5.2 PES in Ecuador: experiences and lessons

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5.2 PES in Ecuador: experiences and lessons DORIS CORDERO Most forest owners, forest dwellers and rural communities do not get any revenue from the full range of goods and services provided by the

1 5.2 PES in Ecuador: experiences and lessons DORIS CORDERO Most forest owners, forest dwellers and rural communities do not get any revenue from the full range of goods and services provided by the forest. Payments for ecosystem services (PES) schemes are intended to change that. A payment or direct compensation is made by the users of the service for the maintenance of an ecosystem service. Healthy forest ecosystems provide these services. Despite Ecuador s great biological diversity, sustainable forest management (natural and semi-natural ecosystems, planted forests and agro-forestry systems) has not yet been achieved. PES schemes have been demonstrated to be a bridge between forest owners and outsiders aiming for forest protection and sustainable management. Nevertheless, there is a movement against PES based mainly on property rights issues (Isch and Gentes 2006). INCREASING PRESSURES ON ECUADOR S REMAINING NATURAL FORESTS MEAN THAT FASTER AND MORE COST-EFFECTIVE ACTION IS NEEDED FROM THE PUBLIC AND PRIVATE SECTORS TO SUPPORT According to the PES definition in Wunder (2005), 1 PES AND OTHER MECHANISMS. Izko (2007) and Cordero (in press) identified a dozen PES experiences that have been implemented in Ecuador. Not all of them complied with Wunder s definition. Most of them are in their initial stages and are related to watershed protection. Schemes related to carbon sequestration, reducing emissions from deforestation and degradation (REDD), landscape beauty/recreation and biodiversity also exist. The country does not have any public policy or legislation regarding PES. Watershed protection Payments for watershed services have been used as an innovative and cost-effective way of providing clean and safe drinking water to local users. They have been promoted by local governments (municipalities) and/or water enterprises with technical assistance from local NGOs. Some have received financial and/or technical assistance from international agencies. Doris Cordero is Forest Program Officer with the IUCN South American Regional Office. 101

ETFRN NEWS: SEPTEMBER 2008 Users of drinking water pay for the protection and maintenance of healthy watersheds, and in most cases the watershed service fee is highlighted in their bills.

2 ETFRN NEWS: SEPTEMBER 2008 Users of drinking water pay for the protection and maintenance of healthy watersheds, and in most cases the watershed service fee is highlighted in their bills. Between 1 and 20% of the total water bill is used for watershed protection (Izko and Cordero 2007); the percentage depends mainly on the number of water users and the specific watershed management costs. Table 1 provides details of a watershed scheme. Most initiatives have an internal regulation that guides investments at the watershed level. Some of the resources are used for the maintenance and recovery of small forests and highlands (páramos) 2 areas. In some cases direct payments to forest owners are made. Due to the lack of hydrological data regarding the affect of forests on watershed services, decision-makers work under the precautionary principle, aiming to maintain water quality among other services. In Pimampiro and Cuenca municipalities, forest conservation not only maintained water quality but was important in diminishing sediments and erosion. In Cuenca, protected forest is also used as a recreational site by local, national and international visitors. Some schemes also invest in environmental education campaigns. Carbon sequestration and REDD The Bilsa and PROFAFOR projects aim to plant and maintain trees for carbon sequestration. The Bilsa project reforested 275 ha on degraded lands in the Bilsa Reserve on the Ecuadorian coast. It was carried out by the Jatun Sacha foundation, which owns the reserve. It was supported by Conservation International (CI) and funded by the U.S. organization, Climate Trust. Between 1994 and 2002 PROFAFOR reforested more than ha on degraded lands in partnership with native communities and private land-owners. The reforested areas are located in the Ecuadorian Andean highlands. The project was carried out by PROFAFOR, an Ecuadorian non-profit enterprise owned by the Face Foundation in the Netherlands. PROFAFOR is no longer planting but still provides technical assistance and capacity-building for its partners. The project s forest management is certified by GFA and the carbon sequestration is certified by SGS. PROFAFOR owns the carbon offsets. Landowners harvest the timber, forest products and non-forest products; they have to replant to maintain the carbon stock. A REDD project has been developed by the Fundación Bosques para la Conservación, also owned by the Face Foundation. It aims to maintain forest carbon storage and avoid deforestation. It has been developed in partnership with the Ecuadorian Environmental Ministry (Ministerio del Ambiente del Ecuador or MAE) and private land-owners at two pilot sites, one in the Amazon region and one in the Ecuadorian highlands. The project protects around ha and is intended to expand. 102

