Transcript PES and property rights

Property rights, collective action,
and PES
John Kerr
Michigan State University
Outline
• How property rights & collective action shape
PES opportunities
• Effects of PES on property rights & collective
action
• Designing PES to accommodate property
rights & collective action concerns
• Brief case study illustrations
Property rights scenarios
Private  public
Individual  group
Collective action scenarios
Active cooperation  passive coordination
Property rights constrain and
shape PES
• Land tenure as requirement for setting up PES
– Land user must be able to commit over many
years
– Costa Rica national program: only land owners
eligible
• Where property rights aren’t clear, PES design
will require creativity
Collective action requirements may
shape PES
• Where ES has threshold effects, collective
action is required
• E.g. biodiversity and watershed services
• Must design PES to coordinate service
provision
– Coordination could be active or passive
PES affects property rights
• PES confers property rights
– Legitimizes land user’s presence
– Legitimizes the land use (if PES is voluntary)
– Buyer owns the ES
• If PES raises land value it may reduce land
access
– Lose the lease or pay higher rent
– Lose access to commons
• The wealthy and powerful encroach
• Govt. restricts access
PES affects collective action
• Would a group-based PES encourage or
discourage collective action?
– Must work together to gain payment
– Will payment per se encourage or discourage
collective action?
• Cash incentive can crowd out other sources of
motivation
Property rights, collective action, &
design of PES
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Conditionality
Transaction costs
Types of payments and rewards
Individual vs. group payments/rewards
Conditionality
• The key feature of PES
• Suggests that payment should be:
– On a regular basis, not just one time.
– Directly proportional to the level of
environmental service provided.
Transaction costs
• Types of transaction costs:
– Search, negotiation, contracting, monitoring,
enforcement, insurance
• High fixed costs:
– Total cost/ha falls with larger contracts
Ways to reduce transaction costs
• Improved monitoring technology
• Institutional innovations:
– Group contracts
– Intermediary organizations
– Build on existing local institutions
– Participatory monitoring
– Low cost data collection systems
– Bundling services
Types of payments
• Cash
• Conditional land tenure security
• In-kind services & development
support
– training, employment, market
access, infrastructure
Cash
• Straightforward and simple
• Facilitates annual payments
• Divisible and direct
– Good for individual-based systems
– Possible problem if group contract
Conditional land tenure security
• Used on illegally settled land
• Eviction if service not delivered
• It’s indivisible – useful for
group PES systems
• Does not facilitate annual
payments
• Challenges to conditionality:
– May be difficult to revoke in long term even if ES
not sustained
In-kind services/development support
• Could be a form of payment
• Questions about enforcing
conditionality
– Could it bring in-migration?
– Can it be revoked?
– Ethical concerns
• Hypothetical: bonuses and
fines on a local development
budget
Group or individual contract?
• Individual
– Simple conceptually
– High transaction costs for
contracts with many small
holders
– Low transaction costs for large
contracts
Group or individual contract?
• Group
– Useful if many small landholders
– Useful if threshold effects
– Reduces transaction costs for
buyer
– Transfers transaction costs to
group
• Monitoring, administering payment
– Concern about elite capture
• Can avoid with indivisible, noncash
payments
Agglomeration bonuses
• Useful where threshold effects with large landholders
• Low level coordination, avoids transaction costs
Source: Goldman et. al 2007)
Case studies
TIST
• The International Small Group
Tree Planting Program
– Tanzania, Kenya, Uganda, India
• Carbon sequestration credits
– No threshold effects  individual
contracts
– Simple monitoring and payment
systems
– Annual payment per live tree
Sumberjaya, Indonesia
Sumberjaya, Indonesia
Sumberjaya, Indonesia
• ~5,200 participants divided into 18 groups
covering 11,000 ha gov’t forest land
• Tenure security is the reward
– Has teeth now, but later?
– Development budget?
• Group internalizes some of the transaction
costs
• Some participants not aware of program
– Group arrangement facilitates participation
– Sustainability?
Sukhomajri, India
Sukhomajri
Chandigarh
Irrigation
ponds
Forest
Sukhomajri, India
• Watershed protection via forest protection
– Between city and village; within village
• Village gets irrigation water as reward
• Landless have water rights
– They share the value of the ES they provide
– Villagers came up with this idea
• Forest Dept. granted rights to products of
protected forest
– But wanted it back when it became valuable
Panchayat and Revenue lands
in India
• Link community forestry programs to Chicago
Climate Exchange?
• Government owned lands
– Allows villagers to “borrow” these lands for
productive purposes
– But if land generates cash, govt might want it back
Conclusion
• PES arrangements must be developed with
awareness of property rights conditions and
collective action requirements
• PES can shape PR & CA
• PR & CA can shape PES
• Much still to be learned