Payment for ecosystem services in urban areas: a framework for its implementation in Brazil

Abstract

The management of water resources in urban environments presents escalating challenges. This article explores the potential of Payment for Ecosystem Services (PES) as a mitigating approach to these challenges, proposing a framework for its application to urban hydrological contexts. Our methodology encompassed a systematic literature review and legislation analysis, in conjunction with a correlation with the ABNT-ISO standards on sustainable cities. Data from Brazil’s National Water and Sanitation Agency (ANA) and National Sanitation Information System (SNIS) were cross- -referenced to enable a more comprehensive critical analysis. The proposed framework provides an integrated perspective on the implementation of PES, underlining its alignment with the principles of sustainable, smart, and resilient cities. The article concludes that PES can be a significant urban planning tool, reinforcing the demand for water sustainability amid rapid urbanization.

Keywords:
Payment for Ecosystem Services (PES); smart cities; sustainable cities; resilient cities

Resumo

Os desafios na gestão de recursos hídricos em ambientes urbanos são crescentes. Este artigo debate a potencialidade do Pagamento por Serviços Ambientais (PSA) para mitigar esses desafios, propondo um framework para sua aplicação no contexto hídrico urbano. A metodologia incluiu uma revisão sistemática da literatura e análise de legislação, bem como a correlação com as normas ABNT-ISO sobre cidades sustentáveis. Dados da Agência Naciona de Águas e Saneamento Básico (ANA) e do Sistema Nacional de Informações sobre Saneamento (SNIS) foram correlacionados, permitindo uma análise crítica mais abrangente. O framework proposto oferece uma perspectiva integrada da implementação do PSA, destacando as dimensões de congruência com as cidades sustentáveis, inteligentes e resilientes. Conclui-se que o PSA pode ser um importante instrumento de planejamento urbano, reforçando a demanda por sustentabilidade hídrica em face da intensa urbanização.

Palavras-chave:
Pagamento por Serviços Ambientais (PSA); cidades inteligentes; cidades sustentáveis; cidades resilientes

Introduction: context, problem and solution

Since the earliest civilizations, water has been a vital resource for the development and sustenance of societies. The first human communities settled near water sources, giving rise to advanced agricultural practices and innovative irrigation systems to ensure its availability. However, the Industrial Revolution and the subsequent urban boom introduced unprecedented complexities in water management (Smith, 1985).

In the Brazilian context, despite the country’s abundance of water resources, water management has become a challenge due to accelerated and often disorderly urbanization (Oliveira, Silva and Costa, 2012). When not properly planned, this urbanization can pose significant challenges to water management, intensifying problems such as diffuse pollution and soil impermeabilization (Barros, Santos and Gomes, 2007). From the perspective of the hydrologic cycle, this condition reduces water infiltration into the soil and subsurface flow, thereby increasing surface runoff, accumulating larger volumes of water over impervious surfaces, and generating floods. In addition, with greater volumes of water accumulating at the surface and with soils rendered impervious by paving, surface runoff velocities also increase – i.e., a higher-energy flow capable of both causing greater damage and transporting larger quantities of sediments and wastes of all kinds. Thus, urban drainage infrastructure must be adequately prepared for such conditions; however, these events are still being observed with increasing frequency in cities throughout the country. In addition to technical and infrastructural challenges, the management of water resources in urban areas is also influenced by complex power relations that shape environmental and urban policies.

Swyngedouw (2004) and Gandy (2022) argue that the process of water urbanization is not merely a matter of engineering or environmental management, but also a contested field in which different interests and power relations confront one another. These dynamics are often concealed by narratives that privilege technological and infrastructural solutions, while issues of equity, access, and justice are marginalized. This study recognizes that water and sanitation policies are not only responses to technical challenges, but also reflections of political decisions that may perpetuate inequalities or open new opportunities for inclusion and social justice. Therefore, a critical analysis of power structures and governance policies is essential to understand how the solutions proposed for urban water problems can be implemented effectively and fairly.

Recent standards issued by the Brazilian Association of Technical Standards (Associação Brasileira de Normas Técnicas – ABNT), incorporating standards from the International Standardization Organization (ISO), bring to the fore concepts, guidance, and indicators for so-called smart cities, sustainable cities, and resilient cities. Together, these elements contribute to discussions and reflections on current planning instruments and to more effective practices, calling for socio-environmental and technological actions that are attentive to these conditions.

Although these standards provide important guidelines for urban transformation, it is important to examine the extent to which they encompass, or neglect, crucial aspects of environmental and social justice. Urban political ecology, as discussed in the academic contributions of Swyngedouw (2004) and Gandy (2022), as well as in studies conducted by De Miranda Araújo Soares and Ribeiro Cruz (2019), suggests that policies and standards often reproduce or mask existing inequalities through approaches that lack effectiveness.

These standards, while advancing notions such as sustainability and resilience, may fail to question who benefits from, or is harmed by, the urban policies implemented. The proposal emerging from the studies presented in this article is grounded in this contributive perspective, seeking to enhance the effectiveness of public policy instruments such as Payment for Environmental Services (PES), known in Brazil as Pagamento por Serviços Ambientais (PSA).

