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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

PaymentsforEcosystemServices: … ZSL PES...PaymentsforEcosystemServices: OpportuniesandChallengesfor Biodiversity) Dr#Steven#Smith,#Technical#Director,#URS# ... Vivel#Payments#for#Ecosystem#Services,#France#!

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Page 1: PaymentsforEcosystemServices: … ZSL PES...PaymentsforEcosystemServices: OpportuniesandChallengesfor Biodiversity) Dr#Steven#Smith,#Technical#Director,#URS# ... Vivel#Payments#for#Ecosystem#Services,#France#!

Payments  for  Ecosystem  Services:  Opportuni6es  and  Challenges  for  

Biodiversity  

Dr  Steven  Smith,  Technical  Director,  URS  Pricing  Nature  for  Biodiversity  Conserva5on|  ZSL  |  11  March  2014  

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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  

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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)  

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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.  

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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    

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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’)  

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‘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.    

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Payments  for  Ecosystem  Services  

Graphic  ©  Forest  Trends    

‘beneficiary  pays  principle’  

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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  

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What  does  PES  ‘look  like’?  

Source:  Defra  (2013).  Payments  for  Ecosystem  Services:  A  Best  PracEce  Guide  

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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  

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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)  

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IdenEfying  the  right  intervenEons…  

Source:  Defra  (2013).  Payments  for  Ecosystem  Services:  A  Best  PracEce  Guide  

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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

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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  

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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  

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‘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).

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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’)  

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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  

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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  

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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  

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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  

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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  

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Thank  you  

Dr  Steven  Smith    Technical  Director  

Policy  and  Appraisal  URS  Infrastructure  and  Environment  UK  020  7798  5121  

[email protected]