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8/7/2019 Market Based Mechanisms - Group D12_naveen changed
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MARKET BASED MECHANISMS
GROUP 12
CHANCHAL RAJ MEENA- 208
GAURAV PATANGE -211
MADHUSUDANAAN N M-216
NAVEEN KIRAN SEKHAR-220
PRANEETH MANDURI-226
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THE CONTEXT - DEFINITIONS
Products and services provided by naturalresourcesEcosystem services
Creating/Exploiting existing Demand-Supplyrelations to promote ecological sustainability
Market basedmechanisms
Strict specifications, regulations formanaging ecology
Command andcontrol mechanisms
Absorption of CO2 by forest cover/marineflora/fauna
Carbonsequestration
Convergent point of ground water,management of dependency on environment
Watershedmanagement
Gene conservation, prevention of extinction ofspecies
BiodiversityConservation
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AGENDA
Recommendations
Case studies
Tried and tested framewor s
Analysis of past mar et successes and failures
ar et based mec anisms for ecosystem services
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FRA EWORKClassification in all t e cases seen so far
ar et
Product (Servicesprovided by t e
natural resource)
Buyers (T ebeneficiaries of t
e
service)Sellers (decision
a ers andsuppliers of t
eservice)
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MYTHS UNVEILED
Perceived as exploiting resources excessively,depletion, extinction
Analysis reveals t at capitalism broug t wit itincreased understanding and involvement of t emasses towards environmental conservation
Capitalism as t e bane of t e environment
Perceived as t e cause of ruin of efficient mar etbased mec anisms
Analysis reveals t at local politics plays a major rolein property rig ts ac nowledgement and enforcinginstitutions
Politics as main urdle for sustainability
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REAL CAUSES OF MBM SUCCESS/FAILURE
Starting from t e demand side ensured success
Does a tree falling in a forest ma e noise if no one is t ere toear it?
Direction of initiation of services
Lac of proper product definition
Excessive focus on monitoring mec anisms No clear property rig ts definition e.g. Forest land of
government, Timber in private ands
Problems wit existing Institutions
Neit er be copied from nor copied to ot er scenarios
Fit wit t e particular ecosystem
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FRAMEWORKS PATTERNS IDENTIFIED
Joint Implementation (JI)
Clean Development Mec anism (CDM)
Pa ment for Environmental Services
(PSA)
Direct Finance Mec anisms (DFM)
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CARBON SEQUESTRATION
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BRITISH COLUMBIA CARBON
SEQUESTRATION
62 milliona of ig lydiverseforests
Em loysdirectly andindirectly
14 er centof t eorkforce
Timber isone of t e
mainsources of
income
T e forestsector asroven to be
fertile groundfor forest
carbon marketdevelo ment
Demand forCarbonCredit
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STAKEHOLDERS
T e forestdepartment -
Supplier
Large powercompanies
Buyers
Privateintermediaries
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KEY ISSUES
Due to w ic Buyers ave been cautious resulting in alac of funding
Uncertainty in t e role of forest carbon sin sin t e Kyoto protocol
Lea age ris s involved in carbonsequestration
Conflict between t e provincial government and forestarvesting company
Property rig ts not clearly defined
Need for efficient Carbon modeling andmeasurement mec anisms
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CURRENT STATUS
Advancedmodeling andCarbon
measurementtec niques
ave beendeveloped
Currently avoluntary
mar et exists
Lac ofinstitutionscoming intot e way of
formal
mar etcreation
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WATERSHED MANAGEMENT
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CAYAMBECOCA
ECOLOGICAL
RESERVE
Financing Waters ed Conservation
ANTISANA
ECOLOGICAL
RESERVE
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CASE FACTS
Area : 520,000 a
pramos, ig -altitude Andean grasslands,
cloud forests recognized for t eir capacity to retain umidityand regulate water-flows
Natural ecosystems are c aracterized by
Glaciers -source of important rivers in Ecuador
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FLOWS OF FUNDS AND BENEFITS IN FONAG
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POTENTIAL SOLUTIONS TO
ADDRESS THESE THREATS
Waters ed valuation
Land purc ase or compensation
measures
Enforcing protection
Targeted land management
Sustainable production systems
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BIODIVERSITY
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At least 0 per cent of t e worlds economy and 80
per cent of t e needs of t e poor are derived from
biological resources. In addition, t e ric er t e
diversity of life, t e greater t e opportunity formedical discoveries, economic development, and
adaptive responses to suc new c allenges as
climate c ange.
The Convention about Life on Earth,
Convention on Biodiversity web site.
