Payments for Ecosystem Services What, Where and How?

Marcela Quintero
CGIAR SEMINAR SERIES
Payments for Ecosystem Services: Win-Win Solutions?
Co-organized by IFPRI, the CGIAR, and Germany’s Federal Ministry for Economic Cooperation and Development (BMZ)
Session at Tropentag 2023
SEP 21, 2023 - 7:45 TO 9:15AM EDT

1. Payments for Ecosystem Services What, Where and How? Marcela Quintero Associate Director General – Research and Innovation Alliance of Bioversity International and CIAT Senior Director – Land & Environment CGIAR Berlin, 21 September, 2023

2. Payment/Rewards for Ecosystem Services Voluntary transactions between service users and service providers that are conditional on agreed rules of natural resource management for generating offsite services (Wunder, 2015) Transfer of resources between social actors, which aims to create incentives to align individual and/or collective land use decisions with the social interest in the management of natural resources (Muradian et al. 2010) High efforts on facilitation and negotiation required to reach a PES agreement It is about reciprocity and trust building Main focus of PES is on environmental outcomes, thought there could be other co-benefits (e.g. poverty alleviation) What it is?

3. Emerging evidence on key factors for the implementation of PES Land tenure Willingness to pay/to accept Institutions and organizational capacity Key for the adoption and environmental effectiveness of PES ( Borner , et al. 2017) PES schemes development phases

4. Key/desired aspects in the design and implementation of PES Design Funding horizons (recurrency of payments) Defining funding sources Private: financial instruments to provide stability to payments Public: legal context, could provide more stability to payments ES provision cost -> differentiated payments ES modeling -> definition of service-providing activities that will condition payments Targeting of service providers Implementation Setting up of PES institutional arrangements Payment’s collection processes Payment's disbursement Monitoring Enforcement

5. Overcoming bottlenecks for the implementation of PES 2013 2015 2021 (17) (22) (54) Case of Peru Progress catalyzed by the creation of a legal framework for PSE and a specific law ruling to collect payment through the potable water tariff (Tristan et al. 2021)

6. Environmental performance of PES PES compliance (and the few existing impact evaluations) based on land use/management decisions compliance This is a not a problem if land use/management options selection was based on solid evidence regarding land use/ES causal relationship. The existing impact studies have shown from small to large impacts, very few ones found none positive impacts. PES effective at local levels (deforestation rates reduction) (Latin America and Africa) Adverse participants selection led to marginal environmental impacts -> areas with low opportunity cost Land use decisions are also affected by other non-PES factors Few evidence on permanence (and reasons for) of land use decisions after discontinuity of PES. Emerging evidence shows permanence of these decisions (e.g. Ecuador and Colombia).

7. Poverty performance of PES Available studies in Costa Rica, Mexico, Mozambique and China reported no negative welfare effects ( Arriagada et al, 2015; Hegde and Bull; 2011, Uchida et al., 2007; Borner et al. 2017) PES livelihood impacts assessments reported more positive impacts (especially financial impacts) than negative ones (46 studies) (Blundo et al. 2018). PES main focus is not poverty alleviation. Pro-poor motivations should not reduce some key design features of PES design Trade-offs between income and other livelihood dimensions and effects on inequality are understudied (Blundo et al. 2018, Borner et al. 2017)

8. Where to focus technical and research assistance for PES? Technical capacities to develop PES project tailored to the source of funding ( public vs. private ) For water related services : Evidence on the impact of land-use practices (restoration, conservation, sustainable use) on the targeted ecosystem service For carbon related projects : Validation of SOC models ( 71% SOC models not validated or validation contexts are not in the South or Least Developed Countries) ( Garsia et al. 2023) GHG calculators built with data from tropical countries: Estimates emissions greater than measurements in 70% of studied cases in Latin America, Africa and Asia) (Richards, et al. 2016) Harness the potential of agricultural practices (agroforestry, conservation agriculture, grass-legume mixtures in pastures, biochar) to carbon sequestration (Costa Jr., et al. 2022)

9. Where to focus technical and research assistance for PES? PES ex-post impact evaluations (lack of capacity, resources, baselines) Monitoring of conditional compliance (Wunder et al. 2028), especially in non-carbon projects. Behavior change determinants (effect of PES on reciprocity, trust building, environmental stewardship, shaping ES protection behavior) Continuous systematic assessment of bottlenecks towards and during implementation, in specific contexts, to support continuous improvement of enabling conditions 2013 - 2015 2021

10. Thanks for your attention Marcela Quintero [email protected]