Institutional Influences and the Governance and Administration of the Programa Produtor de Água Payment for Ecosystem Services Program in Brazil

Regulative Influences: Enactment of PES Statutes

Brazilian states and municipalities had already begun considering PES-related laws at the inception of the WPP, but patterns in the synthesis data highlight important connections between the formation of WPP projects and the passage of PES laws. Analysis of these connections shows that the program created an important impetus for local governments to establish statutes that codified the use of PES as a natural resource management tool (e.g., Barreto et al., 2020; Klamt et al., 2019; Pagiola et al., 2013; Santos, 2018). While WPP projects helped generate new markets for ecosystem services, their administration required governmental oversight. The passage of municipal laws institutionalized PES as a legitimate management tool and facilitated key administrative functions such as contracting, fund disbursement, and technical assistance provision. Perhaps most importantly, they established administrative procedures that have continued to shape PES implementation over time.

While enabling the legal use of PES was a key administrative advancement, an assessment of code connections in the synthesis data found little evidence that local statutes spurred organizational changes to support these new administrative responsibilities. What this analysis uncovered was that on-the-ground execution of WPP activities relied heavily on municipal natural resource agencies, with little mention of adding economic expertise or training to support the new finance-related tasks associated with PES (e.g., Bernardo, 2016; Chiodi, 2015; Fernandes, 2021; Fiore et al., 2017; Marra, 2020; Mendonça, 2016; Viani & Bracale, 2015). Rather, WPP implementation frequently involved layering market-oriented PES mechanisms onto municipal environmental agencies designed primarily for conventional regulatory enforcement. This institutional mismatch strained existing administrative capacity and complicated implementation of finance-related PES activities. These institutional mismatches also likely increased the informational, coordination, and administrative burdens associated with implementing PES contracts, even though such transaction costs were rarely evaluated explicitly in the extant literature.

Further assessment of the synthesis data showed that codes for administrative difficulties were closely connected to issues of capacity and expertise. Executors frequently assembled hybrid governance arrangements involving NGOs, universities, consultants, and private-sector actors to compensate for gaps in administrative expertise and organizational capacity (e.g., Fiore et al., 2017; Klamt et al., 2019; Pagiola et al., 2013; Pereira, 2017; Viani & Bracale, 2015). However, these collaborative arrangements appeared less driven by formal WPP requirements than by pragmatic efforts to make PES implementation workable under conditions of administrative constraint. Collectively, these findings suggest that the WPP played an important role in formalizing PES governance without simultaneously developing the institutional infrastructure and organizational capacity necessary to support implementation effectively. While PES statutes shaped the formal institutionalization of WPP governance, existing environmental regulations also influenced how PES schemes were implemented in practice.

Regulative Influences: Compliance With Brazil’s Forest Code

Interestingly, one area where WPP governance appeared comparatively effective was in supporting compliance with Brazil’s forest-related regulations. Under Brazil’s National Forest Code (Law 12.651), landowners are required to conserve a designated portion of their property as “reserva legal” (legal reserve). Across the synthesis data, codes related to reserva legal frequently connected to references describing WPP PES schemes as more effective than traditional fines for encouraging compliance with forest conservation requirements (e.g., Aguiar, 2017; Comitê de Bacia do Rio Macaé, 2016; Klamt et al., 2019; Mendoça, 2016; Richards et al., 2015; Rose, 2016).

Despite its pragmatic value for encouraging Forest Code compliance, linking WPP enrollment to environmental regulation also created tensions. Participation in PES contracts provided landowners with a mechanism for satisfying legal conservation obligations and helped expand WPP enrollment. However, several studies noted confusion and skepticism among proprietors when officials who had previously imposed fines for Forest Code violations later offered PES payments for maintaining the legally required reserva legal (e.g., Fiorini et al., 2020; Gonçalves, 2013; Marra, 2020; Mendoça, 2016). These tensions suggest that participation in PES schemes did not simply reflect responses to economic incentives or legal requirements. Landowners’ decisions were also shaped by perceptions of legitimacy, prior experiences with state enforcement, and trust in program administrators.

Collectively, these patterns suggest that WPP implementation frequently operated through forms of institutional bricolage in which PES mechanisms were woven into pre-existing environmental governance structures rather than administered through entirely new institutional systems. These hybrid arrangements appear to have enabled pragmatic implementation, but they also generated coordination challenges and taxed administrative capacity raising questions about their overall effectiveness.

Regulative Influences: Contracting and Administrative Effectiveness

Analysis of the synthesis data showed that uncertain land tenure complicated both administrators’ efforts to identify eligible participants and landowners’ willingness to enter PES contracts (e.g., Bernardo, 2016; Castello Branco, 2015; Chiodi, 2015; Guedes & Seehusen, 2011; Pagiola et al., 2013; Ribeiro, 2015; Viani & Bracale, 2015). Although PES enrollment was intended to follow technical assessments of ecosystem services, participation in practice was strongly shaped by land tenure security and landowners’ perceived ability to engage in contractual arrangements. Several WPP projects allowed exceptions for renters or individuals with uncertain tenure yet concerns regarding ownership and legal insecurity continued to complicate enrollment and contract administration (e.g., Bernardo, 2016; Chiodi, 2015; Guedes & Seehusen, 2011).

