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Review of international case studies of Payment for Ecosystem Services (PES)
Project Activity 2.2 for the Project:
Developing a piloting model on payments for coastal wetland ecosystem services in Mui Ca Mau National Park in the context of climate change contributing to poverty reduction in
local community
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THIS DOCUMENT IS SPONSORED BY
Project sponsored by The Swedish International Development Cooperation Agency in Vietnam Project Partners Biodiversity Conservation Agency, Vietnam Environment Administration, Ministry of Natural Resources and Environment, Vietnam Research Center of Forest and Wetlands, Vietnam Forum for Reforms, Entrepreneurship and Sustainability, Sweden This report prepared by Scott Cole EnviroEconomics Sweden Consulting (EES) (www.eesweden.com) With assistance from Daxam Sutainability Services (www.daxam.se) Enveco Environmental Economics Consultancy Ltd (www.enveco.se) Citation BCA, FORES, FORWET 2013 Review of international case studies of Payment for Ecosystem Services (PES), Stockholm, Sweden Project Team Ulrika Stavlöt Ana P Aponte Scott Cole Linus Hasselström Daniel Engström Stenson Nguyen The Dong Huynh Thi Mai Nguyen Chi Thanh Nguyen Tuan Phu Nguyen Tien Dung Le Huu Phu
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Contacts Biodiversity Conservation Agency, Vietnam Environment Administration, Ministry of Natural Resource and Environment Management No 10, Ton That Thuyet Street, Cau Giay district, Hanoi, Vietnam Tel.: + 84 4 37956868 Ext.3108 Forum for Reforms, Entrepreneurship and Sustainability Bellmansgatan 10 118 20 Stockholm, Sweden Tel: +46 08 45 22 660
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Table of Contents
1. BACKGROUND AND PURPOSE OF REPORT 5
2. APPROACH 7
3. METHODOLOGY FOR TECHNICAL ANALYSIS 8
4. RESULTS OF INTERNATIONAL PES LITERATURE REVIEW 12
4.1. Summary of the findings of The BCA Report (Huynh Thi 2011) 12
4.1.1. Review international experience with PES for biodiversity 12
4.1.2. Assess the potential application of PES in Vietnam. 14
4.1.3. Propose a nationwide policy and a roadmap for PES in Vietnam 15
4.2. Technical analysis of PES case studies 16
4.2.1. Background on case studies 16
4.2.2. Ecosystem services addressed 17
4.2.3. Technical aspects of PES schemes 17 4.2.3.1. The ecosystem service bought and sold 17 4.2.3.2. The buyers and sellers 18 4.2.3.3. Contracts and payment 19 4.2.3.4. Determining price 19 4.2.3.5. Administration & enforcement of the PES scheme 19
5. CONCLUSIONS 21
REFERENCES 26
APPENDIX A – FORMAL SUMMARIES OF 16 PES CASE STUDIES 30
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1. Background and Purpose of report
The Government of Vietnam is pursuing market-‐based approaches to environmental protection, with a strategic focus on Ecosystem Services (ES) such as biodiversity conservation. Specifically, the country’s vision is to share the benefits of environmental services between beneficiaries and stakeholders. The country has undertaken several pilot studies that apply a Payment for Ecosystem Services (PES) approach for reaching this goal including, but not limited to1:
1. Payment for landscape protection Bach Ma National Park (2002-‐2007) 2. Payment for carbon sequestration in forests in Cao Phong Hoa Binh (2002-‐2007) 3. Payment for marine protected areas of Nha Trang Bay (2002-‐2007) 4. Payment for Forest Ecosystem Services in Lam Dong and Son La Provinces (2008-‐
2010) 5. Emerging pilot studies related to payment for ES provided by National Parks such
as aquaculture to raise revenue for Park activities (e.g., Bidoup Nui Ba NP, Ca Ba NP, and Xuan Thuy N.P)
These pilot projects are driven in part by Vietnam’s unique Biodiversity Conservation Law adopted in 2008 which includes, among other things, a specific provision requiring users of environmental services related to biodiversity to pay charges to service providers (see Article 74). This unique part of the law paves the way for the implementation of pilot studies related to PES.
Following the success of the Payment for Forest Ecosystem Services pilot – which improved living standards for local people, reduced illegal logging, provided forestry sector employment, and reduced State budget expenses (Phuc Xuan 2012) -‐-‐ Vietnam’s Environment Agency is interested in expanding PES pilot programs to cover ES from non-‐forest ecosystems (Huynh Thi 2011). For example, the Government of Vietnam issued Decree No. 99/2010/ND-‐CP which called for replicating the success of Payment for Forest Ecosystem Services pilot to cover other ES in the country.
Further, the Government of Vietnam is interested in combining continued economic development with two additional goals: (1) mitigation of climate change impacts – in particular rising sea levels which underscores the value of ES provided by coastal wetlands – and (2) alleviation of rural poverty.
The result is this Mui Ca Mau National Park PES pilot study on coastal wetlands, a Partner-‐Driven Cooperation Grant from the Swedish International Development Agency (SIDA).2 Vietnamese partners on the project include the Biodiversity Conservation Agency within the Vietnam Environment Administration (BCA), the Institute of Strategy
1 See e.g., Hoang Minh Ha et al (2008), MONRE (2010), Nguyen Thuy Duong et al (2011), Phuc Xuan (2012). 2 The project is entitled Developing a piloting model on payments for coastal wetland ecosystem services in Mui Ca Mau National Park in the context of climate change contributing to poverty reduction in local community commenced on 15 November 2012 and will last one year. See Huynh Thi 2011.
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and Policy on Natural Resources and Environment within Vietnam’s Ministry of Natural Resources and Environment (ISPONRE), and the Research Center of Forest and Wetlands (FORWET). The Swedish partner is Reforms, Entrepreneurship and Sustainability (FORES) together with their local Swedish experts, Daxam Sustainability Services (Daxam) and EnviroEconomics Sweden (EES).
The project’s goal is to establish a PES structure that will enable poor local communities in Mui Ca Mau National Park to earn income from livelihood models that rely on services provided by coastal wetlands and mangrove forests and then be able to use part of this income to compensate the National Park for the use of these ES. The project has four main objectives:
1. Develop a livelihood model for 20 local households aimed at reducing poverty and generating income for future purchase of ES from the National Park;
2. Develop a mechanism and administrative system for buyers and sellers of ES to interact and conduct transactions (PES);
3. Improve capacity-‐building and public awareness of PES development and implementation in Vietnam and Sweden; and
4. Create a strategic partnership and long-‐term cooperation between Vietnamese and Swedish partners on PES development.
The project’s work plan (BCA et al 2012) specifies several deliverables. FORWET will develop a pilot livelihood model (Activity 1.6) and FORES, together with their Swedish experts, will develop a preliminary PES payment structure (Activity 2.12). The project will test the PES structure and make recommendations for a possible second phase of the PES experiment. The overall goal of the PES structure is to improve the cost-‐efficiency of resource management and sustainable provision of ES from coastal wetlands and mangrove forests in Mui Ca Mau National Park.
The purpose of this report is to provide an intermediate deliverable en route to producing the proposed PES payment structure (expected June 2013). The report identifies PES case studies on the international level, summarizes patterns that emerge from these experiments and/or pilot studies and identifies key lessons learned.
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2. Approach
Because BCA has already conducted an international review of PES programs around the world (Huynh Thi 2011, or hereafter “The BCA Report”), the focus of this analysis is to complement this report by reviewing technical issues related to a PES payment structure.
Therefore, this international review of PES case studies is composed of two parts:
1. Review of previous findings on PES programs from The BCA Report, with a focus on lessons learned in developing a roadmap for future PES development in Vietnam (The BCA Report is written in Vietnamese); and
2. Technical analysis of PES programs that focuses on 16 case studies identified by the authors of this report. The technical analysis will cover issues relating to, for example, identifying buyers and sellers, establishing prices, measuring ecosystem services, linking the supply of ecosystem services to the activities of providers themselves (e.g., tree planting leads to carbon sequestration), developing a payment structure and administration, ensuring adequate monitoring and enforcement, etc.
The next section focuses on the methodology for the technical analysis.
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3. Methodology for technical analysis
Our literature search aims to identify examples of on-‐going PES programs (“case studies”) for which sufficient time has passed to allow for meaningful evaluation. The PES approach to resource management has gained in popularity since the influential article in Science magazine by Ferraro and Kiss (2002), who argued for a direct approach to conservation. We define a PES scheme by referring to the commonly-‐cited definition by Wunder et al (2005), where PES is:
1. a voluntary transaction where 2. a well-‐defined ES (or a land-‐use likely to secure that service) 3. is being ‘bought’ by a (minimum one) ES buyer 4. from a (minimum one) ES provider 5. if and only if the ES provider secures ES provision (conditionality).”
Case studies were found in the peer-‐reviewed and grey literature. Our search targets specific types of PES case studies, although some case studies that are slightly outside our focus were nonetheless considered relevant to the analysis. The priority themes we used to guide our initial literature search include the following:
• Coastal wetlands and marine ecosystem focus • Mangrove focus • Vietnam focus • PES programs that include poverty reduction goals • Focus on climate change mitigation • Any PES experiment that provides valuable lessons learned
Our search resulted in various articles and studies investigating PES schemes around the world. We selected 16 studies that met the priority themes and described a concrete example of an implemented or on-‐going PES scheme. For these studies we completed a two-‐page summary of study results. The top half of Table 1 provides an overview of these studies in alphabetical order and Appendix A provides the two-‐page summaries.
A number of other relevant studies were also collected and reviewed to enhance our case study analysis. These studies are identified in the second half of Table 1. We have cited these studies in Section 4 (Analysis) where appropriate to support the general findings from both The BCA Report and the technical analysis of the 16 case studies.
Table 1 International PES case studies used in the technical analysis
No. Author Key focus of PES case study
Summarized PES Case Studies (see Appendix A)
#1 Asquith et al The US Fish and Wildlife Service and downstream irrigators (supported by the
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(2008) municipality) pay landowners to preserve and protect forests in Los Negros, Bolivia. The ES addressed are habitat for birds and stable water flows provided by the forest.
#2 Barstad et al (2011)
Free-‐willing individuals/NGOs voluntarily pay forest landowners in New England to improve watershed management and the supply of ES like clean water, recreation, and fish habitat.
#3 Barton et al (2009)
The Costa Rica government pays forest landowners to preserve their land for the maintenance of ES from forests.
#4 Clements et al (2010 )
Three case studies in Cambodia: Program 1 and 2 aims to make farmers and villagers stop hunting endangered species and abide by a land-‐use plan by paying them a share of the entrance fees from an ecotourism site or allowing them to sell their rice under a “Wildlife –Friendly” brand which gives them a more favorable price. Program 3 pays locals to protect bird nests and habitats. The NGO “Wildlife Conservation Society” (WCS) is in charge of the program and is also funding and distributing the payments.
#5 Costa (2011) Payment of landowners in Guatemala (Alta Verapaz) for provision of habitat for migrant species, biodiversity, and freshwater supply by governments and international donors (hypothetical framework only).
#6 Dobbs and Pretty (2008 )
The UK government pays farmers and other land managers for a range of environmental preservation and restoration projects to preserve or improve ES like habitat for birds, biodiversity, landscape beauty and historic preservation.
#7 Frost and Bond (2008)
Safari operators in Zimbabwe pay farming communities in wildlife areas to refrain from exploitation and hunting of big game, which improve ESs related to wildlife habitat and aesthetic views..
#8 Kosoy et al (2006)
Programs in Honduras, Nicaragua, and Costa Rica whereby water users pay a fee to forest landowners to manage forests to improve ESs related to water quality and flows.
#9 Kosoy et al (2008)
The Mexican government pays Ejidos (territory held in common by a group of families) to increase and stabilize the flow of ES from forests, with an emphasis on biodiversity and carbon sequestration, through different management and preservation projects.
#10 Munoz et al (2008)
Water users pay a fee to the Mexican government, who distributes this to primary forest landowners to preserve forests and the benefits it provides to the watershed.
#11 Pagiola (2008)
Firms pay forest landowners in Costa Rica for the preservation of their forests to keep or improve the flow of ES related to water regulation, biodiversity, carbon sequestration and landscapes beauty.
#12 Phuc Xuan To et al(2012)
Three PES schemes in Vietnam: (1) The government pays households for forest protection and forest planting to maintain and improve the ES these forests provides; (2) Hydropower plants and (3) water supply organizations pay households for forest preservation to maintain water regulation and soil protection
#13 Sommerville et al (2010)
The NGO Durrell pays eight communities in Madagascar who own local forest management rights to refrain from exploiting or damaging the area. The program preserves biodiversity and saves the only remaining habitat for four endangered species.
#14 Turpie et al (2008)
Water users in South Africa pay a fee on their water tariff that is distributed by the government to roving service providers who perform management activities to improve ES flows from grasslands such as water quality.
#15 Wunder and Alban (2008)
Two cases in Ecuador: (1) Pimampiro: (2000-‐2005) is a watershed scheme where municipal water users pay landowners in the highlands to improve water quality and quantity of water supply; (2) PROFAFOR, (1993-‐2005) is a carbon-‐sequestration program where Dutch electricity companies pay landowners and communities to re-‐forest and afforest to meet carbon reduction goals.
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#16 Zabel and Bostedt (2010)
The Swedish government compensates indigenous Sami villages for allowing their reindeer to roam free, which can result in predation by the wolverine and lynx. The compensation payment serves as an incentive for these villages to refrain from hunting these two endangered species, thus protecting biodiversity.
Other relevant studies related to PES and Vietnam
Huynh Thi, Mai (2011)
(“The BCA Report”) Study by the Biodiversity Conservation Agency that considers a possible roadmap for using PES to conserve the country’s biodiversity. Study analyzed further in Section 4.1 of this report.
Dougill et al (2012)
A case study of the institutional characteristics of three African community-‐based forest projects aiming for carbon-‐storage and poverty-‐reduction benefits. Based on interviews and a literature review, the study makes several findings related to PES project design.
Gauvin et al (2010) Study reviews China’s Grain for Green PES scheme (largest in the world) and examine whether the environmental and poverty alleviation objectives of PES programs can be achieved cost effectively.
Hawkins et al (2010)
Study assesses the legal and regulatory frameworks in Vietnam for mangrove management and the potential of using PES in this context. The study is motivated by the government’s interest in using market mechanisms as a potential conservation tool and to assess the viability of extending current PES schemes into mangrove forests.