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Sun GrownCoffee
S ade GrownCoffee
Mesoamericaregion
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SHADE-GROWN COFFEE AND
CONSERVATION IN MESOAMERICA
To find ways to preserve biodiversity outsideprotected areas, in agricultural landscapes
S ade Grown Coffee is very Bio-diversityfriendly
Many coffee areas are close to protected areas
And t ey connect protected areas to eac ot er
Context
Farmers s ifting trend from S ade-grown Coffeeto ot er crops, including ig yield Sun-Grown-Coffee because of low coffee prices
Problem Statement
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KEY STAKEHOLDERS
Environmentally Conscious coffee consumers
Buyers
Coffee farmers in t e region nearby t e protected area
Sellers
World BanGlobal Environment Facility (GEF)
Smit sonian Migratory Bird Center (SMBC)
Rainforest Alliance
SalvaNATURA (NGO) Coffeeplants-certifying agency
Intermediaries
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SOLUTION SELLING BIODIVERSITYFOR
PRICE PREMIUM
Certification
Shade-growncoffee farmerscertification
Tec nological benefits provide t rougNGOs
Credit preferences
Productcertification
Bird-friendly label sponsored by SMBCEco-OK label sponsored by Rainforest
Alliance
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REASONS FOR SUCCESS
Externalities
Supply Side Success
Availability of Credit and external elps
from NGOs for certificationAvailability of tec nology and funds due
to large participations from variousorganizations
Lower production cost, specially forsmall sized farms
Income derived from ot er products timber, fuel wood, fruit, eco-tourism, etc.
Demand Side Success
Pre-identified mar et mec anisms, from
organic coffeeHelp of ot er organizations aving
sta es in t e project by givingrecognition to t e S ade-grown Coffeeas bird friendly or eco o
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CENTRAL THEME
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PHILOSOPHICAL APPROACH TO MARKET
BASED MECHANISM
Accept t e fact t at
Todays world is driven by incentives
Need for s ift of ideology from political economy to political ecology
Ac nowledge t e sta e of all sta e olders
Command and control mec anism s ould wor only asouter body wit eart at Mar et based mec anism
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RECOMMENDATION
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IMPLEMENTATION OF RECOMMENDATIONSRules / Guidelines Carbon Sequestering Watershed Management Biodiversity Services
Problem Definition Deforestation Deforestation Deforestation
Focus onrootcause Need for industry to rely onforest
Lac
of clean water supplydue to erosion of natural
source
Lac
of competitiveness oft e bio-diverse farm products
Solution directlytargeted
atrootcause
Afforestation and industrial
forest zone
Preserve clean sources Monetize forest farming
creating externalities
Market Mechanism atthe
heart
Carbon credit mar
et Water mar
et Bio-diverse farm products
mar
et
Command and Control
mechanism asregulating
framework
Redefinition of property
rig ts over forest, Tripartite
committee of industry lobby,
forest depart,
environmentalists
Re abilitation policy (one
time compensation + lifetime
exemption from water tax),
clear property rig ts, water
s aring model
Property rig ts (farming and
forest land), guidelines for
setting price and subsidy,
legal framewor
, mar
eting
guidelines
Incentiveto Government Sustainable economic growt Water conservation tax or
fund to save t e forest
Minimal efforts on
government side
Incentiveto Suppliers Funding, regular income Price premium Boost to t eir industry
Incentiveto Buyers Regulatory compliance, cost
effective solution
Affordable clean and regular
water supply
Eco friendly and ealt y
branded products
Incentiveto Society Clean air, control on global
temperature
Efficient utilization of water
resources
Bio-diverse ecosystem
Externalities No externalities No externalities Farming, forest, tourism,
branding
Learnings Importance of institution Creation of demand driven
mar
et
Mar
et sustainability
t roug externalities
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CRITICAL SUCCESS FACTORS
Demandas majorforcedrivingmar ets
Incentivesfor eac andevery
sta e older
Commandandcontrolmechanismcontaininginstitutions,framewor s
Externalitiesto attainmar etsustainability
Bundlingeffectby
avingmultiplesolutions tosame problembased ondifferentunderlinemar etableproducts
suitable tot at context
Extent of Implementation
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REFERENCES
Selling Forest Environmental Services - Mar et basedmec anisms for Conservation and development byStefano Pagiola, Jos u Bis op, Natas a Landell-Mills
Analysis of relations ip between processes ofglobalization and environmental governance by
Kamal, Gueye Economic incentives for Environmental Protection:
Integrating T eory and Practice by Robert W. Ha nand Robert N. Stavins
Innovative Financing Mec anisms for SustainableEcosystem Management by Gerdien Meijerin et all(2008)
Environmentalism: A global History by Ramc andraGu a
Varieties of Environmentalism by Ramc andra Gu a& Juan Martinez-Alier
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GO GREEN
THANK YOU!