Legal and Institutional Aspects of PES Schemes

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1 Legal and Institutional Aspects of PES Schemes Maryanne Grieg-Gran (summarising Thomas Greiber Fostering PES projects in Central and Eastern Europe and the CIS Dec International Academy for Nature Conservation Isle of Vilm

2 Why are legal and institutional aspects important? PES schemes need clear and enforceable rules and transaction mechanisms to promote: Understanding and agreement by all parties Trust and confidence among stakeholders

3 Any rules for PES must operate within a wider institutional framework The institutional framework for a payment scheme is the combination of organisations, social structures and mechanisms that support order and cooperation in relationships between parties

4 Formal Institutions Rules set out by government Laws governing natural resources eg: water law Contract law Administrative mechanisms Informal Institutions Rules in use Customary law Traditions

5 Water Governance problems Lack of water institutions Fragmented institutional structures sector by sector Overlapping/conflicting upstream and downstream interests riparian rights, access to water Diversion of public resources for personal gain Unpredictability in use of laws and regulations

6 Good Governance Good governance is needed to ensure that rules for PES can be implemented Provision for citizen participation Eg: Rights to bring lawsuits to enforce rules Prevention of bribery and falsification of data Eg through criminal liability Fair and consistent application of the law Eg: Written guidance for interpreting rules

7 Appropriate legal framework Recognition of environmental services (eg Forest Law in Costa Rica) Enabling legal environment Avoid legal obstacles Clear property rights Reliable contract law Supportive sectoral rules

8 Clarifying rights why important? Conflict in distribution of payments among land users if rights not clear Who owns the land? who owns the service? If tenure not clear, PES may provide further impetus for overuse of resources Attract increased numbers of resource users to an area

9 Property rights Who may enter a property and enjoy nonextractive benefits recreation? Who has resource use rights? Who can exclude others from use? Who may derive income from the resource? Who has the right to sell resource rights to others? Who has the right to bequeath rights?

10 Appropriate contractual framework Clear obligations and requirements Creating confidence Compliance and enforcement mechanisms

11 Obligations and requirements Clear definition of: the services covered by the scheme the stakeholders activities subject to regulation Clarification of the legal authority underlying the scheme Explicit timeframe for implementation Measurable performance indicators activities, service results or outcomes

12 Creating confidence Involve relevant stakeholders Key stakeholders: negotiation to incorporate the needs of buyers and sellers Wider group of stakeholders consultation Eg: invite comments on a draft Achieving long-term impacts Steps to ensure sustainability of service provision Possibility of adaptation Eg to changing circumstances, or initial outcomes

13 Compliance and enforcement How compliance will be determined Performance indicators Monitoring procedures field inspections, self-monitoring Proving non-compliance Responsibility and admissible evidence Enforcement Assignment of powers of enforcement Informal response mechanisms Formal sanctions Dispute resolution

14 Checklist: making the rules Design an institutional framework Identify the formal and informal institutions needed to support the PES scheme Ensure compatibility with wider legal and institutional context Clarify land and resource tenure Specify rules and transaction mechanisms Define and establish compliance and enforcement mechanisms