Payments for ecosystem services

Transcription

1 Payments for ecosystem services Hitomi Rankine Environmental Affairs Officer UN Economic and Social Commission for Asia and the Pacific (ESCAP) UN-Water Regional Expert Consultation on Water Security in Asia-Pacific 9-10 November 2015

2 Ecosystems as providers of services - a powerful concept Ecosystem services are the benefits that people obtain from ecosystems - Millennium Ecosystem Assessment Ecosystems as natural capital: Both built and natural infrastructure are needed to meet the multiple and complex goals of water resource management. - IUCN Water Programme

3 Payments for ecosystem services - basic investment flow $$$ Buyers ES beneficiaries Governance structure Supply providers - Land managers Improved Ecosystem m gmt + Ecosystem Service Benefits

4 Water security issues and ecosystem services Degraded watersheds Variable water flows Lack of investment in natural infrastructure The benefits of ecosystem services internalized in markets

5 PES as a policy tool Internalization of ecosystem service values in the real economy More equitable solutions to conflict over watershed management Innovative alliances can be built Economic and environmental objectives can be aligned Support to multiple Sustainable Development Goals

6 The potential investors and partnerships are multiplied e.g. Traditional management (for timber) Private sector (plantations) Local governments Local communities Management for service provision Ecotourism operators Local governments Water utilities Hydropower companies Water users Energy users Beverage producers Agro-industries Local communities Farmers

7 Examples (forest values) Location Scale Investor/ buyer USA- NY Catskills Watershed Water utility, water users Viet Nam National Hydropower, water utilities, ecotourism operators Costa Rica National & local HP, water utilities, ecotourism, water users (HH), public (individuals), citizens, schools etc. Republic of Korea Indonesia Lombok island Indonesia Aceh province Provincial/ district Municipal/ district Provincial/ district Downstream water users, gov t Water users households businesses Water utilities

8 Beneficiaries are involved as investors Governments invest mainly in the production function of forests [but it s not enough]. We need help from other stakeholders to invest in the other functions of forests - National Planning Commission official, ESCAP policymakers forum

9 Environment ministries are empowered the cross-sectoral support to the economy provided by forests is a powerful argument for increased investment in forests, which should be better used by line ministries to justify their budget requests - Ministry of Finance official, ESCAP policymakers forum on investment in forest environmental services, Bangkok, May 2007

10 Action points for investments in ecosystem services Use ecosystem service concepts to identify potential partnerships and investment flows Foster policy change: Mandatory payments for large/intensive ecosystem service users (hydropower, water) Give land-users the legal right to manage nonprivate lands (especially state lands) Recognize ecosystem services in law Others..

11 Regional cooperation Use PES approach to mitigate conflicts around transboundary water security issues e.g. in Central Asia Share experiences, in particular around legislative and policy change need to scale up good regional experiences

12 THANK YOU

13 Example 1 New York Federal government and water users as investors New York Times, 22 Jan., 1997 NEW YORK BEGINS SPENDING TO SAVE CITY'S RESERVOIRS - five-year program to cut the flow of pollution into.. reservoirs and avoid the need for a $4 billion filtration plant. [water users to fund the protection of ] thousands of acres of land around the reservoirs, upgrade more than 100 aging sewage treatment plants, and support economic development projects in the Catskills

14 Example 2 Republic of Korea Downstream water users as investors Deteriorating water quality since 1960s End of pipe investments (sewage treatment facilities US$29 billion by 2005) unable to meet demand for clean water : Comprehensive Water Quality Mng t Measures - Huan River, Nakdong River, Kum River and Youngsan River agreement between upstream & downstream residents riparian buffer zone - government land purchases & forest conservation measures on private lands in upstream basin Financing: additional water use fee ( won/ton) paid by downstream residents Supportive regulation: Total Maximum Daily Load Mngt System, as additional complementary measure

15 Example 3 - Costa Rica 1996 Forestry Law - recognized 4 ES Protects 10% of land area (approx. 500,000 ha) Demanders buy CSA s or make special contracts to secure specific areas. Private sector payments approx. US$7 million New water concession fee Special programmes for women, indigenous communities without formal land tenure NGOs contracted to assist with monitoring, promotion of the programme, assist landowners with contracts etc. Works together with national protected areas system (SINAC) to prioritize area coverage

16 Costa Rica FESP programme private sector participation Private sector and water/hydropower utilities as buyers Special contracts or purchase of tax deductable certificates of environmental services (CES/CSA), confers right to use logo Total payments from over US$7 million, over US$5 million from four buyers alone Paid to landowners for SFM - private sector can specify areas for protection Investments/donations received online High investor confidence and motivation real demand & CSR