Hoang Minh Ha (2008)
A PES Booklet designed for Vietnam’s policy makers and other stakeholders that aims to describe the on-‐going PES work in Vietnam. The booklet has been developed by ICRAF Vietnam and supported by international and national partners, including WWF, IUCN, CIFOR and FSIV. It describes several on-‐going PES case studies in Vietnam and also summarizes a number of lessons learned.
McElwee (2010)
Study examines how landowners rely on forests in central Vietnam and considers the need for income substitution for households who lose access to forest resources due to conservation efforts in or near protected areas;
McElwee (2012)
Given Vietnam’s unique national law on PES, this article considers how market-‐based instruments for forest conservation have expanded in Vietnam and how it may continue to play out in the future.
MONRE (2010)
Project funded by Global Environment Facility (GEF) to evaluate the challenges to managing Vietnam’s network of protected areas, which form a cornerstone of the country’s biodiversity conservation strategy. To secure a sustainably financed protected area network the report suggests, among other things, that PES schemes may play a vital role by raising government revenue, in particular in coastal wetland and marine protected areas.
MONRE (2012)
Vietnam’s National Biodiversity Strategy and Action Plan to 2020-‐draft (with a vision to 2030) determines the objectives and tasks for the conservation and sustainable use of biological diversity in accordance with the country’s obligations as a member to the Convention on Biological Diversity.
Nguyen Thuy Duong et al (2011)
Report produced by Vietnam’s Institute of Strategy and Policy on Natural Resources and the environment (ISPONRE) that examines the potential for using PES in wetland environments in Vietnam. The study’s objective is to develop a theoretical basis for a PES scheme based on the environmental services that wetlands provide and to ensure this meets Vietnam’s requirements for the conservation and sustainable development of wetlands.
Petheram and Campbell (2011)
Study analyzes local peoples’ attitudes and preferences related to a hypothetical introduction of PES scheme Cat Tien National Park in Vietnam. The study assessed factors affecting participants’ willingness to participate in a PES scheme, preferences for the structure and design, participants’ capacity to participate, and other contextual issues that may affect program success.
Pham et al (2010) Study assesses the role of intermediaries as actors in facilitating PES, which
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include government agencies, non-‐government organizations, international agencies, local organizations and professional consulting firms. The play important roles related to service and information providers, mediators, arbitrators, equalizers, representatives, watchdogs, developers of standards and bridge builders.
Wertz-‐Kanounnikoff (2006).
Study assesses four types of PES systems and considers the economic, ecological and social considerations in developing each of these types of schemes.
The formal summary of each PES case study in Appendix A is based around a consistent and project-‐relevant set of technical questions. The research team developed these questions with an eye toward designing the proposed PES structure for this project. These include:
• Study background o Where is the study located? o How was funding obtained to start the project? o How long did the experiment last?
• Ecosystem services addressed o Which ES are addressed? o How are they measured? o What are the key threats? o What management activities/action can improve the flow of these ES?
• Key points tested or analyzed o What is bought and sold? o Who are the buyers and sellers? o What is the time frame for project and for payment? o How was price established? o What administrative structure was used to deliver payments and enforce
contracts? • Key results
o Did it work? • Key lessons learned
o What are the relevant lessons learned for policy makers?
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4. Results of International PES Literature Review Below we summarize some of the key conclusions from the PES literature, including a summary of the findings from The BCA Report (Section 4.1) and the conclusions from our technical analysis (Section 4.2). The technical analysis is organized around the project-‐relevant set of technical questions identified above.
4.1. Summary of the findings of The BCA Report (Huynh Thi 2011)
The BCA Report (Huynh Thi 2011) was motivated by a need to develop and implement a comprehensive policy on the payment for environmental services in Vietnam, i.e., develop a policy interpretation and target for Article 74 of the BCL. The goal is to generate financial resources to support the conservation of biodiversity through the use of PES. The key objectives of this report were to:
1. Review international experience with PES for biodiversity (Section 4.1.1) 2. Assess the potential application of PES in Vietnam (Section 4.1.2) 3. Propose a nationwide policy and a roadmap for PES in Vietnam (Section 4.1.3)
4.1.1. Review international experience with PES for biodiversity
The BCA Report notes that hundreds of PES programs exist globally. Those in developed countries tend to focus on payment to farmers to reduce the intensity of agricultural practices, while programs in developing countries frequently focus on payment of landowners for forest management activities. The review covers PES programs in Latin America (e.g., Costa Rica, Mexico, Bolivia, Ecuador, Honduras, etc.), Europe (buyers in Germany that purchase ES from landowners in Latin America), and Asia (China, Indonesia, Philippines, Nepal, etc.). The report classifies the these global PES systems into four major categories depending on the ecosystem service they focus on:
1. Watershed protection 2. Biodiversity conservation 3. Carbon sequestration 4. Landscape/Ecotourism
In reviewing general lessons learned from these programs the report identifies a number of findings:
• The PES model may not be optimal in all cases. It works best when (a) the ES are clearly defined (b) beneficiaries can be identified (c) land-‐use and property rights are clearly defined (d) a strong legal system exists and (e) natural resources can be measured and valued. PES models are most effective when the value of ESs to beneficiaries is high and the cost of providing them by suppliers is low (see Gauvin et
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al 2010). In reality, the value of ES may vary considerably and may be a function of geography, intensity of use, competition, demand for, and cost of, associated market goods that depend on the ES, and the extent of the market.
• A natural tension can arise between efficiency and fairness in a PES model. A cost-‐efficient model is one that minimizes transaction costs but reaching an environmental target may require significant data collection, which can lead to high transaction costs. Moreover, an efficient PES model would, in some cases pay certain landowner more than others if the quality of their land and ES provision is greater. This may raise concerns about fairness among participants and affect acceptance of the model.
• To ensure an effective PES model the government must play an active and important role in the design and regulation of the program, in particular in the early stages of pilot testing and model development when the market infrastructure is not fully established (see also Cole et al 2012). Key areas of government involvement include:
o Legal support that provides protection for rights of local communities to access resources, the framework for buying and selling ecosystem services, and the institutional infrastructure for monitoring and enforcement of contracts.
o Policy support that provides guidance, lessons learned from case studies, technical support, implementation support including monitoring, developing standards, supporting scientific research (ecological studies, economic valuation studies, etc.)
o Financial support, which requires international partnerships and investment. o General support as intermediaries that provide information, mediate, arbitrate,
represent, and provide tools that promote public acceptance and participation (see Pham et al 2010).
• PES models may fail without full participation and acceptance by the community members whose livelihood depends on the land. This suggests that Vietnam develop PES models that include, and maximize the benefits to, poor communities. (see Petheram and Campbell 2010).
• Key attributes of future PES models in Vietnam: - Clarify land tenure; - Create and strengthen cooperative organizations to reduce transaction costs; - Identify flexible payment mechanisms that are cost-‐effective; - Provide flexibility in land use regulations; - Facilitate access to finance on the local level; and - Invest in capacity-‐building for participants (this is frequently lacking from
existing PES program, see Dougill et al 2012). • Promote acceptance through outreach and awareness-‐raising efforts. The BCA Report
notes that “The success of PES mechanisms are directly dependent on the knowledge, awareness and the public's willingness to pay.”
• Other aspects of PES schemes that are important to consider: - PES model development requires interdisciplinary input from experts in
forestry, ecology, physics, environmental science, environmental economics. This suggests that Vietnam actively support academic and scientific research in the areas of ecological study and economic valuation of ES.
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- The PES model must define the ES and make a clear link between the current and future use of land and the provision of the valued ES. This should consider the local role of providers and beneficiaries.
- Payments must offset the opportunity costs and benefits for the whole community.
- Monitoring and enforcement of contracts is critical.
The BCA Report also makes specific findings for each of four PES categories (watershed protection, biodiversity conservation, carbon sequestration, landscape/ecotourism) in BCA Sections 1.2.3.1 -‐ 1.2.3.4 and specific findings related to the PES model structure in BCA Sections 1.2.4.1 - 1.2.4.5.
4.1.2. Assess the potential application of PES in Vietnam.
The BCA Report considers the implication of these PES findings above for the future application of PES approach into Vietnam (BCA Section 1.2.4).
The BCA Report (BCA Section 2.4.3) concludes that the need and potential for expanding PES in Vietnam is strong given the country’s unique ecosystems and the valuable services they provide (e.g., in limiting natural disasters, regulating climate, absorbing CO2, providing recreation, etc.). Environmental legislation in the country has developed since 2003 and provides a basis to build upon the recent progressive policies associated with Biodiversity Law (13/11/2008), the Forest PES pilot study (Decision 380/2008), and the policy to replicate the Forest PES success elsewhere in the country (Decree No. 99/2010/ND-‐CP 24 May 9 2010). The need for continued improvement of environmental management is underscored by the country’s rapid economic growth, which will increase pressure on natural resources while also improving citizens’ standards of living and demand for environmental services.
The potential for future growth of PES models in Vietnam are connected to the country’s critical ecological assets: coastal wetland ecosystems and the marine environment (see e.g., Decree No. 99/2010/ND-‐CP of September 24, 2010). Therefore The BCA Report suggests that a PES policy roadmap should focus on wetlands (both coastal and inland) and marine ecosystems to ensure sustainable development of the country’s valued resources while also working towards poverty alleviation (See BCA Sections 2.4.1 and 2.4.2)
Section 2.4.2 of The BCA Report discusses the potential for applying PES programs to coastal marine ecosystems, which includes mangrove forests (as well as coral reefs, sea grass beds, tidal flats, and lagoons). The mangrove ecosystem, which is the focus of this project, has been adversely impacted by human activities in recent decades. MONRE (2010) note that:
In coastal areas, mangroves are cleared and land is drained for aquaculture. This expansion of arable land and aquaculture areas occurs under government policy guidelines to meet food demands for the growing population and to promote the
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necessary economic development of the country by increasing highly valuable agricultural produce and seafood exports. However, much of the converted land is of limited productivity and is often abandoned; this is especially true of shrimp farms in mangrove areas. (p. 18)
Since 1943 mangrove forest cover in Vietnam has declined by over 60%. Today, planted mangroves outnumber natural mangrove forests 60% to 40% (National forest inventory in Decision 03/2001/QD/TTg of the Prime Minister dated 5/1). The mangrove ecosystem provides both direct economic value (e.g., firewood and coal) as well as indirect values associated with carbon sequestration, coastal fisheries production, storm surge protection, protection against saltwater intrusion into drinking water supplies, provision of biological diversity (e.g., rare animals and plants) and provision of recreational and eco-‐tourism (See Hawkins et al 2010). Activity 2.7 of this Project will assess these values in order to inform the construction of the PES payment structure for Mui Ca Mau National Park.
Finally, The BCA Report suggests locations in Vietnam where a pilot PES program for the marine environment may be feasible. Based the following criteria, Mui Ca Mau National Park is suggested as one of 21 government-‐owned protected areas that would be an ideal testing ground: (1) socio-‐economic conditions suggest poverty alleviation is a policy relevant objective (2) ownership of selected ES are clearly defined (in this case by the State) and (3) an established private market exists for goods and services that are dependent, in part, on the marine ES.
4.1.3. Propose a nationwide policy and a roadmap for PES in Vietnam
The final section of the Report develops guidelines for a PES payment mechanism including the following (BCA Sections 3.2.2, 3.2.3, Recommendations and Conclusions)
• Future PES schemes should focus on wetlands and the marine environment. • The environmental services underlying a future PES scheme for wetlands could
potentially involve (1) aquaculture, seafood, green labeling for fisheries, (2) ecotourism, and (3) water regulation. Similarly, for the marine environment, relevant environmental services may include (1) aquaculture, seafood, green labeling for fisheries and (2) ecotourism. Hawkins et al (2010) note that in a mangrove PES scheme carbon sequestration could be a complementary revenue source for service providers, but due to the ecological characteristics of the mangrove habitat and absorption, it is best combined with other ESs from mangrove habitat.
• The providers should be selected based on consideration of land ownership and management activities in the area. The report suggests providers could be protected areas (e.g., national parks, biosphere reserves, Ramsar sites), communities themselves, or the aquaculture producer association.
• The service users (beneficiaries) could include mining enterprises, seafood processing companies, electricity companies, water supply companies, tour operators,
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restaurants, resorts, hotels, consumers directly (retail), factories near the sea, NGOs, visitors/tourists, cruise ships, fishing boats, or other institutions.
• The price (and payment type) should consider several factors including: the type of service, the opportunity costs for the seller of undertaking the ES-‐promoting activity (i.e., active protection or avoided exploitation), the value to society of the service and/or the cost to society of alternative provision of the service to the buyer, negotiation between provider and user in accordance with relevant laws, the results of pilot studies, and/or the recommendations for payment mechanisms under Decree No. 99/2010/ND-‐CP.
• The payment type may involve direct payments for the use of environmental services to the provider (e.g., branding clean animal feed as environmentally-‐friendly, or a premium for undertaking clean aquaculture techniques) or indirect payments (e.g., fees collected in an environmental trust and invested into the community for infrastructure, vocational training, short and long term loans, etc.). Additional funds could be secured by soliciting contributions from other beneficiaries – either voluntary or obligatory -‐ for the restoration of ecosystems.
The report suggests two possible roadmaps for PES development in Vietnam and proposes a time schedule to select the appropriate alternative (2012-‐2016). The two alternatives are:
1. Alternative 1: Develop a common and general policy framework for all types of ES that could be covered in a future PES scheme. The framework would identify services, providers, beneficiaries, payment structure, etc. to support the implementation of PES nationwide. This alternative meets the requirements of the Law on Biodiversity 2008, but may be time-‐consuming to develop. Further, it maybe too general to allow for application to specific PES models.
2. Alternative 2: Focus time and resources into developing a policy for specific ESs such as wetlands or marine ecosystems. This alternative can be put into practice immediately and may represent a more promising approach given the importance of these ecosystems to Vietnam’s biodiversity. However, this alternative may require development of other policy documents to meet the requirements specified in Article 74 of the Law on Biodiversity 2008.
4.2. Technical analysis of PES case studies Below we summarize the results of our technical analysis of the 16 case studies.
4.2.1. Background on case studies Most of the case studies we examined were funded by governments or non-‐governmental organizations (NGOs). Most of the studies we reviewed were from developing countries in Latin America, South America, Africa and Asia but also some from Europe and USA.
