Sri Lanka’s Shift Towards Payment For Ecosystem Services
09 January 2026, Sri Lanka: Sri Lanka is taking a significant step towards sustainable environmental management with the introduction of a Payment for Ecosystem Services (PES) mechanism—an innovative approach that financially rewards communities for protecting and managing vital ecosystems.
PES models, which have shown success in countries such as Indonesia through initiatives like the Sumberjaya watershed programme, demonstrate how environmental conservation can reduce ecosystem degradation while improving rural livelihoods. By linking economic incentives to sustainable land and water management, these approaches align environmental protection with local development needs.
At the centre of Sri Lanka’s progress is the GCF Knuckles Project, implemented by the Ministry of Agriculture with strong technical leadership from the Center for International Forestry Research and World Agroforestry (CIFOR-ICRAF). Drawing on its global expertise in ecosystem service valuation and PES design, ICRAF is supporting the development of a watershed-based PES framework tailored to the Knuckles landscape.
This framework seeks to connect upstream communities with downstream beneficiaries, including small hydropower companies that depend on reliable water flows from the Knuckles Mountain Range. The initiative aims to protect critical ecosystem services, enhance rural incomes and embed environmental sustainability more firmly within national development planning—marking a new chapter in Sri Lanka’s approach to conservation and climate resilience.
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