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Payment for Ecosystem Services (PES) as a means of sharing environmental benefits: How numbers provide the basis for dialogue in water-based payment schemes in the Andes Andy Jarvis, Marcela Quintero, Nathalia Uribe, Ruben-Dario Estrada

Andy J Payment For Ecosystem Services (Pes) And Numbers For Negotiation Cocoon Sept 2009

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Presentations of CIAT's research on water-based ecosystem services.

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Page 1: Andy J   Payment For Ecosystem Services (Pes) And Numbers For Negotiation Cocoon Sept 2009

Payment for Ecosystem Services (PES) as a means of sharing environmental benefits: How numbers provide the

basis for dialogue in water-based payment schemes in the Andes

Andy Jarvis, Marcela Quintero, Nathalia Uribe, Ruben-Dario Estrada

Page 2: Andy J   Payment For Ecosystem Services (Pes) And Numbers For Negotiation Cocoon Sept 2009

Contents

• The importance of numbers• Our principles• Three examples of science-

based establishment of water-based PES in the Andes– Chingaza– Moyobamba– Fuquene

• Outlook

Page 3: Andy J   Payment For Ecosystem Services (Pes) And Numbers For Negotiation Cocoon Sept 2009

CIAT’s work on Ecosystem services

• Very focussed on externalities• ES that have a national, regional or international

market– Aboveground carbon– Water

• Putting the numbers on ES flows in an integrated manner

• Learning from broad range of cases• Enabling the poor to engage and benefit from

emerging ES market opportunities

Page 4: Andy J   Payment For Ecosystem Services (Pes) And Numbers For Negotiation Cocoon Sept 2009

Reasons for Failures in PES

• High failure rate of PES, though Latin America has been a test-bed

• Unreal expectations for PES• Lack of equity in benefit sharing• Poor or inappropriate governance

structures• Low perceived impact in terms of ES

benefits• High potential to create conflict,

rather than resolve itNumbers as a basis for dialogue

Page 5: Andy J   Payment For Ecosystem Services (Pes) And Numbers For Negotiation Cocoon Sept 2009

Externalities• An externality is the beneficial

or damaging effect caused on a third party by the decision of other(s)

• Those who cause the effect do not receive any compensation for the generated benefit, or do not assume the cost of the damaging effect

• Environmental externality is determined by the environmental effects of a human activity

• When the effect is positive the externality is considered as an environmental service

Example: Watershed services: regulation of streamflows and retention of sediments achieved by land uses and management

Page 6: Andy J   Payment For Ecosystem Services (Pes) And Numbers For Negotiation Cocoon Sept 2009

Poverty and Extreme Poverty in rural zones (Percentage of total rural population)

0

10

20

30

40

50

60

70

Poverty % 59.9 65.4 45.1 63 53.7

Extreme poverty % 32.7 40.4 40.8 37.6 38.3

1980 1990 1994 1997 1999

Source CEPAL: Panorama Social de América Latina, 2000-2001.

Extreme poverty is as bad or worse than 25 year ago

PES that promote natural, economic and social benefits

Page 7: Andy J   Payment For Ecosystem Services (Pes) And Numbers For Negotiation Cocoon Sept 2009

CHINGAZA COLOMBIA

Page 8: Andy J   Payment For Ecosystem Services (Pes) And Numbers For Negotiation Cocoon Sept 2009

i. Hay una pérdida histórica de cobertura vegetal en las cuencas abastecedoras de la EAAB.

ii. Cambios en el uso de la tierra con efectos adversos a los servicios ambientales.

iii. Ahorro en costos de tratamiento y conservación: Caso Nueva York y Caso Quito.

iv. Gestión ambiental aislada.

1. Antecedentes

Page 9: Andy J   Payment For Ecosystem Services (Pes) And Numbers For Negotiation Cocoon Sept 2009

1977 2001

Fuente: Ciat, 2007, Estudio contratado por TNC, EAAB, Patrimonio Natural & Parques

i. Pérdida histórica de cobertura vegetal de las cuencas abastecedoras en el Parque y Sistema Chingaza.