The types of PES that were most frequent in the case studies were community-‐based tax-‐payer funded markets and tax-‐payer funded initiatives by the states (This is also
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supported by Cole et al 2012). That is, in most cases the buyer was the government and the sellers were individual landowners, often households. However, there were some cases of voluntary markets but only a few of them managed fully to fund the scheme.
The source of funding for PES schemes vary. Jindal and Kerr (2007) note that ”payments for these schemes come from private corporations, international NGOs, research institutes, governments, even private individuals” (p. 2). In almost all cases external funding is required to jump-‐start the program, while on-‐going administration costs are covered by buyers through their payments. Because buyers are often governments or NGOs, the practical implication is that the cost to the taxpayer of running these types of PES programs can be considerable. Administration costs in general are a challenge for ensuring a long-‐term and sustainable PES program.
Many of the PES programs have been in place since the late 80s, while some have started in recent years. The majority have been operational for several years, but some lack extensive assessment. Such studies require either additional years in operation or improved evaluation studies to determine their success. Further, assessing the success of PES programs was easier when the program had administrative staff and other infrastructure to facilitate program evaluation.
4.2.2. Ecosystem services addressed Most of the PES schemes are focusing on a broad perspective of ES, such as ES from forests or watersheds, rather than a specific ES. The most common ES addressed in the case studies are ES from forests or watersheds, which both mainly focus on the provision of water-‐related services. However, other studies focused on the protection of habitats for endangered species, biodiversity in general, carbon sequestration and aesthetic views. This finding is consistent with the four categories that The BCA report identify (see Section 4.1.1 above).
While many of the case studies focused on water related ES none of them focus specifically on coastal wetland areas or mangrove forests.
4.2.3. Technical aspects of PES schemes
4.2.3.1. The ecosystem service bought and sold The most commonly occurring service bought and sold is preservation of ES from forests or forested landscapes, i.e., to refrain from exploitation or conversion of forests to agriculture, to abide by land-‐use plans, or to simply protect an area. This is linked with the above-‐mentioned broad perspective of ES in the case studies where forests provide a wide range of ES. The most common metric used is hectares of preserved forest but some also measure quality changes. Most of these activities are connected to the provision of water and in a great share of the studies the actual good bought is the provision of water either as an input factor for a company or for domestic use and the preservation is only a
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means to achieve this objective. Other services bought and sold connected to forests and forested watersheds are reforestation and manual clearing of invasive plants. The most common measures in these cases are hectares reforested or cleared but in some case studies efforts were made to translate number of trees planted or protected into pounds of carbon sequestrated.
In some cases the management activities that sellers were required to implement to improve the flow of ES (in exchange for payment) were based on a land management plan. For example, the sellers signed up for different specific projects such as no burning before or after planting, planting of vegetal fences, prevention and control of forest fires, no extraction of wood products, implementation of organic agriculture and refraining from pesticides or agro-‐chemicals.
Other common services bought and sold is to prohibit land uses that negatively affect habitats for endangered species or to prohibit hunting. In one case study local villagers are paid to manually protect extra sensitive habitats such as bird nests and the metric used was the number of successfully fledged chicks. Petheram and Campbell (2010) find that potential PES participants in Vietnam oppose the idea of payments for avoided resource use alone and McElwee (2010) note that PES schemes that restrict income-‐generating resource use should be balanced by alternative employment and sufficient income to ensure long-‐term effectiveness of the PES scheme.
In many of the case studies the metric used to measure the level of ES provided/sold was not specified. Since ES measurement is a critical component of a successful PES model, this requires significant consideration when designing the PES model structure.
Many PES schemes suffer from a lack of scientific data that links the activity of a seller (e.g., planting a tree) to a measurable and quantifiable increase in the ES being sold (e.g., carbon sequestration or water quality/quantity) and, ultimately, how this improvement affects human welfare (i.e., the value to society). This is a key area of future research to improve PES implementation (Barstad et al 2012; Dougill et al 2012).
4.2.3.2. The buyers and sellers Although most buyers are government agencies, international NGOs or municipalities, there were some cases of private buyers, such as households or firms that consume water, safari operators or other tourist companies. Petheram and Campbell (2010) point out that local PES participants in Vietnam may not trust that the government has the money to pay them or that authorities would manage funds honestly, which is an important consideration in designing the PES structure.
In nearly all case studies the seller is either specified as individual forest landowners, land managers, local farmers or local villages or farming communities. In the remaining cases, the seller was a roving service provider who perform restoration on land under any type of ownership.
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Most PES programs cannot avoid the existence of non-‐buying beneficiaries who benefit from the purchases made by actual buyers (e.g., the general public, firms, private and communal landowners, and other ES users . This may have implications for whether the price paid for the ES actually reflects society’s value for it. There were several examples in the case studies of two buyers for the same service, which may reduce the incentives to participate in PES programs. In other cases, sellers themselves also benefit from the activities.
4.2.3.3. Contracts and payment The most common time frames for contracts are between 1-‐10 years with annual payments. However the length of contracts and the time frames for payments vary significantly. The shortest contracts were one year and the longest were indefinite. Some contracts ran for 50 to 99 years. Besides annual payments, some were monthly and even daily (e.g., to local villagers who protected bird nests).
4.2.3.4. Determining price In most studies the price was determined by negotiation between the buyer and seller, often through intermediaries and agencies responsible for the programs. The benchmark/starting price for the negotiations were often based on incomes forgone, average opportunity costs or costs for the restoration/activities. None of the articles specify in detail how the price was addressed but rather broadly describe the approach used.
In a few of the case studies the price was set directly by the government agency (e.g., based on the size of the government budget) or was determined based on political considerations. In some of the studies the prices were weighted according to affordability, assurance of supply and equity while in some the price was determined by tender offers.
4.2.3.5. Administration & enforcement of the PES scheme In most of the studies the payments are administered by an intermediate, often a centralized or decentralized governmental agency but also in some cases NGOs, which receive payments from the buyers and distribute them to the sellers. For example some water users pay a fee that is distributed by the intermediary to the sellers.
In the great majority of the case studies the payment goes through the intermediary to individual landowners or households but in some cases the payments go to villages or small communities, who in turn decide whether to distribute the payments to individual households/landowners or make investments that generate benefits for the village. Furthermore, in a few cases the sellers preferred in-‐kind payments before payments in cash because they did not have a reliable way to manage the cash and expected a better return on the in-‐kind payments.
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The intermediary is frequently responsible for the monitoring and follow-‐up of projects. In places where trust of institutions was lacking or in places with high risk of corruption, monitoring is conducted by a group that represents all parties (e.g., buyers, sellers, NGOs, the municipality, government agency etc.). The group assesses if the contractual obligations have been met. In some cases the monitoring is made by non-‐profit organizations or by rural district councils. The costs of monitoring is either shared between all parties or paid only by the buyers.
Very few case studies describe how enforcement is performed, but some programs terminate the payments to sellers in the case of non-‐compliance. Others demand that previous payments be paid back to buyers.
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5. Conclusions
Future PES models for mangrove ecosystems in Vietnam’s coastal wetlands and marine environment look promising. The mangrove ecosystem provides significant value to society in terms of carbon sequestration, coastal fisheries production, storm surge protection, protection against saltwater intrusion into drinking water supplies, provision of biological diversity and eco-‐tourism. Further, Mui Ca Mau National Park is an ideal location for testing a PES pilot. However, none of the case studies reviewed in this analysis focused on wetlands or mangrove forests. Further, poor local landowners in nearly all case studies were the sellers of ES. Both of these findings suggest that our proposed PES structure, which relies on a livelihood model to generate income for local landowners who then become the buyers of ES – will be breaking new ground.
Recent work conducted by BCA and other local Vietnamese partners have made some preliminary suggestions on how to design a PES model for mangroves in Vietnam. Their work provides suggestions on the environmental services that could underlie the PES model, the types of providers and service users, payment types, and factors to consider when determining a price. This recent work provides a valuable basis upon which this project will build in proposing a draft PES structure in June 2013.
Duplicating the success of the Payment for Forest Ecosystem Services pilot for the case of mangrove forests in Mui Ca Mau National Park will require an active government role in the early stages of model development. Government agencies will have to inform project participants about the legal, policy, and financial support available and how it can be adapted in this case (see Section 4.1.1). Further, PES intermediaries such as NGOs, international agencies, researchers, and consulting firms will need to provide information (e.g., interdisciplinary research) and other tools to facilitate participation by local communities and other stakeholders.
There are, nonetheless, several challenges to PES implementation in the Vietnam setting. Some of the early challenges identified in Ferraro and Kiss (2002) still hold true today, not the least in Vietnam:
“Potential obstacles to implementing a direct payment approach in developing na-‐ tions include uncertain or inequitable land tenure, limited experience with and en-‐ forcement of legal contracts, and limited local opportunities for nonagricultural in-‐ vestment or employment. Direct Payments may displace biodiversity loss to other areas, may be misappropriated or misused, and may create social conflict.” (p. 1718)
These issues are particularly relevant in the context of future PES development in Vietnam and deserve special consideration in designing the PES structure. McElwee
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(2012) suggest that market-‐based approaches to forest management in Vietnam are unlikely to succeed due to institutional factors such as uneven land tenure. PES development in Vietnam may be further challenged by the lack of well-‐defined property rights, which is known to make PES implementation difficult. For example, if poor farmers do not have the security that they "own" the improvements made to their land, they may not have the incentive to undertake activities as ES providers. Hawkins et al (2010) point out a possible restriction in applying PES for mangrove management in Vietnam given that the State is responsible for distributing benefits from forest resources to local people and other stakeholders. The implication is that the only feasible “seller” in a PES scheme is the State (under some rare exceptions private owners could perhaps participate), which may limit some of the creativity needed to develop an innovative and effective PES scheme. Further, trust of the government in Vietnam in implementing a PES may be weak according to the hypothetical PES assessment conducted in Cat Tien National park in Vietnam (Peteram and Campbell 2011). To the extent that central or local institutions lack credibility in Vietnam – which are critical for the administration of payments, monitoring of contracts, enforcement, etc. – this may present a further challenge for PES models. Finally, Vietnam faces the challenge of seeking income and employment substitution for PES sellers (landowners) who lose access to forest resources and where PES payments are not sufficient (McElwee 2010).
A specific challenge related to a PES development for mangrove forest was pointed out by an international expert3 who suggested that participants/households may be both buyers of mangrove goods and services (shrimp habitat, storm protection, etc.), and sellers of mangrove conservation (participation in mangrove protection and re-‐planting, etc.). This is an important point to consider in the development of our combined PES structure and livelihood model for Mui Ca Mau National Park.
There are also general challenges to PES model development, such as measuring the quantity or quality of ESs bought or sold. For example, many case studies relied on percent forest cover as a proxy (“metric”) for the level of ES that the forest provides such as carbon sequestration, biodiversity, water quantity/quality, habitat for species, etc. However, a key weakness in many of the case studies we reviewed was a lack of scientific data that links the activity of a seller (e.g., planting a tree to increase forest cover) to a measurable and quantifiable increase in the relevant ES (e.g., biodiversity, carbon sequestration, etc.) and, ultimately, how this improvement affects human welfare (i.e., the value to society). Besides tree planting, this link is relevant for a variety of other activities that service providers may undertake such as the effect of stream buffers on water quantity/quality, the effect of preventing or controlling forest fires on biodiversity, the benefits of organic agriculture on habitat quality, etc.
Another general challenge to PES development is the need for patience from policy makers. Despite the fact that many of the programs we reviewed had been in effect for several years it was nonetheless difficult to make any definitive evaluations about
3 See box 26 in MONRE (2012), Jake Brunner, IUCN, August 2012.
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project success. Some PES programs can take years to become institutionally established and ripe for evaluation. Furthermore, there can be significant time delays between ecosystem restoration (e.g. tree planting) and ecosystem maturation and subsequent economic benefits to the community.
Finally, some challenges are hard to predict. Despite well-‐intentioned efforts PES systems may succeed or fail based on un-‐controllable external factors. For example, a program that pays landowner not to convert native vegetation to agricultural land in Ecuador benefited from the fact that international beef prices reduced the profitability of expanding current cattle operations (Wunder and Alban 2008). In another PES program in Ecuador runaway inflation (due to a financial system that is connected to the US dollar) increased program costs and affected the overall program outcome.
The stated policy objective may influence the structure of the PES model. The primary motivation for PES development is to improve management of a country’s resources by creating incentives for improving the flow of ES. The Government of Vietnam has additional policy objectives that include poverty reduction and an increase in government revenues. A key empirical question is whether these three objectives can be accomplished simultaneously or whether there may be trade-‐offs or conflicts between them.
Some of the empirical research addressing possible conflicts between these goals has come to mixed conclusions. Few, if any, PES programs have focused exclusively on poverty reduction or increase in government revenues, but Pagolia (2008) point out that despite this, some studies have shown that PES can be positive for poor areas. However Wunder and Alban (2008) suggest that while the two projects in Ecuador achieved poverty reduction as an ancillary benefit, diluting environmental objectives with other objectives may reduce program efficiency, indicating that a trade-‐off may be inevitable (see also Landell-‐Mills and Porras (2002) and Gauvin et al (2010)). More empirical research may be needed to address this issue. An even more relevant question for this project is how the multiple policy objectives associated with proposed PES development in Vietnam may affect the design and structure of the PES model we proposed in Activity 2.12.
Monitoring and enforcement are critical to program success, but this is true of any regulatory approach, not just PES. For example, some countries have chosen to implement PES in addition to, or as an alternative to, a “command and control” approach. Importantly, implementing a PES approach does not preclude the need for monitoring; to the contrary, enforcement is essential to ensure credibility of a relatively new and innovative approach.
While command and control relies on the “stick,” PES relies on the “carrot” to influence behavior, but both require enforcement. Some PES case studies we reviewed tried to improve the environmental outcome by “layering” a PES approach (e.g., paying a landowner to refrain from illegal activity) on top of a command and control approach (e.g., strictly forbidding a landowner from the illegal activity). A better alternative might be to increase enforcement of the command and control instrument or to raise the
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penalty for non-‐compliance. Wunder and Alban (2008) point out that if pre-‐existing regulatory approaches were actually enforced some PES programs may be unnecessary. This comes back to the need for strong institutions and legal frameworks. One study noted that the threat of enforcing command-‐and-‐control regulations drove the sellers back to the negotiating table since they felt they might lose the economic incentives inherent in the PES scheme.
