Compensation and incentives for the maintenance of ecosystem services: A review of current

knowledge.Ivan Bond, Sheila Wertz Kanounnikoff and Peter

Hazlewood

Funded by the Ministry of Foreign Affairs (Norway)

Three summary messages

The drivers and the causes of landuse change are well known, but they are complex, dynamic, varying over time and space

Payments for ecosystem services are new, but largely unproven tools

Resolving rights is a necessary but not sufficient step for the management of forests and woodlands

Methods and the scope of our review

Landuse change in four regions; Amazon, Congo, Miombo Woodlands and South East Asia

Lessons from payments for ecosystem services

Cross cutting technical issues

Absolute and relative landuse change

0

1

23

4

5

67

8

9

millions of hectares

Latin America andthe Caribbean

Asia Sub-SaharanAfrica

Area deforested (annual average)

0

0.2

0.4

0.6

0.8

1

1.2

1.4

Percent (annual

average)

Latin America andthe Caribbean

Asia Sub-SaharanAfrica

Rate of deforestation

Key lessons on landuse change

• Drivers of landuse change:• Non-timber commodity prices• Timber prices (logging, legal & illegal)• Limited off-farm opportunities and poor economic growth

• Causes:• Infrastructure (roads)• Public policies• Weak regulation / governance

• Both drivers and causes vary over time and space.• Economic drivers assuming dominance

A simple model for payments for ecosystem services

Landuse systems

Fin

anci

al b

enef

its

Fin

anci

al c

osts

Current landuse

Desired land-uses

• Carbon• Watershed services• Bio-diversity

Source: Engel et al. 2008

Review extended beyond Wunder’s definitionReview extended beyond Wunder’s definition

PES Core

PES definitions -- between hardcore and

periphery

PES definitions -- between hardcore and

periphery “PES-like” Schemes

PES Core

PES Core 5 criteria

Theory & some private PES

“PES-like” Schemes:Some of 5 criteria

Public agro-environmental schemes; eco-labels

(e.g. ecotourism), etc.

Other Economic Incentives:

Any “payment” for any “environmental service” by

“anybody”ICDPs, park-ranger salaries, reforestation subsidies, etc.

Other EconomicIncentives

“PES-like” Schemes

PES Core

Source: Sven Wunder, 2008

Sample of PES Projects

Latin America Noel Kempf, Bolivia PSA-H, Mexico

Congo Ibi Bateke Carbon Sink, DRC

Miombo Communal land conservancies, Namibia CB Forest Management (Tanzania)

South-east Asia Singkarak, Indonesia Ulu Masen, Indonesia

Some constraints to lesson learning

PES mechanisms are a relatively recent innovation

Scarce data and very little strictly comparable data

Major regional differences

Definitional issues

Characteristics of PES Schemes

Sources of finance Government – large schemes

User-funded – smaller pilot projects

Mixed funding – users, governments, donors

Payments Cash

Kind

Allocation of Rights

Price discovery Payments not markets (except CBNRM)

What are the major lessons

• Effectiveness• Limited effectiveness to date• Challenges of the underlying / basic science• Design / data problems

• Efficiency• Generally non market, not efficient• Targeting is rare• Transaction costs

What are the major lessons

• Additionality

• Very unclear as to whether additional

• Very unclear as to permanence

• Equity

• Livelihood impact low

• Not harmful though

Some major challenges to REDD from the PES lessons

1. Is there a legal and policy framework that allows payments to landholders / managers or to other agents of landuse change?

2. Are there community organisations who are ready to receive, use and/or disburse payments?

3. What are the main drivers and causes of landuse change in the region or area?

4. What is the role of government at national and local levels?

5. Are there strong technical support agencies with experience in this kind of work?

Recommendations for Norway’s REDD Programme

ImmediatelyStart pilot initiatives at sites where there is

existing community architecture

Develop robust M&E systems so that we reduce the dependence on case studies and anecdotes

Ensure that the science is right

Target areas of high rates of landuse change

Recommendations for Norway’s REDD Programme

Medium term Work to develop the right legal and policy

frameworks Build the capacity of government, civil society and

community based organisations Organisational innovation (new stakeholders) Work to eliminate perverse policies Improve governance Conditionality can be negotiated, but then must be

applied