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Presentation at the RISE/CEPS event in Brussels by Patrick ten Brink of IEEP - Public goods from private land - 1 feb 2010
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Public Goods from private land Ecosystem services and PES
Patrick ten BrinkTEEB for Policy Makers Co-ordinator
Head of Brussels OfficeInstitute for European Environmental Policy (IEEP)
Workshop: Public Goods from Private LandRISE and CEPS
1 Place du Congres, Brussels1 February 2010
1. Introduction to TEEB ambitions and process and approach
2. Ecosystem services, decision making, public goods & trade-offs
3. Ecosystem services & PES
4. Key issues
5. Comment on the Presentation of the RISE Report
Presentation overview
TEEB’s Genesis and progress
“Potsdam Initiative – Biological Diversity 2010”
1) The economic significance of the global loss of biological diversity
TEEB Interim Report CBD COP-9, Bonn, May 2008
TEEB for Policy Makers Brussels 13 Nov. 2009
TEEB Climate Issues Update Strömstadt September 2009.
Oct. 2010
TEEB for Policy Makers report- launched 13 November 2009 -
The Global Biodiversity Crisis• Coral reef emergency• Deforestation • Loss of public goods…
Responding to the value of nature
Available Solutions• PES water, PES – REDD+
• Markets, GPP
• Subsidy reform
• Legislation, liability, taxes & charges
• Protected Areas
• Investment in natural capital et al
Measuring what we manage
• BD & ecosystem service indicators
• Natural capital accounts
• Beyond GDP indicators et al
http://www.teebweb.org/
Critical issues
The values of biodiversity and ecosystems are missing
• Many not known (but this is changing); widespread lack of awareness
• Values are not taken systematically into account in assessments and decision making
• They are generally not integrated into the economic signals, into markets – the economy is therefore often not part of the solution (some exceptions: PES)
Inappropriate incentives; misinterpretation of right solutions, insufficient evidence base at policy makers’ finger tips and weaker public support for action
There is not enough political will or conviction or awareness of benefits/cost to launch due policies (market based or otherwise)
Biodiversity loss continues – eroding natural capital base without realising its value
… Sub-optimal provision of public goods from private land
Ecosystem Services Public Goods and Private Goods
Provisioning services• Food, fibre and fuel• Water provision • Genetic resources
Regulating Services• Climate /climate change regulation• Water and waste purification • Air purification • Erosion control• Pollination• Biological control
Cultural Services • Aesthetics, Landscape value, recreation and
tourism• Cultural values and inspirational services
Supporting Services• Soil formation
+ Resilience - eg to climate change
Market values
Potential Market values– eg REDD & water purification PES
- Avoided cost of purification
Potential Market values– eg water supply PES; -eg ABS
Opportunity cost: Lost output or cost of alternative service provider
Market values : eco-tourism
Social value – identity et al
Social value – health, wellbeing
Ecosystem Services Public Goods and Private Goods
Some ecosystem services are Private goods - eg food and wood provisioning
Others are pure public goods - eg climate regulation / climate change mitigation, genetic diversity, health and wellbeing, cultural identity, spiritual value
Others public goods with private aspects - eg water purification, landscape value and eco-tourism, recreation, genetic knowledge,
• Vittel PES case: payments by Vittel to farmers to change land-use practice to secure quality for bottled water
• PES for forest / watershed management for (clean) water provision – USA, Mexico, New Zealand
• Ecotourism – fast growing market
• Genetic knowledge – bioprospecting and medicines; links to traditional knowledge and access and benefits sharing (ABS)
• Contribution to maintaining public good of current climate – REDD+ PES
Need to understand different opportunities for land use and implications for public and private goods / gains.
Need to take value into account in decision making
Need for public policy for public goods.
Shrimp Farm
private profits less
subsidies
Net of public costs of restoration needed
after 5 years
private profits
Mangroves
0
10000
US$/ha/yr
private profits
5000
If public wealth is included, the “trade-off”choice changes completely…..
$584/ha
$1220/ha
$9632/ha
$584/ha
-ve $11,172/ha
$12,392/ha
Source: Barbier et al, 2007
After AddingPublicBenefitsFrom
mangroves
Based only on private gain, the “trade-off” choice favours conversion…..
Taking account of public goods…can change what is the “right” decision on land/resource use
Fishery nursery
Storm protection
Land-uses and trade offs for ecosystem services
Source: Ben ten Brink (MNP) presentation at the Workshop: The Economics of the Global Loss of Biological Diversity 5-6 March 2008, Brussels, Belgium.
Energy
Soil protection
Food
regulation
Energy
Soil protection
Food
-
Freshwater
Soil protection
Food
Climate regulation
Climate regulation
Energy
Freshwater
1natural extensive
3 intensive
Freshwater
Energy
Soil protection
Food
Climate regulation
Energy
Soil protection
Food
-
Freshwater
Soil protection
Climate regulation
Climate regulation
Freshwater
2
3
Freshwater
EnergyEnergy
Upon closer analysis
Net value may be less
Increasing rewards for ecosystem services provision through PES
(Paid) Benefit to land user -provision
services (eg farm or forest products)
Intensive land use
Cost to population of pollution
To date ‘unpaid’ecosystem services PS
RSCS
Cultural Services
(eg tourism)
Biodiversity ‘friendly’ land use
Regulating services (eg water quality)
Potential new income from different
payments for ecosystem services
Additional PS (other products,
pollination)
COSTS
BENEFITS
Opportunity cost -Income foregoneto landowner
(in absence of PES)
Income from original
products in existing markets
Income from
provisioning Services (PS)
Social Benefit = Private benefit + public good (ESS) – pollution costs
Eg Private optimum Eg social optimum
PES: payment levels and opportunity costs
Payment levels vary widely in practice
• Costa Rica, PSA: for forest conservation US$ 64 per ha/yr in 2006. Portela & Rodriguez 2008; Pagiola 2008 in Wunder & Wertz-Kanounnikoff 2009;
• Mexico’s PSA-H: for preservation of cloud forest US$ 40 per ha/year; for other tree-covered land US$ 30 per hectare/year Muñoz-Piña et al. 2007.