3 5.2 PES IN ECUADOR: EXPERIENCES AND LESSONS Table 1. Main characteristics of watershed services schemes in Ecuador PES scheme Payments by water users Other funding sources Type of payments/main activities related to forest management ETAPA Cuenca Cajas National Park Cuenca 0.03/m 3 Around 0.003/m 3 or 1% of total ETAPA water consumption National park entrance fees ETAPA owns around ha and manages the Cajas National Park (around ha), invests in forest conservation and recovery El Chaco municipality 0.035/m 3 * (around 8,900 collected during 2007) International cooperation (KFW)** Direct payments between municipality and forest owner Pimampiro municipality Around 0.05/m 3 or 20% of each user water bill (around 3,800 yearly) International cooperation** Direct payments between municipality and forest owner, around 550 ha of forest conserved under PES Celica municipality 0.03/m 3 * (around 12,700 collected during 2006) Voluntary income tax donation (according to specific national law) Direct payments between municipality and forest owner FONAG Quito (endowment fund) 1% of each EMAAP-Q user water bill Public electric enterprise, private sector and international cooperation ** Forest programme with land owners, around 300 ha planted per year (around 65% funded by partnerships) * Yearly adjusted. ** Occasional funding (not a sustainable source of funding). Source: Adapted from Izko and Cordero Biodiversity CI and the German organization GTZ have a conservation project with Chachi native communities on the Ecuadorian coast. The conservation agreement aims to conserve biodiversity on more than ha of tropical rain forest located in a biodiversity hotspot. Chachi communities invest the conservation agreement income in activities aimed at improving the quality of life, such as cocoa and agro-forestry systems, drinking-water systems and public infrastructure. GTZ provides technical assistance and capacity building in forest sustainable management and general administrative issues. The scheme depends 103

4 ETFRN NEWS: SEPTEMBER 2008 completely on international cooperation funding. It also received a donation from the rock band, Cold Play. Landscape beauty/recreational During 2003, around 31% of the total amount invested in the Ecuadorian continental protected area system (Sistema Nacional de Areas Protegidas or SNAP) was generated by the PAs themselves. Self-generated resources came almost exclusively from tourism operation licenses and visitor fees. Around 88% of that income was generated in five protected areas (MAE 2005). These licenses and fees could be considered payment for landscape beauty and/or the recreational and cultural values within the PAs. An illustrative example is the Corporación Vida para Quito, developed by the Quito municipality. Vida para Quito works on improving the metropolitan district s environmental conditions, including afforestation, reforestation and urban tree planting. It is funded by 25% of the income tax paid by city residents voluntary donations, as set out in national law. The people who benefit from landscape beauty provide the resources for its conservation and improvement. Lessons learned The diversity of situations and local conditions regarding land tenure, community forest-related rights, socio economic conditions, traditional forest and landuse practices, requires flexibility and specific solutions in terms of mechanisms (regulatory, market-based and/or other arrangements) and institutional arrangements. The need to clarify property rights and land-tenure issues before enter developing a PES scheme contributed to communities and individuals having more secure rights to their land. This encourages the public and private sectors to recognize the advantages of clarifying and securing property and forest-related rights, especially for the rural poor. A key factor to secure the financial sustainability of PES schemes is the existence of a group of users that will demand and pay for certain ecosystem services at the local or global level. Some of the projects cited here received funding from international cooperation agencies. Although that support can be positive, especially in the early stages, it could generate dependency and vulnerability in the long term, since funding is not sustainable and is affected by international policies. Transaction costs, including environmental valuation, legal procedures and monitoring, could restrict the financial sustainability of PES schemes in the long term. A strong institutionalism, local stakeholder participation and coordination are key in securing long life for a PES initiative. 104

