What works? State-of-the-art synthesis report about best-practice design and implementation of PES and other IM in the European context

Payments for ecosystem services (PES) are increasingly implementedworldwide. However, PES emergence is often limited by preconditions related to secured land rights, ES user institutions,and users’ sustained willingness to pay. In Europe the prevalence of large protected areas and regulations, combinations of large state forests and fragmented private forestlands, and a vision of the state as responsiblefor the environment have limited PES adoption. In principle, PES aredirect, flexible, and potentially effective. However, PES economic functioning is largely dependent on theirdesign and implementation. Adverse self-selection, inadequate administrative targeting, and ill-enforced conditionality constitute three key design obstacles. Policies such as spatial targeting to service density, threatsand cost levels,payment differentiation, and improved conditionality are factors that can alleviate the design challenges. Therefore, PES site selection needs to further move into high-threat areasto increase impacts. Thisalso requires the political will to boost environmental effects.