracies and administrative processes that have very high transaction costs, especially if the payment schemes have to be run in perpetuity
• to discourage private investment in the environment
• to discourage innovation, change and structural adjustment.

The increased understanding of ecosystem services has resulted in a growing recognition that the actions of landholders can either contribute to broader environmental and social benefits or degrade them.

Individual landholders may be managing their land in ways that not only provides them with benefits, but may also contribute to the broader public good through the provision of ecosystem services. For example, some farmers who fence off remnant vegetation in a water catchment area may be contributing to improved water filtration (public good) while improving stock control (private good).

Defining stewardship responsibilities is a useful way to clarify the roles and responsibilities of landholders. Clearly, land managers should all meet some basic level of environmental responsibility and be compliant with laws and regulations (i.e. they should adhere to a basic duty-of-care).

Equally, where society obtains environmental benefits from the actions of individual land managers some form of reward could be provided to those land managers (such as a rate rebate or tax incentive).

Stewardship payments provide a targeted way of rewarding land managers when they undertake agreed actions (in excess of their basic responsibilities) that provide longer-term environmental benefits to society. Put simply, stewardship payments are a voluntary mechanism for securing public benefits from private land managers, whereby a land manager receives payments in response to agreeing to manage land in a particular way. There are, however, risks associated with stewardship payments.

Risks associated with stewardship payments

Without careful design, there is a risk that stewardship payments could result in significant misallocation of resources. In particular, it is possible for payment mechanisms:

• to pay people to undertake things that they were already intending to do
• to erode common notions of environmental responsibility and create situations where landholders have an implicit right to hold the environment and other land managers to ransom
• to build bureaucracies and administrative processes that have very high transaction costs, especially if the payment schemes have to be run in perpetuity
• to discourage private investment in the environment
• to discourage innovation, change and structural adjustment.

In many cases the law defines a duty-of-care for natural resources. There are strong differences of opinion about how duty-of-care should be defined and managed. Where duty-of-care is not defined sufficiently by legislation or legal precedent it might be guided by common principles such as, undertaking not to do, or to continue, actions that:

• harm the interests of other people living in the catchment (a duty to the catchment community)
• diminish the productive potential of other land or water, including likely future productivity (a duty to future generations and the economy)
• diminish the contribution that remnants of native vegetation make to agreed regional, national and international biodiversity objectives (a duty to help maintain biodiversity)
• diminish the quality of the water supply, recreation, ecological and other services associated with rivers, streams, wetlands, waterways and groundwater bodies (a duty not to pollute water).

Establishing a duty-of-care with land managers is valuable because then responsibilities for ecosystem services are clearer and it indicates where transitional payments may be needed (temporarily to get a new standard) and provides a useful threshold above which stewardship payments can be paid, although care needs to be taken to ensure that land managers’ rights are also respected.

In many cases the law defines a duty-of-care for natural resources. There are strong differences of opinion about how duty-of-care should be defined and managed. Where duty-of-care is not defined sufficiently by legislation or legal precedent it might be guided by common principles such as, undertaking not to do, or to continue, actions that:

• harm the interests of other people living in the catchment (a duty to the catchment community)
• diminish the productive potential of other land or water, including likely future productivity (a duty to future generations and the economy)
• diminish the contribution that remnants of native vegetation make to agreed regional, national and international biodiversity objectives (a duty to help maintain biodiversity)
• diminish the quality of the water supply, recreation, ecological and other services associated with rivers, streams, wetlands, waterways and groundwater bodies (a duty not to pollute water).

Establishing a duty-of-care with land managers is valuable because then responsibilities for ecosystem services are clearer and it indicates where transitional payments may be needed (temporarily to get a new standard) and provides a useful threshold above which stewardship payments can be paid, although care needs to be taken to ensure that land managers’ rights are also respected.