Increasingly natural capital is becoming the limiting factor in economic activity. Terms such as sustainable growth and green economy have been used to describe an economic growth path that does not lead to the destruction of the environment. Governments have used what is described by Bulte, Lipper, Stringer, and Zilberman (2008) as command control intervention based on the 'polluter pays' principle. Command control interventions include the application of carbon taxes and cap and trade which can be difficult to implement for political and legal reasons. Challenges to implementation include high transaction costs and lack of cheaply available information on the value of environmental services.
PES in South Africa is experiencing limited scope of implementation as a result of limited government participation and therefore funding (Blignaut et al., 2009). There are limited institutional mechanisms for the implementation of PES flowing from limited government participation in PES. Blignaut et al. (2009) propose that PES could be implemented in conjunction with government sponsored poverty alleviation programmes such as the Community Works Programme which is part of the wider Second Economy Strategy as a method of demonstrating the potential of PES in contributing towards poverty alleviation.
It is the contention of this paper that the implementation of PES is constrained by the limited understanding of the link between PES and poverty alleviation. As such the purpose of this note is to contribute towards improving understanding of the PES and poverty alleviation link by identifying relevant international experience on such link and to draw some lessons from international experience for South Africa.
This paper is organised as followed: following this introduction, attention shifts to a discussion that establishes the theoretical framework of the link between PES and poverty alleviation. Next, a discussion into the PES experience in South Africa is set out followed by a discussion into the major PES programmes internationally. The paper then concludes.