What Are PES? Opportunities and Obstacles to Implement Pro-Poor PES Projects

1. What Are PES? Opportunities and Obstacles to Implement Pro-Poor PES Projects By Pablo Gutman / WWF – MPO A Presentation at a Meeting organized by f the Africa Biodiversity Collaboration Group, on Payments for Environmental Services and Poverty Reduction, at WRI, Washington D.C. December 15, 2005

2. What Are Payments For Ecosystem Services (PES)? • PES is the generic name of a variety of arrangements through which the beneficiaries of ecosystem services pay back to the providers of those services. • The PES concept can be thought as the complement (or the opposite?) to the “Polluter Pays Principle.” • In any specific PES scheme there are at least three major issues: (a) the ES; (b) the payment arrangements; and (c) what is driving the whole PES scheme

3. What Are Ecosystem Services And Where Do They Come From? • Ecosystem services are whatever nature provides that is valuable for humankind… but notice that: • There are differences between ecosystem functions and ecosystem services (we should avoid double counting and over assessing). • There are differences between services and goods (that at times are difficult to make) • There are differences between services provided by nature on its own, and through human husbandry (important to decide what are you paying for).

4. The Millennium Ecosystem Assessment View of ES

5. Ecosystem Services May Be Present At Any Scale • Local: For example water quality benefits of conservation in a small watershed. • National. For example country-wide benefits of biodiversity conservation. • International. For example global commons benefits of conserving of biodiversity, international waters or the atmosphere.

6. Payment Arrangements May Vary a Lot • They may entail a market that brings together willing buyers and willing sellers. • Or a private or public entity may pull together the demand. E.g. a private utility or a river basin authority may collect fees and use those revenues to pay providers of ES. • It can be a government-driven system where public revenues (earmarked or not) are used to pay the providers of ecosystem services. • Or it can be an international scheme where international or regional funds are used to pay for the provision of global commons.

7. What is Driving the Whole PES Scheme: 1

8. What is Driving the Whole PES Scheme: 2

9. Current PES Experiences If we accept a “broad” definition of PES there are many PES schemes operating around the world, • Large PES schemes tend to be government driven (e.g., Australia, Brazil, China, EU, Colombia, Costa Rica) • Most private market- type PES are of local scale (e.g. Africa conservancies, LAC watershed protection schemes) they tend to be small (but look to New York water company experience) • The enforcement of the Climate Change Convention may change this picture fostering a large private market for carbon sequestration services.

10. What Have We Learnt From Current PES Experiences? • Most market-type PES have been of small scale, hence a marginal source both of ecosystem services to users and of income to providers; • Government sponsored PES schemes tend to be larger, but critics point to little conservation gains, high costs and poor social targeting. • From a conservation point of view the PES unbundling approach risks loosing stage for the less “marketable” ES, or pitching one ES against another. • From a social point of view it raises issues of equity and access to basic services, and actually PES approaches face a lot of resistance in many developing countries

11. OPPORTUNTIES The world needs a new urban-rural compact The map of rural poverty overlaps with the map of rural biodiversity In many cases the poor are actually the de facto stewards of the environment In many cases nature is the poor’s m ain asset OBSTACLES Fears that the poor will lose more as buyers than they may gain as sellers Conservation is usually nature-intensive, seldom labor-intensive The poor may lack the property rights, know- how and capital High transaction costs Non-supportive regulations Could there be Pro-Poor PES?

12. Is a PES Appropriate for your Rural Conservation and Development Project? 1 It may be, but you will need to carefully think it through, considering PES not in isolation, but as part of a broader sustainable financing strategy. And here is a checklist to help you decide about it • Can you clearly state what are both the social and conservation goals for the area in question? • Achieving these objectives requires promoting significant natural resources use changes among farmers and other rural dwellers? • Is there is a clear relation between the conservation goals and some ecosystem services that are valuable to would-be payers, or at least to a relevant sector of society?

13. Is a PES Appropriate for your Rural Conservation and Development Project? 2 • Are you going after payers that actually can pay, and may be motivated to pay? • Have you a good idea of how the moneys collected will be used? • Have you a good idea of how the rural poor would participate and benefit of such PES scheme? • Are there already in place regulatory and institutional frameworks that may facilitate the adoption of a PES scheme and the participation of the rural poor?.

14. Is a PES Appropriate for your Rural Conservation and Development Project? 3 • You always need a good answer to question 1 • If answers to questions 2 through 8 are mostly “yes” you may have a PES winner at hand. • If answers to questions 2 through 8 are mostly negative, better look for other financing schemes. • If some are yes and some are no, it may be useful to dig a little deeper before deciding if a PES scheme is the way to go for your rural conservation and development project.

15. Where to Learn More and Look for WWF PES-Related Activities? • To learn more about PES, these sites provide valuable references and information: www.iied.org ; www.forest-trends.org ; www.cifor.cigiar.org ; www.worldbank.orgwww.panda.org/mpo ; www.flowsonline.net • For updates on WWF PES-related activities subscribe to PES InfoExchange (email sara.davidson@wwfus.org ) or contact your regional WWF-PES anchor office (DCPO in Europe)