Assessing the livelihood impacts of incentive payments: implications for REDD

Luca Tacconi

Sango Mahanty

Helen Suich

Research funded by:

Australian Agency for International Development

REDD and payments for environmental services (PES)

PES: a system to pay for the provision of environmental services, conditional on performance

Can be used to link national and sub-national REDD activities: redistribute REDD revenues to local forest and land users and local governments

REDD would involve payments to developing countries

Research questions

What have been the impacts of existing PES schemes on livelihoods?

What are the implications for the design of incentive mechanisms for REDD at the local level?

Country Environmental service targeted

Scale of scheme Ownership of land

Global GEF review

Variety of case studies including carbon, watershed protection

National to sub-national Common property, private

Mexico* Carbon (also hydrological services and biodiversity)

National Common property

Brazil* Bundle – reduced deforestation, carbon sequestration, biodiversity conservation, hydrological functions fire management

Sub-national (nine states of the Amazon region)

Private

Indonesia* Watershed protection Sub-national (watershed spanning 2 regencies and 6 sub-districts)

Private

Philippines* Watershed protection Sub-national (spanning multiple local government units)

State

Uganda Carbon Sub-national (small scale) Private and state

Mozambique Carbon Sub-national (ssmall scale) Common property

Nicaragua & Colombia

Biodiversity conservation, carbon sequestration

Sub-national (small scale) Private

Analytical framework

Impacts on livelihood assets:Financial, physical, human,

social, natural

What are the impacts of PES schemes on local livelihoods? capabilities, assets,

activities required for a means of living

(Chambers and Conway 1988)

Access to schemes

Access to PES schemes

Participation by poor households possible Typically constrained by: tenure, labour,

capital needs, transaction costs Design and facilitation can overcome some of

these constraints

http://www.wiso.boku.ac.at/mozambique.html

Financial and physical capital

Individual payments = small % of household income

Collective payments invested in infrastructure, services

Payments don’t reflect opportunity costs

Disjuncture between payment timing and contract duration Photo: Rowena Soriaga

Social capital

Existing community institutions strengthened: resource management & coordination capacity, external linkages

Instances of conflict caused by access disparities, changing labour patterns/roles

Natural capital

Weak evidence of change in access to resources • Most case studies were on

private or collectively owned land

• A risk for public forests given evidence of impact on informal resource use

Weak monitoring of environmental outcomes

Satellite view of deforestation in Brazilhttp://rainforests.mongabay.com/

Human capital

Intermediaries facilitate capacity building environmental awareness, land management, governance, business development, PES

Long term impacts not known; some persisting confusion about PES

What are the implications for REDD?

Can PES be used for state-owned forests?

Limited PES experience available on state lands, but some 80% of forests in REDD eligible countries are state owned

Outcome based mechanisms could reward local people’s involvement in state forest conservation

Payments to local level governments could possibly enable them to provide some foregone services

Access to PES and forests

Poorly managed access and benefit distribution could contribute to conflict

Access to schemes threatened by high transaction costs: collective agreements

Intermediaries play an essential role in facilitating access, and also capacity building: but the capacity of intermediaries sufficient?

How will payments measure up?

Payments in existing PES schemes often not based on opportunity and transaction costs

Opportunity costs change, contracts need to be dynamic Consult with communities on payment design:• individual vs community payments• cash vs non-cash payments

Timing of payment

Monitoring and performance

PES schemes have not monitored performance well, implementation of REDD would require MRV mechanisms

In case of non-performance over the long term, difficult if not impossible to recover funds advanced through PESNational implementation of REDD needs to factor in this risk (eg establishment national fund)

More on PES and REDD

Look out for our forthcoming book:

Livelihoods in the REDD? To be published by Edward Elgar in 2010

luca.tacconi@anu.edu.au