der Leeuw, K.c and de Jong, Jc

Payments for environmental services (PES) is an innovative approach in resource management that seeks to achieve any or all of the following goals: environmental integrity, poverty alleviation, and financial sustainability. In watershed protection, the basic concept in PES is to establish, through a payment system, a connection between the providers of water-related services who are the upland dwellers, and the downstream users or beneficiaries of the environmental service. The study explored the possibility of implementing PES in two northern Philippine sites by examining the science, economics, and institutions aspects of PES. The two sites are the Peñablanca Protected Landscape in Cagayan Province, and the Kalahan Forest Reserve in Nueva Vizcaya Province. This paper discusses the first case study. The results of the study are most useful to the local governments, water districts, non-governmental organizations and others that may wish to explore this mechanism as a strategy, among others, to improve watershed management and reduce poverty in their localities