Which of the following is an example of a payments for ecosystem services (PES) arrangement?

• A. Subsidies for fossil fuels.
• B. Taxes for pollution credits.
• C. Payments to landowners for watershed protection or forest conservation.
• D. Market-based cap-and-trade alone.

Answer: (C)

PES works by providing payments to landowners or managers in exchange for maintaining or enhancing ecosystem services that others value, such as clean water, flood control, or carbon storage. This creates a direct link between a financial incentive and a measurable service that benefits the wider community. Paying landowners to protect a watershed or conserve forests is a classic PES arrangement because the payment depends on delivering that specific service and it motivates landowners to keep practices that uphold the service.

The other options are different types of policy tools. Subsidies for fossil fuels encourage activities harmful to ecosystems, rather than rewarding the provision of ecosystem services. Taxes for pollution credits describe policies aimed at reducing pollution through financial incentives or penalties, not compensating landowners for ecosystem services. A market-based cap-and-trade system sets overall emissions limits and allows trading permits; it regulates pollution at a broader level rather than directly paying landowners to maintain a service.