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Re: Payments for environmental services (PES) in theory and practice: Lessons learned and way forward

Claudia Berretta University of Urbino, Italy

Claudia Berretta PhD –University of Urbino (Italy)

The analysis of the application of the forestation interventions of the RDP (Rural Development Plan) at a very local level - within the Province of Pesaro Urbino in Italy, (from 1995 to 2011)  gives us  some good news. The first good news is that EU Member States can benefit of a stable financial support for the realization of new forests plantings and the consequent delivery of Ecosystem Services (ESs). The second one is that the RDP forestry programs have all the features of a PES mechanism, which is considered as an advanced tool for the enhancement of ESs delivery. We can surely affirm that these programs have all features of a PES mechanism, since the archetype PES definition is very adaptable to this case.

In relation to the concrete application of Reg. No 2080/92 (community aid scheme for forestry measures in agriculture) and Reg. No 1257/99 (support for rural development from the European Agricultural Guidance and Guarantee Fund), and to their features we believe that this funding mainly conceived as a mechanism for the attainment of socio-economic goals such as transferring income to farmers or to contrast the land abandonment and thus, it’s not really working as a supporting tool for the achievement of environmental targets. Although the general recognition of the ESs forest produce, the agreement is solely based in the commitment of planting trees supposing that forest produce public goods with a result of a weak environment targeting. In this case, the payment is received regardless of whether the ESs are effectively delivered. Moreover, the monitoring activities (the monitoring activities are included in the Annual Executing Relation yearly prepared by Regions on the basis of art. 48 paragraph 2 of Reg. (EC) No 1257/99, art. 53, paragraph 1 of Reg. (EC) No 445/02, modified by art. 1, paragraph 6 of Reg. (EC) No 963/2003, and art. 61 Reg. (EC) No 817/2004, and STAR D/761 Final) do not imply the analysis and the quantification of the expected environmental outputs with its explicit ranking. In other words, the EU programs do not have measurable environmental output in order to control if the program attains the declared aims. The difficulties in planning this policy tool at European level are also related to the effective local baseline. The weak targeting could be resolved by introducing a greater site specificity. Indeed, if we consider the case under investigation, we have seen that the financial support is open to all farmers/landowners/public bodies but the allocation is not based on the local baseline and thus additionality can’t be really ensured. Moreover, if priority areas would have been defined, the forestation interventions would have been done in particularly sensitive area with a better achievement of ESs delivery. For instance, with regard to the improvement of the rural landscape value of the Marche Region, some authors believe that afforestation interventions would have been done in plain areas where plantings could increase the vegetable structures mosaic and could create little local ecological network (Antonelli et. al., 2006), but, the plain areas have been marginally involved in the programs.

Although the European and regional plans define the environmental benefits of planting interventions, it has not been realized a differentiated payment system for permanent woods plantings actions. Maybe, if the costs supporting would have been stronger, farmers would have preferred this type of plantings. To direct funds where the Region will have the largest environmental impact, the regional programming would define:

  1. Acknowledgement of the baselines;
  2. Fixation of the ESs level provision;
  3. Definition of the priority areas and the fragile areas on the basis of the local baselines and of the ESs identified;
  4. The setting up of a differentiated payment.

A better definition of the local ESs to be delivered and the consequent definition of the priority area could be a new base for shifting the financial aid, intended as a socio-economic tool, towards a truly environment support to the local farmers that improve the natural resources conditions and produce positive externalities to local community (i.e. by mapping as priority zones the High Natural Value areas).

Another approach could be applied for the definition of the annual premium. Since the annual aid based on the average farm income of the different areas have not really influenced the choice of farmers to participate, the annual premium could be calculated on the basis of the effective ESs the forest planted deliver.

We can for example suggest the study of Colozzi et al. (“Delphi based change assessment in ecosystem services values to support strategic spatial planning in Italian planning”, 2012, Ecological Indicator n. 21) which gives the monetary values of the ESs for land-cover classes. Through this approach the final annual premium embodies the single value of the ESs delivered by forests: climate and atmospheric gas regulation (€ 124 - €/ha per year), disturbance prevention (€ 163), fresh water regulation and supply (€ 3988), waste assimilation (€ 76), nutrient regulation (€ 317), habitat refuge, and biodiversity (€ 629,33), recreation (€ 107,46) aesthetic and amenity (€1.51), soil retention and formation (€ 9.05) and pollination (€301.66). The final sum depends of course from local conditions and from the effective provision of the ESs listed above. These figures clearly show the high value of the services forests produce, nevertheless at present they have no value at all. With this complete new methodology, the purpose would also be to make more manifest the concept of the positive externalities produced by local agrarians.

The introduction of weighting in monetary terms the environmental services in a government tool could also introduce a little cultural revolution too: the citizens could effectively know the environmental benefits they have from the actions financed and could also define the environmental services the society receive per each Euro spent from the government (i.e. from the citizens them-selves).

Maybe it’s time to change the trade-offs between efficiency, effectiveness and equity. In other words the program could move from a PES mechanism with untargeted payment, horizontal participation, low ESs levels designation to a more site specificity programming, an accurate priority and sensitive area definition, in order to reach a strong additionality impact and an higher level of ESs provision although this change would mean for the governmental level higher transaction costs.

It could be also useful to reconsider the way of establishing the cost planting contribution and the financial aid, considering them as a real compensation for the environmental benefits produced instead of a subsidy to the farm revenues.

The innovating key is likely the application of a completely different way of thinking the territory: the plans, the priority area definition and the types of plantings could be defined on the basis of the values and the public goods the community want to protect and enjoy.