Adapting to Climate Change and Payments for Ecosystem Services

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1 Adapting to Climate Change and Payments for Ecosystem Services Case Study: Rwanda International Institute for Sustainable Development

2 Ecosystem Services Ecosystem services are defined by the Millennium Ecosystem Assessment as provisioning, regulating, cultural, and supporting services Provisioning: Food Fiber fuel Regulating Cultural: Mitigate drought and floods Regulate disease carrying organisms Moderate weather extremes and their impacts Purify the air and water Offer aesthetic beauty Part of heritage Supporting: Cycle and move nutrients Maintain biodiversity

3 Payments for Ecosystem Services PES works like a market Ecosystem Services are sold by sellers to buyers Sellers of the Ecosystem Service are those who expend the effort and cost to sustainably manage the resource, i.e landowners, governments, & farmers Buyers of the Ecosystem Service are those who use the resource, such as businesses, governments, & consumers PES schemes exist around the world

4 Why PES? The goals of PES are to: 1. Sustainably manage local natural resources 2. Create incentives that fuel economic growth 3. Link economic growth to the sustainable management of natural resources

5 PES schemes Scenario 1: At the local level, small farmers are paid to improve land management such as reducing runoff, creating erosion barriers, or enhancing biodiversity surrounding a watershed. Payments are granted by local governments who gain the funding from taxes or tariffs.

6 PES schemes Scenario 2: Small landowners are compensated through foundations for carbon sequestration activities, such as through reforestation or wetland conservation. International demand for carbon emissions credits provides the funding for local PES, which is managed by a local NGO or governmental institution.

7 PES schemes Scenario 3: Local or national businesses who depend on a resource invest in its sustainable management. Businesses pay for the management themselves, or distribute funds according to an environmental management plan. The resource is improved, the business gains economically, and the community benefits from increased economic activity & investment.

8 What are Payments? Payments can have various forms Compensation includes: Individual monetary payments Improvements in public services Local infrastructural improvements Improved land tenure rights

9 PES for Climate Change Adaptation Climate Change in Rwanda will lead to: Increased uncertainty in weather, such as rainfall Changes in frequency and intensity of extreme weather events This will affect natural and human systems, altering productivity, diversity, and functions of ecosystems and livelihoods There is a need to reduce the vulnerability of these ecosystems and livelihoods to these impacts, allowing them to adapt to change This will require: Increased understanding of local natural resources, and ecosystem services Protection of natural buffers, e.g. forests / landslides Economic incentives for sustainable resource management Diversifying and enhancing livelihoods so people are better prepared, able to cope and recover from climate stresses (e.g. drought, heavy rainfall)

10 PES for Climate Change Adaptation Environment: PES improves the planning, management, and local understanding of natural resources increased monitoring increased awareness of status of resource by public and private sectors increased funding in resource welfare and best practice Economy: PES provides additional economic support for the long-term growth of a community Institutional Capacity: The process of establishing PES improves communication and education between different sectors, ministries, and levels of administration over resource use and maintenance These three improvements make communities less vulnerable and more resilient to climate change.

11 PES in the UNEP/GEF/IISD Rwanda Project PES could be used to improve watershed management and support hydroelectricity viability in Rwanda Similar PES hydropower projects exist in Costa Rica, the Phillipines, Kenya, and Tanzania, for example.

12 Rwanda Scoping Study: Preliminary Findings Regionally: The Katoomba group has been organizing PES projects in the East and Southern Africa region for the past 10 years. Also, in January 2008, the World Agroforestry Centre will inaugurate an East African PES network called PRESA Kenya has already begun to manage a network of hydropower projects for the joint goal of supplying Nairobi with most of its electricity and improving national water quality Rwanda: Center for Resource Analysis, PEI, and REMA are all performing integrated environmental assessments of ecosystem services. There is opportunity to engage Electrogaz in a cost-benefit analysis of short and long term watershed management options

13 PES in Rwanda, next steps Step 1: Complete feasibility study Step 2: Assess if network participation is desirable (with Katoomba and/or ICRAF) Step 3: Perform thorough analysis of local opportunity costs Step 4: Initiate involvement of Electrogaz in the project