Aumento de Pasturas 18,9%

Page 10: Andy J   Payment For Ecosystem Services (Pes) And Numbers For Negotiation Cocoon Sept 2009

The numbers behind a Payment for Ecosystem Services (PES) Scheme

Agua y sedimentos producidos en Chingaza

Fuente: Ciat, 2007, Estudio contratado por TNC, EAAB, Patrimonio Natural & Parques

Vegetación páramo

Pasto "natural"

Pasto tecnificado

Papa

0

200

400

600

800

1000

Uso fuera parque (sin política ambiental)

Uso actual (con política ambiental)

Hec

tari

as In

terv

enid

as 0.0

10.0

20.0

30.0

40.0

50.0

Conservado Uso actual (con política ambiental)

Uso fuera parque (sin política ambiental)

m3/

ha/a

ñoto

nela

das/

ha/a

ño

Cantidad agua Cantidad de sedimentos

Page 11: Andy J   Payment For Ecosystem Services (Pes) And Numbers For Negotiation Cocoon Sept 2009

Resultados ECOSAUT

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

Conservado Uso actual (con política

ambiental)

Uso fuera parque (sin política ambiental)

US

$/ha

/año

Valor de produccion agropecuaria

Costo total por erosión

Opportunity Costs through economic modelling

$0

$500

$1,000

$1,500

$2,000

$2,500

Conservado Uso actual (con política ambiental)

Uso fuera parque (sin política ambiental)

US

$/h

a/añ

o

Costo por extracción Costo por tratamiento

Page 12: Andy J   Payment For Ecosystem Services (Pes) And Numbers For Negotiation Cocoon Sept 2009

Social and economic benefits for the rural poor

Page 13: Andy J   Payment For Ecosystem Services (Pes) And Numbers For Negotiation Cocoon Sept 2009

FUQUENE COLOMBIA

Page 14: Andy J   Payment For Ecosystem Services (Pes) And Numbers For Negotiation Cocoon Sept 2009
Page 15: Andy J   Payment For Ecosystem Services (Pes) And Numbers For Negotiation Cocoon Sept 2009
Page 16: Andy J   Payment For Ecosystem Services (Pes) And Numbers For Negotiation Cocoon Sept 2009

Porcentajes de Elementos por Subcuenca. Kriging.

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

8 10 12 13 15 16 17 18 19

Subcuencas

Po

rce

nta

jes NO2

NO3

NH3

P

P2O5

Elements Percentage by Catchments

Page 17: Andy J   Payment For Ecosystem Services (Pes) And Numbers For Negotiation Cocoon Sept 2009

Potato growersMinimum tillage

SustainableCattle ranchers

Potable water consumers

Less sediments, N, P, and more water

Positive impact on environmental externalities

Economic Compensation

Economic compensation

Participatory GamesFuquene Lake CaseAlternatives Interdependencies

Up stream

Down stream

Page 18: Andy J   Payment For Ecosystem Services (Pes) And Numbers For Negotiation Cocoon Sept 2009

MOYOBAMBA PERU

Page 19: Andy J   Payment For Ecosystem Services (Pes) And Numbers For Negotiation Cocoon Sept 2009

Land UseDigital Elevation Model

Soil TypesHydrological Response Units

Service providing units

Page 20: Andy J   Payment For Ecosystem Services (Pes) And Numbers For Negotiation Cocoon Sept 2009

Moyobamba watershed (Peru)

URH No. Área (ha) Sed (Ton) / Ha/ 5 yrs

Sed (Ton)/5 yrs Contribution to the total watershed sediments (%)

18 9.1 903 8217 16.5 02 5.8 500 2902 5.8 06 0.9 396 356 0.7 09 0.9 323 291 0.6 12 1.2 261 313 0.6 22 2.2 374 823 1.7 03 1.9 292 555 1.1 19 1.1 239 263 0.5

Total 23.1 3289 13720 27.6

Page 21: Andy J   Payment For Ecosystem Services (Pes) And Numbers For Negotiation Cocoon Sept 2009

Increase Net Income

Better environmental services

Employment generation

Farmers acceptance

Trade off Analysis

Evaluation of land use alternatives for providing environmental services

Page 22: Andy J   Payment For Ecosystem Services (Pes) And Numbers For Negotiation Cocoon Sept 2009

Examples of land use evaluation

• Conservation agriculture (Colombia)– Increases net

incomes, potato production, social benefits, sediment retention and employment; and reduce production costs.

