Deriving double dividends through linking payments for ecosystem services to environmental entrepreneurship: the case of the invasive weed Lantana camara

A payment for ecosystem services mechanism is designed to support an environmental enterprise aimed at controlling Lantana camara, an invasive weed that is costly to eradicate. A forest reserve manager engages the local community in lantana control efforts. The community converts the weeds into household durable items for sale. However, as markets for such products may not account for the environmental services generated through weed control, the enterprise could fail for want of additional financial support. The challenge addressed in this paper is to incorporate the full environmental benefits of the weed-based enterprise and provide adequate compensation to the local community. An optimal compensation mechanism is derived through linking the ecological dimension of weed growth to its impact on biodiversity values within the reserve. Results indicate that optimal payments to the community would need to take into consideration both the value addition to the environment from controlling the invasive weed and the opportunity cost of participation by the community. When there exists a risk of enterprise failure due to low profitability, higher payments by the manager are required. However, the best environmental outcomes are obtained when the manager incorporates the welfare of the local community within the utility function.