Transcript Document

Markets for
Ecosystem Services:
International Experience
Sara J. Scherr
Forest Trends
Ecoagriculture Partners
May 2005
International Trends in Payments for
Ecosystem Services: Key Messages
1) PES strategies are emerging because conservation finance is in
crisis just as broader ecosystem conservation needs are
identified; conservation investment must be part of the
mainstream economy
2) Innovative market and ‘market-like’ mechanisms are emerging
all over the world that seek to convert major “sources of threat”
to sources of conservation stewardship (U.S. leads in some
market developments, lags in others)
3) The rules and strategies developed over the next decade will
influence patterns of conservation and investment globally over
the next century; the U.S. can play a leadership role
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
Motivations to Use Market-Type Instruments
• Failures of traditional regulatory approaches
• Limits of protected areas and
broadened ecosystem approach
• Financial markets reward short-term returns
over long-term ones
• Financial value of natural area conversion is much
higher than for conservation
• Stagnant public and civic funding for
conservation
Who Buys Ecosystem Services?
THE FOREST CLIMATE ALLIANCE
Direct Beneficiaries
• Watershed protection
– Industrial, agricultural water users – to secure stable supply, flow
– Municipal water utilities, consumers (reduce costs, water quality)
– Agencies managing environmental risks (e.g.,floods)
• Biodiversity conservation
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Conservation agencies and organizations working on private lands
Tourist industry, for landscape beautify or protection of key species
Land developers (offsets for damage, or for amenity values)
Farmers (to protect pollinators, sources of wild products)
• Carbon emission offsets or avoided deforestation
– Industries required to comply with carbon rules (offsets for emissions)
– Agencies, municipalities seeking to improve air quality
– Businesses providing carbon offsets
Using Carbon Emissions Trading to Finance
Sustainable Development and Conservation
Above-Ground Time-Averaged and Total Soil Carbon
(0-20 cm) for sites in the humid tropical lowlands
of Brazil, Cameroon and Indonesia
Who Buys Ecosystem Services?
THEIndirect
FORESTBeneficiaries
CLIMATE ALLIANCE
• Consumers:
“green” values
• Companies:
“green” branding
• Investors:
”green” filters
Types of Markets and Payment
Schemes for Ecosystem Services
• Self-organized private deals
Private entities pay for private services
• Public payments to private land and
forest owners
Public agency pays for service
• Open trading of environmental
credits under a regulatory cap/floor
Landowners either comply directly with
regulations, or buy compliance credits
* Eco-label of forest, farm products
Consumers prefer certified sust. supplies
Public Payments for Ecosystem Services
• Agri-environmental payments in EU
– Switzerland – over 8% of total agricultural land
• “Green payments” in China
– Over $1 billion in payments for Green compensation,
etc.
• Watershed payments in Mexico
– Since 2002, $23 mln/year in on 770,000 A
• Watershed payments in Costa Rica
– $9 million on 51,000 A
Private Deals
• Retail carbon market
– Now 0.7m t/CO2; expected to grow to 15m 2008-2012
• Payments for water quality protection
– Perrier bottling plants in France
• Payments for landscape beauty/tourism value
– Chile’s private Protected Area Network – 2.5 million A
• Conservation NGO payments for habitat and
biodiversity conservation
– Latin America - $100,000,000’s
Trading Under a Regulatory Cap or Floor
• The Kyoto-compliant carbon market
– Was 1.16m t/CO2 in 2002 and is expected to grow to a
at least 15m t/CO2 in 2008-2012
( LULUCF under $50 million)
• European Trading System
– 20 million tons CO2 @ 16.7 euros/t (not yet LULUCF)
• New South Wales, Aust. GHG Abatement
– Aus$11-14/tCO2e
• Tradable development rights in Brazil
Creating Markets for Ecosystem Services
Obstacles to Development of PES
* Lack of technical and market information
• Limited institutional experience
• Inadequate legal framework
• Suspicion of markets for public goods
• Equity concerns
Priorities for Action
• Democratize information about ecosystem service
markets
• Encourage broad participation in policy dialogue
about the rules and shape of ecosystem service payments
(local, national, international)
• Reduce learning costs for new entrants to these
markets; through training programs and enterprise support
• Reduce transaction costs through institutional
innovations like suitable intermediaries, ‘bundling’, largearea programs, integrate with economic activities
The Katoomba Group–
Linking Global Innovators
“The Katoomba Group has become the incubator
for the development of new environmental markets,
providing the intellectual capital supporting the
boldest new economy experiments.” – G. Daily
The Katoomba Group’s
“Ecosystem Marketplace”
Run a Search
The first global information service to report on and
track developments in new
ecosystem service-based markets for:
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Water quality and flow related to land use decisions
Carbon sequestration and storage
Conservation of biodiversity and endangered species
Other conservation-related transactions
http://www.forest-trends.org/staff/Marketplace/Index.htm
Vol. 1. No.1
Ecoagriculture Partners
International Learning Network:
Paying/rewarding farmers and farming
communities for stewardship of
ecosystem services
Steering Committee: Forest Trends,
Winrock Int’l, IUCN, NEMA-Uganda,
EcoTrust, IFAD, REBRAF, ICRAF,
Katoomba Group, UNDP/GEF
• Nairobi meeting, September 2004
• Uganda meeting, September 2005
(with Katomba Group)
Thank you!
www.forest-trends.org
www.ecoagriculturepartners.org
www.ecosystemmarketplace.com
Ecoagriculture
Partners