Innovative Financing Mechanism for Environmental Protection: Applying PES in a Watershed Area in Albania

Abstract

This paper aims at the discussion of innovative environmental financing mechanism developed throughout the world and in Albania. The premise of the paper is the fact that government financing and international assistance are not sufficient anymore to address global environmental and biodiversity protection issues. Therefore, new mechanisms, based on the active involvement of the private sector, need to be developed and implemented. The paper focuses on one particular financial mechanism to argue upon the role of private sector: Payment for Ecosystem Services. Based on the “beneficiary pays” principle, upon which PES is conceived, the paper discusses a possible implementation of PES in one study area: Bovilla watershed. This case study analysis identifies the cost and benefits of the scheme in the study area and gives an overview of the design of the scheme. Other innovative instruments are discussed, giving some insights one their use in the Albanian context.

Received: 25 October 2021 / Accepted: 30 November 2021 / Published: 9 December 2021