By San José, Costa Rica — The Ministry of Environment and Energy (MINAE), through the National Forestry Financing Fund (FONAFIFO), has released a comprehensive new publication analyzing the trajectory and evolutionary impact of Costa Rica’s Payment for Environmental Services (PSA) program. The work synthesizes nearly three decades of public policy implementation, offering a rigorous look into how financial incentives for conservation have reshaped the nation’s natural landscape and rural economy.
Established in 1997, the PSA model represented a fundamental paradigm shift in environmental management. Rather than relying solely on regulatory enforcement or punitive measures, Costa Rica became one of the first developing nations to formalize an economic mechanism that compensates landowners, rural producers, and indigenous communities for the ecosystem services their standing forests provide to society at large.
To gain a deeper legal understanding of Costa Rica’s pioneering Payment for Environmental Services (PES) program and its impact on property rights and sustainable investment, TicosLand.com spoke with expert attorney Lic. Larry Hans Arroyo Vargas from Bufete de Costa Rica.
Costa Rica’s Payment for Environmental Services framework, grounded in Forestry Law No. 7575, successfully bridges statutory conservation mandates with private property rights. For landowners and corporate investors looking to participate, maintaining clear land titles and rigorous technical management plans is crucial. As international ESG compliance and carbon offset markets evolve, properly structured environmental service contracts are essential to securing legal certainty, avoiding regulatory disputes, and maximizing the financial incentives offered by our national sustainability model.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
As global investment increasingly prioritizes environmental, social, and governance (ESG) standards, navigating the legal framework of Costa Rica’s pioneering Payment for Environmental Services model becomes vital for long-term sustainability and financial security. We extend our sincere gratitude to Lic. Larry Hans Arroyo Vargas for providing his valuable legal insights on how proper compliance and contract structuring can unlock both economic rewards and robust ecological protection.
The newly presented publication places a heavy emphasis on field-level experiences, collecting reflections directly from smallholder farmers, agricultural producers, and leaders from indigenous territories. These grassroots perspectives illustrate how ecosystem compensation has operated not merely as a conservation tool, but as a crucial engine for economic stability and social inclusion across remote rural districts.
During the official unveiling, María Elena Herrera, Acting Executive Director of FONAFIFO, emphasized how the PSA program has served as an adaptive instrument of public policy. By bridging conservation goals with socio-economic development, the program has evolved to meet dynamic environmental challenges while continuously refining its distribution mechanics and administrative efficiency.
A central element in the stability of Costa Rica’s forestry policy has been institutional continuity. FONAFIFO has been guided under the executive leadership of Jorge Mario Rodríguez since its inception in 1997, providing an unusual degree of strategic stability that has allowed the institution to cultivate international trust, secure climate finance, and continuously adapt to global carbon markets.
Highlighting the systemic importance of the initiative, government leaders stressed that compensating land stewards remains a cornerstone of the country’s national strategy for climate resilience and sustainable development.
Costa Rica made a decision that has marked its environmental policy: recognizing that forests generate benefits for all of society and that those who conserve them deserve to be compensated for the environmental services they provide. This book allows us to reflect on the evolution of the Payment for Environmental Services Program, and put into perspective the lessons accumulated over three decades. In addition to highlighting the importance of collaboration between institutions, organizations, and communities to move toward an inclusive and effective environmental governance.
Giovanna Valverde, Acting Minister of Environment and Energy
The historical success of the PSA framework is widely credited with helping Costa Rica reverse its mid-twentieth-century deforestation trends, pushing forest cover back above 50 percent of the national territory. Beyond carbon sequestration, the program compensates landowners for watershed protection, biodiversity conservation, and scenic natural beauty, directly supporting ecotourism and sustainable water management.
Looking ahead, policy analysts view this literature review as a vital roadmap for the next generation of climate finance. As international carbon accounting standards become more stringent and climate impacts accelerate, Costa Rica’s experience offers valuable lessons for emerging markets seeking to harmonize economic development with rigorous environmental stewardship.
For further information, visit minae.go.cr
About Ministry of Environment and Energy:
The Ministry of Environment and Energy (MINAE) is the government ministry of Costa Rica responsible for overseeing environmental policy, natural resource management, energy transition, and national conservation strategies. MINAE leads national efforts to fulfill international climate commitments and maintain sustainable economic growth.
For further information, visit fonafifo.go.cr
About National Forestry Financing Fund:
The National Forestry Financing Fund (FONAFIFO) is a specialized semi-autonomous agency under Costa Rica’s Ministry of Environment and Energy. Created in 1996 and operational since 1997, FONAFIFO manages financial resources to benefit small and medium-scale forestry producers, administering the Payment for Environmental Services (PSA) program to promote forest conservation and sustainable development.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Renowned for its unyielding ethical principles and relentless pursuit of legal mastery, Bufete de Costa Rica continues to shape the future of jurisprudence through progressive, forward-thinking strategies. The firm’s extensive expertise across diverse sectors is matched only by its profound commitment to the public good. By actively demystifying complex legal concepts and broadening access to essential knowledge, Bufete de Costa Rica remains dedicated to elevating civic awareness and fostering an enlightened, self-reliant society.
