Geoforum 44 (2013) 253–260

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Geoforum
journal homepage: www.elsevier.com/locate/geoforum

The narrowing gap between vision and execution: Neoliberalization of PES

in Costa Rica
Brett Sylvester Matulis
University of Edinburgh, Institute of Geography, Drummond Street, Edinburgh EH8 9XP, United Kingdom

a r t i c l e i n f o a b s t r a c t

Article history: Recent work has called into question the status of Costa Rica’s Payments for Environmental Services pro-
Received 17 May 2012 gram (PES) as an iconic example of market-based conservation. The actual practice of this program has
Received in revised form 10 August 2012 proven to have only loose correspondence with its idealized neoliberal vision. Thus far, however, several
Available online 8 November 2012
important aspects of the program have remained under-analyzed. This paper identifies three key ways in
which the gap between ‘‘vision’’ and ‘‘execution’’ is being narrowed: through changes to the way the pro-
Keywords: gram is financed, through promotion of competitive contracting, and through the removal of collective
Neoliberalization
participation. The paper also explains the detrimental social and ecological implications of these actions.
PES
Costa Rica
Analysis is situated in a theoretical framework that understands neoliberalization as an incomplete and
Conservation adapting process, rather than a monolithic ideology that is uniform across history and geography. The
Governance empirical evidence demonstrates why this interpretation is essential for assessing the practical effect
Ecosystem services of neoliberal policies.
Ó 2012 Elsevier Ltd. All rights reserved.

1. Introduction Costa Rica’s PSA is being neoliberalized. My objective is to strength-

en their position by demonstrating that, in the cases where neolib-
In a recent paper, Fletcher and Breitling (2012) demonstrate the eralization has taken place, there have been detrimental social and
many ways in which Costa Rica’s Pagos por Servicios Ambientales ecological consequences. Whereas Fletcher and Breitling (2012)
program (PSA)1 fails to realize its vision for instating a market-based challenge the alleged success of market-based conservation by
conservation mechanism. They rightly identify many aspects of the emphasizing the ways in which Costa Rica’s PSA has failed to incor-
program that challenge its status as a ‘‘neoliberal conservation’’ pro- porate neoliberal practices, my approach to the same is to reveal
ject; it is largely financed through taxation, it was accompanied by the adverse effects of the ‘‘actually existing’’ neoliberalisms that
an expropriation of land-use rights, markets for the sale of ecosys- have in fact been realized.
tem services are virtually non-existent, and a state-centered struc- This alternative approach addresses an important vulnerability
ture utilizes a redistributive model to target priority areas that exists in the assertion that the practice of making payments
identified through centralized planning. The implication is that the for environmental services in Costa Rica has largely not followed
reputed success of Costa Rica’s PSA in expanding forest conservation a neoliberal development model. In response to such a reading,
is largely the result of interventionist policies, not (as has been proponents of marketization could plausibly argue that the PSA
widely accepted) market-oriented ones. Their purpose is to suggest, has generated forest conservation despite its current form and that
among other things, that the future of initiatives being built upon it could be improved through, for example, the ‘‘efficiencies’’ of the
such programs (e.g. REDD+) may be problematic if they intend to market. On the other hand, by exposing the detrimental implica-
rely on markets to sustain their activities. tions of the neoliberal policies that have already entered practice,
While I am sympathetic to their effort to undermine the it is possible to preempt calls for further neoliberalization and even
assumption that markets can be used to solve conservation prob- promote the reversal of what has already been achieved. Further-
lems – or as Buscher (2012, 30) puts it ‘‘that capitalist markets more, by understanding neoliberalization as a process that is only
are the answer to their own ecological contradictions’’ – I will ar- ever partially complete, it is possible to take this line even while
gue below that they have overlooked several key ways in which accepting Fletcher and Breitling’s (2012) accurate depiction of
the PSA as overwhelmingly non-neoliberal in practice. In the pages
E-mail address: [email protected] below, that is exactly what I will do.
1
Pagos por Servicios Ambientales translates to Payments for Environmental Services. In the following section, I provide context for this analysis by
The Spanish abbreviation, PSA, is used here to refer to Costa Rica’s national program, introducing the policy shift that instated PES and created an open-
while the English version, PES, is used to refer to the generic concept of Payments for ing for liberalized conservation strategies in Costa Rica. In Section 3,
Ecosystem Services.

0016-7185/$ - see front matter Ó 2012 Elsevier Ltd. All rights reserved.
http://dx.doi.org/10.1016/j.geoforum.2012.09.001
254 B.S. Matulis / Geoforum 44 (2013) 253–260

I provide a theoretical framework for the analysis and explain what explain that their perspective ‘‘views neoliberalization in conserva-
it has to offer for conceptualizing these activities. In section 4, I ex- tion policy not merely as an economic program but as a ‘whole way
pand on the position of Fletcher and Breitling (2012) that the prac- of thinking and being,’ . . . that is, an overarching approach to gov-
tice of PSA departs significantly from the neoliberal vision laid-out erning human behavior in general’’ (2012, 404). They are careful to
in its design: first showing that the idea of making payments for acknowledge that neoliberalism is invariably expressed ‘‘in syncre-
environmental services in Costa Rica was formulated according tism with alternate conservation strategies and local sociocultural
to neoliberal principles, and then demonstrating the ways in which formations’’ (2012, 404). Despite this, however, their analysis
actual practice has failed to realize many of these objectives. Then I emphasizes the ways in which neoliberalization has failed to influ-
present my empirical study of the trend towards neoliberalization ence the PSA, rather than the ways in which it has taken root. As a
in Costa Rica’s PSA, providing three concrete examples of neolib- result, they have overlooked some important instances where neo-
eral influence and explaining their consequences. Finally, I con- liberal policies have already begun to enter practice. In order to
clude with a discussion of implications and the importance of shift the focus toward the real effects of neoliberalization, I suggest
interpreting even subtle instances of neoliberal influence as the conceptual framing below that underscores the process as a
significant. perpetually unfinished project.

