Payment for Forests Watershed Environmental Services in Mexico

1. Payment for Forests Watershed Environmental Services in Mexico Josefina Braña Varela, Carlos Muñoz Piña National Institute of Ecology

2. Program’s Objective • Stop the deforestation that threatens those forests critical for watershed-related environmental services in Mexico • Foster the development of local markets for environmental services By Paying land owners to preserve forest land and avoid its transformation for other uses, such as: agriculture and cattle raising.

3. Program’s Basic Guidelines • The proposed areas should have a forest cover percentage equal or greater to 80%, & • The proposed lands must be: • located in recharge areas of acquifers catalogued by the National Water Commission (CNA) as over-exploited are, or • in zones where surface waters present high scarcity, water quality or sediment problems, or • in high-risk hydrological disaster zones. • & the proposed lands must be linked to population centers of more than 5,000 inhabitants or located on priority mountains as identified by the National Forestry Commission (CONAFOR) or located in a Natural Protected Area (2004 criteria).

4. What happened during 2003? • The Mexican Forest Fund was created allocating $200 million pesos (aprox US$ 19 million) from the revenues generated by the national water fees (aprox 2.5% of the current water revenues). • The operation rules were approved by the Ministry of Finance and Public Credit (SHCP) and the Federal Commission for Regularory Improvement (COFEMER). • Critical zones were identified to promote the payment for environmental services. • Applications from approximately 560,000 hectares were received from 25 states (in critical and non-critical areas). • Only 250,612 hectares had the high resolution satellite images required to qualify. • A total of 126,818 hectares (distributed in 15 states) were selected to receive a payment equivalent to 19 million USD over the next five years.

5. Number of hectares per State

6. Distribution of the area according to the Property Regime

7. Signed Contracts per State

16. Implementation Problems • Unexpected success: three times as many applications as those available funds. (Excess demand) • A short period (2 months) between the publication of the operation rules and the deadline to accept the 2003 beneficiaries of the program. • CONAFOR does not have yet a specific structure to implement the Program, and does not have enough personnel to review all applications. • The selection process was based on availability of information more than watershed importance criteria.

17. Next Steps • CONAFOR will monitoring and evaluate compliance on current contracts and decide over their renewal for one more year. • Enhance CONAFOR’s present structure for the implementation of the Program’s next phase. • Introduce deforestation risk as one of the criteria to select plots. Expected even more excess demand. • Continue scientific work on the linkages between forests and water, and communicate results to water users in the watershed for continuing political support. • Evaluate the program. (Implementation and results)

18. Markets & Payments for other environmental services? • Scolel-te • Oficina MDL • Local biodiversity protection agreements (Pronatura-servidumbres ecológicas) • Other federal programs: carbon sequestration, biodiversity protection, and agroforestry ($10 in 2004)