Fairness concerns must be actively addressed. An efficient PES model – i.e., one that obtains the greatest environmental protection at the lowest cost to society – may require “differentiated payments” i.e., some service providers may receive a higher price than others if they are able to produce a higher level or quality of ES. Some participants may perceive differentiated payments to be unfair. To manage issues of fairness and to ensure long-‐term program success, Vietnam must consider the distributional impacts across participants (see Dougill et al 2012). Further, they must actively promote the benefits of PES to generate public support. PES case studies in Vietnam indicate that some individuals perceive that the community benefits more than their own families. In other cases, only a portion of interested households participated due to lack of information about the existence of the program. In still other cases, information only reached former local officials. And in a unique case in Madagascar, certain participants in positions of local political power received a higher level of net benefits from the PES program. These outcomes and the associated perceptions can undermine the success of PES and underscore the importance of active measures to promote public acceptance and the need for good governance at all levels.
One way of generating acceptance for PES programs is to ensure program flexibility for participants. While PES aims to improve the quality of life for participants – either as an improved flow of ES for buyers (and, in many cases, sellers as well) or as augmented income for sellers – the benefits of some PES schemes may best be measured in non-‐monetary terms, including improved community interaction, bequest values, improved human capital or a strengthening of individual or collective motivation for environmental protection. Alternatively, payment mechanisms may be in-‐kind (e.g., payment of livestock or other valued commodities) instead of monetary. This type of flexibility may help garner support and acceptance for the program.
Fairness concerns also arise if a PES model excludes potential buyers who nonetheless benefit from the PES program. These so-‐called “non-‐paying beneficiaries” are those who benefit from the sellers’ provision of an ES but are not required to pay (sometimes called “free riders”). In some cases it may be difficult to get these participants to pay their portion of the benefits they receive,4 which underscores the importance of identifying all potential buyers during the PES structure and design phase.
4 This may be explained by the fact that ES are public goods, i.e., goods that provide benefits to all in society. It is challenging to get individuals to pay for the public goods because there is an incentive to “free ride” off others who pay for and provide the good. The result is that public goods like ESs are often under-‐supplied. This is, of course, the primary motivation for PES models – i.e., to increase the supply of ES.
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In addition to buyers and sellers themselves, there can be some winners/losers in terms of the institutions that carry out the PES. Sometimes local agencies or intermediaries may be seen as pioneers for their innovative work (“winners”), while others may be seen as “losers” if the PES program becomes too expensive or immediate results are not forthcoming.
PES pilot design is important for future evaluation. Few of the PES case studies that we reviewed considered how to design a PES structure so as to allow for effective evaluation in the future. In our proposed PES structure we will consider how to incorporate key data to measure program success over time, thus improving the likelihood that the model can adapt and survive over the long term.
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Appendix A – Formal summaries of 16 PES case studies
P E S i n t e r n a t i o n a l C a s e S t u d y s u m m a r y # 1 : A s q u i t h e t a l . ( 2 0 0 8 )
Asquith et al. 2008.Selling two environmental services: In-‐kind payments for bird habitat and watershed protection in Los Negros, Bolivia.
Location, type of PES, time frame, funding, etc. • Los Negros, Bolivia. Program started 2003 and no end date is decided. Contracts are still
running. • Funded by the NGO, Fundacion Natura Bolivia. US$ 40 000 startup and US$ 3000
annually. • Participation is voluntary. Annual contracts prohibit tree cutting, hunting and forest
clearing on enrolled lands.
What are the ecosystem services (ES) addressed and • ES from forested watershed. Biodiversity (mainly bird habitat) and stabile water flows.
What management activity or restoration is possible to improve the flow of these ES? • Make landowners willing to preserve and protect the forests in the area by paying them
to not exploit it or convert it to agricultural land. What is the current or future threat to these ES? • Tree cutting, hunting and illegal land encroachment. Both from landowners and from
migrants from the Bolivian highlands. Landless migrants/immigrants clear land illegally on land owned by other farmers. They consider land not delimited by barbed wire as unused and available for colonization.
K e y p o i n t s t e s t e d
(1) what good/service is actually bought and sold and how is it measured (what metric)? • The service sold is “to not exploit the forest”. It is measured as preserved forest/ ha. • The service bought is essentially the same. (2) Who are the buyers and sellers (providers)? Are there non-‐buying beneficiaries ? • Buyer 1: The US Fish and Wildlife Service are paying for the protection of habitat for
migratory bird species. • Buyer 2: The actual buyers are downstream irrigators but they are only paying a small
share (per diem and food) for independent monitors of the conservation area. The Municipality of Pampagrande are paying the main part for conservation of the same upland forest vegetation that helps maintain dry-‐season water supply. The project aims to make the irrigators pay the total sum for the service in the future.
• Sellers: Forest landowners who receive in-‐kind payments in the form of beehives, apicultural training and barbed wire.
• Non-‐buying beneficiaries: Isn´t really discussed in the article but the downstream irrigator’s incentives to pay may have been decreased since there are two buyers for the
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same service. “Someone is already paying for the service”. Free-‐riding is a weakness of dual-‐service scheme´s.
(3) How long is the contract/program designed for? Time frame for payment? • The contracts signed with the sellers ranged in duration from 1-‐10 years but were never
longer than 10 years. This is to minimize pre-‐existing fears of land appropriation. The payments are made once annually.
(4) How was the price addressed or determined? • No formal economic analysis has been done. Vargas (2004) carried out semi-‐structured
interviews with landowners where he found that 70% of downstream landowners had a non-‐zero WTP.
• The in-‐kind payments were decided during a meeting between the environmental committees of Santa Rosa and Los Negros. They agreed payments of 1 beehive for every 10 ha of forest protected for a year. It´s equivalent to US$3/ha/year. The PES recipients specifically rejected the option of payment in cash. Some landowners have been paid by barbed wire instead of beehives.
(5) How are payments structured? Who administers, monitors and enforces system? • In-‐kind payments are made annually. A “project control team” including one member
from each party (buyers, sellers, the NGO, and the Municipality) assesses whether the parcel has been effectively conserved. The cost for this “team” is shared between the parties. The team writes a report to a board (including members from all parties), which makes final recommendations on how to deal with any infractions.
R e s u l t s
Did it work? • 46 farmers are currently being paid to protect 2774 ha of cloud-‐forest in the watershed
area. • Only one infraction so far. A landowner constructed a road through a part of his
conservation parcel. Very mild penalty. 1 year exclusion from the program. • Too early to say if the WTP of downstream water users are big enough to cover the
upstream opportunity costs of land. The municipality is now paying the main part of this service.
• The scheme clearly improves the income for most upstream participants (sellers). • How their livelihoods have been affected by the scheme depends on how skillful the
landowners are when it comes to handling beehives. L e s s o n s l e a r n e d
• Even though in-kind payments are preferred by most of the landowners, some of the landowners are asking for other kinds of payments. Other payment-methods have to be investigated.
• The dual-service approach may deteriorate the incentives but were necessary to get enough funding to get started.
• Landowners may only protect areas that weren´t good enough to use for something else (very steep or remote areas). No opportunity cost for them.
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• Instead of starting the project with intensive data collection the project started with a “learning by doing” approach by piloting payments of US$1800 to earn local goodwill.
• More ecological knowledge is needed. Mainly about the relationship between the conservation of the forest and how this influence the water flow. This may increase the incentives for the irrigators to participate. Now they bear a big risk because they can´t be certain that they are paying for something that influence the flow.
P E S i n t e r n a t i o n a l C a s e S t u d y s u m m a r y # 2 : B a r s t a d e t a l ( 2 0 1 2 )
Barstad et al. 2012. Parallel Pilot Initiatives Providing Incentives for Forest Management and Conservation on Private Lands. Final Report for Conservation Innovation Grant NRCS-‐69-‐3A75-‐9-‐149. December.
Location, type of PES, time frame, funding, etc. • New England, USA (Upper Connecticut Watershed & Crooked River). Short pilot project
2010-‐2011. Summarizes three different case studies in one report. • Pilot project only to test market-‐based approaches. Funded by $500,000 Conservation
Innovation Grant in 2009 granted by American Forest Foundation What are the ecosystem services (ES) addressed • ES from forested watersheds: clean water, recreation, aesthetic benefits, fish habitat,
bird habitat, groundwater re-‐charge, etc.
What management activity or restoration is possible to improve the flow of these ES? • forested buffers around streams to prevent erosion and to provide shade/cover, erosion
control, flood management, improve access for recreation, establish protected areas • or improved water treatment practices restoration… What is the current or future threat to these ES? • development pressures leading to fragmentation of landscapes, • pollution from aging municipal water treatment plants / overflow during storm events; • non-‐point source water pollution from land management activities; • proposed dam construction; • spread/invasion of noxious species; K e y p o i n t s t e s t e d
(1) what good/service is actually bought and sold and how is it measured (what metric)? • Either (1) no. of trees planted (2) no. of restoration projects completed (3) no. of acres
of habitat conserved or habitat buffers restored (4) No. of recreational access points protected. Metrics were easy to measure but no clear measure of ES level. However, one effort was made to translate no. of trees into pounds of carbon sequestered.
(2) Who are the buyers and sellers (providers)? Are there non-‐buying beneficiaries ? • Buyers: free-‐willing individuals/NGOs that voluntarily pay for ES from forested
watersheds.
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• Sellers: Forest landowners who received payment to improve management. The US Forest Service sold a “nature experience” to buyers (e.g., come help us monitor fish populations)
• Beneficiaries: Many others beneficiaries that didn’t pay, e.g., businesses, river users etc. Even sellers themselves benefit
(3) How long is the contract/program designed for? Time frame for payment? • 1 yr project pilot only.
(4) How was the price addressed or determined? • Cost as proxy for value; no attempt to value ES per se. e.g., cost of planting a tree (which
included material, labor and monitoring) or the cost of proposed restoration project. (5) How are payments structured? Who administers, monitors and enforces system? • Willing individuals/NGOs go on-‐line and pay for a tree or contribute to a restoration
project. • Contracts with landowners verified tree planting. Monitoring done by local nonprofit
partners. Independent verification from the American Carbon Registry. These costs were paid by “buyers” through their contribution to the program (included in cost of a “tree”).
R e s u l t s
Did it work?
• Innovative and new project without huge success, but expectations were low. • Voluntary participation made it difficult to generate market activity. Lacked regulatory
driver to encourage buyers to participate, which prevented strong incentives for sellers to change behavior. Social media was used to promote voluntary purchases
• Tree-‐planting activity was attractive because it provides multiple ES benefits. Important that participants understand all co-‐benefits and their value because tree planting is expensive.
• Forest landowners willing to plant trees if given financial support. Contacts with local env groups facilitated planting activity and also allowed input from experts to prioritize certain areas for planting. Existing relationships between sellers and NGOs are key.
• Difficult to encourage all beneficiaries to become buyers (free-‐riders). Must convince beneficiary that their activity depends on ES and costs will rise in future in absence of ES
L e s s o n s l e a r n e d
• Need an environmental threat and imminent regulatory pressure to create critical mass -‐-‐ otherwise voluntary participation is difficult to motivate.
• Need significant demand – were too many individual residential users instead of a large user (e.g., water utility, brewery, semi conductor manufacturer, etc.).
• Need clear links between (1) human activity (tree planting) ßà improvement in ES (cleaner water) ß à (3) subsequent impact on human welfare (value for the change)
• Invest in the right places: Use existing conservation priorities and experts • Market to buyers à Talk with potential buyers (utilities, businesses and residents)
about perception and knowledge of ES, threats or risks they see, and what they plan to
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do about them. Inquire about willingness to pay and their expected returns (financial or otherwise)
• Market to sellers à Talk with sellers about their opinions on length of commitment, amount of payment, activity/restoration practice, etc.
• Look for existing payment infrastructure instead of trying to build it new.
P E S i n t e r n a t i o n a l C a s e S t u d y s u m m a r y # 3 : B a r t o n e t a l ( 2 0 0 9 )
Barton et al 2009. Environmental service payments: Evaluating biodiversity conservation trade-‐offs and cost-‐efficiency in the Osa Conservation Area, Costa Rica
Location, type of PES, time frame, funding, etc. • Costa Rica, Osa Conservation Area (ACOSA) in the Brunca region. • Tax-‐payer funded markets. The PES program in Costa Rica (PSA) is funded by tax
revenue (3, 5% of the fossil fuel tax) and by donations from GEF/World Bank Ecomarkets project and German Kfw support.
• The study assesses the cost-‐efficiency of PES allocations in ACOSA in the period 1999-‐2003.
• The articles focus on methodological questions where the algorithm TARGET is the main focus.
What are the ecosystem services (ES) addressed and • ES from forests in general. Not further specified. What management activity or restoration is possible to improve the flow of these ES? • Conservation of forests. What is the current or future threat to these ES? • Mainly conversion to agricultural land and tree cutting K e y p o i n t s t e s t e d
(1) what good/service is actually bought and sold and how is it measured (what metric)? • The service bought is no. of ha of forest preserved. • The service sold is to preserve the forest. (2) Who are the buyers and sellers (providers)? Are there non-‐buying beneficiaries ? • Buyers: Government through FONAFIFO (Costa Rican National Forestry Financing
Fund). Not further specified in the paper but FONAFIFO sometimes acts as an intermediary between private buyers and seller.
• Sellers: Landowners • Non-‐buying beneficiaries: N/A (3) How long is the contract/program designed for? Time frame for payment? • The assessment in the study is made on the years 1999-‐2003. • Time frame for payment N/A.
(4) How was the price addressed or determined?
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• Prices in the program are approximately based on national averages for opportunity costs of forgone cattle pasture and the direct financial cost of the different forestry activities promoted. Establishment of forest plantations, agro-‐forestry systems). No differentiated incentives.
(5) How are payments structured? Who administers, monitors and enforces system? • No information about how payments are structured. ACOSA is responsible for
coordinating the conservation efforts in all public protected land in the area. FONAFIFO is the national governmental organization responsible for administration and monitoring.
R e s u l t s
Did it work? • Target was found to be a flexible and rapid way of evaluating PES allocation scenarios,
habitat connectivity versus biodiversity representation and opportunity costs. • In the ACOSA area, the study finds that the PES allocation criteria in COSTA RICA for
2002-‐2003 are more than twice as cost-‐efficient as the criteria applied during 1999-‐2001, in terms of biodiversity representation and opportunity cost to agricultural and forestry sectors.
• The GIS-‐based multiple criteria scoring approach considered by Costa Rican authorities achieves a compromise between habitat connectivity and biodiversity representation that is close to the TARGET solution when policy makers put a relatively high importance of opportunity costs.