2. Costa Rica’s new direction 3. Neoliberalism versus neoliberalization

Costa Rican forest policy changed dramatically with revision of The ‘‘neoliberal’’ label is often used quite loosely to refer to any
its national Ley Forestal in 1996 (Forest Law No. 7575). Under pres- form of pro-market ideology. This imprecision has been criticized
sure from a third round of Structural Adjustment imposed by the by scholars on the grounds that it results in the loss of meaning,
World Bank, the new law eliminated the preceding ‘‘certificates’’ becoming ‘‘nothing more than a vehicle for academics who like
scheme, so the government would (theoretically) no longer di- to criticise things that they do not like’’ (Igoe and Brockington,
rectly subsidize any forest management activities (Watson et al., 2007, 445). Despite its loose usage, the ideology of neoliberalism
1998, 74). In its place, the law made provisions for a system that is quite clearly defined (and generally agreed upon) by the commu-
would encourage particular land uses through establishment of nity of scholars critically engaging with it. Neoliberalism is an eco-
financial links between individual users and producers of ‘‘ecosys- nomic concept that stresses free trade, private enterprise, and a
tem services’’ – it formed the legal basis of the PSA program. As limited role for government, and it is most often embraced by
identified by Blackman and Woodward (2010, 1628), a ‘‘major mo- political conservatives. As identified by Castree (2008a, 142–143),
tive for creating the PSA program was to recast reforestation and the key features of neoliberalism include: privatization (the trans-
conservation subsidies as payments for environmental services’’. fer of ‘‘previously state-owned, unowned, or communally owned’’
Essentially, it sought to reorganize the foundation of how environ- property to private hands), marketization (the assignment of prices
mental conservation was carried out in Costa Rica. The PSA re- through market mechanisms to facilitate exchange), deregulation
framed conservation in economic terms that saw degradation as (the ‘‘‘roll-back’ of state ‘interference’’’ in markets), re-regulation
the result of ‘‘market failures’’ to internalize the true value of func- (the ‘‘deployment of state policies’’ to support those markets),
tioning ecological systems (Rodriguez, pers. comm., 2 February, the development of market proxies (the restructuring of the ‘‘resid-
2012). ual public sector’’ to operate more like the private sector), and an
Fundamentally, the new program altered the rationale for sup- array of flanking mechanisms (such as charities, NGOs, and private
port of forest management. What had been aid for prescribed land organizations) to fill the void left by the state. Various other inter-
uses was re-conceptualized as compensation for service provision. pretations may include decentralization and ‘‘devolution of gover-
Interpretation shifted to cast earlier forms of conservation support nance to non-state actors’’ (Fletcher and Breitling, 2012, 402), and
as assistance for practices that were not economically viable, while the primacy of individual liberty over communal responsibility.
new approaches are framed as remuneration for astute asset man- Of course, as Fletcher and Breitling (2012) have already shown
agement. This meant landowners that were supported by these in the case of Costa Rica’s PSA, practice rarely aligns perfectly with
new conservation regimes could be regarded as ‘‘deserving’’ re- ideology. The archetypal conception described by Castree almost
source managers, as opposed to subjects of welfare dependency. certainly exists nowhere as such – indeed, he acknowledges that
It is clear that the very core of how conservation support is deliv- his characterization is an abstraction of ‘‘multiple ‘neoliberalisa-
ered in Costa Rica shifted with the passage of the 1996 Forest Law, tions’ extant in the world’’ (2008a, 142, 2008b). Does this mean,
and that the underlying ideology of the new approach is largely then, that the critiques of neoliberalism are little more than swipes
rooted in a neoliberal worldview. at a straw man? If nothing is ever truly neoliberal, are so many so-
While Fletcher and Breitling (2012) have already shown that a cial ills really attributable to it?
significant gap exists between the neoliberal vision of the PSA The answer is in understanding neoliberalism not as a mono-
and its actual practice, proponents of marketization have eagerly lithic force that displaces previous modes of economic governance,
sought to change this. In the pages below, I will demonstrate the but rather as a process that is incomplete and ever-adapting (Peck
ways in which they have proceeded towards this goal, but first I and Tickell, 2002). It is not essential that every aspect of the ideal-
will step back to review the difference between an analytical ized neoliberalism exist for neoliberalization to be occurring, and it
framework built on the concept of neoliberalism as an ideology is not essential that the process be complete for detrimental conse-
versus one built on an appreciation of neoliberalization as a pro- quences to emerge. Neoliberalization can even exist simulta-
cess. The purpose is to demonstrate how, despite the gap between neously with overtly non-neoliberal practices, when new policies
the neoliberal vision and actual practice, it is possible that neolib- interact and overlap with existing ones – it is the messy product
eralization is still actively taking place. of complex histories and diverse geographies. ‘‘Actually existing’’
Importantly, this is not intended to suggest that the conceptu- neoliberalisms, Brenner and Theodore (2002) explain, are the re-
alization of neoliberalism put forward by Fletcher and Breitling sult of context- and place-specific histories, rather than grand loca-
(2012) is somehow lacking sophistication, or even that it does tion-independent theories. In this sense, the result of neoliberal
not appreciate the hybrid and piecemeal character of ‘‘actually policies is always multiple neoliberalisms, according to local condi-
existing’’ neoliberalisms. Drawing on Foucault (2008, 218), they tions. They are frequently, therefore, ideologically fragmented and
 B.S. Matulis / Geoforum 44 (2013) 253–260 255