These conditions also likely increased the informational and administrative burdens associated with participant selection and contract management, even though such transaction costs were rarely assessed by WPP executors or analysts. From a bricolage perspective, WPP contracting practices appear to have emerged through adaptive negotiation between formal PES requirements and local realities of land tenure insecurity. Executors and participants informally adjusted eligibility expectations, participation criteria, and enrollment practices to make PES implementation workable under conditions of institutional ambiguity.

Normative Influences: Integrating Social and Environmental Objectives

The WPP’s broader objective of promoting rural socioeconomic development alongside ecosystem conservation also shaped enrollment and implementation practices (ANA, 2008). Across the synthesis data, social objectives were frequently linked to administrative challenges, particularly where executors attempted to balance technical ecosystem-service selection criteria with social inclusion goals (e.g., Chiodi, 2015; Ribeiro, 2015; Rose, 2016). In practice, ambiguities surrounding land tenure, uneven contracting capacity, and competing social and environmental priorities limited the feasibility of strictly technical enrollment processes (e.g., Aguiar, 2017; Bernardo, 2016; Fernandes, 2021; Mendoça, 2016; Pagiola et al., 2013). These tensions suggest that WPP implementation depended not only on formal program rules, but also on negotiated judgments regarding equity, participation, and local feasibility.

Regulative Influences: Administrator Obligations

Although ANA’s guidelines established obligations for both landowners and WPP executors (ANA, 2018), the synthesis data show an overwhelming focus on participant compliance with PES contracts rather than on the effectiveness of program executors as administrators. References to landowner obligations and monitoring were common, whereas assessments of executor accountability, administrative performance, and the effects of governance practices on long-term participation were comparatively rare. This asymmetry suggests that WPP evaluations emphasized recipient behavior more heavily than institutional capacity and governance performance, despite the importance of these factors for effective PES implementation. Expanded investigation of how contractual arrangements shape both administrator and participant behavior are needed to strengthen understanding of PES governance more broadly. Beyond contracting and enrollment, institutional dynamics also shaped how WPP projects interpreted and replicated broader models of PES governance.

Normative Influences: The Illusion of Exemplary Administration

Analysis of “success” narratives within WPP-related publications showed that model PES initiatives were typically evaluated using ecological indicators such as land conservation and benefits from direct payments to landowners (e.g., Bremer et al., 2016; Fiorini et al., 2020; Jardim & Bursztyn, 2015; Kfouri & Favero, 2011; Kroeger et al., 2019; Viani et al., 2019). While these studies frequently documented environmental and economic outcomes, systematic evaluation of governance structures, administrative procedures, and implementation costs was rare. As a result, governance effectiveness was often implicitly inferred from ecological and economic achievements rather than directly assessed. Alignment with recognized “successful” projects also provided local executors with institutional legitimacy and political credibility within emerging PES governance networks, reinforcing pressures toward organizational imitation even where local administrative conditions differed substantially.

Extrema, Minas Gerais, emerged as one of the WPP’s most influential model projects and was widely referenced as an example for subsequent PES initiatives (e.g., Bremer et al., 2016; Fernandes, 2021; Garcia & Longo, 2020; Gonçalves, 2013; Jardim & Bursztyn, 2015; Kfouri & Favero, 2011; Pagiola et al., 2013; Pereira, 2017; Richards et al., 2015; Viani et al., 2019; Viani et al., 2019). Its reported environmental and economic successes contributed to broader assumptions that its organizational structures represented best practices suitable for replication across Brazil.

However, synthesis data from Extrema and other widely referenced projects such as Pipiripau, Goiás, and Guandú, Rio de Janeiro, also documented recurring governance difficulties, including stakeholder conflicts, limited organizational capacity, contracting challenges, and coordination problems within multi-party UGPs (e.g., Chiodi, 2015; Fernandes, 2021; Gonçalves, 2013; Jaime, 2018; Melo, 2013; Mendonça, 2016; Pereira, 2017; Wilburn et al., 2017). Similar implementation challenges appeared in projects modeled after these initiatives, suggesting that organizational forms were often replicated without equivalent consideration of local administrative capacity, implementation burdens, or institutional context (e.g., Aguiar, 2017; Andrade et al., 2020; Benincá, 2019; Bernardo, 2016; Fernandes, 2021; Marra, 2020; Rose, 2016).

While program designers promoted replication of “successful” organizational models, synthesis evidence suggests that effective PES governance depended less on adherence to standardized designs than on context-specific adaptation. These dynamics once again reflect institutional bricolage, where governance arrangements emerge through locally embedded practices, relationships, and organizational capacities rather than through transplantation of externally defined models. These patterns of organizational behavior suggest that replication frequently reflects institutional pressures toward conformity and legitimacy rather than demonstrated administrative superiority.