It is important to underscore that the current national context continues to give rise to concerns regarding deficiencies in basic sanitation as well as constraints on water availability.

It should also be noted that water and sanitation are recognized as fundamental human rights by the Organização das Nações Unidas – ONU (2019). The concepts of sustainable and resilient cities, which seek to adapt to change and adversity, become even more pertinent when one observes growing demands and challenges related to water in urban areas.

When examining Brazil’s water scenario, water demand shows distinct patterns depending on the sector of use. According to data from the Agência Nacional de Águas e Saneamento Básico – ANA (2022), the main uses of water in the country are divided into irrigation (50%), public water supply (25%), industry (9%), and animal watering (8%). This demand also varies geographically, with the Southeast consuming 8.8 billion m³·ano-1, followed by the Northeast (3.6 billion m³·ano-1), South (2.4 billion m³·ano-1), Center-West (1.3 billion m³·ano-1), and North (1.0 billion m³·ano-1) (SNIS, 2021). Projections from ANA suggest a 42% increase in water withdrawals by 2040, which becomes particularly challenging when this figure is considered alongside the legal target of universalizing sanitation by the end of 2033 (ANA, 2022; Brasil, 2020).

Within this panorama, PES emerges as a promising strategy: an economic incentive instrument intended to stimulate the preservation of ecosystems (Coelho et al., 2021). Nevertheless, while the application of PES is well documented in rural settings, there is a notable gap in its adaptation and application to complex urban realities (Souza et al., 2018).

Within this context, this study develops and presents a framework tailored to the implementation and legal enhancement of hydrologic PES in Brazilian urban areas, taking into account the intersection between PES and the principles of smart, sustainable, and resilient cities. The focus is on ensuring that hydrologic PES application practices are increasingly recognized as allies in the search for solutions to urban challenges, especially those associated with drainage, water quality, safety, and related factors.

Accordingly, this paper positions itself as a contribution to advanced urban planning instruments by outlining potential applications of Payment for Environmental Services (PES) as a strategic ally in the pursuit of more sustainable, resilient, and smart cities. This approach seeks a more integrated dialogue between urban policies and environmental policies, recognizing that the effectiveness of PES in urban areas requires a broad understanding of the political, social, and economic dynamics that influence water resources governance. In this way, the framework proposed in this study not only addresses technical challenges but also incorporates a critical analysis of power structures and community participation – both essential to the success of hydrologic PES in complex urban contexts.

Methodological procedures

The study was developed through a methodological approach structured into interconnected stages. Initially, a systematic literature review was conducted on Payment for Environmental Services (PES) in urban areas, covering primary sources, such as scientific articles, books, and theses, and secondary sources, such as reports and legal documents. In parallel, an analysis of Brazilian legislation related to PES was carried out, primarily focused on the recent Política Nacional de Pagamento por Serviços Ambientais (PNPSA), Brazil’s national policy for Pagamento por Serviços Ambientais (PSA), with the aim of identifying opportunities, gaps, and potential areas for improvement.

The premises established by the ABNT NBR¹ ISO series of standards for the certification of indicators for Sustainable Cities and Communities were also examined:

• ABNT NBR ISO 37120 (2021b): sustainable cities and communities, Indicators for city services and quality of life.

• ABNT NBR ISO 37122 (2020): sustainable cities and communities, Indicators for smart cities.

• ABNT NBR ISO 37123 (2021a): sustainable cities and communities, Indicators for resilient cities.

Based on the consolidated data and information, an integrative framework was developed, addressing the technical, legal, economic, and social dimensions of PES in urban settings. This model underwent iterative refinements, incorporating information from case studies and other relevant sources. The dialectical principle was adopted to underpin the critical-reflexive analytical approaches. This methodological choice ensured that the research engaged with the multiple contradictions and conflicts associated with PES in urban areas, enabling a more in-depth and comprehensive analysis (Lima & Mioto, 2007).

In this context, the study aligns with the characteristics of a case study, allowing for a detailed and comprehensive analysis of the object of study (Prodanov and Freitas, 2013). National and international data were cross- -referenced with specialized technical literature on PES in urban areas, providing a cohesive perspective on the Brazilian scenario of the topic.

For the collection and analysis of information, it was employed documentary analysis , drawing especially on ANA data and SNIS information. This stage was vital for consolidating dispersed information into an organized dataset, as described in Figure 1.

Figure 1
– Methodological roadmap for developing the study

In summary, the methodological approach adopted was exploratory and descriptive, and it was broadly grounded in bibliographic sources. The detailed process and the cross-referencing of information are best visualized in Figure 1. These sources provided crucial information on water resources and basic sanitation, forming the theoretical basis for the development of the proposed framework.

Results and discussion

Based on the methodological procedures described, this article presents, in greater detail, the information identified, conducting ?critical and reflexive analyses that lead to the presentation of the framework that is the focus of this work.