may only vaguely resemble each other when compared across laid out in the PSA. As Fletcher and Breitling have already shown,
space and time – neoliberal reform leads to divergent outcomes, however, there exists a ‘‘significant gap between vision and execu-
‘‘not . . . a neoliberalized end of history and geography’’ (Peck and tion’’ in the program (2012, 408). In agreement with this assess-
Tickell, 2002, 383). ment, I will provide further evidence that the PSA was conceived
Since there is no finished product, no point at which the neolib- with a profoundly neoliberal vision, but executed in ways that
eralization process is complete, neoliberalism can exist even in more closely resemble the conventional systems that it was meant
cases that deviate substantially from the idealized conception. to replace.
When it is present, it is always to varying degrees according to
the success of its promotion, its confluence with existing regimes, 4.1. Neoliberal vision
and the resistance mounted against it. That is why, in the case of
Costa Rica’s PSA, no matter how overwhelmingly non-neoliberal When the new forest law passed and the PSA was established,
actual practice proves to be, there is still the possibility of ambitious designs were laid by those critically positioned to influ-
encroaching neoliberalization. It is important, therefore, to uncover ence the program’s direction. Sage and Sanchez (2002), for exam-
and assess even the most subtle instances of neoliberal influence, ple, envisioned radical possibilities that would realize
in order to understand the serious consequences that can often still marketization and facilitate state withdrawal. In a short paper,
exist. the two employees at FONAFIFO (the Costa Rican agency imple-
Nevertheless, the smooth-edged conceptualization presented menting the PSA) laid out what the program had the potential to
by Castree (2008a) serves a purpose in its own right. The ‘‘ideal become.2 Beginning with the initial form of the new program, they
type’’, as articulated by sociologist Max Weber, helps to order re-conceptualized the PSA not as a subsidy, but rather as govern-
our perception of disordered reality (Weber, 2007 [1904]). It is in- ment ‘‘purchases’’ of ‘‘service rights’’. They then envisioned the pro-
tended to represent a distillation of actually existing cases, even gram’s evolution through several iterations that would first link
though it may only ever have loose correspondence to any one of producers with users in a government-sustained quasi-market, then
them. It constitutes a reference point that helps to bind our re- create a tradeable ‘‘certificate’’ of environmental services (essentially
search together, so that broader-scale conclusions can be drawn. a packaged commodity representing an abstract ecosystem service),
While caution against ‘‘overly universal understandings’’ is advis- then facilitate the formation of an investment market for those cer-
able, the ideal-type provides structure for reading across empirical tificates, and finally culminate in the withdrawal of government
studies (see Bakker, 2009; Castree, 2009), allowing them to be seen from the program and idealized direct financial transactions be-
as more than just ‘‘a patchwork of qualitatively distinct parts that tween users and producers taking place in open markets (Sage and
are relatively incommensurable’’ (Castree, 2008b, 155). Sanchez, 2002, 73).3
There is danger, however, that the ideal-type can be misinter- The vision laid out by the two is somewhat idealistic, offering
preted as comprising the necessary and essential elements of a almost no commentary on how it was to be achieved or how, for
phenomenon, rather than serving as a device for conceptualizing instance, direct agreements between users and producers could
it. In that case, the focus shifts to extreme examples and risks over- be sustained without some sort of coordinating body. What their
looking actual cases where certain elements exist only to a degree. paper illustrates, however, is that the concept of PES was being
In other words, it has a tendency to make the real thing seem as understood in neoliberal terms by (at least some of) those working
though it is not a perfect representation of itself. In assessing the to carry it out. Even though early stages of the PSA may have
‘‘neoliberalness’’ of Costa Rica’s PSA, for example, it would be a resembled previous modes of supporting conservation, a funda-
mistake to conclude that it has no neoliberal characteristics simply mental change in the ideology underlying the practice had taken
because it lacks certain ‘‘ideal’’ elements (e.g. markets) or includes place. Within the institutions tasked with implementation, the
other antithetical ones (e.g. government involvement). PSA was being treated as far more than just a change of name for
The importance of understanding how neoliberalism operates direct subsidization (Sage and Sanchez, 2002).
and how to identify it, of course, is rooted in the implications that
it has for society and the environment. As Harvey (2005a) demon-
strates, neoliberal policies are (one of) the fundamental causes of 4.2. Actual practice
uneven development and declining prosperity for the most vulner-
able segments of the population. As conservation is drawn under While the idea of PES clearly represents a new direction for so-
the logics of neoliberal economics, nature becomes just the latest cio-environmental management, the practical transition has pro-
grounds for capital investment, re-framing conservation ‘‘as an ven far more gradual. Indeed, many of the actual practices of
accumulation strategy’’ (Katz, 1998, 48; Smith, 2007) and ulti- making payments for environmental services in Costa Rica do not
mately opening new spaces for ‘‘accumulation by dispossession’’ map neatly onto a neoliberal model. First, there was a level of con-
(Harvey, 2005b). By concealing the social and ecological context tinuity from the previous management regime to the current one,
of ‘‘service’’ production, power asymmetries are reproduced and in that the new regime initially supported all the same land-use
inequalities are expanded (Kosoy and Corbera, 2010). The emer- practices and carried over the same payment levels from the certif-
gence of this new approach to environmental conservation, then, icates scheme (Pagiola, 2008). Moreover, several aspects actually
can be interpreted as just the latest stage of uneven development extended previous approaches to conservation, particularly with
under the capitalist mode of production. regard to program financing. Initially, the PSA was funded almost
entirely by a new tax on fossil fuels (Sánchez-Azofeifa et al.,
2007). As Fletcher and Breitling (2012) point out, this was intended
4. Vision and practice to be a temporary measure that would be replaced by revenue gen-
erated on international carbon markets, but when those markets
The move to marketize conservation in Costa Rica, of course,
2
was framed in far more benign terms by those in favor of economic Sánchez is listed as ‘‘Environmental Services Section Chief’’, and Sage is listed as
‘‘Consultant in charge of the FONAFIFO project’’.
liberalization. From that perspective, markets would promote effi- 3
The ‘‘certificates’’ mentioned here should not be confused with the earlier system
ciency and bring ‘‘financial sustainability’’ to conservation efforts of certificates, as they represent a commodified service, not (as previously) a bond
by replacing (what are presumed to be) unreliable sources of gov- issued as direct government payment. This new certificate has already been realized
ernment financing (World Bank, 2000). A vision to achieve this was as the Certificado de Servicios Ambientales, or Certificate of Environmental Services.
256 B.S. Matulis / Geoforum 44 (2013) 253–260

