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Payments for Ecosystem Services: Opportuni6es and Challenges for
Biodiversity
Dr Steven Smith, Technical Director, URS Pricing Nature for Biodiversity Conserva5on| ZSL | 11 March 2014
Natural capital and ecosystem services
! “Natural capital is the land, air, water, living organisms and all formaEons of the Earth's biosphere that provide us with ecosystem goods and services imperaEve for survival and well-‐being”
International Institute for Sustainable Development (2013)
! Ecosystem services include: ! Provisioning services – provision of food, water, Ember,
and fibre ! Regula5ng services – regulaEon of air quality, climate,
water quality, and flood risk ! Cultural services – opportuniEes for recreaEon,
tourism, and cultural development ! Suppor5ng services – nutrient cycling, soil formaEon,
and biodiversity
An environmental and social issue
! “…it has been esEmated that ecosystem services and other non-‐marketed goods account for between 47% and 89% of the so-‐called ‘GDP of the poor”
The Economics of Ecosystems and Biodiversity (2010)
The ‘ecosystem cascade’
Source: Adapted from Potschin, M.B. and Haines-‐Young, R.H. (2011). Ecosystem services: Exploring a geographical perspecEve. Progress in Physical Geography 2011 35: 575.
A mul6-‐faceted agenda
Biodiversity Natural capital
Biodiversity offseeng
'No net loss' / ‘net gain’
Natural Capital AccounEng
NaEonal accounEng
Corporate accounEng
Ecosystem services
Ecosystem approach
ES in EIA / ESIA
ES in corporate decision-‐making
ES in cost-‐benefit analysis
ES in spaEal/land use planning
Ecosystem markets
Trading systems*
CerEficaEon schemes
* Includes cap-and-trade markets for pollution reduction and markets for trading biodiversity offset credits
Payments for Ecosystem Services
ES in agri-‐environment
Ecosystem markets
! “Understanding the links between biodiversity and a wider range of ecosystem services is rapidly improving… and we are increasingly able to place values on such services… The urgent and logical next step is to develop markets that enable these values to be realised for services such as water quality, flood risk management, climate regulaEon and other benefits”
Making Space for Nature: A review of England’s Wildlife Sites and Ecological Network (the ‘Lawton Review’)
‘Environmental policy toolkit’
! RegulaEon ! Provision of services by Government (e.g. publicly owned
green infrastructure) ! Voluntary efforts by business, communiEes and individuals ! Incen6ve or market-‐based mechanisms
! Charges (e.g. taxes and user fees) ! Tradable permits (e.g. emissions trading) ! CerEficaEon schemes (e.g. eco-‐labels) ! Payments for Ecosystem Services (PES)
Jack, B.K., Kouskya, C. and Simsa, K.R.E. (2008). Designing payments for ecosystem services: Lessons from previous experience with incenEve-‐based mechanisms. PNAS 105(28): 9465-‐9470.
Payments for Ecosystem Services
Graphic © Forest Trends
‘beneficiary pays principle’
Defini6on
! “A PES is: ! a voluntary transacEon where; ! a well-‐defined ecosystem service (or a
land-‐use likely to secure that service); ! is ‘bought’ by a (minimum of one)
ecosystem service buyer; ! from a (minimum of one) ecosystem
service provider; if and only if ! the ecosystem service provider secures
ecosystem service provision (condiEonality).
Wunder S. (2005). Payments for environmental services: Some nuts and bolts. CIFOR Occasional Paper No. 42, Centre for InternaEonal Forestry
Research, Bogor, Indonesia
What does PES ‘look like’?
