Global Forum on Food Security and Nutrition (FSN Forum)

Consultation

Payments for environmental services (PES) in theory and practice: Lessons learned and way forward

Dear Forum Members,

The concept of payments for environmental services (PES) has gained prominence as a tool for achieving ecosystem conservation and, at the same time, improving the livelihoods of farmers as environmental service providers.  Since the UN Millennium Ecosystem Report, published in 2005, PES is increasingly discussed as a tool to remunerate farmers for the positive externalities they create through the adoption of sustainable agricultural practices. 

Through a 3-year project on the “Remuneration of Positive Externalities (RPE)/Payments for Environmental Services (PES) in the Agriculture and Food Sector” initiated in June 2012, FAO would like to learn more about the opportunities and challenges encountered in ongoing and completed PES projects.

The theory and practice of PES

The provision of environmental services, such as preservation of biodiversity habitats, watershed protection, and carbon sequestration have the character of a public good. They benefit mankind at large but tend to be available at no charge. This situation leads to the unsustainable use of scarce natural resources because existing markets fail to value them properly. PES schemes aim to address this market failure by providing financial incentives and other types of rewards (such as capacity development, knowledge sharing, risk alleviation, etc.)  to land users to maintain/improve the provision of valuable environmental services.  For the scheme to work there must be a willing buyer of a particular environmental service who transfers a payment to a land-owning seller who is willing to adopt measures that ensure the sustainable provision of the particular service.

There are however many open questions with regard to the scope of PES, their cost-effectiveness in addressing the growing global challenges of climate change and food security, and the theoretical baseline assumptions, largely derived from neoclassical economics.

The answers to such questions can often be found in lessons learned from existing projects, and they have to be taken into account in future designs of PES schemes.

Independent of the particular context and the targeted ecosystem service(s), an effective PES project needs to be based on incentives that help to better align the private interests of the local actors with the general public interest of preserving the environment while increasing food security. This is often achieved through public private partnerships that result in innovative practices, institutions and products that make PES schemes financially sustainable and generate positive externalities on their own. Yet, the impact of innovation on the design, implementation and sustainability of PES has so far hardly been addressed in the current academic literature.

The objective of the online discussion

In this online discussion we hope to find answers on how best to address the challenges and opportunities based on prior practical experience and research. We therefore invite practitioners, policy experts and scholars in the public and the private sector and other parties interested in PES to provide us with insights from particular PES projects in developing and developed countries and suggestions on how to make PES more effective as a tool to build up natural capital while also investing in human capital and poverty reduction.

Questions to be discussed in the FSN Forum:

1. What are the lessons learned from PES in developed and developing countries?

  1. What are the main challenges and opportunities with regard to PES projects in your particular country?
  2. Do you know of highly successful PES cases in your particular field of expertise (watershed management, biodiversity/wildlife conservation, carbon sequestration,…)? If so, what were the main factors that contributed to the success of the PES scheme?
  3. Do you know of PES projects that have failed to deliver despite substantial donor support? If so, what were the reasons that caused the failure?

2. PES can be conceived as a diverse set of policies, institutions and processes that mobilize funding from direct beneficiaries, taxpayers, consumers and other interested parties to reward/remunerate/pay providers of environmental services. Which type of PES-related policy instruments would you recommend for your own particular country and why?

  1. Are PES-related policy tools applied in affluent countries with lots of off-farm employment opportunities and low population growth rates also adequate for least developed countries where farm sizes often tend to get smaller due to lack of opportunities outside agriculture?
  2. What should be the role of the public sector in creating a regulatory/enabling environment for PES to deliver?  Where is public sector assistance most needed (knowledge transfer,  communal/private land rights, infrastructure, measurement of environmental quality changes, etc.)?
  3. To what extent is it justified to abandon the ‘polluter pays’ principle of PES to increase agricultural productivity and reduce poverty in developing countries? Or should we use other tools to tackle these objectives separately?

3. What should be the role of innovation and entrepreneurship in making PES work for sustainable development?

  1. In some cases, PES has become a vehicle for a market for environmental goods (e.g. farmers respond to a growing regional demand for trees by setting up their own tree nurseries). Do you know of other business opportunities for farmers that could arise from the implementation of a PES scheme?
  2. According to your practical experience with PES, where do we need innovation to make PES more effective and what type of reward system could create such innovation?
  3. Innovative landscape approaches focus on the improvement of environmental services on the landscape-level while the PES approach is focused on the remuneration of individual farmers on the field-level. How can the two approaches be reconciled?

We look forward to receiving your inputs.

Thank you very much

Philipp Aerni 

Bernardete Neves

This activity is now closed. Please contact [email protected] for any further information.