failed to materialize, the tax remained. Even as the program has conversion shows that, in certain ways, Costa Rica’s implementation
progressed, the proportion of financing that could be regarded as of PES is strongly contradictory to fundamental features of
market-based remains wholly insignificant, amounting to 0.5% neoliberalism.
since the start of payments (FONAFIFO, 2011).4 Clearly, there exists a disconnect between the PSA concept and
In fact, the involvement of markets has failed to materialize on actual practice, as the new program bears great resemblance to the
several fronts. Payment levels are actually set at fixed-rates by one it replaced. Though the PSA represents a fundamentally ‘‘new’’
presidential decree, rather than determined by demand on an open way of carrying out conservation activities, the endurance of
market (Pagiola, 2008). This means that a single payment level ex- overtly state-centered practices render it almost unidentifiable as
ists for each contract modality so that each PSA participant re- neoliberal against the idealized model. Understandably, this has
ceives the same per-hectare rate for equivalent management. led some (e.g. Rojas and Aylward, 2003; Watson et al., 1998) to
Payments do not, therefore, reflect the variability of opportunity characterize the PSA as little more than a continuation of older
costs or the market value of productive land. This has led to claims subsidy-based policies. However, the work of critical scholars is
that the PSA is ‘‘overpaying’’ in some cases and offering inadequate emphatic about the tendency of states to expand, in their efforts
incentives in others (World Bank, 2007). Despite criticism of this to form and sustain neoliberal markets (Peck, 2010, 2004; Larner
‘‘inefficiency’’ (Wünscher et al., 2008; World Bank, 2007), the gov- and Craig, 2005). Thus, it is possible that the shift in ideology
ernment has resisted pressure to implement market-oriented val- embodied by the PSA can represent the onset of the neoliberaliza-
uation techniques such as reverse auctions (Chomitz et al., 1999), tion process, despite the many overtly non-neoliberal practices
contingent valuation (Whittington and Pagiola, 2011), or other that have endured. As recognized by von Platen, the ‘‘economic
mechanisms for price differentiation (Sills et al., 2005). implications of the change’’ to conservation policy are such that
A consequence of fixed-rate payments is that supply and de- ‘‘there is indeed more to it than a simple change of name’’ (1999,
mand do not come to a ‘‘natural’’ balance. For the PSA, this has 23).
meant that demand for participation routinely outstrips the avail- Despite Fletcher and Breitling’s careful recognition that neolib-
ability of financing (Pagiola et al., 2005). As a result, a prioritization eralism is never expressed in its idealized form and that neoliber-
scheme and applicant selection process has been required. This has alization can exist alongside overtly anti-neoliberal practices, their
meant further government involvement and distancing from the assessment casts considerable doubt on the ‘‘neoliberalness’’ of
idealized vision. Operation guidelines, also set through presidential Costa Rica’s PSA, going as far as asking to what extent institutions
decree, have consistently identified priority ‘‘biological corridors’’ can ‘‘deviate from a free market ideal before they can [no] longer
and criteria for targeting high poverty areas (see Zhang and properly be labeled ‘neoliberal’ at all’’ (2012, 410). Their suggestion
Pagiola, 2011). These measures indicate that the Costa Rican gov- is that when ‘‘ostensibly neoliberal structures are actually sup-
ernment (broadly speaking) is concerned with pursuing a particu- ported by decidedly non-neoliberal practices’’, they may not be
lar socio-ecological vision over unrestrained market-rule.5 ‘‘amenable to characterization as ‘neoliberal’ at all in any meaning-
The strictest government regulation that accompanied the ful sense’’ (2012, 410). In my view, whether or not the ‘‘neoliberal’’
development of the PSA, and the one that most directly conflicts label can be attached to the program as a whole may be less impor-