– However the initial investment can not be afforded with current small farmers cash flows

Ex ante analysis

Upper part Potato cropping/conservation farming

Sediment yield (10 years) -39%

Net Income +18%

Labor employment -14%

Social benefits +40%

Middle part Potato and cereals cropping/conservation farming

Sediment yield (10 years) -49%

Net Income +1%

Labor employment +62%

Social benefits +111%

Page 23: Andy J   Payment For Ecosystem Services (Pes) And Numbers For Negotiation Cocoon Sept 2009

Moyobamba (Peru)Conventional

SystemConventional System with live barriers

Shade-coffee Tree plantations

Sediments (ton/10 yr)

-50% -50% -44%

Agua (m3/sec)

-11% -14%

Net Income (USD)

-9.7% +89% -5.3%

Employement +77% -5%

Initial investment

(USD)

9 13 176 470

Page 24: Andy J   Payment For Ecosystem Services (Pes) And Numbers For Negotiation Cocoon Sept 2009

Experimental economics to explore willingness to implement new management practices and to make “payments”

0

10

20

30

40

50

60

70

80

90

100

1 2 4 3

Scenario

aver

age

of

peo

ple

in

%

0

10

20

30

40

50

60

70

1 2 4 3

Scenario

aver

age

of

peo

ple

in

%

c

Source: U.Javeriana. 2004. Análisis de la acción colectiva para el Manejo de cuencas. Estudio piloto-cuenca de la Laguna de Fúquene. Proyecto Cuencas Andinas GTZ CONDESAN

Farmers willing to implement conservation agriculture practices

Downstream water users willing to transfer resources to upstream farmers implementing conservation agriculture

Sc.1: Allowing communication between farmers and water users

Sc 2. Without communication

Sc.3. Applying small penalties

Sc 4. Applying high penalties

Page 25: Andy J   Payment For Ecosystem Services (Pes) And Numbers For Negotiation Cocoon Sept 2009

Where to invest for environmental AND social benefits (eco-efficiency)

Áreas prioritarias de inversión

MayoresMenores

Fuentes de sedimentos

Áreas prioritarias con ahorros potenciales de tratamiento agua

Área prioritaria sin ahorros potenciales de tratamiento agua

CARBON IN THE AMAZON

Page 26: Andy J   Payment For Ecosystem Services (Pes) And Numbers For Negotiation Cocoon Sept 2009

Opportunity costs of REDD in threatened Brazilian Amazon forests

Börner et al. (submitted), Amazon Initiative (CIAT, CIFOR, ICRAF)

Page 27: Andy J   Payment For Ecosystem Services (Pes) And Numbers For Negotiation Cocoon Sept 2009

Opportunity costs of REDD in threatened Brazilian Amazon forests

0

5

10

15

20

25

30

0 5000000 10000000 15000000 20000000

Deforestation avoided (ha)

Op

po

rtu

nit

y c

os

t R

$/t

CO

2

offset price for temporary emission reductionsoffset price for permanent emission reductions

Börner et al. (submitted), Amazon Initiative (CIAT, CIFOR, ICRAF)

Jan Boerner
Price lines represent average 2007 prices at Chicago Climate ExchangeGrey areas are the result of sensitivity analyses of prices, discount rates and carbon content.
Page 28: Andy J   Payment For Ecosystem Services (Pes) And Numbers For Negotiation Cocoon Sept 2009

Potential equity effects of different REDD payment scenarios by tenure category

2855

1277 1333 1139

8089

3212

1183

371 384 370261

405

1487

270 192

0

3000

6000

9000

Largeholdings Smallholdings Settlements Indigenouslands

Extractivereserves

Mill

ion

R$

Fixed price

Biomass targeting

Quasi-auction

Börner et al. (submitted), Amazon Initiative (CIAT, CIFOR, ICRAF)

Tradeoffs: Maximum environmental benefit at cost of rural smallholder poor?

Jan Boerner
Fixed price means all providers get the same price per ton of carbon.Biomass targeting means that per ton payments are adjusted by average municipal per ha carbon contentQuasi-auction means that farmers can offer bids for REDD payments and only accept payments that are equivalent to above-average expected returns to their actual land uses.
Jan Boerner
Bars show total returns to land users in each tenure category under the assumption that these land users have caused the deforestation in this category. Yet, in the case of Indigenous Lands, for example, deforestation is often caused by external actors....so this has to be interpreted with caution, however, shows that most benefits would go to large landholders if REDD payments were to be made only on the basis of expected additionality.
Page 29: Andy J   Payment For Ecosystem Services (Pes) And Numbers For Negotiation Cocoon Sept 2009

CONCLUSIONS

• PES provide a new paradigm for natural resource management….

• …but also a new paradigm for addressing concerns of rural poverty

• Establishment of schemes must be based on sound, integrative analysis of natural, social and economic benefits

• In CIAT we’re very interested in matching with partners to generate rural livelihoods through PES. We can provide natural, economic and social analysese, and you…..