L e s s o n s l e a r n e d
• Conservation area authorities can improve cost-‐efficiency further by using biodiversity complementary and opportunity cost as explicit ranking criteria for PES.
• Despite lacking survey data, a GIS-‐based TARGET approach can be a useful tool for regional level assessments.
• The advantages of an approach based on GIS data increases with the size of the area and the number of biodiversity attributes considered.
• To rank individual PES applications, survey data is needed to correctly specify net opportunity costs of alternative uses of land, labor and capital and finer scale definitions of biodiversity attributes.
P E S i n t e r n a t i o n a l C a s e S t u d y s u m m a r y # 4 : C l e m e n t s e t a l ( 2 0 1 0 )
Clements et al. 2010. Payments for biodiversity conservation in the context of weak institutions: Comparison of three programs from Cambodia
Location, type of PES, time frame, funding, etc. • Cambodia, Comparison of 3 programs (1. Community-‐based ecotourism 2. Agri-‐
environmental payments 3. Direct contracts for bird nest protection). Program 1 started 2004, Program 2 started 2007 and program 3 started 2002.
• The programs are funded by the NGO “Wildlife Conservation Society” (WCS). Program 1 is partly funded by a “village fund” (no more info than that) Program 2 no info about
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funding and Program 3 is funded by US$25 000/year. Program 1 and 2 aims to be financial sustainable. No information of initial fund.
• No ending date decided.
What are the ecosystem services (ES) addressed and • Program 1 and 2: ES from forests, focusing on habitat for endangered species. • Program 3: Protecting bird nests, not entire habitats.
What management activity or restoration is possible to improve the flow of these ES? • Program 1 and 2: Pay villagers for stop hunting endangered species and abiding by a
land-‐use plan. • Program 3: Protect bird nests from egg collectors by hiring local protectors.
What is the current or future threat to these ES? • Hunting, habitat destruction, human disturbance. K e y p o i n t s t e s t e d
(1) what good/service is actually bought and sold and how is it measured (what metric)? • Program 1: The service sold is that local villagers will stop hunting endangered species
and that they abide the land-‐use plan. No information about how the service is measured.
• The service bought is that the area will be preserved. • Program 2: The service sold is that farmers keep to the land-‐use plan and no-‐hunting
rules. They are then allowed to sell rice through a village committee. They get preferential prices by bypassing middlemen and selling to hotels under the “Wildlife-‐Friendly” certification system.
• The service bought is “ecological” or “good” rice. • The services sold in both cases are measured by ensuring that the sellers are abiding the
rules. • Program 3: The service sold is to protect nests. It is measured by looking if the chicks
successfully fledge. • The service bought is the protection of nests and as a result preserved species.
(2) Who are the buyers and sellers (providers)? Are there non-‐buying beneficiaries ? • Program 1: The sellers are local villagers. • The buyers are tourists (mainly birdwatchers) who pay fees to visit the area. They pay
for one days visit. • Program 2: The sellers are local farmers • The buyers are tourist hotels and a marketing association. • Program 3: The sellers are local villagers. • The buyers are WCS who are paying for the reporting of nest and protection of nests. • No information of non-‐buying beneficiaries. (3) How long is the contract/program designed for? Time frame for payment? • Program 1: No specific time frame. Payments when they sell.
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• Program 2: No specific time frame. Payments when they sell. • Program 3: No specific time frame. Payments daily.
(4) How was the price addressed or determined? • Program 1: Entrance fees of US$ 30 per person if they see all key species. Otherwise
US$ 15. No info about how the price was determined. • Program 2: The price offered was initially 200% of the price offered by the old buyer
(middlemen). The middlemen later raised their price but the price offered by the program was still higher (55-‐65%). The payment value was set based on the market premium available for the products. Not opportunity costs.
• Program 3: Only information is that the value is determined by WCS and that it costs US$ 25 000 yearly. No recognition of the birds’ value has been done.
(5) How are payments structured? Who administers, monitors and enforces system? • Program 1: WCS monitors and supports elected village committees, governmental
authorities and the private tourist sector. All these are involved in the process. The village committees are the ones who are in charge at the site and are responsible of management of income and local enforcement of the land-‐use plan.
• Program 2: Payments are made after the village committee has monitored the farmers. External verification by the marketing association.
• Program 3: Monitored and administered by WCS directly. R e s u l t s
Did it work? • Program 1 and 2 became institutionally effective after a few years of operation. They are
more long-‐term and indirect than program 3. • Program 3 provided very rapid protection for many species that were at risk of local
extinction. • A substantial increase in species populations are observed for both the bird nest and
ecotourism program which is very promising given the context of the general ongoing in species abundance in Cambodia.
• A full-‐scale evaluation of the programs requires a counterfactual comparison once they have been in operation for several years.
L e s s o n s l e a r n e d
• Under conditions of high uncertainty over threats and potential impacts of interventions, less specific payment programs that reward a set of outcomes may be more effective than a tightly targeted program.
• Program 1 and 2 with an increased institutional diversity had a more sustainable outcome at the cost of reducing the payments that were made to local people, because revenue was also required to fund the other organizations for monitoring, enforcement and supporting roles.
• Direct payments to some individuals may fail to generate support for conversation. • Payment programs that are structured to facilitate intrinsic motivations are more likely
to be successful.
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P E S i n t e r n a t i o n a l C a s e S t u d y s u m m a r y # 5 : ( C o s t a 2 0 1 1 )
Máñez Costa, M., 2011. A participatory framework for conservation payments. Land Use Policy 28: 423-‐433.
Location, type of PES, time frame, funding, etc. • A watershed in a mountain area in Guatemala (Alta Verapaz). • NOTE: The study is a simulation of potential impacts of a PES system. What are the ecosystem services (ES) addressed and • Habitat for migrant species, biodiversity, freshwater supply. What management activity or restoration is possible to improve the flow of these ES? • Re-‐vegetation and soil conservation is needed to protect from rainfall-‐erosion. What is the current or future threat to these ES? • Erosion leads to damaged habitats and bad water quality in the nearby river basin
(which is used as a water reservoir). K e y p o i n t s t e s t e d
(1) what good/service is actually bought and sold and how is it measured (what metric)? • For example: Area of eco-‐farming (without further definition), natural forest
preservation, living fences, living barriers. (2) Who are the buyers and sellers (providers)? Are there non-‐buying beneficiaries ? • Buyer: Not specified • Seller: Farmers • Beneficiaries: Public (3) How long is the contract/program designed for? Time frame for payment? • Up to ten years was simulated. (4) How was the price addressed or determined? • It was varied to simulate market response to varying prices. (5) How are payments structured? Who administers, monitors and enforces system? • N/A R e s u l t s
Did it work? • Conservation payments may be suitable for reducing poverty and improving the
management of ES. • Participatory frameworks are useful when designing a PES system. L e s s o n s l e a r n e d
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• Local input is needed when designing payment schemes that are supposed to compensate land managers for promoting “good” environmental management. Just economic knowledge on opportunity costs is not sufficient for predicting participation in the market.
• Farmers would be willing to bid a higher or lower amount of land units for conservation depending on the price that is offered but mainly depending on the characteristics of their farming system. I.e.: the heterogeneity of farming systems is perhaps more important than price. Different farmers will respond in different ways to any given price.
• Risk is an important factor. For some farmers, PES is seen as a more constant flow of incomes than income from other sources, thus participating in the PES market may be an attractive option.
P E S i n t e r n a t i o n a l C a s e S t u d y s u m m a r y # 6 : D o b b s a n d P r e t t y ( 2 0 0 8 )
Dobbs and Pretty 2008. Case study of agri-‐environmental payments: The United Kingdom
Location, type of PES, time frame, funding, etc. • The United Kingdom. Evaluation of two agri-‐environmental payments programs. • ESA (The Environmentally Sensitive Areas program) started 1986. In 2003 the
payments were UK£53 million. • CSS (Countryside Stewardship Scheme) started 1991. In 2003 the payments were
UK£52 million. • Funds came from the EU and the UK government. About half from each. • Voluntary incentive-‐based scheme. What are the ecosystem services (ES) addressed and • Improved habitat for birds, biodiversity, landscape beauty, historic preservation, restore
neglected land or features and create new habitats.
What management activity or restoration is possible to improve the flow of these ES? • Reversion of cropland to grassland, management of meadows, managing moorland.
What is the current or future threat to these ES? • Conversion of unexploited land to cropland. K e y p o i n t s t e s t e d
(1) what good/service is actually bought and sold and how is it measured (what metric)? • Service bought is a broad range of environmental restoration and preservation projects.
No metric specified. • Service sold is the provision of landscapes and to carry out different management
practices. No metric specified.
(2) Who are the buyers and sellers (providers)? Are there non-‐buying beneficiaries ? • Buyers: The UK government through the ESA program. • Sellers: Farmers and other land managers.
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(3) How long is the contract/program designed for? Time frame for payment? • Ten year voluntary contract with annual payments. (4) How was the price addressed or determined? • Rates are based on capital costs and incomes forgone and can be adjusted to accomplish
scheme objectives. Incomes forgone for various practices are established on a “typical” farm for a wide geographic area. Within each area the payments are tiered. Individual contract payments reflect the particular capital structures and management practices agreed to in each contract.
(5) How are payments structured? Who administers, monitors and enforces system? • A government agency monitors and can terminate contracts in the cases of non-‐
compliance and also demand recovery of all money previously paid. • No info about how payments are structured. R e s u l t s
Did it work? • Incentives offered have induced enrollment of substantial portions (40-‐90%) of eligible
areas in England ESAs characterized by grazing and generally less intensive agriculture, but enrollment has been lower in areas characterized by more intensive arable production.
• Most of the UK ESA schemes made positive contributions to “greening the edges”. • ESAs are seen to be most successful in maintaining the environmental capital that
already exists than to adding or enhancing that capital. • Public administrative costs for the ESA scheme were 18% of the total costs for the
scheme. • There are uncertainties if the farmers will continue the preservation after the contracts
expire but in a study slightly more than half of the participating farmers thought they would continue to farm in the same way as during the contract period.
• The larger farmers got more incomes from the ESA scheme than smaller farmers. • The CSS scheme appeared to have had limited impacts on arable farming practices. • Two thirds of the participants in the CSS scheme said they would definitely re-‐apply
when their current contract expires meaning the payment levels were adequate for these farmers.
L e s s o n s l e a r n e d
• The scheme had problems to deal with whole watersheds because this needs cooperation and participation of many farmers with different orientations and incomes.
• The scheme had also problems to attract farmers in more productive arable areas. • The CAP (The European Union’s Common Agricultural Policy) protects farmers too well
to find it economically attractive to make the major farming system changes that would be called for to participate in the payment schemes.
• To attractive these farmers it would probably need such high payment rates that they would be deemed politically unacceptable.
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P E S i n t e r n a t i o n a l C a s e S t u d y s u m m a r y # 7 : F r o s t a n d B o n d ( 2 0 0 8 )
Frost and Bond 2008. The CAMPFIRE program in Zimbabwe: Payments for wildlife services
Location, type of PES, time frame, funding, etc. • Zimbabwe, Program Campfire (Communal Areas Management Program for Indigenous
Resources). • Started 1989 and continues to operate today. • Community based PES, but the article discuss if the program really is a PES. Depends on
definition of PES. “Campfire was never conceived of as a PES program though it exhibits many PES-‐like features”. ß INTERESTING TO NOTE IN OUR SUMMARY
• Main funder is USAID (United States Agency for International Development). USAID spent around US$ 25.2 million during 1989-‐2003. This was not only for the program but also for natural resource management in general. No specific amount of funding for the program is available. All funding are for start-‐up costs.
What are the ecosystem services (ES) addressed and • ES addressed is landscape beauty (aesthetic views) and wildlife habitat. Mainly for safari
hunting. What management activity or restoration is possible to improve the flow of these ES? • To not damage or exploit the area and to restrict hunting. What is the current or future threat to these ES? • Main threats are transformation of habitats to agricultural land and that farmers
considered wild animals as pests and were therefore hunting them. K e y p o i n t s t e s t e d
(1) what good/service is actually bought and sold and how is it measured (what metric)? • The service sold is: that the citizens of the communities’ won´t hunt or harass wildlife, to
limit expansion of crops and livestock and confine settlement to agreed zones. • The service bought is the right to access the area and to do safari trips in this preserved
area. SO IT IS MANDATORY RIGHT ?
(2) Who are the buyers and sellers (providers)? Are there non-‐buying beneficiaries ? • Buyers: Safari operators that buy rights for eco-‐tourism and safari hunting. • Sellers: Farming communities whose land-‐use determines the fate of wildlife. • Non-‐buying beneficiaries: N/A
(3) How long is the contract/program designed for? Time frame for payment? • Program started 1989 and can potentially continue indefinitely. In most of the cases the
safari operators pay an annual lease fee for the concession plus a trophy fee for each animal shot from an annual quota. In other cases the safari operators pay a percentage of gross income.
(4) How was the price addressed or determined? • Safari operators buy the rights through tender offers. SO IT IS BASED ON COMPETITIVE
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BIDS? INTERESTING …
(5) How are payments structured? Who administers, monitors and enforces system? • A RDC (Rural District Councils) administers the program. Authorized by the government
as intermediaries. Under them there is a “ward” (sub-‐district administrate unit with six villages) that receives 50% of the revenues that in turn decides if they are going to pay individual families or invest in agreed community development projects.
• The monitoring hasn´t been extensive. RDC relied on the safari operators to make proper payments. Most agreements have held so far.
• No information about monitoring the service sold. R e s u l t s
Did it work? • There has been no extensive assessment about the effects on conservation of wildlife
and wildlife habitat. The indicators looked at is population rates of some species compared to other areas.
• The population of species in the concerned areas has been stabile while there in other parts of Zimbabwe has been a decline in population rates.
• A substantial amount of prime wildlife habitat has been converted to settlement and agricultural lands in parts not involved in the project.
• The direct financial impact on poverty has been marginal. KEY RELEVANT CONCLUSION FOR US
• The amount paid to individual families has been small and therefore most of the money has been kept at ward-‐level to make “bigger” development investments.