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The United Nations Framework Convention on Climate Change (UNFCCC), developed on the basis of current concerns, taking into account the limits of the Kyoto Protocol aimed to expand opportunities for climate change mitigation by the capitalization of opening of the carbon market. REDD in scripts committed people who maintain the forest in a compensatory mechanism PES. After assessment of carbon stocks, payments are supposed to arrive directly to grassroots communities, the most vulnerable and the most in terms of capacity building, structure or infrastructure that improve living conditions.

I had the opportunity to take a ride in areas where PES projects were implemented, indicators of improved living conditions are not very noticeable. People are still languishing in poverty. And already she attacks back to the forest.

Beyond governance should constitute a major focus, the full participation of all stakeholders in particular youth development strategies should be another priority

CED (Centre for Development and Environment) is a Cameroonian NGO engaged in environmental advocacy. It implements a project of "payment for services Systemic eco community" in two community forests with a learning by doing approach. The objectives of this project (supported by the Rainforest Foundation UK) are the following:

• Protect, restore and sustainably manage forests, while improving

Living conditions of local populations (poverty reduction)

• Improve and strengthen the management of community forests by the villagers by developing their knowledge and capacity building,

• Develop local capacity to cope with institutional change,

economic and environmental issues;

• Learn practical lessons for future initiatives with community based

forest on REDD + to power and communicate processes

at the regional political / international level.

The partners in this project are the Communities Bio Climate Research and Development (BR & D) and Rainforest Foundation UK (RFUK).

The project is part of trials to contribute to the definition of a model for the implementation of Reduced Emissions from Deforestation and Degradation (REDD) in Central Africa. The goal is to find ways for PES can promote sustainable livelihoods in forest communities. To achieve this, the project has adopted a strategy, the system level vivo. The communities are located in the villages in the district Nomedjoh Lomié Haut Nyong, Eastern Region and in the borough of Nkolenyeng Djoum Dja and Lobo, South Region. Cameroon was chosen for the pilot because it is the Congo Basin country which has a policy of recognition of community forests since over a decade. In addition, Cameroon appears as a laboratory for reforms in the forestry sector in Central Africa.

Despite the sucess of this projet, major constraints and challenges of the implementation of the PES remain to be improved. At the national level, legislation is particularly complex and cumbersome for community forestry as far adapted and flexible regulations that require a gait Forestry social actors could adopt. Moreover, it does not provide new features related to "Payment for Environmental Services" (PES carbon, watershed protection, maintenance of soil fertility, biodiversity) as they come in basically an economic income drill can produce.

 At local level, the implementation of a PES requires the field to find an institution or organization that is able to credibly engage in such a contract. Hence the institution must have a legitimate authority in the eyes of people. This raises the question of what the community (social entity created by colonization and they equate to a village). While the village brings together families and lineages that are real institutions regulating access to and use of land. Community institutions are then fully develop wide decision if they are to have a real impact on the users of the resource. because families are often flexible to incorporate people from outside the community but are assimilated by the granting of such land.

Thanks

Hi Moderator,

I submit herewith my humble contributions to PES discussion as follows;

1. Some of the lessons learned from PES in developed and developing countries are;

a) - PES activities are inefficient because of lack of an equitable incentive scheme thus, the financial benefits are unevenly distributed leaving out real actors who are supposed to be the rural poor, and due to inaccessibility are often relegated to the background.

- PES doesn't have a management structure with defined action plan or programme, this often create confusion or mixup of projects. Moreover, persons and groups that require particular needs and express wish to participate in PES projects don't know who to contact, moreso, one doesn't know who is doing what, where, when, and who to approach and for what kind of projects?.

- PES projects most often don't reflect the local environmental contexts and realities, with little socio-economic consideration of local people's rights and concerned communities that are major actors. Projects often are planned at big public offices with political elites, know-hows, and the haves  because they have the means to reach the project donor or rather a preferred choice of the donor without seeking the opinion of local stakeholders.

- Because PES have no defined policies, it negatively impacts on its activities.

- PES strategy needs to be revised to include Best Available Technologies packages, and capacity building to deliver to stakeholders who will facilitate implementation of PES activities.

- PES doesn't have field and on the spot system of monitoring and evaluation of its activities instead through online is inappropriate. Projects should be followed up to ensure they are successfully implemented and data collected with establishment of PES  data bank.

- PES should develop a business plan to start with to be able to measure progress of its projects.

- PES should address quantify and value issues of indigenous rights including knowledge, innovation and practice.

b) Some successful PES projects that I know of is the recently created Mt Cameroon National Park. However, implementers of PES projects sometimes make fake promises to local stakeholders who are mostly the indigenous communities and true actors on the field. It  is often very discouraging, for example, the boundary tracing and opening of the Mt Cameroon National Park was conceived as a programme to involve all surrounding villages on the mountain to participate in the activity.  This was to serve as some kind of indirect benefits and incentive to locals but upon execution, some villages were intentionally left out.

