Current World Bank Work on Environmental Service Payments. Gunars Platais Environment Department The World Bank

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1 Current World Bank Work on Environmental Service Payments Gunars Platais Environment Department The World Bank

2 Environmental Services Different forms of land use can generate a variety of environmental services Land users typically to not receive any compensation for such environmental services Thus they ignore these in their decision making process leading to socially suboptimal results Gunars Platais - ENV 2

3 Environmental Services Response to this problem has typically been remedial Remedial measures are often imperfect and expensive Often far more expensive than preventive measures Gunars Platais - ENV 3

4 Environmental Services Recognition of this problem and the failure of previous approaches to dealing with it has led to efforts to develop systems in which land users are compensated for the environmental services they generate Gunars Platais - ENV 4

5 Developing payment systems Service Welfare of beneficiary Land use Hydrological effects Service Welfare of beneficiary Service Welfare of beneficiary Payment Capturing benefits Paying service providers Gunars Platais - ENV 5

6 Environmental Services While the principles are clear, designing and implementing a system of payments for environmental services in practice is often difficult Gunars Platais - ENV 6

7 What are Environmental Services? Working Definition: Regulatory functions upon stocks and flows of matter and energy of natural ecosystems which help to maintain or improve the environment and quality of life. Gunars Platais - ENV 7

8 Environmental Services Regulation of the chemical composition of the atmosphere Transformation of solar energy and production of biomass Maintenance of biological diversity Storage and recycling of macro- and micro-nutrients Regulation of hydrologic cycles (e.g., hydrologic stability) Maintenance of water quality Prevention and control of soil erosion and sedimentation Mitigation of natural disasters Maintenance of scenic beauty Gunars Platais - ENV 8

9 Hydrologic Services Upstream land uses affect Quantity, Quality, and Timing of waterflows Possible downstream beneficiaries: Domestic water use Irrigated agriculture HEP Fisheries Recreation Downstream ecosystems Gunars Platais - ENV 9

10 New Principles Payment for Environmental Services from those who Benefit and Payment to those Land Owners whose Natural Capital produces those services. Development of Markets for Environmental Services Gunars Platais - ENV 10

11 Environmental Service Programs Definition A mechanism, based upon a legal, institutional, technical, and operational framework, to contract land owners for the environmental services which their lands produce when they adopt land uses and production systems which are environmentally-friendly. Gunars Platais - ENV 11

12 Designing a System of Payments for Environmental Services Identify and quantify environmental services What environmental services does a given land use generate? How much of that service is generated? And how much is the service worth? Develop systems of environmental service payments that work How are payments actually to be be made in order to achieve the desired change in land use sustainability efficiently? Gunars Platais - ENV 12

13 Designing a System of Payments for Environmental Services Pay for systems of environmental service payments How can payment systems be financed? Institutional issues What are the institutional preconditions for the payments to be possible? Political economy issues How do we deal with the political economy implications (i.e. winners and losers) of setting up and enforcing payments? Gunars Platais - ENV 13

14 Payments for environmental services : Projects: World Bank support Costa Rica: Ecomarkets Project ($33 million WB + $8 million GEF) Colombia/Costa Rica/Nicaragua: Regional Silvopastoral Management Project ($4.5 million GEF) Mexico: Community Forestry Project (under preparation) Venezuela: Canaima National Park Project (under preparation) Dominican Republic, Ecuador, El Salvador: Pilot PES projects (under preparation) Gunars Platais - ENV 14

15 Payments for environmental services : Research: Case studies Hydrological aspects Valuation Capacity building: World Bank support Courses in Ecuador, Venezuela, Panama, Perú, Mexico, Senegal, Ghana Planned courses in Brazil, Morroco, Dominican Republic Gunars Platais - ENV 15

16 Payments for environmental services : World Bank support Detailed case studies Summary of main lessons In collaboration with IIED and WWF También disponible en español Gunars Platais - ENV 16

17 Initial lessons Not a universal solution One size does not fit all Identify the services being provided clearly Understand and document the links between land use in mountain areas and services Begin from the demand side, not the supply side Monitor effectiveness Design flexible mechanisms Ensure the poor can participate Gunars Platais - ENV 17

18 Sample of Useful Web addresses Gunars Platais - ENV 18