Payment for ecosystem services (PESs) is part of a new and more direct conservation and management paradigm explicitly recognizing: (1) the need to bridge the interests of communities connected by ecosystems, (2) the costs of securing and maintaining the provision of different ecosystem services and (3) that those who benefit from these services need to pay for these costs. While discussions on the potential of PES are becoming more frequent, Nepal lacks concrete policies and an umbrella legislative framework at the national, sub-national, and institutional levels to operationalize PES. A lack of vertical and horizontal coordination among government departments and agencies often creates problems at the implementation level. This paper discusses PES as a possible instrument to finance ecosystem management in Nepal, based on lessons learned from various ongoing PES-type schemes. We review a number of such schemes based on the available literature and key informant surveys in selected PES pilot sites. We argue that PES experience in Nepal remains limited and is as yet insufficient as basis for mainstreaming. We recommend that (1) existing schemes need to be monitored to analyze challenges and effectiveness, and (2) such analyses should be carried out simultaneously with informing the national policy dialog to support the debate on implementing PES for sustainable ecosystem management.

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