Equity workshop: Balancing equity and efficiency in Payments for Ecosystem Services (PES)

Balancing equity and

efficiency in PES

Expert Workshop on Equity, Justice and Well-being in Eco-

system Governance; March 26/27th, 2015; IIED, London

Meine van Noordwijk, Beria

Efficient FairEfficient Fairly efficient Efficiently fair Fair

Meine van Noordwijk, Beria

Leimona, Sara Namirembe,

Peter Minang

Reciprocity

Fairness

Equity

Proportionality

Compensation

Rewards

Payments

Referring to Past

Present

Efficiency

RightsCBDR

FPIC

Indigeneity

EquityQuid-pro-quo

Co-investmentReferring to Future

Efficiency

Effectiveness

Shared Goals (SDG’s)Joint strategies

FPIC = Free and Prior Informed Consent

CBDR = Common But Differentiated ResponsibilitySDG = Sustainable Development Goal

Strategic

behaviourAltruism

Intrinsic values

Mo

ne

tary

fu

ng

ibili

ty

Fairness/efficiency: 5 scales of economics

Individual & household decisions

on scarce resources

Behavioural economics: really

internalizing externalities at

emotional core of decision making

Annu. Rev. Environ. Resour. 37, 389-420

$$ don’t

buy real

happiness

Mo

ne

tary

fu

ng

ibili

tyon scarce resources

National scale decisions on

scarce resources

Environmental economics: inter-

nalizing externalities of individual

decisions for common goods

Ecological economics:

planetary boundaries put

hard constraints

$$ don’t

get us a

new planet

Payments for Environmental Services: Evolution Toward

Efficient and Fair Incentives for Multifunctional Landscapes

DIVERGENT model

of Territorial

configuration

Cheap massive,

profitable urban

housing

Low-cost, low-

quality food

provisioning

Control of Water

excess and

scarcity

Elite

suburban

residence

Rural-urban

migrants

UrLand

Quality

Segregate vs Integrate at

societal level

Luis García-Barrios et. al.

2009. Bioscience and 2010

La Jornada del Campo.

Fortress type

conservation

against masses

Rural

poor

Cheap massive,

profitable)

industrial

agribussinessElite orga-

nic food

Wage

laborers

Elite

ecotourism

Control of erosion & Water

excess and scarcity

Eco-

servants Off-farm

suppliers

AgLandNatLand

Quality

Rural-Urban (Desa-

Kota) Matrix Land-

scapes and

Livelihoods

Income

Entreprise

Social relations

ID

Identity, self-

realization

Marketable

goods & services

People are complex entities…

Their decisions are influenced by

many aspects of a ‘well-being’ or

Maslow pyramid, representing

Physical security, shelter

Food & water security

Health

Income

many aspects of a ‘well-being’ or

Maslow pyramid, representing

their ‘basic needs’, their social

relations within evolving local

institutions, and human capital.

Income

Entreprise

Social relations

ID SDG4 (Continuous learning), SDG5 (Gender, social inclusion)

SDG8 (Employment, decent jobs)

SDG810 (Less inequality),SDG16 (Accountability),SDG17 (Partnership)

SDG1 (End poverty)

The 17 Sustainable Development Goals (SDG’s) address

all levels of a ‘human well-being’ or Maslow pyramid*



Health

Income SDG1 (End poverty)

SDG3 (Health), SDG12 (consumption), SDG15(conservation)

SDG2 (Food), SDG6 (Water), SDG7(Energy), SDG14 (Oceans)

SDG9 (Infrastructure), SDG11 (Cities), SDG13 (Climate change)

* The specific formulation of many SDG’s makes clear that they typically

involve more than one level, e.g. Gender includes physical security

Income

Entreprise

Social relations

ID

Identity, self-

realization

Human

Soci

al c

ap

ita

l

Fin

an

cia

l ca

pit

al



Health

Income Human

capital

Soci

al c

ap

ita

l

Natural

capital

Fin

an

cia

l ca

pit

al

Built-up

capital

The ‘well-being’ or Maslow pyramid relates to all of the 5 asset (capi-

tal) types of the ‘livelihood analysis’. It can help us understand the

multiple dimensions of ‘poverty’. Financial capital (and lack of

income definitions of poverty) focus on middle of the diagram.