Cultural Cognitive Influences: Adaptive Administrative Designs

In contrast to standardized “model” projects, synthesis data associated with more effective PES governance closely connects with flexible and locally adaptive arrangements. Projects in Vera Cruz, Rio Grande do Sul and Camboriú, Santa Catarina were repeatedly linked to collaborative leadership, strong university and industry engagement, and administrative approaches tailored to local organizational conditions (e.g., Bremer et al., 2020; Klamt et al., 2019; Kroeger et al., 2019; Santos, 2018). These findings suggest that no singular organizational design reliably produced effective PES governance. In these instances, implementation capacity and effectiveness depended on adaptive coordination and context-specific institutional arrangements consistent with institutional bricolage, rather than through strict adherence to externally defined administrative models.

Normative Influences: Valuation and Administrative Costs

Because monetary compensation was key to WPP design, valuation processes became deeply embedded within program administration. Across the synthesis data, substantial attention was devoted to determining payment levels, estimating opportunity costs, and assessing the economic value of ecosystem services (e.g., Aguiar, 2017; Chiodi, 2015; de Souza Paiva & Coelho, 2015; Fernandes, 2021; Junqueira et al., 2017; Melo, 2013; Moreira, 2019; Kroeger et al., 2019; Ramos et al., 2016). These patterns reflected a widespread assumption among executors and analysts that carefully calibrated financial incentives were necessary to influence landowner behavior and encourage PES participation. Consequently, considerable organizational effort was invested in estimating ecosystem-service values and payment equivalencies, including assessments comparing the costs of watershed protection, water treatment, and agricultural production (e.g., Aguiar, 2017; Börner et al., 2017; Castello Branco, 2015; Chiodi, 2015; de Souza Paiva & Coelho, 2015; Fernandes, 2021; Junqueira et al., 2017; Kroeger et al., 2019; Melo, 2013; Moreira, 2019; Ramos et al., 2016; Santos, 2018).

In contrast, explicit consideration of transaction and administrative costs was comparatively limited. Although several studies referenced coordination, monitoring, contracting, and implementation burdens as important governance challenges (e.g., Fernandes, 2021; Kroeger et al., 2019; Pagiola et al., 2013; Viani & Bracale, 2015), systematic assessment of these costs was uncommon relative to the extensive attention devoted to opportunity costs and ecosystem-service valuation (e.g., Aguiar, 2017; Pagiola et al., 2013; Viani & Bracale, 2015; Zanella et al., 2014). These asymmetries suggest that ecosystem valuation functioned not only as a technical tool but also as a legitimizing institutional logic that shaped organizational priorities and evaluative attention within PES governance.

Executors therefore behaved logically by prioritizing data collection and analysis related to ecosystem-service valuation, including comparisons between watershed protection and water treatment costs or assessments of agricultural opportunity costs used to establish PES payment equivalencies (e.g., Bernardo, 2016; Comitê de Bacia do Rio Macaé, 2016; Kfouri & Favero, 2011; Kroeger et al., 2019). Precise valuation data was clearly both useful and important for PES initiatives. However, its normative importance may also have diverted organizational attention away from administrative coordination and implementation burdens that were equally important to long-term governance capacity.

From a bricolage perspective, these patterns reflect how WPP actors developed governance practices using the institutional tools, expertise, and evaluative frameworks most readily available to them. In practice, ecosystem valuation received greater institutional attention than administrative coordination or implementation burdens because valuation metrics aligned more closely with dominant PES governance logics and existing technical capacities.

Cultural Cognitive Influences: Assumptions About Landowner Decision Making

The WPP’s “provedor-recebedor” (provider-receiver) framework symbolically reinforced the idea that landowners actively produced ecosystem services and should therefore receive compensation for conservation activities. This economic framing strongly influenced program design and administrative practices. Nonetheless, synthesis data examining landowners’ experiences suggests that extension activities, technical assistance, and collaborative relationships were often valued as highly as direct financial payments (e.g., Aguiar, 2017; de Souza Paiva & Coelho, 2015; Santos, 2018; Zanella et al., 2014).

Many landowners recognized that PES payments associated with government programs could be temporary, whereas extension activities generated more durable improvements in land management capacity. Outreach and technical assistance also strengthened trust and communication between participants and executors, allowing for discussion of broader management objectives beyond immediate economic incentives (e.g., Chiodi, 2015; Mendonça, 2016; Moreira, 2019; Ribeiro, 2015). These patterns suggest that landowners’ participation decisions were shaped not only by financial incentives, but also by social connections, practical knowledge, and perceptions of long-term benefit.

Collectively, these findings highlight the limits of narrow economic models of PES governance. WPP implementation depended not only on financial incentives, but also on trust, experiential knowledge, and locally adaptive governance practices. These dynamics further reinforce a bricolage perspective in which PES administration emerged through negotiated and context-dependent institutional arrangements rather than through purely market-based coordination mechanisms.