Payment for Environmental Services

Payment for Environmental Services (PES), known in Brazil as Pagamento por Serviços Ambientais (PSA), has gained prominence as a contemporary strategy for valuing and managing natural resources. It constitutes an economic incentive-based instrument aimed at ecosystem conservation, promoting the recognition and valuation of environmental services generated through conservation and preservation efforts (Coelho et al., 2021; Souza et al., 2018).

Ecosystem services arise naturally from ecosystems without direct human action. They are vital to maintaining and improving the environment and to promoting human well--being. These include, among others, water provision, nutrient cycling, and landscape aesthetics. Environmental services, in turn, while oriented toward maintaining ecosystem services, are enhanced by human actions, including consulting, education, and damage mitigation (Brasil, 2021; Steiner, 2013).

It is relevant to underscore the different categories of ecosystem services, as set out in documents published by the Millennium Ecosystem Assessment – MEA (2005), and reflected in the PNPSA (Brasil, 2021), namely, provisioning, regulating, supporting, and cultural services.

The protector-receiver principle underpins PES, seeking to expand preservation actions through positive incentives. In practical terms, PES represents a voluntary transaction in which a provider of environmental services is compensated by a beneficiary (Brasil, 2021; Hupffer, Weyermüller e Waclawovsku, 2011). Considering growing debates in Brazil, the PNPSA was established in 2021, ratifying and characterizing PSA as a voluntary transaction that benefits both providers and recipients (Brasil, 2021).

Since 2005, ANA’s Programa Produtor de Águas has stood out in the application of hydrologic PES, encompassing 57 projects in 14 Brazilian states. Its implementation, however, is essentially concentrated in rural areas that supply urban zones (ANA, 2023).

Globally, studies on hydrologic PES directly applied in urban areas are scarce, reflecting the complexity and specificities of each urban context. This is due, in part, to the stringent criteria required for implementing a PES scheme (Wunder, 2005), as well as to the inherent complexity of urban environments.

Urban ecosystems are densely occupied regions designed to fulfill human needs. Richards e Thompson (2019) highlight the numerous benefits of these ecosystems, while also pointing to the economic challenges they face. In Brazil, the exploration of perspectives aimed at qualifying the services provided by activities focused on river restoration and on improving water quality in urban rivers remains incipient (Souza et al., 2018).

In the context of urban Payment for Environmental Services (PES), Richards and Thompson (2019) classify ecosystem service providers into three types, namely, private commercial owners, private non-commercial owners, and public owners. The beneficiaries, or recipients, of these services may pursue varied objectives. However, such objectives can be grouped into four general types, namely, maintenance, improvement, compensation, or philanthropic promotion of ecosystem services. Chart 1 presents a detailed relationship between urban PES schemes provided by municipal government agencies and the objectives of beneficiaries.

Chart 1
– Urban PES examples provided by municipal government agencies

Type of service provided	Actions undertaken	Ecosystem service	Beneficiary	Return on investment
Improvement of an ecosystem service from which the beneficiary directly benefits	Planting street trees to increase shade on buildings	Reduction of ambient air temperature	Private businesses located along streets (e.g., restaurants, shops and offices)	Reduced energy costs for air conditioning
	Removal of culverts/drainage inlets alongside the creation of adjacent wetlands	Nutrient filtration services that reduce water pollution and eutrophication	Water treatment companies	Reduced operating costs for water treatment

Thus, before addressing the implementation of hydrologic PES in urban areas, a more detailed analysis of water management in the Brazilian context is essential, as well as an examination of the PNPSA recently established in Brazil.

Legislation on PES: opportunities and gaps

Furthermore, in the context of understanding PES, it is important to address its legal institutionalization in Brazil which, beyond the punctual actions already implemented, gained greater momentum with the enactment of Lei n. 14.119, de 13/1/2021. This legislation established the so-called PNPSA, defining concepts, objectives, guidelines, actions, and implementation criteria, and creating the Cadastro Nacional de Pagamento por Serviços Ambientais (CNPSA), the National Registry for Payment for Environmental Services (CNPSA), and the Programa Federal de Pagamento por Serviços Ambientais (PFPSA), the Federal Program for Payment for Environmental Services (PFPSA) (Brasil, 2021).

The main points of this legislation include:

1. definition of environmental services: the law defines environmental services as activities or processes that provide benefits for the conservation, improvement, and recovery of natural ecosystems. Such services include the maintenance of biodiversity, climate regulation, hydrologic regulation, and other ecosystem services.

2. PES mechanism: it establishes a mechanism through which providers of environmental services may be compensated financially or through other incentives, such as infrastructure improvements or access to financing on favorable terms.

3. Cadastro Ambiental Rural (CAR): the law establishes that, to be eligible for payments, providers of environmental services must be registered in the CAR, demonstrating the environmental regularity of their rural properties.

4. PES contracts: payments will be made based on contracts that stipulate the rights and obligations of the parties, as well as the timeframes and conditions for payment for environmental services.

5. PNPSA: it provides for the creation of a federal PES program aimed at fostering projects and actions that promote the conservation and recovery of environmental services throughout the national territory.

6. support for ecosystem restoration and maintenance projects: the law encourages initiatives that seek to restore and maintain ecosystems, promoting biodiversity and ecological balance.