Source: Defra (2013). Payments for Ecosystem Services: A Best PracEce Guide
Scale of PES
! PES can be developed at a variety of spaEal scales, e.g. ! Interna6onal, e.g. REDD+, Green Development Mechanism, Ecuador Yasuni ITT Trust Fund
! Na6onal, e.g. Agri-‐environment schemes (tend to be public-‐financed)
! Catchment, e.g. downstream water users paying for watershed management on upstream land (tend to be private-‐financed)
! Local, e.g. residents collecEvely funding an NGO to manage local green space for biodiversity
PES actors
! Buyers (individuals, communiEes, businesses or governments acEng on their behalf)
! Sellers (land or resource managers whose acEons can potenEally secure producEon of the beneficial service)
! Intermediaries (‘honest brokers’ who can assist with scheme design and implementaEon)
! Knowledge providers (e.g. resource management experts, land use planners, economists, regulators and legal advisors who can facilitate scheme development)
IdenEfying the right intervenEons…
Source: Defra (2013). Payments for Ecosystem Services: A Best PracEce Guide
PES schemes: examples
! Pago de Servicios Ambientales, Costa Rica ! Pago por Servicios Ambientales Hidrológicos, Mexico ! ConservaEon Reserve Program (CRP), US ! Environmental Stewardship, UK (NB being replaced by ‘NELMs’) ! Catskills Long-‐Term Watershed ProtecEon Program, US ! Vivel Payments for Ecosystem Services, France ! Lake Naivasha Watershed Management Project, Kenya ! BEF’s Water RestoraEon CerEficates, US ! Yasuni ITT Trust Fund, Ecuador (now scrapped) ! Tasmanian Forest ConservaEon Fund ! Sustainable Catchment Management Programme (SCaMP), UK ! Woodland Carbon Code, UK ! Peatland Code, UK
www.dse.vic.gov.au
Case study: Upstream Thinking
! Buyer = South West Water (private water company)
! Sellers = Farmers in target catchments
! Intermediary = Westcountry Rivers Trust (charity)
! Ecosystem services = water quality (plus water quanEty, biodiversity)
! Encourages and/or incenEvises farmers to implement land management acEons to improve raw water quality, with many management measures locked into 10 or 25 year covenants
" South West Water and the Westcountry Rivers Trust worked together to develop an acEon plan for three target catchments
Mode of payment
! The mode of payment is a key variable in scheme design: ! ‘Output-‐based’ payments where payments are made on the basis of actual ecosystem services provided
! ‘Input-‐based’ payments where payments relate to agreed changes in management pracEces, on the assumpEon that these are likely to yield the desired change in service(s) provision
‘Packaging’ ecosystem services
Adapted from Lau, Winnie W.Y. (2012). Beyond carbon: Conceptualizing payments for ecosystem services in blue forests on carbon and other
marine and coastal ecosystem services. Ocean and Coastal Management (April 2012).
PES and biodiversity
! Biodiversity oyen figures strongly in public payment schemes in which the government contracts with ecosystem service providers on behalf of the public
! Government-‐financed public payment schemes tend to include a focus on wildlife because public goods such as biodiversity are widely enjoyed by diffuse beneficiaries and, as such, markets are unlikely to spontaneously arise in the absence of government intervenEon
! Water – which forms the basis for many PES schemes – is, in contrast, a ‘club good’ (it’s possible to exclude ‘free riders’)
Opportuni6es for biodiversity
! ‘Add’ biodiversity to exisEng PES schemes focused on a different anchor service (e.g. water quality, water storage, flood risk) and encourage exisEng buyers to pay a premium for biodiversity benefits (bundled scheme) or idenEfy addiEonal buyers for the biodiversity benefits (layered scheme)
! Government could pay for the biodiversity benefits as part of a layered scheme, creaEng a public-‐private payment scheme
Opportuni6es for biodiversity
! Biodiversity conservaEon organisaEons could help to cover the significant start-‐up costs of a PES scheme in return for not having to pay the recurrent future costs (OCED, 2010)
OECD (2010). Paying for biodiversity: enhancing the cost-‐effecEveness of payments for ecosystem services
Challenges for biodiversity
! Our capacity to make linkages between biodiversity and ecosystem services “at spa5al (landscape) scales relevant to the human enterprise is limited at present”
Balvanera et al (2006). QuanEfying the evidence for biodiversity effects on ecosystem funcEoning and services. Ecology Levers 9:1146-‐1156
! It is difficult to idenEfy clear private sector ‘dependencies’ on biodiversity and therefore a financial moEvaEon for parEcipaEng in biodiversity-‐related PES schemes
Challenges for biodiversity
! PES schemes focused on a parEcular service risk creaEng trade-‐offs, for example where non-‐naEve tree species are planted with the aim of sequestering carbon; important to ‘work with nature’
! “not all ecosystem processes sustain and fulfil human life. Processes such as fire, drought, disease, or flood work against this goal, yet they are vital for ecosystem funcEon, structuring landscapes, and providing vital services and regulatory funcEons to nonhumans”
Redford and Adams (2009). Payment for Ecosystem Services and the Challenge of Saving Nature. ConservaEon Biology 23(4): 785-‐787
Current research project
! ‘Developing the Evidence Base on PES Beneficiaries in England’, Defra
! InvesEgaEng how wider parEcipaEon in PES schemes might be encouraged with a focus on two groups of beneficiaries: ! business sectors with dependencies on natural capital/ecosystem services
! local authori6es who might be in a posiEon to procure ecosystem services on behalf of local residents and businesses
Thank you
Dr Steven Smith Technical Director
Policy and Appraisal URS Infrastructure and Environment UK 020 7798 5121