Budgeting for government-financed PES: Does ecosystem service demand equal ecosystem service supply?

Research on payments for ecosystem services (PES) has become a growing field, but evidence on the congruence between ES demand and ES supply is insufficient. This study linked ES demand (voter preferences for public goods) and ES supply (public good provision through government-financed PES) to compare the observed and a preference-based budget allocation in a rural German region (Brandenburg). The results from a stated choice experiment among regional voters and a Delphi study on the effectiveness of PES were linked through an optimization approach minimizing the deviation between voter preferences and the model budget allocation. The observed budget allocation showed a relatively high degree of congruence with the identified preferences; therefore, our hypothesis that a high level of participation and transparency in the budgeting process, as is the case in the study region, leads to congruence between the budget allocation and voter preferences cannot be rejected. An exact match between both was not mathematically feasible, and the closest fit led to significantly reduced environmental benefits. These results support the notions that the observed budget allocation is relatively optimal and that a completely preference-driven allocation would lead to undesirable, less cost-effective outcomes. Further validating studies should be conducted to test different statistical models and estimation robustness and consider possible within-area differences. (C) 2016 Elsevier B.V. All rights reserved.