7. promotion of biodiversity and climate: it prioritizes PES projects that contribute to biodiversity conservation and to climate change mitigation and adaptation.

8. diversified funding sources: the legislation allows for the creation of diversified funding sources, both public and private, to support the implementation of PES practices.

9. social inclusion: it seeks to ensure the participation of traditional communities, Indigenous peoples, and family farmers in PES programs, providing them with direct benefits.

10. technical criteria for valuation: the valuation of environmental services must follow technical, scientific, and strategic criteria, ensuring that payments are fair and representative of the importance of the services provided.

11. integrated actions: the PNPSA must operate in an integrated manner with other public policies on conservation and sustainable development, not replacing but complementing existing policies.

These core points of the PNPSA highlight Brazil’s effort to establish a consistent policy of incentives for the conservation and maintenance of ecosystem services through a framework that formalizes PSA as an environmental management tool. The PNPSA is a legislative instrument that recognizes the importance of ecosystem services and seeks to incentivize their conservation and recovery through financial or in-kind incentives, reflecting the need for a more sustainable approach to environmental management in Brazil.

It is important to highlight and analyze that the PNPSA refers to rural and urban environments as contexts for its application, although it places greater emphasis on rural areas. Certainly, the outcomes of a well- -designed PSA program applied in a rural area can also directly or indirectly affect urban areas. Even so, criticisms can be raised regarding the application of PSA in urban areas due to the lack of clear guidelines for this purpose. The law does not provide specific measures or guidance for its execution in urban areas. Although it recognizes the importance of conserving vegetation remnants in urban and peri-urban areas to maintain and improve air quality, water resources, and population well-being, it does not detail how these objectives should be achieved in urban contexts. In addition, the law acknowledges the role of various entities, including the private sector and non- -governmental organizations, in the management of PSA projects, but it does not specify how these entities should operate in urban areas.

The effectiveness of the law in urban areas would depend largely on implementation and oversight by the relevant authorities and organizations.

Water and sanitation scenario in Brazil

Water dynamics in Brazil are strongly influenced by precipitation in the form of rainfall, which constitutes the main input of water into the hydrologic cycle. This precipitation interacts with other components, such as runoff, recharge of surface and groundwater bodies, evaporation, soil infiltration, and storage in artificial reservoirs (ANA, 2022). In addition, inflows and outflows of water from neighboring countries, as well as outflows to the sea, contribute to the country’s water availability.

In 2017, according to the Instituto Brasileiro de Geografia e Estatística (IBGE), Brazil held a total water stock estimated at 27 million hm³, composed of precipitation (51.1%), inflows (36.4%), and return to the environment due to economic activities (12.5%) (IBGE, 2020). Precipitation across the national territory is characterized by considerable geographic and temporal variability, with annual averages ranging from 3,000 mm in the Amazon region to less than 500 mm in the Semi-arid region (ANA, 2023).

Indeed, although Brazil holds around 12% of the world’s freshwater, its geographic distribution is uneven. The North has ample water availability, yet it concentrates on a small share of the country’s population. In contrast, the Southeast and Northeast regions, which together shelter approximately 69% of the population, hold less than 10% of the available volume (SNIS, 2021).

Brazil, with its 5,570 municipalities, has a predominantly urban population, corresponding to 84.74% (ibid.). Diverse sources, including artificial reservoirs, wells, and water sources, supply these urban areas. Direct abstraction from artificial reservoirs for uses such as agriculture, fisheries, and aquaculture accounts for 94.5% of the total, while urban water supply represents 3.2% (IBGE, 2020).

Chart 2 presents an overview of water supply indices and sewerage service coverage across Brazilian regions, based on 2020 data provided by the SNIS. This table highlights disparities among regional water demands, which can be correlated with the effects of urbanization.

Chart 2
– Water supply and sewerage volumes in Brazil (billion m3/year)

	Volume*
	South	Southeast	Centre-West	Northeast	North	Average
Volume of water produced	2.4	8.8	1.3	3.6	1.0	3.42
Volume of water consumed	1.5	5.2	0.8	1.8	0.5	1.96
Volume of sewage collected	0.69	4.0	0.46	0.77	0.09	1.20
Volume of sewage treated	0.65	3.0	0.43	0.6	0.08	0.95

• *volume billion m³·yr⁻¹)
• Source: SNIS (2021).

Chart 3, in turn, compares indices of progress towards sanitation targets. It can be observed that, although water supply coverage is advancing, achieving the universalization target, especially for basic sanitation, remains a significant challenge.

Chart 3
– Service coverage indices compared with sanitation targets by Brazilian regions

	Population (%)
	Target	South	Southeast	Centre-West	Northeast	North	Average
Total population served by the public water supply network	99	91.0	91.3	90.9	74.9	58.9	81.4
Urban population served by the public water supply network	NA	98.8	96.1	98.0	89.7	72.0	90.9
Total population served by the public sewerage network	90	47.4	80.5	59.5	30.3	13.1	46.2
Urban population served by the public sewerage network	NA	54.3	84.9	65.8	39.3	17.2	52.3

• NA = not applicable
• Source: SNIS (2021) and Brasil (2020).