5.2 PES IN ECUADOR: EXPERIENCES AND LESSONS Conclusions Because of the increasing pressures on the remaining natural forests, faster and more cost-effective action is needed from the public and

5 5.2 PES IN ECUADOR: EXPERIENCES AND LESSONS Conclusions Because of the increasing pressures on the remaining natural forests, faster and more cost-effective action is needed from the public and private sectors to support PES and other mechanisms. Institutional, policy and legal initiatives are also needed to improve forest governance and manage the many functions of forest ecosystems. PES schemes need to be based on better socioeconomic and environmental practices, in order to become more widespread. In some cases there is widespread concern regarding the impact of PES on sustainable forest management, which should be responded to in the short term. A better understanding is needed on the part of the private sector and civil society of the full range of goods and services provided by forest ecosystems. People also need to be aware of the results of forest projects based on non-traditional goods and services. Stakeholders feel that PES has a positive impact on the providers welfare and the ecosystem s health. In case of watershed service schemes, however, the data available is not sufficient to allow for an accurate measurement of the impact of payments or compensation, either in terms of hydrological services or the service providers well-being. There is an increasing need to develop cost-effective methodologies to eliminate the uncertainties regarding land-use changes in watershed services. Carbon projects have resulted in a lot of lessons and experience regarding longterm contracts with community and individual owners, monitoring methodologies for carbon sequestration, capacity building among forest owners and rural communities, institutional arrangements, SFM and other factors, that should be taken into consideration when designing new projects. Biodiversity projects could merge with other ecosystem service initiatives for watershed protection, REDD and ecotourism and could generate additional income for forest dwellers. The experiences generated by SNAP and Vida para Quito are an important initial step of the user-pays principle in landscape beauty at the local level. They could provide valuable information for future initiatives. 105

6 ETFRN NEWS: SEPTEMBER 2008 Endnotes 1. Wunder (2005) defines PES as a voluntary transaction where a well-defined ecosystem service (or a land use likely to secure that service) is bought by a (minimum of one) ecosystem service buyer from a (minimum of one) ecosystem service provider if, and only if, the provider secures the ecosystem service provision (conditionality). 2. These are highlands above or msl depending on the latitude, according to Ortiz (2003). References Cordero, D. In press. Esquemas de pago por servicios ambientales para la conservación de cuencas hidrográficas en el Ecuador. Investigación Agraria: Sistemas y Recursos Forestales 17 (1). Isch, E. and I. Gentes Agua y servicios ambientales: visiones críticas desde los Andes. Water Law and Indigenous Rights (WALIR) Consorcio CAMAREN. Quito: Ediciones Abya-Yala. Izko, X. and D. Cordero Elementos para una Estrategia Nacional de Financiamiento Forestal Ecuador. In: Comunidad de prácticas sobre financiamiento forestal. FAO. MAE Análisis de las necesidades de financiamiento del Sistema Nacional de Areas Protegidas del Ecuador. Quito: Génesis Ediciones. Ortiz, D Los páramos dentro del contexto ecuatoriano. In: Hofstede, R. et al. (eds.). Los Páramos del Mundo. Proyecto Atlas Mundial de los Páramos. Quito: Global Peatland Initiative/NC- UICN/EcoCiencia. Wunder, Sven Payments for environmental services: some nuts and bolts. CIFOR Occasional Paper No. 42. Jakarta, Indonesia. 106

Introduction to International Forestry Issues, Institutions and Prospects

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