From the land users’ perspective, the biodiversity conservation and carbon sequestration benefits are externalities. As such, they do not take them into consideration in making their land use decisions, thus reducing the likelihood that they will adopt practices that generate such benefits, including silvopastoral systems. Recognition of this problem and of the failure of past approaches to dealing with it has led to efforts to develop systems in which land users are paid for the environmental services they generate, thus aligning their incentives with those of society as a whole. The simple logic of Payments for Environmental Services (PES) is that compensating land users for the environmental services a given land use provides makes them more likely to choose that land use rather than another.
There has been considerable experimentation with PES and other market-based approaches in recent years (Pagiola and Platais, forthcoming; Pagiola and others, 2002; Landell-Mills and Porras, 2002). Latin America has been a particularly fertile ground for such experimentation (Pagiola and Platais, 2001). Costa Rica has developed an elaborate, nation-wide PES program, the Pago por Servicios Ambientales (PSA) (FONAFIFO, 2000; Pagiola, 2002). Under the 1997 Forestry Law, land users can receive payments for specified land uses, including new plantations and conservation of natural forests. The PSA program is now being supported by a World Bank loan and GEF grant under the Ecomarkets Project (World Bank, 2000) (Box 1). The town of Heredia has established an ‘environmentally adjusted water tariff’, the proceeds of which are used to pay landholders to maintain and reforest watershed areas (Castro, 2001; Cordero, 2003). In a separate initiative, hydropower producer La Manguera SA is paying the Monteverde Conservation League to maintain under forest cover the watershed from which its plant draws its water (Rojas and Aylward, 2002). In Colombia, irrigation water user groups and municipalities in the Cauca valley are paying to conserve the watersheds that supply them with water (Echevarría, 2002b). In 2003, Mexico created the Payment for Hydrological Environmental Services program (Pago por Servicios Ambientales Hidrológicos, PSAH), which pays for the conservation of forests in hydrologically critical watersheds using revenue from water charges (Bulas, 2004). In southern Mexico, the Scolel Té project is paying farmers to provide carbon sequestration services (Tipper, 2002). In Ecuador, the city of Quito has created a water fund with contributions from the water utility and the electric power company to pay for conservation in the protected areas from which it draws its water (Echevarría, 2002a).
The bulk of PES programs to date have focused on water services, reflecting both the urgency of addressing water issues in many developing countries and the relative ease with which the beneficiaries of water services can be identified (Pagiola and Platais, forthcoming). The approach has been used for biodiversity benefits in a few cases, mostly with GEF support as in the case of the Costa Rica Ecomarkets Project. Environmental NGO Conservation International has also used the approach (which it calls ‘conservation concessions’ or ‘conservation incentive agreements’) in several cases, including Guyana and Peru (Hardner and Rice, 2002; Rice, 2003). Many of these efforts have focused on relatively untouched areas, however, rather than on agricultural areas.
Box 1. World Bank support for PES The World Bank is working with several countries to develop PES programs, through loans, technical assistance, and capacity building. In addition to the RISEMP project, current operational activities involving PES include: Costa Rica. The Ecomarkets Project, which supports the country’s PES program, includes a US$32.6 million loan from the World Bank to help the government ensure current levels of environmental service contracts and a US$8 million grant from the GEF to assist the program’s conservation of biodiversity (World Bank, 2000). Guatemala. The Western Altiplano Natural Resources Management Project includes a component aimed at testing and piloting PES mechanisms at the local level and supporting the development of the required national policy framework and instruments (World Bank, 2003a). Venezuela. A GEF-financed project focusing on Canaima National Park is under preparation, including a mechanism to channel watershed conservation payments made by hydropower producer CVG-EDELCA. Mexico. The World Bank provided technical support to the government’s efforts to establish the Payment for Hydrological Environmental Services program. Dominican Republic, Ecuador, and El Salvador. Pilot PES programs are under preparation in these countries. El Salvador is at the most advanced stage. South Africa. The Cape Action Plan for the Environment (CAPE), under preparation, aims to use a PES approach as one of the tools to encourage conservation in the Cape Floristic Region. BioCarbon Fund. The newly created BioCarbon Fund is examining the potential for buying carbon sequestration services generated by land use change. For example, one proposal would pay for carbon sequestered by improving shade-grown coffee systems in the Mexican uplands. In addition, the World Bank’s training arm, the World Bank Institute (WBI), has provided training on PES targeted to technical personnel in ministries, conservation agencies, and nongovernmental organizations (NGOs) involved in implementing PES programs. It should be noted that the World Bank did not originate the PES concept. The World Bank has played an important role in launching such projects primarily because its borrowing countries have requested its assistance in doing so. By virtue of its role in assisting many countries, it has been able to cross-fertilize efforts in individual countries with the lessons learned in others (Pagiola and Platais, 2003). |
