Costa Rica’s Experience with Payment for Ecosystem Services (PES) and the

Way Forward

MBA. Silvia Rojas Fernández

National Forestry Financing Fund

Environmental Bank Foundation

The Fourth GGKP Annual Conference6-7 September 2016Jeju Island, Republic of Korea

51,100 km2

Costa Rica

4.872 M

Costa Rica

Ministry of Environment MINAE

SINAC

PES

Biodiversity C-Neutral

Oceans

International Agreements & Conventions

National Development Plan 2015-

2018

National Forestry

Development Plan

1950-1960

Land tenure

Agriculture Expansion

Accelerated Deforestation

1960-1970

Protected Area

1st Forestry Law

Increasing Deforestation

Social benefits rural areas

1970-1980

Financial Incentives

Tax Deduction

Primary forest to

deforestation

ACTIONS

IMPACT

The Evolution of Forest Cover

The Evolution of Forest Cover

1980-1990

2nd Forestry Law

CAF, CAFA, CAFMA,

Decrease Deforestation

Rate

1990-2000

3rd & 4th

Forestry Law

CCB & PES

Decrease Deforestation

Increase Forest Cover

2000-2010

PES

Water Tax

CCUs & C-Neutral

Increase Forest Cover

ACTIONS

IMPACT

The Evolution of ForestCover

1987ForestCover 21%

2005ForestCover 51%

2013Forest Cover52.4%

Prohibited since 1996 by Forestry Law 7575

Changes in Land Use

• Financial contribution for private landowners

• Recuperation and conservation of forest cover

What is PES?

Legal Framework

Government Financing Monitoring

PILARS

National Forestry FinancingFund

Forestry Law No. 7575

Ministry of Environment

Climate Change

Mitigation

Water Resource

Scenic Beauty Biodiversity

PES

Framework

FONAFIFO

PES

MINAE

Financial Institutions

Forestry NGOs

Beneficiaries

Regulatory Institutions

AcademyRECOPE

IRS

OTHER

World Bank

KfW

GEF

SINAC

NFO

BFAE

CCSS

Property

Registration

Cadastre

Variety of PES

Reforestation

Reforestation Fast-Medium

Growing Species

Native Species

Reforestation

Agroforestry Systems

Agroforestry with Native

Species

Agroforestry

Forest Protection

Water Resource

Conservation Gaps

Protection Other

Natural Regeneration

Forest Management

15 years

300 ha max

5 years

350-5000 trees

5 years

2 – 300 ha max

5 years

2 – 300 ha max

PES Financing

PES

Fuel Tax

NationalNGOs

WaterTax

World Bank

KfW

NGOs

3,5%

25%

Operational Path

Financing

Mechanisms

Resources

Annual

Payments

Apply

S & M Forestry

Producers

NGOsSINACBureau

FONAFIFO

Field

Supervision

IRSMINAEDonors

Operational

Supervision

Transparent

Financially Secure

Monitored

SUPPLY < DEMAND

But, there´s one situation…

PES Financing

PES

Fuel Tax

NationalNGOs

WaterTax

World Bank

KfW

NGOs

Additional

Financing

Mechanisms

3,5%

25%

Carbon Credits (CCUs)

Specific Projects-Private Sector

Living Forest Project

REDD +

Additional Financing Mechanisms

• Trust fund

• Invested in financial markets

• Uses revenues to finance a nation wide program

(BCP)

• Focused on 4 main regions

• Ecosystem approach

• Areas with no PES

Sustainable Biodiversity Fund - FBS

Financial Actors Involved

KfWGEF – World

BankConservation International

Conservation Osa

Costa Rica´s National

Bank (BNCR)

FONAFIFO´s Employee

Association

International

National

Products

• 20 + years

• Transparent, secure and monitored

• Efficient against illegal logging and land use

changes

• Fosters private-public alliances

• Lessons learned have helped many countries

throughout the world

Accomplishments

Accomplishments

Has1.100.000

15.000

Families

6,5M

Trees

HasIndigenous Territories

123.000

52.4%Forest Cover

1997-2015

$420 MInvested

The Challenge

Conservation

Forest

Management

Restoration

ReforestationAgriculture

Sustainable

Development

Source: Gyde Lund 1999

• Small but conscious country

• National framework: legal, government, monitoring and financially secured

• There will always be a need for additional financing mechanisms

• Public – Private Partnerships

• Transparent and monitored

• Innovation is the key

Conclusion

Conclusion

• This slide closes the presentation with key points

• Points should be bulleted

• List key summary points only

• Make sure to highlight policy implications

and/or contributions of the work in addressing

key 'green' and 'inclusive' green growth challenges

Thank You

MBA. Silvia Rojas Fernández

National Forestry Financing Fund - FONAFIFO

Environmental Bank Foundation - FUNBAM

Silvia.rojas@fonafifo.go.cr

T: +506 2545-3503