• The project has grown rapidly since the start and are now supporting some 777 000 households. WOW VERY BIG COMPARED TO OUR PROJECT FOCUSING ON 20 HOUSEHOLDS
L e s s o n s l e a r n e d
• Community-‐level commercial transactions can seldom be pursued in isolation. • Non-‐differentiated payments weaken incentives. An advantage with the non-‐
differentiated approach is that it minimizes the risk for envy and internal division. GOOD POINT
• Start-up costs are high and may need to be underwritten. To meet the cost of creating a supportive environment for PES solely from payments runs the risk of raising costs to buyers to unaffordable levels. KEY FOR OUR SUMMARY
• Competitive bidding allows producers to hold on to rents. Creating a more competitive buyer environment in which providers have greater bargaining power is a significant challenge to emerging PES schemes.
• Schemes must be flexible and adaptive. To not insist on rigid adherence to some preconceived plan can make it work better.
• A decentralized management can strengthen the feeling of ownership and increase the providers’ incentives.
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P E S i n t e r n a t i o n a l C a s e S t u d y s u m m a r y # 8 : K o s o y e t a l ( 2 0 0 6 )
Kosoy et al 2008. Payments for environmental services in watersheds: Insights from a comparative study of three cases in Central America
Location, type of PES, time frame, funding, etc. • Three case studies. Location: Jesus de Otoro (Honduras), San Pedro del Norte
(Nicaragua), Heredia (Costa Rica). Fieldwork was carried out July to December 2004. • The Jesus de Otoro program started 2001, Funded by Swiss international cooperation
(no more info) US$30 000 for design and setup. • Heredia started 2002. No info about funder. Total fund US$ 32 000 for design and setup. • San Pedro del Norte started in 2003. Seed fund provided by the Program for Sustainable
Agriculture in Hillsides of Central America (PASOLAC). Total fund US$10 000 for initial setup.
What are the ecosystem services (ES) addressed and • ES from forests in all three case studies. Mainly water related ES. What management activity or restoration is possible to improve the flow of these ES? • Jesus de Otoro: No burning before, during or after planting. Planting of vegetal fences,
irrigation ditches and terraces. Establishment of agroforestry systems. Production of organic fertilizers. Implementation of organic agriculture. Forest protection and reforestation.
• Heredia: Prevention and control of forest fires. No hunting or extraction of forest products. No extraction of wood products. No forest conversion to agriculture or cattle ranching. Reforestation.
• San Pedro del Norte: Manage and conserve the forested areas. Prevention and control of forest fires. Restricted timber extraction. Implementation of a management plan. Livestock raising is not allowed. Subsistence crop farming is allowed only in one hectare per provider, without the use of pesticides and agro-‐chemicals.
What is the current or future threat to these ES? • Not specified but can be deduced from above. K e y p o i n t s t e s t e d
(1) what good/service is actually bought and sold and how is it measured (what metric)? • Households pay for water (mᶟ or just a fixed amount every month) and the intermediary
pay providers for abiding the criteria mentioned above. • The service sold is that the land owners will fulfill that agreement.
(2) Who are the buyers and sellers (providers)? Are there non-‐buying beneficiaries ? • Buyers: Jesus de Otoro: 1269 water using households. Heredia: 48,667 water using
households and one private beverage company (Florida Ice and Farm Co) San Pedro del Norte: 125 water using households.
• Sellers: Landowners in all three cases. • Non-‐buying beneficiaries: N/A
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(3) How long is the contract/program designed for? Time frame for payment? • No info about length of the program. Payments are either made monthly as a fixed fee
or as a pay as you go fee for every mᶟ you buy which is added to your water bill.
(4) How was the price addressed or determined? • Jesus de Otoro: The fee was decided through voting of representatives from the different
water sectors in town. • Heredia: The fee charged to users was decided on political grounds. • San Pedro del Norte: The fee was decided through a participatory process in the Water
Committee, which includes representatives from different water sectors in the area.
(5) How are payments structured? Who administers, monitors and enforces system? • Households pay for water (mᶟ or just a fixed amount every month) and the intermediary
( pay providers for abiding the criteria mentioned above. • Jesus de Otoro: Intermediary: The local Council for Administration of Water and
Sewage Disposal(JAPOE) • Heredia: Intermediary: ESPH S.A a public local enterprise for water provision and
sanitation. • San Pedro del Norte: Intermediary: The Water Committee (a local committee who was
created as a response to an earlier inefficient public enterprise. • No information about monitoring or enforcing. R e s u l t s
Did it work? • No evaluations of the change in ES are made in the article. • The amount received from the PES scheme constitutes less than 2 % of gross annual
income for most providers, in the three cases. • Most providers do not think that the amount they receive is fair. • Opportunity costs were larger than the actual or potential payment (the article is also
measuring different opportunity costs and compare them with the payments). • The degree of compensation is negative since the opportunity costs were higher than
the actual payment. L e s s o n s l e a r n e d
• Why do providers participate when compensations are negative? • If rational actors, the negative result is a methodological artifact. • If actors are assumed to be agents with “bounded rationality” the providers may have seen the
payment as a support for activities that they would have done even if the payments were absent. The payment can in either way play a significant role in reinforcing good environmental stewardship.
• There are doubts about the cost effectiveness of the payments in relation to alternative tools because of the fact that landholders that already were committed to forest conservation are more likely to participate in the program than landholders prone to deforestation and urbanization. This may have to do with attitudes towards the environment.
• Intangibles may play a very critical role in the design and performance of PES schemes.
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• The relationship between land uses and hydrological dynamics is probably the most critical technical challenge of water-related PES schemes.
• Due to the uncertainty of the relationship between expanded forest cover and increased groundwater flow and, PES schemes that aims to increase water availability by these actions should be avoided.
• PES schemes are more likely to be effective when they tackle water quality problems since there are less technical uncertainty and less divergence between public expectations and scientific evidence on the relationship between land use and water quality.
• In the cases analyzed in the article the effects on upstream income is small, and in one of the cases the PES go to wealthy providers.
• Calculation of upstream opportunity cost of forest cover based on on-farm profits in general overestimates actual willingness to accept compensation among providers.
P E S i n t e r n a t i o n a l C a s e S t u d y s u m m a r y # 9 : K o s o y e t a l ( 2 0 0 8 )
Kosoy et al 2008 Participation in payments for ecosystem services: Case studies from the Lacandon rainforest, Mexico.
Location, type of PES, time frame, funding, etc. • Mexico, four case studies looks at communities that implemented the program and
compared them with four that didn´t. Aims to answer : What decides if Ejidos´ (territory held in common by a group of families) decide to join or reject a PES initiative?
• Community based PES. A program called (PSA-‐CABSA). The budget for PSA-‐CABSA is negotiated in Congress every year.
• Started 2004 and is still running. • Government funds but no info about total sum.
What are the ecosystem services (ES) addressed and • Biodiversity and carbon fixation.
What management activity or restoration is possible to improve the flow of these ES? • Conservation of local natural resources. • Establish a private reserve for protection of birds. • Reforest 24 % of degraded pasture lands. • Protect the forest commons.
What is the current or future threat to these ES? • Land conversion K e y p o i n t s t e s t e d
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(1) what good/service is actually bought and sold and how is it measured (what metric)? • Case study 1. Service sold is conservation of local natural resources by establishing an
eco-‐tourism site for bird watching. • Case study 2. Service sold is to establish a private reserve for the protection of birds. • Case study 3. Preservation of 1450 ha of fragmented common forests. • Case study 4. Protection of the forest commons. S
(2) Who are the buyers and sellers (providers)? Are there non-‐buying beneficiaries ? • Buyers: The government through the program PSA-‐CABSA. • Sellers: Ejidos (territory held in common by a group of families) • Non-‐buying beneficiaries: N/A
(3) How long is the contract/program designed for? Time frame for payment? • Case study 1: The Ejido will receive 500,000 Mx$ over 5 years.
(27,000Mx$/household/year) • Case study 2: The Ejido will receive 325,000Mx$ over 5
year.(15,500Mx$/household/year) • Case study 3: The Ejido will receive 600,000 Mx$ /year over 5 years. (10,500
Mx$/household/year. • Cas study 4: Annual transfers to the Ejido of 618,000 Mx$ over a 5 year period.
(4) How was the price addressed or determined? • Set by the PSA-‐CABSA or the government. Not further specified.
(5) How are payments structured? Who administers monitors and enforces system? • CONAFOR (Mexico´s National Forestry Commission), which is below PSA-‐CABSA, sets,
monitors and enforces the contractual agreements through a number of verifiers who are hired to evaluate project development on-‐site. CONAFOR work as an intermediary, funding project design and implementation.
• If Ejidos fail to comply with project activities CONAFOR cancel payments. R e s u l t s
Did it work? • There have been problems with communication between CONAFOR officials and the
participants, which has resulted in many applications being turned down due to not meeting eligibility criteria.
• A significant factor explaining some Ejidos unwillingness to participate in PES relates to the inability to self-‐organize and develop project applications.
• Ejidos with rules about forest conservation already in place had a higher tendency to participate than Ejidos without rules. Existing infrastructure helps to determine success of program…interesting, good to note.
• PES may support the permanence of future generations in rural areas by strengthening alternative employment sources.
• Many Ejidos emphasized bequest values as important for their decisions.
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L e s s o n s l e a r n e d
• The relationship between Ejido leaders and CONAFOR verifiers had to be strengthened in order to avoid jeopardizing their long-‐term commitment to the project.
• The information provided to the Ejido leaders has been critical to encourage participation. The eligibility criterion has to be well explained to the providers.
• The size of the Ejidos may be an important factor promoting participation. Small Ejidos seemed more prone to get involved than larger ones.
• It is important to look beyond the idea of “incentives” to move towards “motivations”. • Involvement in PES may not always be a matter of compensating for opportunity costs, but
rather a question of how non-monetary individual and collective motivations can be further strengthened.
P E S i n t e r n a t i o n a l C a s e S t u d y s u m m a r y # 1 0 : M u ñ o z e t a l ( 2 0 0 8 )
Muñoz et al. 2008. Paying for the hydrological services of Mexico's forests: Analysis, negotiations and results
Location, type of PES, time frame, funding, etc. • Mexico, 2003-‐2005. The Payment for Hydrological Environmental Services (PSAH)
Program. • Government acts as single buyer on behalf of water users. • US$26 million yearly. Funded through an earmarked portion of federal fiscal revenues
from water fees. What are the ecosystem services (ES) addressed and • ES from forests with focus on water services. What management activity or restoration is possible to improve the flow of these ES? • Preservation of forests. What is the current or future threat to these ES? • Conversion of forests to agriculture and cattle ranching. K e y p o i n t s t e s t e d
(1) what good/service is actually bought and sold and how is it measured (what metric)? • Water users buy water, and pay a specific fee to the government who in turn pays the
providers. • The service sold is that the providers will preserve the forest they own. It is measured in
preserved forest/ha. (2) Who are the buyers and sellers (providers)? Are there non-‐buying beneficiaries ? • Buyer: Water users through the government. • Sellers: Landowners with primary forest cover (forests in good state of conservation) • Non-‐buying beneficiaries: N/A
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(3) How long is the contract/program designed for? Time frame for payment? • Providers’ signs up for 5 years. The payments were made annually. (4) How was the price addressed or determined? • The price was based on estimations of average annual opportunity costs from growing
corn and for livestock production. After that, negotiations took place between the intermediary INE (Instituto Nacional de Ecologica) and CONAFOR (The Director General of the National Forestry Commission) and the providers. After the negotiations the price was determined as US$ 27, 3/ha/year for all forests except cloud forests, which received US$36,4/ha/year.
(5) How are payments structured? Who administers, monitors and enforces system? • Direct payments annually to the providers through the intermediary CONAFOR. • Monitoring is made by the intermediary and participants that do not fulfill their
assignment will not receive payment at the end of the year, no matter how small the change.
R e s u l t s
Did it work? • More than 900 applications were received in the first year, offering closely to 600 000
ha. Budget constraints allowed less than a third of these applications.’ • The program has reported no deforestation in participating areas. These numbers might
be a bit hard to believe in and may be a result of the current low-‐resolution monitoring methods.
• 78% of the payments went to forests owned by people living in population centers with high or very high marginalization.
• There appears to be a bias against the poorest of the poor: the very highly marginalized are under-‐represented relative to the highly marginalized.
L e s s o n s l e a r n e d
• Public knowledge about the ecological relationships is critical for policy design and the design of PES schemes.
• More price differentiation would bring in more environmental benefits than a fixed payment system.
• Landowners might reduce deforestation in participating territories but increase it in other areas. This might not be a big problem if the “other areas” are less important to preserve.
• If barriers exist for the very highly marginalized to participate the program should be complemented with an outreach and support campaign to ensure that the poorest can participate on equal terms.
• Even though the system with the government as an intermediary can be effective and easy to implement the companies should be tried for their true willingness to pay.
• A nation-wide program can be more easily implemented but might not be tailored good enough to local needs and conditions, and not linking directly contributions by users and payments to the forest owners that provide most of their ES. A more decentralized scheme
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can handle these obstacles.
P E S i n t e r n a t i o n a l C a s e S t u d y s u m m a r y # 1 1 : P a g i o l a ( 2 0 0 8 )
Pagiola 2008. Payments for environmental services in Costa Rica.
Location, type of PES, time frame, funding, etc. • Entire country of Costa Rica. The article broadly summarizes the experiences of PES in
Costa Rica. The PES program in Costa Rica is called the PSA program. It started in 1997 and is still ongoing. The PSA program is funded by tax revenue (3, 5% of the fossil fuel tax, US$10 million a year), a loan from the World Bank and a grant from Global environment facility (GEF). Total amount not available.
• Types of PES are mainly taxpayer-‐funded markets but also voluntary markets and regulatory compliance markets. The payments for the services are mainly financed by taxes and water tariffs. Other incomes are those coming from selling carbon emission rights to the World Bank Carbon Emission Fund and the incomes coming from firms paying to preserve important watersheds.
What are the ecosystem services (ES) addressed and
• The ES addressed are broadly defined as ES provided by forest such as water services, biodiversity, carbon sequestration and landscapes.
What management activity or restoration is possible to improve the flow of these ES? • Mainly conservation of forests, that will help maintain all the ES that comes from the
above.
What is the current or future threat to these ES? • Not a specific definition of the threats but mainly exploitation of forest that includes
conversion to pasture and clearing forest. K e y p o i n t s t e s t e d
(1) what good/service is actually bought and sold and how is it measured (what metric)? • The service bought is no. of ha of forest preserved. • Service sold is to preserve the forest.