with liberal conceptions of governance, is the outright ban on tant than whether or not certain aspects have undergone a degree
land-use conversion. As Fletching and Breitling point out, this reg- of neoliberalization great enough to have measurable detrimental
ulation makes the new forest law ‘‘something of a paradox’’ that consequences. As I will demonstrate below, specific concrete inter-
simultaneously promotes ‘‘neoliberalization and state interven- ventions by market proponents are, in fact, having this effect in
tion’’ (2012, 407). When the law was passed, some feared the inad- Costa Rica’s PSA.
vertent creation of perverse incentives that would, for example,
encourage the removal of primary-growth forest for the purpose
of accessing reforestation funds (Watson et al., 1998), as had oc- 5. The process of neoliberalization
curred previously under the certificates scheme (Morell, 1997).
So along with the measures to reform the conservation incentive Notwithstanding the important challenges to its characteriza-
scheme came provisions that restricted an owner’s right to convert tion as a ‘‘paradigmatically neoliberal ‘market-based’ conservation
forested land to other uses – it became illegal to cut ‘‘natural’’ for- mechanism’’ (Fletcher and Breitling, 2012, 402), the PSA is being
est for the purposes of harvesting timber, producing agricultural or neoliberalized in (at least) three important ways: the way in which
pastoral lands, or bringing about any other form of development.6 it is financed, the way in which labor is managed, and the way in
It effectively extends state (and restricts private) control of re- which landowners participate. I take each in turn to explain the
sources. As a result, opposition to the new law was (at least initially) changes that have occurred and illustrate what the effects have
quite strong by some environmental economists. For example, Bruce been.
Aylward noted that the measure ‘‘effectively expropriates land use This research is based on a combined approach of open-ended
rights on forested terrain’’ and is ‘‘both ecologically and economi- interviews and critical analysis of policy and project documents.
cally flawed’’ (quoted in Watson et al., 1998). This ban on land-use Interviews were conducted, in person and via Skype, during a
5 month period at the end of 2011 and beginning of 2012. They
included key figures in the administration, operation, and policy
4
This was calculated using the sum of revenues generated from contracts with formulation, such as government officials, development specialists,
Florida Ice and Farm, various hydroelectric companies, and CSA sales and the total forestry engineers, landowners, and organization representatives
FONAFIFO budget for PSAs: 100  507,539,487/99,797,775,525. from institutions such as FONAFIFO, the World Bank, Colegio de
5
While these priority areas appear to be the product of state-level planning
Ingenieros Agronomos, Instituto Tecnológico de Costa Rica, FUNDE-
intended to promote a particular socio-ecological vision, further investigation is
warranted to determine if the principles of ‘‘economic efficiency’’ are a factor in their COR, Conservation International, ASANA, ASIREA, CEDARENA,
formation. If, for example, biological corridors are formed with the intention of IngeoFor, and the Asociación Corredor Biológico Talamanca Caribe.
directing scarce resources to areas that provide greater services, rather than areas of This work draws on over 10 years of contact with Costa Rican con-
particular biological importance, this could actually be an example of emergent
servation and environmentalism, in both academic and professional
neoliberalization.
6
A mechanism for ‘‘sustainable forest management’’ remained in place until 2003,
capacities. The primary group of documents analyzed were those
wherein selective cutting was permitted under strict management plans (World Bank associated with two World Bank projects targeted at Costa Rica’s
2007). PSA (the Ecomarkets Project and the follow-on Mainstreaming
 B.S. Matulis / Geoforum 44 (2013) 253–260 257