Marketable

goods & services

People

(land users)

Land is used by people to

satisfy their own needs within

emerging local institutions,

but once they find external but once they find external

markets for products and

services, this feeds back to

their land use decisions

Marketable

goods & services

Influence &

lateral flowsClimate

Water

Geomorphology

*erosion/sedi-

mentation

*landslides

People elsewhere

including neigh-

bours and ‘tele-

connections’

Income

Entreprise

Social relations

ID

Identity, self-

realization

*landslides

Nutrients

Fire

Vegetation & flora

Fauna

Biogeography

Externality of decision making

Land use, however,

has environmental

effects that affect the

land users directly,

but also impact on

people elsewhere



Health

Income

Suppor

ting

E

volu

tion

ary

Marketable

goods & services

Influence &


Water

Geomorphology

*erosion/sedi-

mentation

*landslides

Reg

ula

tory

Cultura

l

Pro

vision

ing

Ecosystem services*

People elsewhere

including neigh-

bours and ‘tele-Income

Entreprise

Social relations

ID

Identity, self-

realization

Suppor

ting

E

volu

tion

ary

*landslides

Nutrients

Fire

Vegetation & flora

Fauna

Biogeography

Reg

ula

tory

Cultura

l

Pro

vision

ing

* Environmental Services (ES) equals ecosystem services (ES*) minus market-based provisioning

bours and ‘tele-

connections’

The terminology of ecosystem and environmental services reflect

these impacts on others, as externalities of LU decision making




Health

Income

Suppor

ting

E

volu

tion

ary

Marketable

goods & services

Influence &


Water

Geomorphology

*erosion/sedi-

mentation

*landslides

Reg

ula

tory

Cultura

l

Pro

vision

ing

Ecosystem services*

Income

Entreprise

Social relations

ID

Identity, self-

realization

Income

Entreprise

Social relations

ID

Identity, self-

realization

Suppor

ting

E

volu

tion

ary

*landslides

Nutrients

Fire

Vegetation & flora

Fauna

Biogeography

Reg

ula

tory

Cultura

l

Pro

vision

ing


The various ES affect people at all levels of their well-being pyramid.

To deal with negative effects of declining ES, they have 6 options: Externality of decision making’



Health

Income



Health

Income

Option 1: move to a clean place elsewhere

Suppor

ting

E

volu

tion

ary

Marketable

goods & services

Influence &


Water

Geomorphology

*erosion/sedi-

mentation

*landslides

Reg

ula

tory

Cultura

l

Pro

vision

ing

Income

Entreprise

Social relations

ID

Identity, self-

realization

Income

Entreprise

Social relations

ID

Identity, self-

realization

Suppor

ting

E

volu

tion

ary

*landslides

Nutrients

Fire

Vegetation & flora

Fauna

Biogeography

Reg

ula

tory

Cultura

l

Pro

vision

ing

Human history is full of shifting loci of culture, but now there’s

nowhere left to go; global impacts affect any place on this planet

Externality of decision making’



Health

Income



Health

Income

Option 2: forbid pollution, regulate land use

Suppor

ting

E

volu

tion

ary

Marketable

goods & services

Influence &


Water

Geomorphology

*erosion/sedi-

mentation

*landslides

Reg

ula

tory

Cultura

l

Pro

vision

ing

Income

Entreprise

Social relations

ID

Identity, self-

realization

Income

Entreprise

Social relations

ID

Identity, self-

realization

Suppor

ting

E

volu

tion

ary

*landslides

Nutrients

Fire

Vegetation & flora

Fauna

Biogeography

Reg

ula

tory

Cultura

l

Pro

vision

ing

This option depends on power relation and may require strong

enforcement; it breaks down under more democratic governance




Health

Income



Health

Income

Option 3: engineer to reduce ES dependence

Suppor

ting

E

volu

tion

ary

Marketable

goods & services

Influence &


Water

Geomorphology

*erosion/sedi-

mentation

*landslides

Reg

ula

tory

Cultura

l

Pro

vision

ing

Income

Entreprise

Social relations

ID

Identity, self-

realization

Income

Entreprise

Social relations

ID

Identity, self-

realization

Suppor

ting

E

volu

tion

ary

*landslides

Nutrients

Fire

Vegetation & flora

Fauna

Biogeography

Reg

ula

tory

Cultura

l

Pro

vision

ing

Engineering

Engineering can help with e.g. water and water-related issues

(floods, landslides), but tends to be high-cost and rigid (sunk costs)Externality of decision making’



Health

Income



Health

Income

Option 4: payments for environmental servicesMarketable

goods & services

People

(land users)

ES

metric

Marketable

goods & services

Influence &

lateral flowsPeople else-

where including

neighbours and

‘teleconnections’

Income Income

PES (payment for environmental services)