(2) Who are the buyers and sellers (providers)? Are there non-‐buying beneficiaries ? • Buyers: Firms that use water as an input in their production (either buying due to self-‐
interest to preserve an important watershed (as they perceive it), or because they are obligated to pay water fees). Firms that have to buy permits of carbon emissions and
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organizations or firms that pay for ES for ethical or publicity reasons (voluntarily). So there is nothing mandatory about this program? This is a key issue to take up in the PM, i.e., are most PES voluntary or mandatory and what does this imply about the success of the program?
• Sellers: Forest Landowners who receive payment for preserving the area. • Non-‐buying beneficiaries: Not discussed in the article. (3) How long is the contract/program designed for? Time frame for payment? • Contracts are mainly yearly and the payments are also yearly. The program is
continuing indefinitely.
(4) How was the price addressed or determined?
• Not really discussed in the article more than that it is “set by an executive decree”. (5) How are payments structured? Who administers, monitors and enforces system?
• The PSA program is managed by FONAFIFO, a semiautonomous agency with independent legal status. The board of FONAFIFO is composed of three public representatives and two representatives from the private forest sector.
• FONAFIFO has a relative degree of autonomy but it remains subject of some governmental restrictions. FONAFIFO has eight regional offices that handle applications, monitor implementation and sign contracts. FONAFIFO are responsible but sometimes hire other agencies to do monitoring for them.
• Initial payments can be requested at contract signing but subsequent annual payments are made after verification of compliance.
R e s u l t s
Did it work? • It´s hard to summarize the results when the perspective of the article is so broad but the
main parts is: • The PSA program has been and is very successful. Even though the program is only
partly financed by service users, progress has been made when it comes to getting the actual users of the services to pay.
• A new water tariff will make the direct payments increase as a share of the whole. • Many users want to free-‐ride on the efforts made by the government and other users.
Where there are many users of a service it is harder to get the users to pay. • Although it is not designed as a poverty reduction program some studies has shown that
the effects of the program can be positive for poor areas. The results of the effects have been mixed.
• Hard to measure the impact on forest conservation due to other changes (legal, information etc.). The new harder environmental legislation may have been possible only because of the PSA carrot.
• Studies have found that PSA recipients have higher forest cover than others.
L e s s o n s l e a r n e d
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• The biggest lesson learned is to be flexible and adapt to different situations. • The link between preserved forests and the ES –performance has to be investigated more
closely. This will probably make more users willing to participate. • Familiarity with the PES approach seems to make users more willing to participate. • Important to make the income streams as constant as possible. The fossil fuel tax may be
insecure in the future. More direct payments are preferred. • Efficiency and long-‐term sustainability demand that understanding of how different
land use practices contribute to environmental services be substantially improved.
P E S i n t e r n a t i o n a l C a s e S t u d y s u m m a r y # 1 2 : P h u c X u a n e t a l ( 2 0 1 2 )
Phuc Xuan et al 2012. The Prospects for Payment for Ecosystem Services (PES) in Vietnam: A Look at Three Payment Schemes
Location, type of PES, time frame, funding, etc. • The article examines the development and implementation of three nationally
supported PES schemes in Vietnam. • Case study 1: Ba Vi National Park in Hanoi metropolitan Area. Government supported
incentive payment scheme. Started in the early 1990s. Totally funded by government. • Case study 2: Lam Dong province located at the source of the Dong Nai River.
Regulatory compliance markets were companies have to pay an environmental service fee for the use of the ES. Started in 2008. Start up costs funded by government.
• Case study 3: Son La province. Same market type as case study 2. Start up costs funded by government.
What are the ecosystem services (ES) addressed and • Case study 1: ES from forests. • Case study 2: Water regulation, soil protection and scenic landscape provided by the
forests. Carbon sequestration and biodiversity conservation were considered too complex to measure.
• Case study 3: Water regulation and soil protection provided by the forests. What management activity or restoration is possible to improve the flow of these ES? • Case study 1: Forest planting, and forest protection (not further specified) • Case study 2: Preservation of forests. Not specified how. • Case study 3: Preservation of forests. Not specified how.
What is the current or future threat to these ES? • Case study 1: Not specified (people use the forests for their livelihood). • Case study 2: Not specified (the area is used for hydropower plants) • Case study 3: Large areas of forest in the province have been cleared for hydropower
plants.
K e y p o i n t s t e s t e d
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(1) what good/service is actually bought and sold and how is it measured (what metric)? • Case study 1: Service bought/sold is forest protection and forest planting. Measured in
ha. • Case study 2: Service bought is the stabile provision of water to the hydropower plants
that can be used in the production of electricity. Measured in m ³. Service sold is stabile provision of water by conservation of forests (ha).
• Case study 3: Service bought is the stabile provision of water to the hydropower plants that can be used in the production of electricity. Measured in m ³. Service sold is stabile provision of water by conservation of forests (ha).
(2) Who are the buyers and sellers (providers)? Are there non-‐buying beneficiaries ? • Case study 1: • Buyer: The government • Sellers: Households nearby the forest area. Households in the buffer zone were
prioritized. In total 4,200 ha of land were contracted to 97 land recipients. In one of the areas, The Ba Vi commune, a total of 270 ha of forestland inside the park was contracted to 6 out of 94 households. These six households got the contracts because of their prior knowledge of it as local officials (party officials). The area was too big for them to protect so they in turn gave annual leases to the other village households in exchange for labor for forest protection activities.
• Non buying beneficiaries: N/A • Case study 2: • Buyers: 4 buyers identified: 2 state owned hydropower plants companies, 1 water
supply organization and 1 Tourism Company. • Sellers: Nearly all of the forestlands in the province are managed by state entities. The
remaining land is managed by 564 households. To ensure that local households were able to benefit from the revenues, local authorities maintained old contract arrangement from the 1980s, which resulted in the fact that only 10 % of the village households gained access to PES benefits.
• Non buying beneficiaries: The other tourist companies benefiting from landscape beauty of the forest.
• Case study 3: • Buyers: 3 buyers identified: 2 state owned hydropower plants and one water supply
company. • Sellers: More than 50 000 forest owners, mostly households. • Non buying beneficiaries: N/A
(3) How long is the contract/program designed for? Time frame for payment? • Case study 1: Land was allocated to participants for 50 years with scope for extension if
they complied with forest protection regulations. Annual payments of 100 000 VND/ha (US$5) for forest protection and 2.3 million VND/ha (US$153) for forest planting.
• Case study 2: No info about length of contract. Environmental service fee for hydropower plants of 20 VND (0.125 cents) per kilowatt hour; for water supply companies the fee was set at 40VND (0.25 cents) per m³ of water supplied. Payments
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are 290,000VND/ha (US$16) for water regulation, 270,000 VND/ha (US$15) for soil protection and 10,000 VND/ha (US$0, 5) for scenic landscape values. All payments were made annually. Totally US$ 2, 8 million was being paid to 3,400 local households. Each household will have gained US$ 600/year, an amount 3, 75 times higher than their income prior to PES implementation.
• Case study 3: No info about length of contract. Total revenue of 63 billion VND (US $3,5 million) in 2009, and an average payment per hectare of forest of 397,000 VND (US$21).
(4) How was the price addressed or determined? • Case study 1: No info about how the price was determined. • Case study 2: A team developed a “complicated equation” to calculate the payment
levels but failed to find a suitable fee to apply to tourist companies benefiting from the landscape beauty of the forest. The team consulted different stakeholders about their WTP and came up with 0.5-‐2 % of the tourism companies´ gross revenue. A K coefficient was developed to reflect different conditions of the forest (status, natural, planted etc.).
• Case study 3: No info about how the price of 400,000 VND (US$22) was addressed. Only that the site had very high opportunity costs and that the payment couldn´t match that.
(5) How are payments structured? Who administers, monitors and enforces system? • Case study 1: The park is directly managed by MARD (The Ministry of Agriculture and
Rural Development).The providers were given direct monetary payments annually from a Park Management Board who also offers the contracts to the providers. No specific info about monitoring and enforcing.
• Case study 2: A “relevant state organization” administers and monitors the program. Payment was made based on participation of the households in the PES schemes rather than on performance of the services provided by the forest. There were some problems with the land use certificates because it sometimes showed different allocations than the actual area allocated which made it hard to see the improvements of the ES. Payments were therefore calculated according to the land area shown in the participants land use certificate and based on the forest quality at the time of land allocation.
• Case study 3: The distribution of payments faced a number of problems. Only 14% of the total amount was transferred. Only 10% of the households have received any payment. This was mainly because of the complexity of local land tenure arrangements. The ways the payments are arranged are most likely to change in the province. (No info about administration or monitoring on this site but probably similar to case study 2)
R e s u l t s
Did it work? • Case study 1: Only a part of the interested households were able to participate due to
lack of information. The information only reached former local officials. • Various actors established contrasting and overlapping claims and rights to land inside
the park. This led to conflicts occurring between the Park officials and villagers as the State disregarded villagers´ claims on the land, as well as unofficial and illegal deals between the six forestland contract holders and other households in the village.
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• The majority of local households failed to benefit from the scheme. • Case study 2: Each household have earned an amount 3.75 times higher than their
annual income prior to PES implementation. In many areas, the implementation of PES policy is unlikely to solve the problem of poor forest governance.
• The current structure of payments do not reach the poor, particularly the poorest, usually newly-‐established households and migrants lacking access to land bur strongly reliant on forestland and forest resources.
• Case study 3: The result of case study 3 is not very good, both due to the low rate of payments (only 10% of the participants have received payments from the buyers) and due to the complexity of the local land tenure agreements.
• Results in general: • It is too early to conclude that a PES program would be an effective mechanism for
forest protection more broadly in Vietnam. • Owing to the lack of technical capacity in measuring the quality of service provided by
the forest, it is not clear if the quality of service provided has been improved. • The share of payments retained by the government from PES schemes was proving
insufficient to cover inventory costs. • In addition to the state, the PES policy in Lam Dong has mobilized a significant funding
pool from private actors. • PES income may compete with, rather than supplement other livelihood activities. L e s s o n s l e a r n e d
• There have been problems implementing the programs due to the uncertainty about land tenure agreements. To conduct an inventory of all forest areas in Case study 3 is the way to come around this problem but would take at least five years at a cost of 56 billion VND.
• The unfair distribution of contracts among households has triggered conflicts in the villages resulting in resistance from the villagers by surreptitiously cutting coffee trees belonging to households with contracts.
• In Lam Dong, local authorities decided to pay better-off households a lesser amount per hectare than poor households as a leveling strategy, although both groups provided the same kinds and quality of environmental services. This suggests that while the PES schemes in Vietnam partly embrace the ideals of market-oriented solutions, the socialist market context firmly embeds these programs within contrasting political and economic agendas.
• The state still plays a role in mediating market activities. • One of the state owned power plants didn´t pay PES fees of 218 billion VND (US$ 1.9 million)
in 2010, despite numerous payments requests from the MARD. The hydropower plant was only able to do this because it is owned and protected by the Vietnam Energy Group, which belongs to the Ministry of Industry and Trade. These types of companies may delay their payments indefinitely.
• More than 60 % of Vietnams forests are managed by state entities and the payments derived from these may provide a strong incentive for state entities to hold on to the land, capturing the benefit streams associated with PES while poor households are unable to access such benefits in the face of stronger restrictions on resource access.
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• The implementation of PES may exacerbate pre-existing inequalities as local elites monopolize direct income flows and state forest entities control the majority of national forestland.
P E S i n t e r n a t i o n a l C a s e S t u d y s u m m a r y # 1 3 : S o m m e r v i l l e e t a l ( 2 0 1 0 )
Sommerville et al. 2010. The role of fairness and benefit distribution in community-‐based Payment for Environmental Services interventions: A case study from Menabe, Madagascar
Location, type of PES, time frame, funding, etc. • Menabe, Madagascar. Program started 2003 and is still running. • Community-‐based PES. Communities are competing with each other about an award. • Information about who is funding is not available. • Annually US$ 8500 is distributed as an award to communities. What are the ecosystem services (ES) addressed and • ES from forests with a focus on biodiversity (the forests are sole habitat for 4
endangered species and critical habitat for numerous other endangered species).
What management activity or restoration is possible to improve the flow of these ES? • Preventing citizens of the communities to damage and exploit the area. A deal is signed
which clearly define the rules for management/administration of the forest. Community forest associations are responsible for the implementation of the deal.
What is the current or future threat to these ES? • Mainly conversion from forests to agricultural land but also hunting, timber cutting and
creation of new paths. K e y p o i n t s t e s t e d
(1) what good/service is actually bought and sold and how is it measured (what metric)? • The service sold is the agreement to follow the rules set by the government and Durrell. • The service bought is that the citizens follow the rules. • The annual assessment is made by Durrell and the performance is measured using an
indicator scoring system. The score depends on each community´s specific properties relative to the other communities in the region.
(2) Who are the buyers and sellers (providers)? Are there non-‐buying beneficiaries ? • Buyers: The NGO Durrell • Sellers: 8 Communities that own local forest management rights. • Non-‐buying beneficiaries: N/A (3) How long is the contract/program designed for? Time frame for payment? • No information about the length of the contracts. Annually distribution of US$8500. (4) How was the price addressed or determined?
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• No information about how the total sum of US$ 8500 was determined. So it sounds like “value” was implicitly determined here based on the size of the gov’t budget for this program ! i.e., there was no attempt to try and set price based on how this was valued by society.
(5) How are payments structured? Who administers, monitors and enforces system? • US$ 8500 is annually distributed to the 8 communities that are part of the program. The
distribution depends on the performance. It can change significantly from year to year. • The award is not distributed in cash but instead used to purchase in-‐kind incentives.
Communities have purchased generators, building materials, bicycles and cows, which the citizens can use. Key finding from other articles too – payment can be non-‐monetary. Important to note.
• Durrell is responsible for the program. R e s u l t s
Did it work? • The majority of individuals reported that the community as a whole benefited positively
from the intervention. It is described as a success. • Individuals perceived the community to have benefitted more often than they perceived
their family to have benefitted. • Only a few reported that their family had explicitly lost out from the intervention. • The results indicate that association members and those in power received the highest
level of net benefits. • Individuals with high opportunity costs (individuals who wanted to expand their
agricultural land) were less likely to perceive their family as benefitting overall and also perceived unfairness of the distribution.
• 85% of the respondents perceived the distribution of the incentive (in-‐kind payment) to be fair.
L e s s o n s l e a r n e d
• Community-‐based PES doesn´t necessarily address individual opportunity costs, which may make it difficult in incentivizing individual behavior.