Market-based Instruments for Environmental Management), but as Fletcher and Breitling (2012, 408) suggest, the water tariff is, in
also include those produced by FONAFIFO, its agents, and certain ways, a step away from it. The tariff was designed to be
consultants. anti-redistributive. Unlike the fuel tax, the tariff is limited in how
revenues may be used to target important ecosystems or to assist
5.1. Neoliberalization of PSA financing lesser developed communities. For example, it is unable to finance
conservation of areas of high biological importance if they fall out-
First, while the PSA has failed to develop the market financing side of any watershed with water concession holders, and it cannot
that was promised (Sage and Sanchez, 2002), a trend towards neo- prioritize impoverished areas if no concession-holding industry is
liberal financing mechanisms is still evident in its various revenue located there. Indeed, early analysis has already found that much
streams, namely in the differences between the fuel tax and water of the revenue generated from the tariff ‘‘must be spent in areas that
tariff. The fuel tax was established under the same law that initially are not priority biodiversity conservation areas’’, that ‘‘the areas to
instituted the PSA, while the water tariff was developed later, in which the bulk of watershed payments are targeted are simply not
2006, as the Ministry of Environment (MINAE)7 sought to expand the poorest’’, and that ‘‘where watershed payments and low social
the program. The fuel tax levies a charge on gasoline sales to finance development coincide, available funding is too limited to have a sig-
PSA activities. It is possible to interpret the tax as a ‘‘payment’’ by nificant impact’’ (Zhang and Pagiola, 2011, 413–414).
users of carbon sequestration services (since emitters of carbon are The water tariff reorients the PSA under the logic of liberal eco-
being charged to counterbalance their emissions with forest expan- nomics, rather than the objectives of conservation or social devel-
sion), however, most analysts reject this interpretation. Pagiola, for opment. The implications of this are extensive. Most importantly,
example, insists such a revenue stream can ‘‘only tenuously be re- those who reside in ‘‘wealthy’’ watersheds (i.e. those with signifi-
garded as a payment by service users’’ because it is non-voluntary cant water concession holders) receive a disproportionately great-
and funds are ‘‘not used solely to generate carbon sequestration’’ er share of the benefits of the PSA. The result, therefore, is
(2008, 715–716). This, of course, is the nature of a tax; revenues geographically uneven patterns of conservation development.
are collected and then redistributed to achieve particular social While the concept (that only those who benefit from the services
and ecological objectives. This flexibility has served the PSA well in are required to pay for them) may at first glance be attractive,
that it has allowed targeting of priority conservation areas identified the extension of its logic is far less acceptable: only those who
through various ecological studies (e.g. the GRUAS reports; Zhang can afford to pay for services are able to access them. The design
and Pagiola, 2011) and prioritization of lesser developed communi- of the water tariff risks unjust distribution in the name of realizing
ties through use of the Social Development Index (Porras, 2010). the conceptual purity of direct user/provider transactions.
Existing issues notwithstanding,8 the ability to target the program If it seems a stretch to claim that the tariff (a fee levied by the
is critically important to protecting the interests of vulnerable com- State) is a form of neoliberalization, we must only recall that the
munities and ensuring that the most ecologically important areas re- state frequently plays an important role in forming and sustaining
ceive first preference. neoliberal markets and that not ‘‘all government intervention is
The water tariff, on the other hand, works quite differently; fees inherently anti-neoliberal’’ (Fletcher and Breitling, 2012, 409). Fur-
are collected from holders of water concessions, and a percentage thermore, the tariff contains a provision that allows water users to
is transferred to the PSA for use within the watershed in which the opt-out of paying the tariff directly by, instead, entering into a vol-
revenues were generated. The language, as it appears in the presi- untary agreement for service provision (Pagiola, 2008) – the idea
dential decree, explicitly states that revenues cannot be transferred being that this will encourage reluctant buyers (or ‘‘free riders’’)
to other watersheds and cannot be used to pay for the provision of to enter the market.
other services (e.g. carbon sequestration or biodiversity conserva-
tion) (Decree 32868-MINAE, Chapter IV, Article 14).9 This stipula-
tion on where tariff revenues can be used derives from the idea 5.2. Neoliberalization of forestry work
that only those who benefit from the services should have to pay
for them – it is an attempt to bring the PSA closer to the idealized Second, the forestry industry has undergone dramatic restruc-
vision of ‘‘user fees’’. Though it is still criticized for its non-voluntary turing that has had important effects on both the experience of
nature (Pagiola, 2008), the World Bank appears to consider the tariff work and the operation of the PSA program. Here, I focus on the
as progress towards the ultimate objective of direct user/provider latter – that is, how the decentralization and privatization of labor
transactions. Documents from the Bank’s ‘‘Mainstreaming Market- shapes who benefits from payments for ecosystem services. Much
Based Instruments’’ project (aka Ecomarkets II) cast the tariff in a of this can be traced to institution of the regente system. Regentes
favorable light, praising its ability to generate finances ‘‘which di- forestales, literally ‘‘forestry regents’’, are professional forestry
rectly correspond to users of the services’’ (World Bank, 2006, 12). engineers that are responsible for the on-the-ground implementa-
The difference between the ‘‘tax’’ and the ‘‘tariff’’ is more than tion of most aspects of forest management in Costa Rica. The sys-
just semantics. Rather than representing an expansion of taxation, tem was created during a period of broader government
decentralization and was designed to replace the General Forestry
7
Directorate (DGF), a government office, with a network of individ-
The full name of the agency that established the water tariff is the Ministry of
Environment and Energy, abbreviated ‘‘MINAE’’. It has since become the Ministry of
ual private foresters (Silva, 2003). It predates the PSA by several
Environment, Energy, and Telecommunications, or ‘‘MINAET’’. years (Rodríguez Zúñiga, 2003), but is central to its operation.
8
A recent study has shown that an increasing share of the PSA ‘‘payments’’ is being In order for a landowner to participate in the PSA he or she must
captured by wealthy corporate and foreign investors (Porras 2010). This problem present an application to FONAFIFO consisting of a land manage-
arguably arises from prioritization based on regional instead of individual social
ment plan and other supporting documents. Management plans
criteria – use of the Social Development Index gives a slight preference to the poorer
regions of Costa Rica, but it does nothing to ensure it is the poor within those regions must be written by a licensed regente. Most regentes operate as
who benefit. independent contractors in the private sector and are compensated
9
The decree states that tariff revenues are to be used to finance payments on for their work through a percentage of the payments made to their
‘‘terrenos privados dentro de la cuenca donde se genere el servicio ambiental de protección client landowners from PSA enrollment.10 The rate that independent
del agua y se ubiquen en zonas de importancia para la sostenibilidad comprobada del
régimen hídrico’’, or ‘‘private lands within the watershed that generates the
10
environmental service of water protection and that are located in zones of proven A small minority works as salaried staff for non-governmental organizations or
importance for the sustainability of the water regime’’. cooperatives.
258 B.S. Matulis / Geoforum 44 (2013) 253–260