Bu

yers

Selle

rs

metricIncome Income

PES emerged as a ‘simple’ solution to financially intenalize externalities

Option 5: boycott products without certification

Suppor

ting

E

volu

tion

ary

Marketable

goods & services

Influence &


Water

Geomorphology

*erosion/sedi-

mentation

*landslides

Reg

ula

tory

Cultura

l

Pro

vision

ing

Income

Entreprise

Social relations

ID

Identity, self-

realization

Income

Entreprise

Social relations

ID

Identity, self-

realization

Suppor

ting

E

volu

tion

ary

*landslides

Nutrients

Fire

Vegetation & flora

Fauna

Biogeography

Reg

ula

tory

Cultura

l

Pro

vision

ing


Boycotts help to increase awareness and can lead to ‘ecocertification’

as response, but this may have high transaction costs for all




Health

Income



Health

Income

Option 6: Link the institutions and identities

Suppor

ting

E

volu

tion

ary

Marketable

goods & services

Influence &


Water

Geomorphology

*erosion/sedi-

mentation

*landslides

Reg

ula

tory

Cultura

l

Pro

vision

ing

Income

Entreprise

Social relations

ID

Identity, self-

realization

Income

Entreprise

Social relations

ID

Identity, self-

realization

Suppor

ting

E

volu

tion

ary

*landslides

Nutrients

Fire

Vegetation & flora

Fauna

Biogeography

Reg

ula

tory

Cultura

l

Pro

vision

ing


Creating a shared sense of identity, moral standards of acceptable

behaviours can internalize externalities of LU decisionmaking




Health

Income



Health

Income

Income

Entreprise

Social relations

ID

Identity, self-

realization

Income

Entreprise

Social relations

ID

Identity, self-

realization

Suppor

ting

E

volu

tion

ary

Marketable

goods & services

Influence &


Water

Geomorphology

*erosion/sedi-

mentation

*landslides

Reg

ula

tory

Cultura

l

Pro

vision

ing

Ecosystem services*

ES

metric



Health

Income



Health

Income

But, the PES reality is more complex…

Suppor

ting

E

volu

tion

ary

*landslides

Nutrients

Fire

Vegetation & flora

Fauna

Biogeography

Reg

ula

tory

Cultura

l

Pro

vision

ing

Engineering


PES (payment for environmental services)

Bu

yers

‘Se

llers

’

Intermediaries

metric


Income

Entreprise

Social relations

ID

Identity, self-

realization

Income

Entreprise

Social relations

ID

Identity, self-

realization

Suppor

ting

E

volu

tion

ary

Marketable

goods & services

Influence &


Water

Geomorphology

*erosion/sedi-

mentation

*landslides

Reg

ula

tory

Cultura

l

Pro

vision

ing

Fairnes

s per

ception

Efficie

ncy



Health

Income



Health

IncomeSuppor

ting

E

volu

tion

ary

*landslides

Nutrients

Fire

Vegetation & flora

Fauna

Biogeography

Reg

ula

tory

Cultura

l

Pro

vision

ing

Engineering


Fairnes

s per

ception

Efficie

ncy

Green

accounting

Fairness & efficiency


Access, LU regulation

Payments, rewards, incentives, tax

Respect, recognition, suasion

Natural capital and

ES monitoring

Three PES-related

paradigms• Commodification of

environmental services

A. packages of ES become tradable commodities,

B. ecocertification of existing B. ecocertification of existing commodities;

• Compensation for foregone ES-unfriendly but legal opportunities;

• Coinvestment in environ-mental stewardship.

Drivers

A2. LU rights (e.g. community forest mngmnt)

Response/

feedback Actors/

agents

Land

use/cover

Conse-

quences &

Livelihoods, provisioning &

profitability

A1. Land use policies, spatial development planning, roads

GG

G

Institutions,

identity,

pride

Drivers

B1. Incentive structure through policy change (tax, subsidy etc)

B2. PES and conditional ES incentives

feedback

optionsBiodiversity, Watershed

functions, GHG emissions,

Landscape beauty

agentsuse/cover

changes

quences &

functions

Modified from: Van Noordwijk, M., B. Lusiana, G. Villamor, H. Purnomo, and S. Dewi. 2011. Feedback loops added

to four conceptual models linking land change with driving forces and actors. Ecology and Society 16(1): r1.

[online] URL: http://www.ecologyandsociety.org/vol16/iss1/resp1/

C. Suasion and institutional support

G G

G = Potential gender specificity of analysis & targeting of interventions

Fairness vs Efficiency

�Giga-fairness vs Giga-efficiency

� Macro-fairness vs Macro-efficiency

�Meso-fairness vs Meso-efficiency

� Both Fairness & Efficiency reach and connect across scales

�Tradeoff only in short term

� Procedural fairness may seem inefficient, but it isn’t //

legitimacy is key to success

�Meso-fairness vs Meso-efficiency

�Micro-fairness vs Micro-efficiency

�Pico-fairness vs Pico-efficiency

Post-scriptum

Entreprise

Social relations

ID

3 equity dimensions: Recognition

Procedure



Health

Income Distribution of costs & benefits