Food and Agriculture Organization of the United Nations- FAO

Payments for Environmental Services (PES) from Agricultural Landscapes

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Main markets

Supporting biodiversity conservation

Payment programmes for biodiversity conservation are in various phases of development around the world, addressing components of biodiversity from the genetic to the ecosystem level and including both agricultural and wild biodiversity.

In the U.S. the conservation banking market is a biodiversity cap-and-trade system that allows for the sale and purchase of endangered species credits to offset negative impacts to endangered species and their habitat elsewhere. Internationally, payment mechanisms include certification of biodiversity-friendly agricultural products, hunting concessions, ecotourism development, markets for biodiversity offsets and niche markets for products with high agricultural biodiversity value. These programmes are unlikely to target agricultural lands in general but could do so when there is a preference for offsetting impacts locally and where local agricultural landscapes contain significant biodiversity (12). The following list gives a description of different types of payment mechanisms and how they work.

Table 3.7 - Different types of payment mechanisms to support biodiversity conservation(13)

Purchase of High-Value Habitat

  • Private land acquisition (purchase by private buyers or NGOs explicitly for biodiversity conservation)
  • Public land acquisition (purchase by government agency explicitly for biodiversity conservation)
    		•

    Payment for Access to Species or Habitat

  • Bioprospecting rights (rights to collect, test and use genetic material from a designated area)
  • Research permits (right to collect specimens, take measurements in area)
  • Hunting, fishing or gathering permits for wild species
  • Ecotourism use (rights to enter area, observe wildlife, camp or hike)

    • Payment for Biodiversity-Conserving Management

  • Conservation easements (owner paid to use and manage defined piece of land only for conservation purposes; restrictions are usually in perpetuity and transferable upon sale of the land)
  • Conservation land lease (owner paid to use and manage defined piece of land for conservation purposes, for defined period of time)
  • Conservation concession (public forest agency is paid to maintain a defined area under conservation uses only; comparable to a forest logging concession)
  • Community concession in public protected areas (individuals or communities are allocated use rights to a defined area of forest or grassland, in return for commitment to protect the area from practices that harm biodiversity)
  • Management contracts for habitat or species conservation on private farms, forests, grazing lands (contract that details biodiversity management activities, and payments linked to the achievement of specified objectives)

    • Tradable Rights under Cap and Trade Regulations

  • Tradable wetland mitigation credits (credits from wetland conservation or restoration that can be used to offset obligations of developers to maintain a minimum area of natural wetlands in a defined region)
  • Tradable development rights (rights allocated to develop only a limited total area of natural habitat within a defined region)
  • Tradable biodiversity credits (credits representing areas of biodiversity protection or enhancement, that can be purchased by developers to ensure they meet a minimum standard of biodiversity protection)

    • Support to Biodiversity-Conserving Businesses and Production Processes

  • Business shares in enterprises that manage for biodiversity conservation
  • Biodiversity-friendly products (eco-labeling)
  • Niche market development for products with valuable agricultural biodiversity

    • Three factors currently hinder the development of biodiversity markets. First, many of the benefits of biodiversity arise in the future and are uncertain: the market is therefore driven mainly by philanthropy, consumer preference, and, to a lesser extent, by regulation. Second, it is difficult to define 'units of biodiversity' for the purpose of carrying out transactions. Third, the conservation community continues to debate the value of conservation funds being expended in agricultural settings where native biodiversity may already be significantly degraded or whether investment should focus on lands that have been less disturbed. Table 3.8 provides a summary of main financing sources to protect biodiversity at international level with special reference to the agricultural sector.

    Table 3.8 - Financing biodiversity conservation and the role of farmers (14)

    Main funding sources for biodiversity conservation

    Biodiversity conservation has been funded mainly from international donors with biodiversity conservation goals. Probably the largest is GEF: since the early 2000s, 22 projects funded by GEF have some elements of an environmental services payments programme. Total project funding of US$965 million (among which $188 million is from GEF). GEF projects focused on protection of natural forests and management of protected areas (e.g. GEF funding for Costa Rica national PES programme targets participants within a priority area in the Costa Rican section of the Mesoamerican Biological Corridor).

    Other important donors supporting biodiversity conservation through PES are:

    • WWF in various schemes around the world - they see PES as a new way of attracting sustainable financing for conservation (e.g. in Sierra de las Minas, Guatemala or in the Danube basin, Eastern Europe );
    • Conservation International (CI) - supporting conservation of cloud forest primarily as bird habitat at Los Negros, Amboró National Park, Bolivia (together with other U.S. public and private donors);
    • The Nature Conservancy (TNC) - in several cases, e.g. supporting the Quito city water fund (FONAG) Ecuador , investing in the protection of water sources located in several protected areas around the city.
    • Demand for organic, shade-grow product or bird-friendly products also depicts the concern over farming systems that protect biodiversity, with a demand for these growing.
    The role of agriculture

    Most PES schemes for biodiversity conservation target protected areas, buffer zones and biological corridors. Very often these are managed by farmers, often occupying the land in "slash-and-burn and move" fashion or under illegal occupation.

    PES schemes have been providing incentives to:
    - improve the production of the already cleared land and avoid further conversion;
    - reduce the impacts of farmer's practices in these sensitive areas

    In these cases PES incentives often include regularization of the use rights of the land - in Indonesia , the ICRAF RUPES programme is working with farmers to adopt agroforestry in their "illegal" coffee gardens in exchange for land tenure (Sumberjaya, Sumatra ).

    (12)FAO. 2007. The State of Food and Agriculture 2007. Part I: Paying farmers for environmental services. Rome .

    (13)For Services Rendered: The Current Status and Future Potential of Markets for the Ecosystem Services Provided by Tropical Forests. Sara Scherr, Andy White and Arvind Khare, with contributions from Mira Inbar and Augusta Molar ITTO Technical Series No 21 International Tropical Timber Organization 2004 Yokohama , Japan.

    (14)idib.