regentes are paid is agreed upon with each of their client landowners comparative advantage to larger landowners and, thus, is actually
and set in a contract. There is a legally mandated limit of 18% for re- contributing to an expansion of wealth disparity.
gente fees, but otherwise the government plays no role in regulating Of course, both proponents and opponents of marketization
agreements to ensure just outcomes. Instead, the rate charged is usu- want the greatest amount possible to go towards service genera-
ally determined by factors such as contract size, contract modality,11 tion rather than administration, but the assumption of those who
and ease of site access (Valenciano, pers. comm., 7 February, 2012). favor the competitive independent contractors model is that this
Apart from submission of prepared applications and an occa- cannot be achieved under a system that offers a more equitable
sional inspection, regentes have little contact with FONAFIFO, the flat-rate regardless of contract size or location. This position de-
quasi-governmental agency responsible for managing PSA rives from an oversimplified conceptualization of human behavior
finances.12 Regentes are paid directly by their clients and supported which presumes regentes will charge as much as possible unless
by their professional association, rather than being employed by the checked by competitive market forces. As McAfee suggests, how-
government and receiving a salary from the ordinary budget. This ever, ‘‘economically ‘rational’ behaviour aimed at individual gain
decentralization has created a private industry of professional forest- is often less determinant than social obligations and communal
ers that operates independently from most government functions norms’’ (2012, 118). Another regente (Alfaro, pers. comm., 23 Janu-
(Silva, 2003). ary, 2012), for example, explained that he continues to offer his
The implications are vast. Most significantly, it appears to services through a community development organization in spite
achieve something promoted among market proponents: a system of the fact that he could earn more drafting PSA contracts indepen-
of competitive contracting wherein regente compensation stabi- dently. Relying on this sort of social responsibility, it is possible to
lizes at the most ‘‘efficient’’ levels. In other words, competition envision a model that spreads enrollment fees across the popula-
drives lower, where possible, the rate that regentes charge for their tion without compromising regente performance or raising the
services, thus avoiding ‘‘waste’’ in overcompensation. There is evi- overall cost of administration (lowered rates for small landowners
dence that this has taken place in Costa Rica. At the start of the pro- could be offset by only marginal increases for large ones). In fact, a
gram, most regentes charged a standard across-the-board 18% rate collective participation model aimed at distributing costs existed
(Ewing, pers. comm., 13 January, 2012), but as it has progressed, in Costa Rica until it was undermined by further neoliberalization.
competitive forces have driven rates down as low as 6% or 8% in
some cases (Valenciano, pers. comm., 7 February, 2012; Zuñiga,
pers. comm., 30 January, 2012).13 5.3. Neoliberalization of landowner participation
There are some obvious benefits here; lowered regente fees
means a greater share of the budget is used to generate ecosystem The third example is closely related to the second and concerns
services and less is used for program administration. However, clo- a shift from collective to individual participation in the PSA. The
ser examination reveals that competitive contracting dispropor- contratos globales, or ‘‘global contracts’’, were developed early on
tionately benefits the wealthier larger landowners (explained as a form of group contracting intended to level transaction costs,
below) and may even be harming the most vulnerable participants making it no more expensive for small landowners to participate
by undermining collective participation (explained in the following than it is for large ones. It was developed in direct recognition of
section). the high fixed costs of contract preparation and comparative disad-
Competition has not caused the cost of participation to decline vantage for small landowners (Pagiola et al., 2005). The idea was
for all landowners. Because most of the costs associated with pre- that landowners could pool their resources under a single contract,
paring PSA management plans are fixed (Miranda et al., 2003), the thus reducing the per-hectare rate for all involved. However, the
potential for savings is correlated with contract size. In other mechanism was met with several challenges, including how to
words, savings are greater on large contracts. The result of foster- handle instances of individual non-compliance and ownership
ing competition, therefore, has primarily been lower per-hectare change within the groups. As designed, problems with single mem-
costs for large landowners, not across-the-board lower rates for bers could cause payment delays or even contract invalidation for
all participants. Small landowners are still charged upwards of the entire group (Porras, 2010). In response, the mechanism was
18%, due to the fixed costs associated with contract preparation. revised to culminate in individual contracts (Pagiola, 2008); appli-
This affirms Silva’s (2003, 112) assertion that ‘‘the regente system cations can still be entered as groups, but each member is ulti-
privileges larger landowners over smallholders and poor peasants’’ mately issued a contract independent from others. This, of
(2003, 112). In some cases, the smallest landowners are excluded course, provides a solution to the partial compliance problem,
entirely. As explained by one active regente (Zuñiga, pers. comm., but it results in ‘‘much smaller savings’’ (Pagiola, 2008, 722) and
30 January, 2012), contracts less than 30 ha are often too small undermines the coherence of collective participation. It effectively
to justify the expenses of contract preparation, particularly in cases constitutes the individualization of participation in the PSA, which
that require significant travel. Clearly, competition has given a is consistent with the ideological preferences of neoliberalism. In
fact, the individualized contracts change the practice so fundamen-
tally that the head of PSA at FONAFIFO characterizes the contratos
11
globales as having ended completely (Sánchez, pers. comm., 15
Modalities currently allowed under the PSA are conservation (aka protection),
forest plantation (aka reforestation), agroforestry, sustainable forest management (i.e.
February, 2012; for more on the ‘‘end’’ of group contracting, see
selective cutting of ‘‘natural’’ forests), and natural regeneration. The conservation Porras, 2010).14
modality has further subcategories for protection of forests in hydrologically Further undermining collective participation is the system of
important areas and ‘‘vacios de conservación’’ – each offers higher payment rates competitive contracting described in the previous section. As
than regular forest protection. For more details, see Ortiz Malavasi (2011).
12 regentes offered progressively lower rates to owners of larger lands,
FONAFIFO, or the National Forestry Financing Fund, was originally created to
manage PSA finances. It was given a special hybrid public/private status to allow many were drawn out of groups designed to distribute savings,
greater flexibility in managing the various revenue streams, allowing it access to carrying away the ability of organizations to remain active in group
public finances, but sheltering private revenue streams from ordinary bureaucratic contracting. Certainly, landowner decisions are not mere matters
channels. Because of its reputation for efficient management, it was given expanded of economic calculus motivated by personal self-interest, but the
responsibility over the PSA in 2003, taking over applicant selection and oversight
from SINAC.
13 14
This is for the ‘‘protection’’ modality, which constitutes about 90% of PSA It should be noted that, while participation has been individualized for all
contracts. ordinary contracts, collective indigenous participation currently remains.
 B.S. Matulis / Geoforum 44 (2013) 253–260 259

