PES – issues reimplementation

Augustin Berghöfer, TEEB Scientific CoordinationHelmholtz-Zentrum für Umweltforschung – UFZ

PES Workshop Vilm14-16. Dezember 2010

“Potsdam Initiative – Biological Diversity 2010”

……the economic significance of the global loss of biological diversity….

TEEB Interim Report CBD COP-9, Bonn, May 2008

TEEB Main Reports Nov. 2009 – Oct. 2010

TEEB Climate Issues Update Strömstad September 2009.

TEEB’s genesis …

Economic invisibility of nature’s benefits

Forests:• Halving deforestation (cost: $33bn annually) generates

net benefits of about $3.7 trillion (NPV) in avoided damage of climate change (Eliasch Review 2008)

Protected areas:• Global spending on Prot.Areas p.a.: ~ $6.5-10 billion• Need for PAs (15% land, 30% sea) p.a.: ~ $45 billion• Benefits from effective PAs p.a.: ~$4-5 trillion

• OECD agricult. subsidies p.a. (2008) ~$261billion (TEEB D1 ch8)

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Beyond provisioning ecosystem services

Shrimp Farm

private profits

less subsidies

less public benefit from mangroves

public benefits from mangrovesincl. storm protection and fish nursery

private profits

Mangroves

0

10000

US$/ha

private profits

5000

Public and private benefits from nature

If public wealth is measured, the answer to the “trade-off” changes completely

$584ha

$1220ha

$9632ha

$584ha

- $11,172ha

$12,392ha

Source: Hanley, & Barbier, 2009

What role for PES?

‚In a situation where trade-offs exist between private and societal benefits from land uses, PES can tip the balance and render conservationfocused land uses more privately profitable with benefits for both the private land user and forsociety.‘ (TEEB D1 ch5)

TEEB overview of complementary policy options

TEEB D1, Chap.2

Providing Information Setting Incentives Regulating Use

• Buyer – seller match: state – state (Yasuni), province – county (EFT Brasilien), village – village (Los Negros), city – PA (Sao Paulo), business – province (MoorFutures), business –farmers (Vittel)

• Object under contract: single- bundled- layered ES, environmental quality or action

• Delivery: time period, monitoring (choice of indicators),

• payment: ex-ante, ex-post, iterative; in kind/cash

Diversity in PES

• Principal doubts: ”nature is being commodified”; beneficiary pays instead of polluter

• Ecological side effects: how does PES for 1 service affect others?

• Equity: barriers to participation in scheme, loss of access to formerly free ES, distribution of risk

• Governance: demanding requirements re trusted monitoring, distribution of funds, adjudication

• Costs: high transaction costs (mgmt costs), efficiency in allocation (additionality)

Some Challenges to PES

Valuation as a basis for PES? In

crea

sing

sys

tem

com

plex

ityec

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s, s

cale

s, n

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Value plurality

Commodity-type values

Ethical / cultural convictions

Monetary valuations robust and useful

Monetary valuations with low reliability and of doubtful pertinence

Source: TEEB Foundations (2010), Chapter 4

Do we need valuation for PES?

• In Japan, valuation served to justify introduction of local tax for forest conservation (TEEB D1 ch5)

• In Bolivian villages, valuation was considered unnecessary: people knew their opportunity costs of alternative land use –key element was recognition of reciprocity

-> PES affects the bundle of services provided – valuation canhelp identify how such change will affect people.

Towards suitable conditions for PES

1. Enabling institutional context2. Equity issues3. Local implementation processes

Mecklenburg-Vorpommern:

• 2000-2008 restoration of 30,000ha • Emission savings of 10 t CO2 eq/ha• Cost: 10 - 50 € per saved t CO2

• “MoorFutures”• no subsidies for peatland use• Full backing by ministry • Voluntary Carbon Standard• Planned standard for co-benefits• Public foundation is landowner

• 930,000ha drained peatlands for agriculture cause emissions of 20 Mio.t CO2-eq. per year

• Low cost option + biodiversity friendly

Enabling institutional context: carbon offsets from peatlands in Germany

A. S

chäf

er 2

009

Restored peatland in Trebeltal 2007Foto: D. Zak, http://www.fv-berlin.de

Enabling institutional context

• What laws do different PES schemes need for fair, effectiveand efficient deals?– Specifying property rights to ES?– Devolution of NRM authority?– Funding channels (trust funds, bilateral agreements, projects)?– Standards and certification?

• What strategies work best in conditions of limited higherpolitical backing?

• What institutional features to meet demanding requirements re trusted monitoring, distribution of funds, adjudication

The problemPasture degradation resulting in income loss, further expansion of pasture area.

Focus on Ecosystem servicesHow to tackle poor pasture practices and with it soil erosion, increase of water runoff and biodiversity loss?

Policy responseSilvo-pastoral management on 3.500ha: planting improvedgrasses, fodder shrubs and trees. GEF-funded payment forbiodiversity and carbon fixation (PES) to cover initial investmentcosts.

Results:1. Enhanced local benefits: nutrient recycling, fruit, fodder, timber, water flow regulation, protection against landslides.2. After the project, farmers still keep the silvopastoral systemswithout the PES, due to its multiple benefits.

(picture: CIPAV)

Equity issues: Temporary PES for facilitating transition to silvo-pastoral management in Colombia.

Source:TEEBcase Silvopastoral Project

Equity Issues

1. Who has access to PES scheme?2. Who participates in decision making and how?3. How are funds distributed among sellers? 4. How are risks distributed among sellers (and buyers)?

THE PROBLEM: Degradation of watershedsTHE PROBLEM: Extreme poverty upstream

Local implementation processes: Compensation scheme for upstream farmers in Moyobamba, Peru

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THE PROBLEM: Decrease in water quality and quantity

CONTEXT: 3 watersheds supply water for 42.000 habitants

First Peruvian PES scheme:Urban water users compensate upstream

farmers to promote better land use

TEEB approach lenses on PES implementation Moyobamba’s case

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STEP 6STEP 5STEP 4STEP 3STEP 2STEP 1

• critical areas for service delivery wereidentified

• services for current land uses withchange scenarios were estimated

Evaluate changes in ecosystemservices1. switching to shade-grown coffee:

economic benefits for farmers

2. Urban population supported the fee

Distributional impacts of policy options

Authorities and social organizationsrecognized:

• Water supply costs and constrains

• Inadequate land-use and povertyupstream

Specify and agree on the problem1. Legal, institutional and financial

evaluation

2. Design the scheme (after evaluation of alternatives): fee on water to promoteland use change

Identify and appraise policy options

Consensus that sound watershedmanagement was relevant for water supply

Identify relevant ecosystem services

Water supply company and partnersdecide on studies to:

• characterize ecosystem services

• understand stakeholder relations

• characterize socio-economic context

• identify land use alternatives

Define the information needs and selectappropriate methods

7 years process:2004-2010

Multi-stakeholder involvement

Currently under implementation

Well described process

Local implementation processes

1. Which sequence makes sense? First pre-assessment, thencapacity building, then scheme design, refinement and outreach?

2. What are needs-oriented content and format for capacitybuilding?

3. How to systematically draw on existing ecosystemknowledge for PES?

4. What role for social impact assessment? 5. What options for a simple approach? What degree of detail

is required for sound arrangements?

• Weitere Informationen unter: www.teebweb.org• Wissenschaftliche Koordination des TEEB-Projektes: teeb@ufz.de

• Weitere Beitragende:

Many thanks

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