17 Example 4: Viet Nam Hydropower plants, water utilities, ecotourism operators as investors Context: High population densities, vulnerability to drought and floods, degrading forests, high dependence on hydropower Strong government leadership (support by Asia Regional Biodiversity Conservation Programme, IUCN, ESCAP, others). Mandatory payments from hydropower plants, water utilities, ecotourism operators PM s decision 380/QD-TTg, 30 April 2008 piloted PES in two areas Per kwh payment by HP plant, per m3 water payment for water utility (not able to recover through users) High volumes of funds US$5,170,000 for

18 Example 4: Viet Nam continued Impact Payments of $14-15/ha per year, with average of 25.4 ha of forest land managed per household Illegal logging incidents reduced by 50% and poverty rates reduced by 15% High levels of awareness

19 Viet Nam cont d Participation: 203,335 ha of forest contracted High levels of participation from ethnic households Future plans Increased forest area allocation Increased payment levels Application of IT to strengthen monitoring of improvements Refine fund management and targeting mechanisms (source: Vice Chair of the PPC of Lam Dong Province, 21 Jun 2010)

20 Example 5 - Rinjani conservation, Lombok Context: drought, conflict between water users agriculture, households, upland communities Valuation revealed willingness to pay, but agreement difficult WWF supported collaboration with water utility Voluntary action by water utility and community Mandatory payments from water users domestic and commercial Intermediary institution - water users, community, water utility

21 Example 6 - Aceh river watershed, Aceh province, Indonesia BAPEDAL-ESCAP-led project, with WWF, ICRAF RUPES, others Context: Aceh Governor Irwandi s logging moratorium, rebuilding activity after the tsunami Special Autonomy (LOGA) - Provides high level of autonomy over land classification and NR management Moratorium on logging of natural forests - Reduction in deforestation - Redesign of forest management sector - Reforestation Post-conflict and post-tsunami reconstruction - Information access greatly improved - Reconstruction assistance can support poverty reduction

22 Aceh province Policy development (including cross-sectoral policy strengthening spatial law, environmental management law) 2 pilot project areas - Aceh watershed, Peusangan watershed Aceh watershed single buyer (water utility) funds to be managed by community forum Peusangan joint management plan by 5 districts to form basis for action, several buyers online, but Rapid Hydrological appraisal shows that traditional PES may not be feasible

23 Aceh province Shows how conditions can differ, even in one province Trust building needed stepwise approach High buy-in because water issues evident (sedimentation and quantity issues) Constraints limited water service connections in rural areas, state land ownership, governance, fear of privatisation - misunderstandings

24 Comparing voluntary and mandatory payments Mandatory national/provincial Voluntary Example Green fee on electricity, fuel taxes, or water concession fee used to create a fund and make payments in targeted area Water company paying communities in watershed directly e.g. as in Costa Rica Transaction High, but Gov t better able to partly High but manageable - flexible costs absorb, will require legislative arrangements and capable and motivated institutions, good coordination Fund raising potential High benefits from scale and potential to aggregate many users Low limited numbers of interested investors Effectiveness Depends on governance arrangements Better targeting to problem areas, can be defined in more flexible ways, Side benefits Wider societal awareness if there is a good communication strategy Builds social capital

25 Buyers perspectives

26 A closer look at the investors Traditional management (for timber) Private sector (plantations) Local governments Local communities Management for env. services Ecotourism operators Local governments Water utilities Hydropower companies Water users Energy users Beverage producers Agro-industries Local communities

27 Who are potential investors? Can be either direct beneficiaries, or indirect beneficiaries Direct beneficiaries have commercial interest Indirect beneficiaries enjoy the service via an intermediary commercial interest or institution facilitating the use of the service Require different kinds of payment mechanisms and policy support to capture investments

28 ES direct & indirect beneficiaries Forest ecosystem service Hydrological services Scenic/landscape beauty Biodiversity support Climate regulation services Direct beneficiaries/users Water utilities Hydropower producers Enterprises providing ecotourism and nature-based tourism-related services Bioprospecting interests International conservation interests Enterprises providing ecotourism and nature-based tourism-related services Carbon market investors brokers/intermediaries Greenhouse gas emitters Energy-intensive industries Indirect beneficiaries/users Intensive water users all economic sectors and households Hydropower users all economic sectors and households Tourists Drug purchasers Individuals Tourists Carbon offset purchasers Non-hydropower, nonrenewable energy users in all sectors Global community