evidence does suggest that a sufficient number of larger landown- more than just a continuation of older state-centered approaches
ers have been lured away to make the practice unfeasible for some to conservation management. Fletcher and Breitling are correct
organizations. ASANA, an organization in the Dominical area, for that the PSA is hardly the ‘‘quintessential market mechanism’’ that
example, withdrew from coordination of group contracting be- it is often characterized to be, but I do not agree that it ‘‘could
cause they could no longer compete with the rates being offered equally be described as a subsidy in disguise’’ (2012, 408).
by independent regentes to the individual owners of larger lands I have built upon Fletcher and Breitling’s accurate depiction of
(Ewing, pers. comm., 13 January, 2012). Clearly, the competitive the PSA as broadly failing to realize the neoliberal vision that
system is discouraging ‘‘cooperative behavior for the development was laid out for it, but I have also shown three concrete ways in
of peasant or smallholder communities’’ (Silva, 2003, 113). If fact, which neoliberal policies are starting to emerge: in program
because their budgets are often tied to revenue generated from financing, in labor management, and in landowner participation.
regente services and ‘‘they get more revenue per staff member by Even though the program may never resemble the radical vision
accepting large projects’’ (Silva, 2003, 113), some of the organiza- laid out by Sage and Sanchez (2002), the neoliberal changes that
tions that formerly protected small landowner interests have been are occurring warrant cautious evaluation. As I have sought to
pulled into the business of competitive contracting, making them demonstrate, even minor changes can have far-reaching
the virtual equivalent of private profit-driven institutions operat- consequences.
ing in a market-based system. My emphasis is placed on revealing the detrimental effects of
Perhaps surprisingly, many pro-market perspectives had identi- the instances where neoliberalization has in fact taken place. The
fied group contracting as a novel means of making the PSA acces- purpose is to go beyond the suggestion that markets may not be
sible to the poor (Pagiola et al., 2005; World Bank, 2006, 2007). able to sustain these sorts of conservation programs to suggest that
Few, however, appreciated the need to actively foster and develop they can actually have social and ecological consequences that are
it. The decline of collective participation can be partly attributed to counterproductive to their intended objectives. This position fore-
institutional neglect and the laissez-faire attitude of liberally closes on arguments that could plausibly be put forward by market
minded actors influential to program management. From this per- proponents responding to Fletcher and Breitling (2012) – that is,
spective, collective participation is interpreted as something that that Costa Rica’s PSA has been successful despite the gap between
spontaneously emerged to fill a need (in the sense of Hayek’s spon- vision and execution and that it could be improved by introducing
taneous order premise), not something that required active sup- further neoliberal reforms.
port. This is evident in Chomitz et al. (1999), for example, where The commentary above shows that, in each case where neolib-
the claim is made that a number of NGOs ‘‘spontaneously adopted’’ eralization has occurred, the result is uneven development, consol-
the role of project ‘‘bundlers’’ in the Costa Rican system (pg. 161). idation of control over resources, and accumulation of benefits
In fact, confidence that the provision of such needs would self- among wealthier, larger landowners: modifications to the way
regulate appears to be so great that the decline of collective partic- the PSA is financed has led to a realignment of conservation policy
ipation has gone largely unnoticed; reference to group contracting to be based on economic (rather than social or ecological) priori-
as a means of assisting poor landowners has continued to be made ties; privatization of forest management has led to conditions more
well after it was abandoned in 2002 (e.g. Bennett and Henninger, favorable for the participation of large landowners; and individual-
2008; Pagiola et al., 2005; Sills et al., 2005; World Bank, 2006, ization of contracting has led to the erosion of support for small
2007). landowner participation. This is consistent with broader critical
Granted, the individualized version of ‘‘group contracting’’ that analysis of neoliberalism (Harvey, 2005a) – the interests of capital
exists today – the version that has very little cost saving benefits routinely intervene to consolidate control over resources and accu-
for small landowners – still retains some important advantages. mulate wealth. Importantly, however, as this paper suggests, prac-
For example, organizations that assemble group applications often tices do not need to be overtly or even completely neoliberal to
reach out to landowners that might otherwise lack the social cap- have these undesirable results. Even though Costa Rica’s PSA is
ital or knowledge to get involved on their own. However, as this re- hardly recognizable as a neoliberal project, certain elements, when
mains the initiative of independent organizations, it is clearly not influenced by neoliberal policies, have the same effect.
an important priority for the program as a whole. Otherwise, such The reason for this, I suggested in my theoretical discussion, is
outreach might be integrated as a central component to regular that neoliberalism is not a monolithic force that displaces previous
operations, not left to development organizations. modes of governance. The ‘‘ideal type’’ characterization of neolib-
The effect of individualization further compounds the problem eralism does not represent a metric against which the ‘‘neoliberal-
of large landowner advantage. The removal of the ability to collec- ness’’ of certain policies can be tested, but is rather a device for
tively participate in the PSA substantially diminishes access for the conceptualizing a phenomenon (Castree, 2008b; McCarthy and
poor. As the balance of participation shifts from groups to individ- Prudham, 2004). The ‘‘actually existing’’ neoliberalisms will never
uals and corporations, an increasing share of PSA benefits is being map neatly onto this idealized model because varied histories
captured by larger, wealthier (and often foreign) landowners and geographies produce divergent outcomes (Brenner and
(Porras, 2010). It is a troubling prospect that I have attempted to Theodore, 2002; Peck and Tickell, 2002). Instead, when understood
demonstrate is directly correlated with the PSA’s gradual as an incomplete and adapting process, neoliberalization can be
neoliberalization. identified in even the most overtly non-neoliberal projects. And
as I have attempted to show here, those neoliberalizations can still
have important implications. Attention must be devoted to even
6. Conclusion these incomplete and partial instances of neoliberalization,
certainly because they are the only type that ever actually exist.
The objective of this paper has been to demonstrate that there
are, indeed, some important ways in which Costa Rica’s PSA is
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