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2009-02-19 | EfD Discussion Paper

User Financing in a National Payments for Environmental Services Program: Costa Rican Hydropower

Blackman, Allen and Richard Woodward. 2009. “User Financing in a National Payments for Environmental Services Program: Costa Rican Hydropower.” EfD Discussion Paper 09.
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National government-funded payments for environmental services (PES) programs often lack sustainable financing and fail to target payments to providers of important environmental services. In principle, these problems could be mitigated by replacing at least some government funding with direct contributions from individual environmental service users who have incentives to underwrite payments and who can ensure that they are targeted appropriately.

The authors use original survey data and official statistics to analyze user financing in Costa Rica’s renowned national PES program, focusing on the amounts and sources of such financing, the drivers of contributions by private hydroelectricity plants (the most important sources of user financing), and hydroelectric plant managers’ perceptions of the PES program.