The results indicate an urgent need for strategic actions focused on water management, given the ongoing process of urbanization and existing regional disparities. These actions call for the application of modern instruments such as Payment for Environmental Services (PES) to provide a balanced and sustainable environment for future generations.

When analyzing the data, it is evident that, although water supply services are at a more advanced stage, meeting the targets outlined remains a substantial challenge. Technical and financial difficulties in expanding water networks, especially in rural areas, are clear. The situation becomes even more complex when sewerage is considered, whose universalization targets face obstacles not only across regions but also in the selection of effective and cost- -efficient wastewater treatment technologies.

So, what is the intersection between sanitation issues, water availability, and the implementation of PES in urban contexts? A large share of successful PES cases related to water resources reported in the literature involve the restoration of rural areas, water sources, and riparian vegetation as essential for the effective delivery of environmental services (Souza et al., 2018). However, it is important to note that urban rivers, even in highly anthropized environments, can provide significant environmental benefits if subjected to restoration processes. Moreover, actions linked to stormwater drainage, for example, structures for detaining runoff, contribute substantially to watercourses more broadly.

A global concern is the estimate that, since 1900, between 64% and 71% of wetlands have been lost due to human activities. These losses have negative impacts on multiple scales, from municipal to global, directly impairing water availability (Unesco, 2018). In the Brazilian context, many urban centers, such as São Paulo, are supplied by artificial reservoirs close to densely populated areas, notably the Guarapiranga and Billings reservoirs. In high-density population areas, reductions in water infiltration rates, altered surface runoff dynamics, and discharges of sewage, often untreated, into reservoirs are frequently observed.

The contemporary urban scenario, as discussed by Komninos (2008), is marked by accelerated transformations and challenges arising from the increasing globalization of innovation networks. Accelerated urbanization, climate change, and technological innovations have intensified the demand for more sustainable, smart, and resilient cities (Marcotullio, Hughes and Sarzynski, 2014; Pickett, Cadenasso and Mcgrath, 2011).

PES, sustainable, resilient, and smart cities

In response to these challenges, international standards such as those developed by the International Organization for Standardization (ISO) provide important guidance for urban development. In the Brazilian context, Moschen et al. (2019) highlight governance tools for sustainable cities, aligned with United Nations guidelines, particularly the Sustainable Development Goals (ODS). Within this panorama, Payment for Environmental Services (PES) emerges as a promising tool that can strengthen management and planning instruments in cities.

Urban sustainability, in essence, aims to balance environmental, social, and economic demands (Lim and Missios, 2007). From this perspective, cities seek to minimize their ecological footprint and promote inclusive development. NBR ISO 37120:2021 underscores the importance of robust urban indicators in this context (ABNT, 2021). Water resources, essential to urban life, naturally lie at the centre of these discussions.

In the context of the ongoing technological revolution, smart cities have emerged as urban models that leverage information and communication technologies to optimise services and resources (Karal and Soyer, 2023). Urban resilience, in turn, focuses on how cities can anticipate, respond to, and adapt to stresses and shocks (Papa et al., 2020). Water-related challenges, such as flooding and scarcity, are central elements in this debate on resilience.

At the core of this triad, sustainability, intelligence, and resilience, PES stands out as a key element. This economic and policy instrument reinforces the conservation of water sources and the restoration of degraded areas. Through PES, urban water management can be strengthened, thereby advancing sustainability, smartness, and resilience.

Standards directed at smart, resilient, and sustainable cities aim to foster harmonious urban development by weighing social, economic, and environmental dimensions. PES therefore presents itself as a tool aligned with this mission, evidencing the synergy between standards and sustainable practices. Figure 2 presents a schematic linkage between PES and elements of sustainable, smart, and resilient cities, followed by guidelines that can be integrated into each of these dimensions within a PES context.

Figure 2
– Linking PSA to sustainable, smart and resilient cities

Regarding sustainable cities, two approaches stand out, the recognition of environmental services and the financing of projects. A sustainable city recognizes the importance of local ecosystems in providing valuable services, such as water purification and climate regulation, among others. PES can be used to remunerate urban properties that maintain or create green spaces that provide such services. PES can source serve as a funding source for conservation projects, the recovery of degraded areas, or the creation of new urban green spaces. In terms of biodiversity promotion, biodiverse areas are valued by rewarding spaces that function as habitats for multiple species and contribute to urban ecological balance. With respect to encouraging urban agriculture, PES can serve as an instrument that stimulates urban agriculture by enabling locally produced food, reducing the carbon footprint, and strengthening food security. Regarding water resources conservation, rewarding the maintenance of permeable and riparian zones supports water conservation, protects water sources, and reduces flood risks.

In the context of smart cities, smart technologies can be used to monitor environmental services and to quantify and value ecological benefits. These data can serve as a basis for PES schemes. In terms of transparency and engagement, digital platforms can facilitate transparency in PES programs by allowing citizens to see how payments are being used and what benefits are being achieved. In smart cities, such platforms integrate data and optimize implementation and monitoring, for example, for PES and energy efficiency programs, thereby contributing to a reduction in the urban ecological footprint.

