Agriculture has been supplying food, fibre and fuel as provisioning services, but is under severe distress due to low incomes. The farms also regulate climate, surface water flows, ground water levels, and waste assimilation and breakdown besides offering water purification. But there’s currently no mechanism to compensate the farmers for these services. However, modern agriculture with its excessive groundwater extraction, over use of chemical fertilizers and pesticides and straw burning is also causing a number of disservices. In this scenario, a mechanism to pay the farmers for ecological services they offer can work on two levels: it will ensure a guaranteed income to the farmers and it will prompt them to adopt sustainable farming practices like organic farming which will fetch higher incentives.

1. Payment for Ecosystem Services: A
Policy for Guaranteed Farm Income
and Sustainable Agriculture
Dr. Devinder Sharma
Lalit Kumar

2. The ongoing agrarian crises…
• A steady decline in the proportion of national
income coming from the primary sector: less
than 14% of GDP in 2016 with 50% of the
population still dependent on agriculture.
• Over the 2001-2011 decade, the growth rate
of rural population declined by 5.9%, while
the urban population growth rate increased
by 0.3%.

3. • Steady decline in per capita availability of land (less
than 2ha per family)
• Declining and stagnating crop productivity in food
crops like Rice and Wheat in agrarian basket states of
Punjab and Haryana.
• Emphasis on Subsidies in agriculture instead of
public capital investment which crowds out private
investments.
• Farmers trapped in low income-low productivity-low
investment cycle.

4. • From 87000 cr of credit in 2003-04 to over 9 lakh
cr in 2016 has only aggravated the debt burden
of the farmers without a commensurate increase
in income.
• Climate change and ecological degradation have
put pressure on the farming sector as almost
60% of agriculture is rain-fed.
• Third straight year of decline in global prices of
agricultural produce.

5. A steady income for Farmers….Payment for Ecosystem
Services
• Agriculture conventionally supplies food, fibre, and
fuel—“provisioning services” in ecosystem service
parlance (MA 2005).
• Apart from producing such provisioning ecosystem
services, the agricultural ecosystems supply “regulating
services” like climate regulation, water purification,
surface water flows, ground water level, and waste
assimilation and breakdown (Robertson et al. 2014) .
• Thus, agro-ecosystems provide beneficial ecosystem
services to society at large and currently there is no
mechanism to compensate the farmers for it.

6. Campa fund for the forestry sector..
• Within the agricultural systems, the type of
production system determines the scale and
capacity for generating ES as these are vulnerable
to land use changes as well techniques of
production.
• The PES mechanism can be used to correct for
natural externalities and help adapt sustainable
measures which would help increase the net stock
of natural capital.

7. Values of Ecosystem Service generated in Cultivated
Land agro-ecosystem (TEEB)
Ecosystem Services of
Cultivated Land
Values ($/ha/year)
for the year 2007
Values Rs/ha/year)
for the year 2007
Values
(Rs/ha/year) for
the year 2016
Food 1,361 61245 97992
Water 167 7515 12024
Raw materials 61 2745 4392
Air quality 170 7650 12440
Climate 777 34965 55944
Waste 222 9990 15984
Soil fertility 281 12600 20160
Pollination 22 990 1584
Genetic Diversity 726 32670 52272
Recreation 53 2385 3816
Total 3,839 1,72,755 2,76,608

8. Promoting Sustainable Agriculture
• Agricultural operations could not only provide
ecosystem services but also deplete ecosystems
and natural assets. The major disservices
observed in Indian agriculture are excessive water
extraction, over use of chemical fertilizers and
pesticides use, air quality deterioration
(stubble/straw burning), decline in biodiversity,
etc.

9. The PES approach would help fulfill the promise of a
guaranteed income to the farmers while prompting them
to adopt sustainable farming practices which is relatively a
novel idea in public policy.
Unlike many other schemes of the government, the PES
would not be a subsidy but a payment for benefits
generated by farmers for which they have not been
compensated for, due to lack of a market mechanism.
PES schemes have been experimented with in China on
large scale starting with their “Grain for Green” program
(Zhang et al. 2010). Similar proposals have been floated in
Europe too (Bernués et al. 2014; Maes et al. 2016).

10. • A suitable institutional mechanism can be
evolved in India with stake-holder
participation. This would help achieve
multiple goals of doubling the farm income,
reducing rural urban migration, reduce the
pressure on urban infrastructure and lead to
adoption of ecologically sustainable
production techniques. Agriculture, in turn,
would become a profitable and attractive
profession to pursue.

11. • On the flip side there are farmers who are
contributing more ES than the average farmer
because of their farming practices – like organic
farming.
• They should receive a higher payment than
others who are not following natural capital asset
enhancement through their farming practices.
The adjusted values thus derived could form part
of the proposed guaranteed income basket of the
farm household.

12. • Thanks