The Role of Intermediaries in Mexico’s Payments for Environmental Services Programs

Abstract

This dissertation analyzes the role of two types of intermediaries – nongovernmental organizations (NGOs) and state governments – in Mexico’s National Payments for Environmental Services (PES) programs. It consists of three chapters that evaluate: (1) the influence of NGOs on PES program outcomes, (2) the learning process in NGO-community interactions, and (3) the role of NGOs and state governments in building durable PES mechanisms. I specifically look at the influence of intermediaries using a sample of 44 Mexican communities (common property owners) participating in PES. Half of the observed communities were enrolled in Mexico’s Matching Funds program (Mecanismos Locales de Pagos por Servicios Ambientales a Través de Fondos Concurrentes – Local Payments for Environmental Service Mechanisms through Matching Funds), which operates through local intermediaries. The other half were selected from neighboring communities in the National PES program (Programa Nacional de Pago por Servicios Ambientales – National Payments for Environmental Services Program), which operates without intermediaries. Using a two-level controlled comparison method, I first compare the influence of five NGOs and three state governments that participate in PES with communities that have different levels of internal governance. Then, I compare the communities participating in Matching Funds to neighboring communities with similar governance levels participating in National PES. In order to overcome the potential biases and shortcomings of the controlled comparison, this method was supplemented with process tracing within each PES case. My analysis is based on an examination of qualitative data consisting interviews with key stakeholders, participant observation, and document analysis collected during field research in Mexico from February 2016 to July 2016. The first chapter analyzes the role of intermediary intervention and community level governance in producing the differential outcomes observed in many PES initiatives. I examine the interaction of the types of support provided by intermediary non-governmental organizations (NGOs) on enrolled communities with different levels of internal governance (strong, medium, weak) and the ways in which this interplay results in differential material, governance, and environmental outcomes. I find that in the Matching Funds program where NGO intermediaries are present, communities with a medium governance level experience the most material, governance, and environmental gains. Matching Funds communities with high and low levels of governance experience some gains, but also material and governance losses. These outcomes are different from the benefits experienced by communities in the National PES program in which intermediaries are not present, where it is the communities with a high governance level that enjoy the most material, governance, and environmental benefits. Communities with medium and weak governance levels in National PES experience environmental gains, limited material gains, and no governance gains. These findings suggest that intermediary involvement in PES is advantageous for communities with a certain levels of internal governance, but not for others. The second chapter analyzes the processes through which PES projects carried out by intermediary NGOs in communities are adapted or not adapted to local conditions and needs. I describe the mechanisms through which the communities enrolled in PES provide feedback to project managers, and the ways in which managers are able to learn from beneficiaries and subsequently revise their project models. While dominant theories suggest that feedback and subsequent adaptation is possible through institutional learning as well as exit and voice mechanisms, I argue that in practice, inequalities in resources and decision making power prevent PES beneficiaries from voicing the negative feedback necessary for project managers to learn from mistakes. The third chapter examines the institutional circumstances under which it is possible to transition from government-led PES to local PES mechanisms by partnering with local organizations. Using Mexico’s Matching Funds program as a case study, I evaluate how NGOs and state governments perform in relation to both building the institutions necessary for sustainable local PES and capacity building within provider communities. I find that neither type of local partner is able to achieve both goals; instead, they have complementary strengths and weaknesses. On one hand, NGOs are a type of organization that have a strong relationship with local communities but lack the necessary financial structure and authority to establish and enforce durable PES payments. While the NGOs in this study excelled at assisting communities participating in PES, they were less effective at securing durable funding that would enable PES to persist in the future. On the other hand, state governments are organizations with the power and authority to establish trust funds and local institutions for durable local PES mechanisms, but lack a significant relationship with local communities. The state governments in this study did not attempt to build capacity in local communities but were more successful at institutionalizing PES, making local PES initiatives part of their long-term plans for environmental protection.