• Vittel mineral water, France Perrot-Maître 2006; Wunder and Wertz-Kanounnikoff 2009
– Ave. payments are EUR 200 ha/year over a five year transition period and
– up to 150,000 EUR per farm to cover costs of new equipment.
– Contracts are long-term (18-30 years),
– with payments adjusted to opportunity costs on a farm-by-farm basis.
PES will be able to address the opportunity costs in some cases – but often not in the ones where opportunity costs are very high
Trade implications important where relate to traded goods (eg Ag)
PES link to income foregone not full opportunity costs
Ecosystem services – at what level are the benefits felt ?
What are the policy implications > Funding? PES?
0
1
2
3
4
5
Biochemicals &
pharmaceuticalsClimate / climate change
regulation
Genetic / species diversity
maintenance
Biodiversity
Ecotourism & recreation
Education, art & research
Cultural & amenity valuesWater (quantity)
Food/Fibre/Fuel
Erosion control
Natural hazards control (fire,
flood)
Water and air purification &
waste management
Pollination / seed dispersal
Mainly local benefit
Additional national benefit
Mainly global benefit
Action locally leads to local, to national & to global benefits.
PES and the Polluter Pays Principle (PPP)
Private Optimum (in absence of legal requirements)
Private solution with legal requirements
(‘reference level’)
Environmental target (practical /politically feasible environmental optimum at the time)
No impact (i.e. within assimilative capacity of ecosystem)
No emissions
Costs of measures borne by farmer – eg Polluter Pays Principle (partly implemented)
PES to farmers to help pay for measures to meet objectives / targets beyond legislative requirements
Self-damaging practice
(Damage) Costs to farmers and society
Reducing emissions/impactsexample farming & PES
No control
PES ?
PES ?
PPP
Costs born by society
(eg pollution impacts)
Issues
Private Optimum
Private solution with legal requirements
(‘reference level’)
Environmental target
No impact
No emissions
Self-damaging practice
Reducing emissions/impacts
No control
PES ?
PES ?
PPP
Q of principle/instrument name: “PES” if Public goods; “Subsidy”is avoiding public bad (eg pollution
impacts) ?
Only PES for public goods ?
Q of practicality: Are there enough funds available for widespread use of PES ?
To what extent would savings / value of greater public goods pay for it?
Q of principle : Would raising the reference level not allow for greater provision of goods, (& avoidance of
bads) and hence make less requirement for PES? - use of
standards, liability, enforcement etc
Q of social custom or responsibility : public goods often created without payment (eg traditional practice, social custom); risks of
moving to money based system?
Public goods on private land Key Issues
• Without payments for public goods – many public goods will be lost
• Some public goods can be addressed via PES – important tool, good potential, but not the only tool and many complicating factors (eg international dimension)
• Not all public goods will be able to be the focus of payments for service;
• & potential for payments has its limits - budgets
• Complementary effort needed to avoid loss of public goods - regulation, property rights, subsidy reform, charges/taxes, liability, voluntary codes, social norms etc
• Balance between PES and PPP, principle and pragmatism
• Removing harmful subsidies reduces need for PES
• Thin (& moving) line between PES and subsidies – important for budgets & governance
• Decision making needs to factor in private and public goods and bads – look at the whole chessboard.
• Major effort needed for reform of support/pricing to ensure optimal use of natural capital
• Cannot do without public policy for public goods – fundamental rationale for role of government. Focus on private optimum will not lead to social optimum.
3/18/2010 17
Thank you
For full TEEB for Policy Makers report – see TEEB website
http://www.teebweb.org/
Patrick ten Brink, [email protected]
IEEP is an independent, not-for-profit institute dedicated to the analysis, understanding and promotion of policies for a sustainable environment in Europe
TEEB for Policy-Makers What issues are covered /chapters on the web
Part I: The Global Biodiversity Crisis and Framework for Policy Response
Ch1 The global biodiversity crisis and related policy challenge
Ch2 Framework and guiding principles for the policy response
Part II: Measuring what we Manage: Information & Tools for Decision-Making
Ch3 Measuring to Manage our Natural Capital
Ch4 Recognised the Value of Biodiversity
Part III: Solutions: Instruments and measures
Ch5 Rewarding benefits of Ecosystems and Biodiversity
Ch6 Reforming Subsidies
Ch7 Incorporating the costs of ecosystem and biodiversity loss
Ch8 The Value of Protected Areas
Ch9 Direct Investments in natural capital and ecosystem restoration
Part IV: Synthesis
Ch10 Conclusions and recommendations
Available on http://www.teebweb.org/