For resilient cities, the relevance of disaster prevention and climate change adaptation should be emphasized. Conservation and restoration actions for green areas, incentivized by PES, can contribute to urban resilience by reducing flooding through the maintenance of absorption areas. PES can finance the preservation of mangroves and other wetlands that function as natural barriers against extreme climate events, involving residents in conservation efforts and promoting collective well-being through community empowerment. Also, within a PES approach, previously degraded areas can be restored, recovering biodiversity and essential ecological functions.

By applying impact assessment techniques, cities can determine the actual benefits of PES schemes and adjust strategies as necessary. The Zoneamento Ecológico-Econômico of urban areas, for example, could be used to identify priority areas for PES schemes based on their capacity to provide environmental services. In this context, the PNPSA, enacted as Lei n. 14.119 de 13/1/2021, offers a foundational framework by recognizing the importance of environmental services for society and by establishing guidelines for remuneration and incentives for conservation-oriented and sustainable practices.

The interrelationship between PES practices and the Sustainable Development Goals (ODS) becomes particularly evident when analyzed considering ISO 37120 (ABNT, 2021). Goal 6, which addresses clean water and sanitation, and Goal 15, focused on life on land, stand out as directly benefiting from PES initiatives. In turn, Goal 11, focused on sustainable cities and communities, has expanded its reach and strengthened by the appropriate and strategic use of PES. Moschen et al. (2020) emphasizes the relevance of ISO 37120 (ABNT, 2021) in guiding cities towards sustainable development, aligning them with the global targets established by the ODS.

When considering the strategic alignment among the ODS, the PNPSA, and PES practices, the potential of these efforts becomes apparent not only in the Brazilian context but also globally, reinforcing the need for cooperation and collective action.

Ultimately, it is evident that integrating PES, strengthened by the PNPSA (Brasil, 2021), into the practices and policies of smart, resilient, and sustainable cities requires a multidisciplinary approach. Such an approach should bring together specialists in ecology, technology, urban planning, and economics. Together, they can devise strategies that maximize benefits both for the environment and for citizens.

Proposed framework for urban hydrologic PES

Environmental services should be incorporated into urban planning and management, particularly in Brazil, which holds the world’s greatest biodiversity and faces frequent pressures on preserved areas due to agricultural expansion and urban growth (Silva et al., 2019).

The Brazil’s national policy for PES (PNPSA) recognizes the relevance of environmental services and introduces measures for their valuation and remuneration. Although it highlights the possibility of PES in urban environments, the PNPSA is largely oriented toward non-urban settings (Brasil, 2021). This indicates both an opportunity and a need for municipalities to expand and adapt the PES concept to the urban context, considering the specific characteristics of this environment, including its linkage to municipal urban master plans, municipal urban master plans. To make the law clearer and more effective in inducing PSA in urban areas, the following suggestions could be made:

• clear guidelines for urban areas: the law could provide specific measures or guidance for application in urban areas. This could include details on how to achieve the conservation of vegetation remnants in urban and peri-urban areas, which are crucial for maintaining and improving air quality, water resources, and population well-being.

• role of different entities: the law could specify how different entities, including the private sector and non-governmental organizations, should operate in urban areas. This could include details on their roles in managing PSA projects.

• municipal legislation: the law could encourage municipalities to enact local regulations and establish conditions for implementing PSA in urban areas. This could help tailor implementation to the needs and specific conditions of each urban area.

• integration with other policies: the law could provide for the integration and coordination of PSA with other urban and environmental development policies. This could help ensure a comprehensive approach to environmental conservation in urban areas.

Within these aspects, it is important to clarify and emphasize the point regarding municipal legislation. Even if the PNPSA does not explicitly state this, in Brazil it is possible for municipalities to legislate on the topic, provided that such legislation is regulatory in nature and imposes restrictions that are equal to, or more stringent than, those established by federal law.

Where environmental services are being generated, there is also the possibility of implementing PSA in urban areas. This may include, for example, residents and managers who implement sustainable projects such as rainwater harvesting, green roofs, permeable sidewalks, and green areas within their lots, among other measures. In other words, PSA in the urban context can incentivize and value those who implement techniques that influence environmental quality and urban resilience through actions that effectively ensure the provision of environmental services related to water resources and environmental quality (Schimaleski Garcias, 2020).

The need to address environmental issues in urban areas is critical and urgent. On this basis, a strategy is proposed for implementing urban hydrologic PSA, as illustrated in Figure 3.

Figure 3
– Framework for implementing urban PSA

For a PES scheme to achieve maximum effectiveness, robust tax incentives, feasibility for external investment, and strategic continuity of actions and investments are essential. However, given the current structure of the PNPSA, there is a need to intensify efforts, potentially at the municipal level, to adapt, implement, and operationalize urban PES mechanisms. Many of the actions listed in the proposed framework would, in some cases, require only legal and/or technical adjustments at the municipal level to become feasible as PES. Many municipalities in Brazil already apply or encourage some of the elements cited in the proposed framework, although not necessarily linking them explicitly to PSA.