- Some PES projects fail because they may not be the rightful priority of the concerned communities, thus careful consideration must be made when designing PES projects, for example, alternative income generating activities such as rearing of animals and birds, or provision of particular type of improved agricultural crops to farmers may not be helpful and can create a negative impact in the community where the protected area is created especially if there's no enough  buffer zone for the local populations. Also, land scarcity and arable land problems for farming can arise and serve as a big drive to invasion of the park for farmland, more especially if animal rearing etc is not the culture of the particular community will be an uphill task habit to change.

2. The type of policy that I recommend is closed loop policy and not opened loop. The policy should have commitments with defined obligations for concerned parties, with no room for free-riding by members. This will prevent  abandonment of prevents and ensure stability and continuity.

a). Opportunities outside agriculture are rare in least developed countries with high population growth rates mostly require more off-farm employment opportunities to reduce pressures on forests.

b). Environmental Governance/decision-making of PES should be revised to take in to account African local environmental context for PES to deliver properly and efficiently.

c) Most farming systems in Africa are small scale with insignificant pollution therefore, the " Polluter Pays Principle" doesn't count so much in African agricultural set up so can't be given substance in developing countries.

3. The role of innovation and entrepreneurship in making PES work for sustainable development will include;

a) - Creation of PES micro-finance schemes and institutions to facilitate financial resource availability. This ensures efficiency and project's lifespan, long term with greater opportunities and benefits for the project's goal and the poor who often do not have access to funding whereas funded projects are always short-lived.

- Design alternative income generating activities e.g Animal rearing, honey farming, flower gardening and sales etc.

b)- Promote Agroforestry farming systems by providing farmers with improved viable hybrid seedlings.

- Develop training manuals for PES projects.

c) Employ Integrated ecosystems management approach in natural resource management to recover depleted forests and agricultural farmlands can render them more productive.

This will be my humble submission at moment.

Thanks.

1. What are the lessons learned from PES in developed and developing countries?

a) What are the main challenges and opportunities with regard to PES projects in your particular country?

The main challenge of PES scheme in Uganda is lack of policy and national strategy in support of the pace programmes in country. The opportunity in Uganda are there for PES scheme for instance the Trees for Global Benefits that works with the farmers as tree growers for carbon sequestration. The existence of the Natural resources such as the Central Forest reserves under National Forestry Authority and National Parks under the Uganda Wildlife Authority. These areas are watershed management, biodiversity / wildlife conservation areas and carbon sequestration.

b) Do you know of highly successful PES cases in your particular field of expertise (watershed management, biodiversity/wildlife conservation, carbon sequestration,…)? If so, what were the main factors that contributed to the success of the PES scheme?  

Trees for Global Benefit have been one the most successful PES project in Uganda. Despite some complains among the carbon producers it remains one of the most success projects that one can easily look at. Another example is the Mt. Elgon Regional Ecosystem Conservation Programme (MERECP) with its REDD+ pilot which offers alternative income generating activities and through community Revolving funds it has been highly successful. What needs to be done is replicating such good initiatives to other areas. The main challenge here is that some projects can work well in a given community but then when taken to other communities they fail due to the cultural set up of the communities and other factors such awareness and education levels.

c) Do you know of PES projects that have failed to deliver despite substantial donor support? If so, what were the reasons that caused the failure?

Mount Elgon area had a challenge when the FACE foundation project was implemented because of the design problem where the local people were not well sensitized hence they could not promote the project but instead it turned out to be the main source of conflict between the management and the communities who were viewed as encroachers. But the situation is different with MERECP programme.

2. PES can be conceived as a diverse set of policies, institutions and processes that mobilize funding from direct beneficiaries, taxpayers, consumers and other interested parties to reward/remunerate/pay providers of environmental services. Which type of PES-related policy instruments would you recommend for your own particular country and why?

a) Are PES-related policy tools applied in affluent countries with lots of off-farm employment opportunities and low population growth rates also adequate for least developed countries where farm sizes often tend to get smaller due to lack of opportunities outside agriculture?

Policies and strategies needs to be country specific because of the different circumstances so that at the end of the day the local circumstance plays a major role in determining how the policies can easily be implemented otherwise it will remain as a stumbling block in implementation of the PES Schemes. Policies should give clear framework in terms of how to operationalise the PES schemes with clear ideas on how the beneficiaries are selected and what are the roles and mode of engagement.

b) What should be the role of the public sector in creating a regulatory/enabling environment for PES to deliver?  Where public sector assistance is most needed (knowledge transfer, communal/private land rights, infrastructure, measurement of environmental quality changes, etc.)?  

