Getting Started with

Payments for Ecosystem Services

October 2009

Getting Started with

Payments for Ecosystem Services

United States Forest Service 1

MODULE FOUR: Steps to

Developing a Payment for Ecosystem

Services Project

Steps to Developing a PES Project: Part 2

• Module 4.2: Steps to Developing a Payment for Ecosystem Services Project: Part 2• Step 3: Structure PES Agreement

• Agreement Basics • Key Issues for Sellers • How to Reduce Costs • Options for Payment Types • Contracts • Key Elements of an Agreement

• Step 4: Implement PES Agreement • Key Actions• Monitoring and Evaluation• Value of Honest Brokers

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Step 3: Structure PES Agreement

• Design management and business plans

• Reduce transactions costs

• Review options for payment types

• Select a contract type 33333

Agreement Basics

• Who is responsible for each action? • What ecosystem service results are

expected? • How results will be demonstrated? • Who will be responsible for

monitoring, evaluating, verifying, and certifying results?

• Who will receive what amount of money in what time frame?

• Which criteria will evaluate the fairness of the PES deal?

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Key Issues for Sellers

• What costs may be incurred during implementation of the deal?

• What are the projected revenues for sellers?

• What, if any, intangible benefits will sellers realize

• What are potential risks to sellers and pathways for mitigating risks?

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How to Reduce Costs

• Aggregate projects• Build on existing programs• “Bundle” environmental service

payments• Cost-sharing mechanisms• Intermediary institutions provide

special services and overall management services

• Reduce data costs• Large-scale, area-wide projects• Set up a Trust Fund

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Options for Payment Types

• Direct financial payments• Financial support for specific

community goals• In-kind payments• Recognition of rights• Pay-per-tree• Forest establishment and protection• Profitable and sustainable land

management• Providing services 7

Contracts

• Memorandum of Understanding or Memorandum of Agreement

• Legal contract

• Customary law agreements

• “Handshake” agreement

• Quid-pro-quo8888

Key Elements of an Agreement

• Terms and types of payments• Timing of payments• Requirements to be met for payment• Managing risks• Signatories to the contract

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Step 4: Implement PES Agreement

• Finalize the PES management plan

• Implement activities

• Verify PES service delivery and benefits

• Monitor and evaluate the deal

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Key Actions

• Hire personnel

• Prepare accounting management and tracking systems

• Open accounts to manage funds

• Train participating community members on the activities allowed

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Monitoring and Evaluation

• Determination of who selects indicators and who is reporting to whom

• Selection of indicators

• Creation of a “Local Ecosystem Conceptual Process Model”

• Selection of monitoring sites

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Value of Honest Brokers

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• Assessing ecosystem service products and values to buyers

• Establishing relationships and rapport with potential buyers

• Enabling sellers get to know potential buyer(s) well, ensuring meetings reveal key details

• Ensuring the final agreement is in sellers’ best interest

• Risk management advice / services

• Negotiating on behalf of the community

• Proposal development

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“Take your time. And don’t sign it if you don’t fully understand.”

- Chief Oren Lyons, Onondaga Nation Council of Chiefs of the Six Nations of the Iroquois Confederacy

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Thank You!

Questions & Discussion

www.katoombagroup.org

Kate Hamilton: khamilton@ecosystemmarketplace.com

Fiona Mulligan: fmulligan@forest-trends.org

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