The Imposto sobre Circulação de Mercadorias e Serviços (ICMS) Ecológico, Brazil’s state-level value-added tax on the circulation of goods and services in its ecological fiscal- -transfer modality (ICMS Ecológico), emerges as a promising tax incentive. As outlined by Pinto et al. (2015), 17 Brazilian federative units have adopted this mechanism. In Mato Grosso do Sul, for example, ICMS Ecológico subsidizes initiatives focused on solid waste treatment and the maintenance of legally protected areas (Unidades de Conservação – Ucs), managed at the municipal level. A positive evolution is observed between 2002 and 2014, both in terms of the number of municipalities involved and the financial amounts transacted (ibid.).

In terms of investment, private entities may focus on areas such as the restoration of Áreas de Preservação Permanente (APP), legally protected areas under Brazilian environmental law, the installation of cisterns for rainwater harvesting and use, the implementation of green roofs, and the protection of green areas and springs, with technical support from environmental agencies.

In parallel, public investments may focus on expanding and improving essential services such as sewerage, stormwater management, and the promotion of Soluções baseadas na Natureza (SbN), i.e., Nature-based Solutions (NbS).

Applying PSA in an already degraded setting points to the possibility of using this instrument to restore or revitalize environmental services, as well as to promote changes in conventional drainage techniques and the upgrading of basic sanitation services (Schimaleski and Garcias, 2020). SbN, according to guidance from Unesco and the Instituto Brasileiro do Meio Ambiente e dos Recursos Naturais Renováveis (Ibama), are nature-aligned strategies that often replicate natural processes and aim to improve water management. In contrast, grey infrastructure refers to human interventions in ecosystems intended to meet urban needs, such as dams and wastewater treatment plants.

Emphasizing the importance of green infrastructure, several elements are incorporated, including green streets, parks, aquifer recharge zones, and green roofs (Silva et al., 2019; Phillips et al., 2023). NbS, as well as green streets, can be applied with the aim of directly or indirectly improving quality of life and residents’ well-being in cities, thereby minimizing the negative effects of climate change and urbanization (Phillips et al., 2023). In addition, a relationship is established between green infrastructure solutions and ecosystem services in urban environments, as shown in Chart 4.

Chart 4
– Intersection between green infrastructure solutions and ecosystem services in urban contexts

Grey infrastructure	Primary ecosystem service	Secondary ecosystem service	Green infrastructure solutions
Reservoirs	Regulation of water supply	Water temperature control	Creation of green spaces (shading of channels)
Water supply system		Drought mitigation	Stormwater harvesting
		Water purification	Restoration and conservation of urban river basins; construction of wetlands; green spaces (bioretention and infiltration); permeable pavements
Water treatment plant		Construction of wetlands	Construction of wetlands

Combining methods that use green and grey infrastructure can result in substantial economic benefits, manifested as cost reductions and an overall mitigation of associated risks (Unesco, 2018, p. 6). A practical illustration of this synergy is observed when NbS are applied within green infrastructure contexts. Among the available structural measures that promote water retention, systems that enhance water infiltration into the soil stand out. Green streets, according to the study by Phillips et al. (2023), use urban trees as a nature-based solution aimed at residents’ well-being in Brussels, improving local socio-environmental outcomes.

However, green streets are also used as a sustainable drainage solution for streets, functioning as constructed wetlands that infiltrate water into the soil. For example, rain gardens, illustrated in Figure 4, are characterized by the absence of a dedicated reservoir for storing stormwater. They are structured in topographic depressions in which native plant species are cultivated, mainly shrubs and flowers. In contrast, bioretention is a more intricate approach, designed specifically to minimize surface runoff and effectively remove contaminants present in the water (UFSM, 2021).

Figure 4
– Nature-based solution: rain garden (vegetation and stones) for stormwater retention in Copacabana, Rio de Janeiro State

Rain gardens, for most of the time, remain dry, retaining stormwater only during and immediately after rainfall events (UFSM, 2021).

Green structures are intrinsically linked to the restoration or maintenance of native vegetation, enhancing biodiversity, safeguarding water availability, and mitigating adverse impacts resulting from natural and anthropogenic hazards. However, their implementation in urban and public areas poses a challenge, particularly on privately owned land. In this context, Payment for Environmental Services (PES) emerges as a viable strategy to make this initiative feasible (Silva et al., 2019, p. 189).

Bioretention cells are characterized as shallow surface depressions vegetated and designed to receive, treat, and release stormwater, producing runoff volumes and water quality closer to those of a naturally forested watershed. These cells are suitable for application in commercial areas, parking lots, and public roadways (Rosa, 2017).

In his study, Rosa (2017) used hydrological modelling that included precipitation scenarios based on cartographic and topographic information for the study basin, complemented by geoprocessing techniques. The author assessed the basin’s hydrological responses under different conditions, including scenarios with green infrastructure implemented across 100%, 50%, and 10% of impervious areas. The results highlight the basin’s capacity for detention to attenuate flooding and the basin’s potential for implementing green infrastructure, promoting benefits such as increased infiltration and reduced surface runoff.

