The Small4Good project has synthesised relevant Payment for Ecosystem Services (PES) schemes and developed recommendations for effective monitoring, reporting and verification (MRV) systems.
Seven recommendations have been identified for designing Payment for Ecosystem Services (PES) schemes that are effective and attractive to small forest owners (SFOs). Evidence shows that complex contracts, high monitoring costs and a mismatch with forest owners’ time preferences can discourage participation. To address these barriers, we recommend using action-based PES as the default approach, rewarding clearly defined forest management practices rather than requiring the measurement of ecological outcomes. Outcome-based bonuses could be used selectively where results can be verified simply and at low cost.
Seven recommendations have been identified for designing Payment for Ecosystem Services (PES) schemes that are effective and attractive to small forest owners (SFOs). Evidence shows that complex contracts, high monitoring costs and a mismatch with forest owners’ time preferences can discourage participation. To address these barriers, we recommend using action-based PES as the default approach, rewarding clearly defined forest management practices rather than requiring the measurement of ecological outcomes. Outcome-based bonuses could be used selectively where results can be verified simply and at low cost.
Bundling multiple ecosystem services within single PES schemes can improve cost-effectiveness and legitimacy. Finally, stable income streams and alignment with emerging EU policy frameworks are essential to ensure long-term participation and scalability.
| # | Recommendation | Core idea | Main rationale / benefit |
| 1 | Action-based PES as default | Pay for clearly defined forest management actions rather than measured outcomes | Lower administrative burden, reduced MRV costs, clearer incentives, lower risk for forest owners |
| 2 | Collective participation via intermediaries | Use forest owner organisations to aggregate parcels, contracts, MRV and payments | Economies of scale, lower transaction costs, simpler participation for SFOs |
| 3 | Simplified, standardised MRV | Build MRV on existing data, tools and proxies; verify at collective level | Costs proportionate to payments while maintaining scheme credibility |
| 4 | Flexible, modular contracts | Offer short to medium contracts with renewal options and partial upfront payments | Better alignment with SFO time preferences, higher uptake and liquidity |
| 5 | Bundled ecosystem services | Remunerate packages of services without double counting | Reflects multifunctional management, improves cost-effectiveness and legitimacy |
| 6 | Predictable income streams | Combine public baseline payments with private or market-based top-ups | Reduces income risk and supports long-term participation |
| 7 | Policy alignment and future-proofing | Align PES schemes with evolving EU carbon and nature-credit frameworks | Builds trust, reduces bureaucracy, enables future scaling |
Further reading: D3.1-Recommendation-of-relevant-PES-schemes-pending-EC-approval.pdf
Published paper (part of basis for D3.1): Link (open access)