The public sector can offer services from policy development, knowledge transfer, and communal / private land rights by offering security of tenure, infrastructure, measurement of the environmental quality changes and even ensuring that the benefits are delivered to the local communities. Awareness and knowledge transfer is work that can be left most to NGOs so that they can also contribute the conservation efforts and promote the replications of the best practices and documenting them.

3. What should be the role of innovation and entrepreneurship in making PES work for sustainable development?

a) In some cases, PES has become a vehicle for a market for environmental goods (e.g. farmers respond to a growing regional demand for trees by setting up their own tree nurseries). Do you know of other business opportunities for farmers that could arise from the implementation of a PES scheme?

For PES to be successful the issue and the question of the livelihood of the community must remain the main focus for any PES project to Succeed. Unless the programme answers the questions of livelihoods it will not succeed even if it has much donor blessings and support.

b) According to your practical experience with PES, where do we need innovation to make PES more effective and what type of reward system could create such innovation?

There is no any single approach on how to make PES more effective it depends on various factors. For PES to be more efficient the communities need to be part of the design, let the benefits or reward reach the target beneficiaries for this case the communities. Allow the communities use the money from PES as part of livelihood improvement as it’s the case with Mount Elgon. Some communities they only need support and through the community revolving fund they have been able to get support and increase on their savings and improve on their livelihoods. The payment should be done in groups so that the groups can help in the co-management of the natural resources such as the national park and central forest reserves in the case of Uganda. For Instance in our toolkit on proposed benefit sharing in Mount Elgon: A toolkit to assess proposed benefit sharing and revenue distribution schemes of community REDD+ projects. The most interesting aspect of Mt. Elgon case is that the funds avoid so many middle men agencies’ by directly transferring the funds from the fund’s managers LVBC to the Community Based Organisations.

c) Innovative landscape approaches focus on the improvement of environmental services on the landscape-level while the PES approach is focused on the remuneration of individual farmers on the field-level. How can the two approaches be reconciled?

Sometimes where the community is adjacent to the National Park or the central reserve and have limited land for PES they can enter into collaborative forest management so that they can be able to contribute to the management of the Protected areas as a group and not individuals. This helps in improving the relationship between the park management and the local communities.

Estimados Philipp, Bernadete y colegas del Mundo de los PSA.

Les Saludos desde Guatemala ( Centro America), desde esta parte del mundo, hemos  avanzando  desde los conceptos, procesos e implementacion y empoderamiento  de  comunidades y sociedad;  hemos caracterizado 35 casos de PSA, y sobre esta base iniciare las discuciones.

Antes de responder  con las preguntas del Foro, es importante difinir y enmarcar los conceptos, principios, criterios y marco legal de los PSA, PSE, CPA (Pago o Compensacion por servicios ambientales -Ecosistemicos), RPE (Remuneracion por Externalidades positivas).

En la mayoria de nuestros paises no existe un marco legal vigente que regule los PSA, tampoco existen orientaciones de PSA en las leyes relacionadas a Bosques, biodiversidad, agua, suelo. Los Casos mas avanzados en legislacion de PSA podrian estar en Costa Rica, Mexico, Brasil, Nicaragua.

Los PSA deberian analizarse desde dos sentidos:

Sentido Extricto (PSA Estricto): Generacionde externalidades positivas (cumple con al menos 5 principios de Wunder et,al.:(Voluntario, servicio ecosistemico definido, Comprador, vendedor, condicionalidad), Segun Russi, tambien podria anadirse: adicionalidad, intermediario y costos de transaccion.

Sentido Amplio ( PSA Amplio), Reduccion de Externalidades Negativas y pago por contaminacion:(Creditos de carbono, MDL(Cambios de matriz Energetica), REDD+; ademas de las subenciones, compras e incentivos  del Estado, como los proyectos forestales estatales.

Posteriomente entrare a responder las preguntas con detalle.

Saludos Cordiales 

Bayron Medina

Guatemala

 

Apreciados Philipp y Bernardete, colegas del Foro Global:

Un honor poder impartir aprendizajes en esta importante tematica PSA. La situación en mi pais es bastante incipiente, pero no lejana de llegar a concretizarse, se han desarrollado varios proyectos.

1. Como les manifestaba, PSA constituye un reto y una oportunidad de poder conservar los pulmones verdes de nuestra localidad, implica poder avanzar en la conservacion y mejoramiento genetico de las especies y una oportunidad de generar proyectos que propenden el desarrollo sostenible.

2. Hay 2 proyectos sobre manejo de cuencas en la serrania de Peru, un proyecto importante de reforestacion con Eucaliptus globulus en la Comunidad Ignacio Tavara, en la Region Piura.

3. No conozco proyectos que hayan fracasado, considero una opcion importante y destaco la labor de FAo en este cometido.

Cordialmente,

Bertha Garcia C.

Peru