The need to address sustained economic growth while simultaneously preserving the natural environment presents important policy challenges for countries such as South Africa. Growing concerns about climate change, a loss of biodiversity, and the poor management of natural resources such as forests and water all indicate that the benefits of growth – and its ability to deliver social well-being – must be increasingly considered in light of environmental costs.
Some of the most innovative instruments focused on balancing growth and environmental impact are originating in developing countries. Payment for Ecosystem Services (PES) is one such instrument, used most commonly in Latin America, which is gaining increased traction. Through the use of monetary and in-kind payments, PES incentivises landowners and communities to maintain intact ecosystems, restore the natural environments of degraded land, and use natural resources sustainably. PES recognises that landowners and communities face opportunity costs in foregoing certain economic activities to preserve and restore natural environments and that compensation is necessary to make these costs acceptable, particularly for poor people. The justification for these payments is that preserved ecosystems can provide important natural services, such as regulating the hydrological cycle or sequestering carbon. sustainable land use management can bring strong economic returns. A study by Blignaut and Mander (2010), looking at five past watershed restoration and reforestation projects in South Africa, estimates that conservation in these areas
has provided a monetary annual return equivalent to R116 to R220 per hectare per year over periods of about 30 years compared to equivalent estimated costs of watershed restoration totaling between R21 to R88 per hectare per year.