29 Why pay? Absence of land use regulations To be seen to be doing the right thing For private benefit (satisfaction) or commercial benefit (eco-labelling) To mitigate risk - if there is a threat to a commercial interest e.g. water utility, ecotourism operations To avoid/mitigate conflict e.g. where upstream forest use is threatening downstream water supply

30 Why pay? Willingness to invest often higher than expected Philippines study of 25 gov t & private companies >> 84 % convinced of the business case Valuation can help reveal demand Da Nhim HP plant in Viet Nam to lose $3.75 million per year in added operating and plant costs if 45,000 ha of pine forests in the watershed converted to agricultural use Water users in Ho Chi Minh city willing to pay Philippines community support for marine park

31 Securing buyer confidence Revealing the value of ES, linking with specific ES needs and issues Stepwise commitments - e.g. Aceh Indonesia Bridging finance policies can take a long time to secure benefits - e.g. tax support Transparency in the use of funds Conflict resolution+ redress mechanisms

32 Making it easy to buy.. Water/electricity users pay through utility bill green fee - Lombok, Indonesia; Heredia, Costa Rica Publicly-accessible payment points e.g. internet, banks, service kiosks Creating units of ecosystem service so it s easy to see what we are paying for ICRAF RUPES river care project Costa Rica national PES scheme - certificate of protection one standard, unit of service International carbon markets carbon emission reduction units Hydropower plants, water utilities relate to production inputs water (per m 3 charge)

33 Some buyer perspectives Viet Nam hydropower plant: Fees are too high The economic valuation was it correct? We only get the benefits of reduced sedimentation in several years, but we have to pay now! We are starting to invest in monitoring sedimentation to see if we are getting what we are paying for..

34 Some buyer perspectives Pak Ayoub, Aceh water utility director: We want to pay first for controlling illegal logging We will increase our commitments to cover the costs of sustainable forest management if all goes well in the coming years

35 Government perspectives

36 Gov t demander and supplier of ES Ministry/ others Industry Energy + water Tourism Ecosystem service demanded Carbon sequestration Hydrological cycle regulation, aquifer recharge, water quality maintenance Scenic/landscape beauty

37 To capitalize on growing ES demand, national governments will need explicit national policies and legislation re ES, while considering synergy between ES policy and national development plans ES finance strategy, based on both international and local demand for ES To empower local governments Recognize local communities as ES managers (e.g. communities living inside national parks) Induce payments or other forms of investment from key stakeholders, e.g. fiscal policy support for CSR

38 Challenges for line ministries How to meet and finance rising demand for FES (international and local?) implicit demand explicit demand Need to ensure that economic sectors adequately supported by secured flow of FES planning for ES in sectoral planning Need environmental finance strategy engaging each sector - PES policy should be conceived within a wider environmental finance strategy, not on its own

39 .. for the forestry sector Changing role as managers of multiple services, also timber and NTFPs More urgent need to develop a clear idea of what constitutes sustainable use and legislate so that multiple services can be recognized (possible?) Promote clear understanding of which land uses and forest types secure which ES Plan forest investments based on services as well as goods provided by forests to maximise investment return from forest protection and management Use ES concepts in communicating impact of work Engage in strategic planning and management in the water sector

40 for ministries of finance Designing fiscal policy to encourage action by both demanders and suppliers of FES Local government fiscal policy to support role as suppliers/demanders of ES Designing financial mechanisms to link demanders and suppliers and increase investments Designing policies to facilitate investments from several stakeholders Encouraging forest managers to take into account and report non-use values of forests (accounting rules)

41 Policy support is needed Recognition of ecosystem services in law Giving users the legal right to manage non-private lands (especially state lands) Recognition of intermediary institutions as joint managers (stakeholder groups) Flexibility for direct beneficiaries to recover costs from users if needed (water and energy price regulatory framework affected) Land use planning, ideally based on ecosystem service functions not just traditional To facilitate cooperation across administrative boundaries

42 Bundling services Forests don t only provide water-related services Multiple ES provided by one ecosystem Example Costa Rica s national airline sells offsets to ticket buyers, makes payments to CR national PES fund To provide complementary financing e.g. meeting high start up costs (biodiversity investors) v.s running costs (water users) Example Costa Rica bilateral donor and GEF biodiveristy fund investment supported establishment and improvements, water concession and fuel taxes fund ongoing costs To better compensate where there are high opportunity costs To reduce transaction costs Issue with carbon additionality difficult to prove if bundled with other services

43 An increase in forest cover is not a satisfactory indicator of return on investment we need to know what services are increased as a result - Ministry of Finance official, UN ESCAP policymakers forum on investment in forest environmental services, Bangkok, May 2007