The ecological rehabilitation of small watersheds emerges as a strategy to revitalize urban ecosystems. This includes approaches such as the collection and treatment of domestic and industrial effluents, as well as the management of diffuse pollution, which challenges urban administrators (Barros, Santos and Gomes, 2007).

In addition, it is essential to consider the sustainability of PES in the context of water provision services and the maintenance of water quality. Schimaleski and Garcias (2020) identify five essential conditioning components: conservation of riparian vegetation and other permanent preservation areas; control of the degree of soil impermeabilization; adoption of less impactful agricultural and livestock practices; application of sustainable urban drainage techniques; and ensuring the quality of basic sanitation services.

Beyond the direct physical impacts of urbanization, such as soil impermeabilization that intensifies surface runoff, political structures and urban planning frameworks also play an important role in managing, or exacerbating, water-related problems. The 2014-2015 water crisis in São Paulo, as discussed by Millington (2018), provides a vivid example of how political decisions can intensify water crises. In São Paulo, the combination of inadequate water management policies and a severe drought resulted in a crisis that not only highlighted the vulnerability of urban water systems but also exposed failures in environmental governance and the lack of long-term measures for water conservation and water resources management. This case underscores the need for an integrated approach that considers both physical infrastructure and urban development policies. Appropriate public policies that integrate sustainability and resilience considerations throughout urban planning and implementation are essential to prevent and mitigate future water crises in urban areas.

Although the focus of this study has been on technical and legal solutions for urban drainage and water management, it is also important to recognize the complementary role that waste pickers can play in mitigating challenges associated with urban water management. By effectively managing and recycling municipal solid waste, waste pickers help reduce the volume of refuse that can obstruct drainage systems, contributing to the efficiency of these systems and reducing the risks of flooding and other problems related to stormwater management (Souza and Mello, 2015). The inclusion of these workers in urban Payment for Environmental Services (PES) programs could not only recognize their critical role in urban sustainability but also drive an expansion of the scope of such programs to encompass essential services that promote urban resilience in the face of climate change and extreme events. This is a topic that this article presents as a perspective for future studies and analyses.

Conclusions

Growing urbanization and its subsequent implications for water resources have been a persistent concern for the planning and sustainable development of Brazilian cities. In this scenario, hydrologic Payment for Environmental Services (PES) emerges as a promising instrument. However, as noted by Souza et al. (2018), its applicability remains at an embryonic stage, particularly in urban contexts.

The recent Brazilian Policy for PES (PNPSA) brought to public debate in 2021 about the valuation and remuneration of ecosystem services. Nevertheless, although the PNPSA points to the potential of PSA in urban environments, its focus remains predominantly on non-urban settings. This signals an urgent need to explore and consolidate PSA in urban contexts, where pressure on natural resources is even more pronounced.

This study aimed to develop an adjusted framework for the implementation and legal improvement of hydrologic PES in Brazilian urban areas. Given the challenges of the Brazilian urban context, complementing what is established by the PNPSA through municipal legislation may, through the proposed framework, offer pragmatic and context- -specific solutions for the diverse realities of municipalities across the country.

The studies and analyses presented here serve as strategic arguments, shedding light on the challenges of urbanization and offering a critical roadmap for the convergence of public policies, sustainable practices, and fiscal and tax incentives. These actions align with the concepts of smart, sustainable, and resilient cities, promoting synergy between environmental conservation and urban development.

In the context of standards for sustainable, smart, and resilient cities, hydrologic PSA is not only a conservation instrument but also a strategic solution to address urban challenges. Its integration with the SDGs makes the urgency, and the opportunity, of implementing it as a key tool in urban planning even more evident.

Among the key elements of the framework is its capacity to organize complex information while guiding decision-makers, public managers, and other stakeholders towards practical actions that promote urban sustainability. By mapping providers and beneficiaries of ecosystem services and identifying environmental services relevant to the urban context, the potential to transform urban scenarios through hydrologic PES becomes clear.

In conclusion, although PES is not explicitly mentioned in the cited NBR ISO standards, its essence and objectives are intrinsically aligned with the vision of future cities proposed by those standards. Integrating PSA into urban planning therefore becomes not only a promising opportunity but an emerging necessity to address growing pressures on sanitation systems and water resources.

Finally, this study advances the debate on hydrologic PES in Brazilian urban areas in a significant way. By proposing a structured framework, reflecting on its practical application, and integrating it with the vision of sustainable, smart, and resilient cities, we hope not only to contribute academically but also to positively influence the development of more balanced and sustainable cities in the future.

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Note

• 1
  NBR – Brazilian Standard.
• Data availability statement:
  All the data supporting the results of this study were published in the article itself.

Edited by

• Editors:
  Lucia Bógus and Luiz César de Queiroz Ribeiro

• Organizers of this issue:
  Ana Marcela Ardila Pinto, Carlos Fernando Ferreira Lobo, Natália Villamizar Duarte

Data availability

All the data supporting the results of this study were published in the article itself.

Publication Dates

• Publication in this collection
  17 July 2026
• Date of issue
  May-Aug 2026

History

• Received
  12 Nov 2023
• Accepted
  20 Apr 2024