2025

Batpurev, Khorloo; Sinclair, Steve J.; Cabeza Jaimejuan, Maria Del Mar; Syrjänen, Kimmo; Triviño, María; Kujala, Heini Inkeri

In this study, we illustrate some of the most common challenges and pitfalls in payment for ecosystem services (PES) scheme design, through Finland's METSO program, a major forest-based PES policy in the European Union. We use four fundamental PES design concepts: conditionality, permanence, administrative targeting, and impact on social motivations. We find that METSO has primarily managed to avoid common design pitfalls. However, we identify some of the drawbacks of using timber volume as an ecosystem proxy for the conditions of payment. We then broaden our analysis with two issues that are novel in the literature: implications of achieving conservations targets such as the European Union Biodiversity Strategy 2030 through a private land conservation scheme such as METSO and implications of warming climate on the design of forest-based PES schemes. These issues call attention to the design of future policy instruments. Finally, we propose recommendations to policymakers on PES design.