Environmental services can be thought of as a collection of biophysical results that are the consequence of properly managing the environment and natural resources. The outcome of environmental services has a significant impact on human beings and wide natural processes.

For example, a standing forest might regulate both the quality of water as well as the capacity of storing water. However, the result of deforestation would be either the reduction or elimination of these environmental services. If the soil erodes the water quality could be contaminated.

Another example of environmental services would be the conservation and protection of wetlands areas. Wetlands areas protect wildlife habitat, enhance the quality of water, and provide a significant amount of flood protection. If wetlands areas are converted to other uses then all of these resources would be lost.

People in the corporate and political world, as economic agents, manage the environment and natural resources. Their outlook and actions and deeds determine whether the results of what they do will impact the environment, society, and future generations positively or negatively.

Relatively recent policy innovations that have been attracting a lot of attention in developed as well as developing countries is the concept of paying for the provision of environmental services. Rather than trying to control and command environmental polices this concept attempts to harness market forces in order to realize positive environmental outcomes.

The idea behind paying for environmental services is to reward the providers of these services for what they have previously been doing for free.

The idea of connecting payments for environmental services (PES) to poverty reduction and economic development is of paramount importance in developing countries. PES has the potential of utilizing money from the global community to support the environment and develop environmentally aware policy objectives in these countries.

The global implications are significant because many developing countries are uniquely and abundantly endowed with ecosystems and species that are no longer found in the developing world.

Here's an example of the potential offered by this concept:

Developing countries may thus become competitive suppliers of carbon appropriation because of the low costs of land and labor. And payments for environmental services for these goods can help to increase employment, generate income, and economically develop these areas while providing environmental goods on a global level.

In all too many situations environmental problems may create a major roadblock to economic development. For example, when soil is degraded it reduces agricultural productivity and lowers the quality of the water. This causes disease and health problems in many parts of the developing world.

Payments for environmental services offer a viable way to deal with these problems so that environmentally positive outcomes would result.