Transcript Document

Using Payments for
Ecosystem Services to
Achieve Conservation
and Development
Objectives
Sara Scherr
Forest Trends
Ecoagriculture Partners
September 2005
Investing in “Natural
Infrastructure’
Air quality
Pest & disease control
The Forest Climate Alliance
Watershed protection and regulation
Strategic Advice to National Policy Initiatives
Wilds species
& habitat
protection
Biodiversity
Offsets
Plant pollination
Carbon sequestration and storage
Soil formation and fertility
Decomposition of wastes
Landscape beauty
a) Self-Organized Private
Deals
Private entities pay for private services
* Perrier-Vittel pays upstream landowners
for improved agricultural practices and
reforestation of sensitive infiltration zones
(US$230/ha/yr)
* TNC, CI, WCS payments to farmers and
communities for conservation
management
Price of service typically negotiated, based
on willingness to buy and sell (valuation
studies may be an input for negotiation)
b) Public Payments to
Farmers,
Communities
Public agency pays for service
•Public payments for watershed
protection in Mexico ($60 mln
in 2004)
•US pay landowners for wildlife
conservation (EQUIP, Safe
Harbor)
• Price of service either set by
program (based on willingness to
sell and valuation studies) or
through auction
c) Open Trading of Ecosystem
Credits Under a Cap or Floor
Landowners either comply directly
with regulations, or buy
compliance credits
* Wetland banking in US allows
developers to offset damage
* The Kyoto-compliant carbon emission
offset market
* Freshwater nutrient-trading
* Price of service is based on supply and
demand for the service (with demand
determined by regulation)
d) Eco-labeled farm, forest,
THE
FOREST CLIMATE ALLIANCE
natural
products
Consumers prefer certified
sustainable supplies
* “Shade-grown coffee” in
Mesoamerica (US$5 billion for
sale in USA alone)
* Certified timber
* Eco-landscape source labels
* Price of service embedded as
part of product price--usually by
market (FSC), sometimes by
negotiation (Starbucks)
Building Blocks for Ecosystem
Services Payments and Markets
DRAFT – FOR INTERNAL DISCUSSION PURPOSES
Create Supportive
Legal / Regulatory
Context
(includes establishing
tenure / rights)
Identify
Ecosystem Services,
Buyers & Sellers
(includes assessment of
both buyers’ and sellers’
goals / motivations
to ensure that they are
complementary)
Develop the Rules
for the Market
or Trading
(includes determining what
is being sold, who is
paying for what, etc.)
Launch
Markets &
Payments
For
Ecosystem
Services
Establish
Supporting
Organizations &
Services
(includes verification
services, etc.)
Adapted from Brand, David. 2002. “Investing in the Environmental Services of Australian Forests,” in S. Pagiola, J. Bishop, and N. Landell-Mills (editors).
Selling Forest Environmental Services: Market-Based Mechanisms for Conservation
and Development. London, U.K.: Earthscan Publications.
0
Potential Benefits for
Sustainable Development
Poverty Reduction
 New sources of finance for conservation, esp.
outside Protected Areas
 Incentives for rational decision-making
about resource use and management
 Income for rural communities with few other
market opportunities (e.g., where no transport)
 Rewards rural communities for real benefits
they provide to others
 Financing for transition to sustainable
agriculture, forestry and fisheries
DRAFT – FOR INTERNAL DISCUSSION PURPOSES
Essential Components for
Ecosystem Services Market Growth
Public Payment
Schemes
Open Trading
Self-Organized
Private Deals
Identified Ecosystem Services
Component 1
Component 2
Component 3
Component 4
(includes: ecosystem services for available for both current and future payments / markets)
Enabling Legal, Regulatory, & Administrative Context
(includes: supportive context for ecosystem service payments and markets)
Supporting Institutions
(includes: public or private entities that facilitate / oversee public funds, regulate private trade, etc.)
Engaged Local Communities & Stakeholders
(includes: communities, NGO’s, financial institutions, businesses, government, etc.)
Component 5
Flow of Market Information
Component 6
Technical Assistance
(to sellers, buyers, and other market actors , which includes training, education, and advising)
Component 7
Component 8
Component 9
Component 10
Financing
(for all needed components, including: ecosystem management costs, transaction costs, etc.)
Support Services For Market Actors
(such as: brokering, legal advice, measurement and valuation of ecosystem services,
3rd party verification, accounting, etc.)
Standards and Guidelines
for Ecosystem Service Payments or Markets
Awareness of Ecosystem Service Values, Payments & Markets
(among policymakers as well as
2 potential sellers and buyers)
Current Obstacles to Developing
PES

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Lack of technical and market information
Potential buyers not organized
High costs fo find, negotiate, monitor deals
Lack of experience and capacity
Inadequate legal and regulatory framework
Political conflict over rights, responsibilities
Distrust of markets for public goods
Potential Benefits & Risks for
Community Sellers
Benefits
* New, often more regular, flows of income (15-25% +)
* Portfolio diversification
* Catalyst for adopting better management practices
* Asset appreciation (pest & disease control, high inventory)
* Locally-valued ecosystem goods and services
* Social investment, such as preserving cultural heritage
Risks
* Loss of economic use options
* Loss of land and forest ownership or access
* Loss of local ecosystem services
* Contractual obligations if services not delivered
Overcoming Obstacles for
Community Producers
• Democratize information about ecosystem service
markets
• Encourage broad participation in policy dialogue
about the rules and shape of ecosystem service payments
• Reduce learning costs for new entrants to these
markets; training programs and enterprise support;
financial viable and appropriate business models
• Reduce transaction costs through institutional
innovations like suitable intermediaries, ‘bundling’, largearea programs, integrate with economic activities
The Katoomba Group–Linking
Global Innovators, Providing
Policy Support
Are PES relevant for
East and Southern
Africa?
 Critical need for new sources of
confirmation finance
 Many one-off projects being
developed or in pipeline
Use models that fit local social
and institutional conditions
(“it’s all about design….”)
 Be strategic about role of PES
in national conservation and
development strategy