• Community-‐based PES can be used as poverty reduction if the payments are targeted to the poorest or are in-‐kind, non-‐rival and non-‐excludable. This may decrease the effect that the ones with power and wealth benefit the most. OK, good to know, answers my question above
• Targeting can be used when individual opportunity costs are important. • The perception of fairness and good governance (the performance of local leaders) is
very important to make Community-‐based PES work.
P E S i n t e r n a t i o n a l C a s e S t u d y s u m m a r y # 1 4 : T u r p i e e t a l ( 2 0 0 8 )
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Turpie et al. 2008. The working for water program: Evolution of a payments for ecosystem services mechanism that addresses both poverty and ecosystem service delivery in South Africa
Location, type of PES, time frame, funding, etc. • South Africa, The Working for Water (WfW) program started 1995. • WfW was initially initiated as a poverty relief works program. The bulk of the funding
has been generated through poverty relief programs in turn funded by tax revenue. • Annual budget of R400 million. (R 6.50-‐7.50:US$1) • Both mandatory and voluntary PES. Funded by tax revenue and voluntary payments by
water users. What are the ecosystem services (ES) addressed and • ES from grasslands with focus on water quality, provision and flows. What management activity or restoration is possible to improve the flow of these ES? • Restoration of grasslands by clearing them from invasive alien plants. What is the current or future threat to these ES? • Bad management practices such as overgrazing, damming, inappropriate burning
regimes, and reclamation of wetlands. Other threats are conversion of grasslands by afforestation with alien Pinus and Eucalyptus species. Also other alien vegetation.
K e y p o i n t s t e s t e d
(1) what good/service is actually bought and sold and how is it measured (what metric)? • The good bought is manual clearing of invasive alien plants on important grassland. • The good sold is the service to clear the specific area that the workers are hired to clear. • The metric is ha. (2) Who are the buyers and sellers (providers)? Are there non-‐buying beneficiaries ? • Buyers: The government through the governmental program WfW. They in turn act on
behalf of water users who pay a water resource fee in the water tariff. This part is mandatory. Both municipalities and even some companies have agreed voluntary payments for the service of restoration of grassland. The voluntary part is only a small proportion so far.
• Sellers: Roving service providers in the form of small-‐scale contractors who perform restoration work on land under any type of ownership. The contractor staff must have been previously unemployed.
• Non-‐buying beneficiaries: Private and communal landowners benefit from having their land cleared through increased productivity.
(3) How long is the contract/program designed for? Time frame for payment? • No info about the contract lengths for the mandatory part. The voluntary buyers’ signs
contracts with the WfW and the length of the contracts can vary. • No info about contracts with sellers. • No info about the time frame for payment but the budget is annual so the payments may
be annual as well.
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(4) How was the price addressed or determined? • Mandatory part: The charges levied are based on WfW’s cost estimates, divided by the
total volume of registered water use by the agricultural, domestic and industrial sectors, weighted according to affordability, assurance of supply and equity.
• Voluntary part: The prices are negotiated between the municipality/company and the WfW and the final price depends on the site specific circumstances.
(5) How are payments structured? Who administers, monitors and enforces system? • The mandatory payment is structured in the way that water users pay a water resource
fee in the water tariff that is administered by WfW. • The voluntary payment can be a lump payment for a specific amount of year or an
annual payment. • WfW administers the program but there are no specific information about the
monitoring and enforcing other than that they have to improve that part of the program. R e s u l t s
Did it work? • The WfW program has been hailed as highly successful in terms of its objective of
restoring water supply in alien-‐infested catchments. • It has been called “one of the most successful integrated land managements programs in
the world”. • The program has cleared more than one million ha of invasive alien plants. • The program has created thousands of jobs with a strong emphasis on gender equity,
and provides considerable benefits such as skills training and health and HIV/AIDS awareness programs.
• Estimations has been made that showed that 24 000 previously unemployed people, 52% of whom are women, were employed in 2000.
L e s s o n s l e a r n e d
• A unique feature of the program is that the cost of intervention is low. This is mainly because of low opportunity costs.
• As demand for water grows, there is the potential for moving from a system that is highly dependent on government funding to one based on voluntary transactions. This potential is demonstrated by the voluntary agreements that have been entered into to date, as well as by the expressed willingness of consumers to participate where they have been consulted.
• Thanks to the low costs of the program, it has the luxury of being able to priorities areas for actions using ecological and social rationales.
• Given the scale of the invasive alien species problem facing the country the WfW-model is likely to be sustainable and productive over the long term.
• The program has potential to be expanded to other deal with other ecosystem serviced as well. • The fact that the program is labor intensive and provides opportunity for poverty relief makes
it even more attractive.
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P E S i n t e r n a t i o n a l C a s e S t u d y s u m m a r y # 1 5 : W u n d e r a n d A l b a n ( 2 0 0 8 )
Wunder, Sven and Montserrat Alban. 2008.Decentralized payment for environmental services: cases of Pimampiro and PROFAFOR in Ecuador. Ecological Economics 65: 685-‐698
Location, type of PES, time frame, funding, etc. PES #1: Pimampiro: (2000-2005) watershed scheme in Pimampiro municipal watershed-protection scheme. Funding: (1) users of water (~80% of operation costs) and (2) local municipality. But also (3) start up capital costs came from int’l NGOs. Not sustainable or advised that local gov’t continue to incur costs of program over time (political concerns).
PES#2: PROFAFOR, (1993-2005) Forests Absorbing Carbon-dioxide Emissions Forestation Program carbon-sequestration program whereby Dutch electricity companies pay local landowners to re-forestation and afforestation to meet carbon reduction goals. Funding: Everything paid by Dutch electricity firms apparently – (1) start up costs (2) landowner payments and technical assistance (75% of operation costs) (3) administration such as enforcement, etc. (25% of operation costs).
What are the ecosystem services (ES) addressed ? What management activity or restoration is possible to improve the flow of these ES? • Pimampiro addresses water quality/quantity through forest management and promoting
natural vegetation cover • PROFAFOR provides carbon sequestration services by paying landowners to plant trees What is the current or future threat to these ES? • Pimampiro – agriculture displacing forests, leading to local water quality/quantity impacts • PROFAFOR – agriculture displaces forests, leading to CO2 emissions globally. Key points tested
(1) what good/service is actually bought and sold and how is it measured (what metric)? Pimampiro: the service is water quality delivered through proper forest management. There are 19 households contracts covering ~600 hectares. Contracts are measured by % vegetative cover, but as with most PES there is some scientific agreement on measuring the quantity of ES being delivered, i.e.,. how does existence of tress actually reduce evaporation, reduce run-off, improve water quantity/quality? Research on-going. PROFAFOR. Carbon sequestration. But, as is typical, controversy about how to attribute the actual amount of carbon sequestered by native vegetation (preferred) versus other vegetation.
(2) Who are the buyers and sellers (providers)? Are there non-buying beneficiaries ? Pimampiro
• Buyers: 1350 households in town that have water meters and pay 20% surcharge on water consumption. There are lots of free-riders in town that do NOT have water meters. But surveys indicate that 80+% are willing to pay for this ES of water provision.
• Sellers: 27 households in upper region that get paid to manage forests. Most of these are extremely poor, with payments making up 30% of annual income.
PROFAFOR
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• Buyers: Dutch electricity firms wanting to reduce CO2. Obviously lots of free-riders since the global community benefits from CO2 reduction.
• Sellers: mostly private landowners (~130) but also communities as a whole. Note that some sellers also benefit from forest training over and beyond financial payment
(3) How long is the contract/program designed for? Time frame for payment? Pimampiro: Initially 5 years, but then extended indefinitely into the future. Note that it took one year to set this up and 4 additional months to negotiate and write contracts. Long lead time. PROFAFOR Up to 99 years. Payment made over time. First to cover planting costs (80% of cost) then other 20% if trees survive, which gives incentive for proper management re-forested (30% of payment). Finally, 70% of revenues from harvest at end of cycle PLUS final 30% of revenues if they fully re-forest afterwards (if they do not re-forest, they must pay). In addition, they receive “in-kind” payments in terms of products from thinning etc. (4) How was the price addressed or determined? Pimampiro: 6-12 $/yr/hectare depending on quality of forest type and how it improves water quality/quantity PROFAFOR. Based on opportunity costs of re-forestation, plus the market priced of timber. Pretty straight forward calculations.
(5) How are payments structured? Who administers, monitors and enforces system? Pimampiro. In practice, picks 3 random contracts (of 19) to visit each year and check whether they are doing as they say, but in practice little money available for this monitoring to happen. But it has led to penalties and some were kicked out. It seems to have ‘conditionality” in delivering ES. PROFAFOR. Visits every contracted area at least once every year, some times more. This is costly, but still only 25% of total costs. Penalties have been enforced against individual landowners, but bigger problem enforcing against communities themselves. Results
Did it work? In general: We find that both schemes have been relatively effective in reaching their environmental objectives, in terms of having probably high additionality levels and low leakage effects. A strong focus on the targeted environmental service and a strong degree of conditionality seem to be two key factors explaining these achievements. Although neither scheme has targeted poverty alleviation or other side objectives, both are likely to have improved PES recipients' welfare, mostly through higher incomes. We highlight several observations with more generalized relevance and lessons for the design of PES schemes.
Pampiro. The Pampiro has inspired other similar programs. In total, three other watershed protection PES schemes in Ecuador are now up and running, while another seven are in design stages (as of 2008).
PROFAFOR is successful, but of course communities with higher quality forest resources do better. Successful communities also invest revenues in schools, family orchards, machinery (including trace- tors), infrastructure and creation of micro-credit schemes. ‘Less successful’ cases typically are more land-scarce and have low plantation management capacity, resulting in sub-opti- mal tree growth. They often exhibit organizational weak- nesses — at the extreme,
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communal leaders have run away with the PES funds.
Beyond the pure income accounts, there are wider livelihood effects from PES. For instance, forestry training has expanded human capital, although this has mostly been restricted to community leaders.
Lessons learned
Monitoring costs need to be internalized into user payments to make the system fully financially sustainable, instead of relying on local gov’t budgets to incur part of adm cost of running program.
Both schemes' natural focus on environmentally strategic but economically marginal lands was clearly in favor of the poor because they tend to live in these areas.
the hydrological service is much more spatially specific than carbon sequestration
No side objectives were targeted in either scheme, in terms of either welfare goals (e.g. poverty alleviation) or of other environmental services (e.g. biodiversity protection). However, both schemes are likely to contribute to some extent to such goals through unintentional side effects. However, the authors also note that diluting environmental objectives with other objectives may reduce program efficiency. A possible trade-off here. The Pimampiro PES scheme is a conservation set-aside, ‘activity- reducing’ scheme, basically designed to downscale agriculture in an environmentally sensitive area. In contrast, PROFAFOR is an ‘asset-building’ scheme that at least temporarily increases economic activity and local employment (Wunder, 2005). PROFAFOR While measures can mitigate farmers' liquidity shortages, they cannot eliminate the underlying basic problem: that it takes significant time for trees to grow before they can be harvested and yield significant economic returns.
Calculating land opportunity costs more explicitly could raise the environmental efficiency of the PES schemes – “greater bang for the buck” through differentiated payments. One could discriminate and pay different landowners differently (more for high threat areas and elevated opportunity costs) , but this raises inevitable issues of fairness.
In addition to buyers and sellers themselves, there can be some winners/losers in terms of the institutions that carry out the PES. Sometimes they are pioneers (winners), other times they loser b/c they incur too great a portion of administrative costs.
Start up costs can be very high for small area PES schemes.
P E S i n t e r n a t i o n a l C a s e S t u d y s u m m a r y # 1 5 : Z a b e l a n d B o s t e d t ( 2 0 1 0 )
Zabel and Bostedt 2010. Outcomes and Determinants of Success of a
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Performance Payment Scheme for Carnivore Conservation
Location, type of PES, time frame, funding, etc. • Northern part of Sweden. • Government funded performance payment scheme, started 1996. • Empirical investigation conducted during 2008 and 2009. • No info about total funding but SEK 200 000 per offspring. What are the ecosystem services (ES) addressed and • Biodiversity, preservation of lynx and wolverine. What management activity or restoration is possible to improve the flow of these ES? • Protect the endangered species lynx and wolverine by preventing illegal poaching. What is the current or future threat to these ES? • Illegal poaching, mainly by reindeer herders. K e y p o i n t s t e s t e d
(1) what good/service is actually bought and sold and how is it measured (what metric)? • Service bought is that the reindeer herders will refrain from illegal hunting of lynx and
wolverine and to let their reindeer roam free as potential food for carnivores. • Service sold is essentially the same as above. • Both services are measured in the total numbers of offspring that are certified on the
Samis reindeer grazing grounds. (2) Who are the buyers and sellers (providers)? Are there non-‐buying beneficiaries ? • Buyer: The government. • Sellers: Indigenous Swedish Sami villages (reindeer herders). • Non-‐buying beneficiaries: N/A. (3) How long is the contract/program designed for? Time frame for payment? • No info about length of the program. No info about time frame for payment but
inventories of the populations is made annually and that probably implies annual payments per offspring.
(4) How was the price addressed or determined? • The payments are SEK 200 000 per offspring, (SEK 1≈0,14 US$). It is computed to, on
average, compensate slightly more than the damage a carnivore is expected to cause during its lifetime.
(5) How are payments structured? Who administers, monitors and enforces system? • The carnivores are inventoried every winter. The Sami villages receive payments (SEK
200 000) for every offspring certified on their grazing grounds. The inventory is performed by herders and rangers and is conducted according to very detailed regulations.
R e s u l t s
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Did it work? • The econometric analysis provides evidence that the combined “carrot and stick
approach”, i.e. performance payments and penalties on illicit poaching, provide sufficient incentives for herders to abstain from illegal poaching.
• The most important sole factor impacting the number of wolverine offspring is the abundance of mountainous areas, which is wolverines preferred habitat.
• There is a negative relationship between the size of the Sami villages (number of herders) and the conservation success.
• There is a positive relationship between the allocation of performance payments directly to individuals and increased conservation success.
• L e s s o n s l e a r n e d
• If strict conservation is required due to the status of a carnivore species, providing pro-‐conservation incentives, such as performance payments, additional to regulations can generate favorable results.
• The conservation success depends on a groups´ potential to engage in collective action. • Group size was found to be a particularly important factor but other factors such as
economic or cultural homogeneity, social capital, and exit options are also likely to be important.
• The general advice is to allocate as much as possible directly to individual group members.
• Because of its relative uniqueness, an interesting question would thus be to test the transferability of the performance payments approach to a developing country setting.
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