This document outlines the key concepts and process for establishing payments for ecosystem services (PES) schemes. It defines ecosystem services and PES, and describes the five main steps to set up a PES scheme: 1) identify the ecosystem service and buyers/sellers, 2) establish scheme principles, 3) negotiate and implement agreements, 4) monitor implementation, and 5) consider opportunities for multiple benefits. Examples of existing PES schemes are provided, such as those in Costa Rica, Mexico, and the UK, covering services like water quality, habitat protection, and carbon sequestration.
1. Payments for Ecosystem
Services
Robert Spencer, Business Line Director – Sustainability
URS Infrastructure & Environment UK Limited
Oxford Green Breakfast | 6th November 2013
4. Ecosystem services
“The benefits that people obtain from
ecosystems”
Millennium Ecosystem Assessment, 2005
Provision of Freshwater
Ecosystem services include:
Provisioning services – provision of food, water,
timber, and fibre
Regulating services – regulation of climate, water
quality, and flood risk
Cultural services – opportunities for recreation,
tourism, and cultural development
Supporting services – nutrient cycling, soil formation,
and biodiversity
Regulation of Pollination
Recreation Opportunities
Biodiversity Services
5. What is the ecosystem approach?
Ecosystems are made up of key processes and structures such as trees
which give rise to supporting services such as photosynthesis and soil
formation)
These underpin the services that provide benefits to people such as timber
and lower flood risk
The values people place on services reflect the benefits they receive
The ecosystem approach requires that these benefits are included in
decision making so that policy better reflects people’s values
Ecosystem or
land cover type
Biophysical
structure or
process
Supporting
services
Final services
Benefits
Values
Woodland
Trees
Water storage
Flow regulation
Lower flood risk
Reduced damage
6. Traditional scenario
Cut down trees
– gain value
from giving
over land to
development
and some
timber
production
Timber
Value for
development
Preserve
woodland –
less value to
landowner
8. What’s the problem?
In 2005, the Millennium Ecosystem Assessment concluded that the
majority of global ecosystem services have been degraded
In 2010, The Economics of Ecosystems and Biodiversity report concluded
that many ecosystems have been degraded to such an extent that they are
nearing critical thresholds
In 2011, the UK National Ecosystem Assessment concluded that around
30% of services are currently declining and many others are in a reduced
or degraded state
9. Ecosystem services: a growing agenda
Rio +20 ‘Green Economy’
ICMM ‘Good practice guidance for mining and biodiversity’
The Economics of Ecosystems and Biodiversity (TEEB)
Intergovernmental Platform on Biodiversity and Ecosystem
Systems (IPBES)
Nagoya ‘Aichi Biodiversity Targets’
International Finance Corporation requires client projects
to “maintain the benefits from ecosystem services”
EU target to halt the loss of biodiversity and the
degradation of ecosystem services in the EU by 2020 and
restore them in so far as feasible
UN Decade on Biodiversity
US, Brazil, and Australian legislation mandate biodiversity
offsets
10. Ecosystem services: closer to home
Natural Environment White Paper (2011)
“We must go beyond that, working together to safeguard ecosystem services
and restore degraded ecosystems through more cost-effective and integrated
approaches”
National Planning Policy Framework (2012)
“The planning system should contribute to and enhance the natural and local
environment by recognising the wider benefits of ecosystem services”
A Living Wales (2010)
“Ensure that Wales has increasingly resilient and diverse ecosystems that
deliver economic, environmental and social benefits”
Defra Ecosystems Approach Action Plan (2010)
“Ensure that the value of ecosystem services is fully reflected in policy and
decision making in Defra and across Government at all levels”
Revised European EIA Directive (2012)
“A description of the aspects of the environment likely to be significantly
affected by the proposed project, including, in particular… biodiversity and the
ecosystem services it provides…”
Applying an Ecosystem Approach in Scotland: A Framework for Action
(2010)
“An ecosystem approach implies…a change in the way that human activities
affect ecosystems by integrating ecosystem values into the drivers of these
activities”
11. Drivers for engagement
“Declines in biodiversity and ecosystems could have a
$10bn to $50bn impact on business”
UNEP 2010
Financial risks
Environmental risks and assets increasingly affecting share price
and ability to secure funding
Regulatory risks
Penalties from new policies such as pollution taxes and
moratoria on natural resource extraction
Reputational risks
Exposure from media and NGO campaigns, shareholder
resolutions and changing customer preferences
Operational risks
Increased scarcity and cost of raw materials, disruptions to
business caused by natural hazards
Competitive advantages Growing markets for certified sustainable products, efficiency
improvements, increased supply chain resilience
12. Ecosystem approach for business
“The world's biggest corporations responsible for $2.15
trillion in environmental costs in 2008…institutional
investors with a $100m holding in a typical diversified
equity fund could ‘own’ $5.6m in external costs”
UNEP
Ecosystem services playing an increasingly important role in the private sector
Corporate level e.g. Puma’s
Natural Environment Accounting
Operations level e.g. impact and
risk assessments to meet growing
lenders standards
14. Ecosystem markets
“Understanding the links between biodiversity and a
wider range of ecosystem services is rapidly improving…
and we are increasingly able to place values on such
services… The urgent and logical next step is to develop
markets that enable these values to be realised for
services such as water quality, flood risk management,
climate regulation and other benefits”
Making Space for Nature: A review of England’s Wildlife Sites and Ecological Network (the ‘Lawton Review’)
15. ‘Environmental policy toolkit’
Regulation
Provision of services by Government (e.g. publicly
owned green infrastructure)
Voluntary efforts by business, communities and
individuals
Incentive or market-based mechanisms
Charges (e.g. taxes and user fees)
Tradable permits (e.g. emissions trading)
Certification schemes (e.g. eco-labels)
Payments for Ecosystem Services (PES)
Jack, B.K., Kouskya, C. and Simsa, K.R.E. (2008). Designing payments for ecosystem services:
Lessons from previous experience with incentive-based mechanisms. PNAS 105(28): 9465-9470.
17. Definition
A PES is:
a voluntary transaction where
a well-defined ES (or a land-use likely to secure that
service)
is being ‘bought’ by an (minimum one) ES buyer
from a (minimum one) ES provider
if and only if the ES provider secures ES provision
(conditionality)
Wunder S. (2005). Payments for environmental services: Some nuts and
bolts. CIFOR Occasional Paper No. 42, Centre for International Forestry
Research, Bogor, Indonesia
18. Key PES principle – ‘additionality’
“Payments should typically be for actions that
are additional to what is usually expected of
landholders – they should not be compensated
for obeying the law, but rather for actions that
society considers beyond the landholder’s
responsibility”
RSPB (2010). Financing nature in an age of austerity
20. Scale of PES
PES can be developed at a variety of spatial
scales, e.g.
International, e.g. REDD+, Green Development
Mechanism, Ecuador Yasuni ITT Trust Fund
National, e.g. Agri-environment schemes (tend to be
public-financed)
Catchment, e.g. downstream water users paying for
watershed management on upstream land (tend to be
private-financed)
Local, e.g. residents collectively funding an NGO to
manage local green space for biodiversity
22. Existing PES schemes
“PES programmes are
now being increasingly
applied across developed
and developing countries.
There are today more
than 300 PES
programmes
implemented
worldwide, most of
which have been set up
to promote biodiversity,
watershed services,
carbon and landscape
beauty” (OECD, 2010)
23. PES schemes: examples
Pago de Servicios Ambientales, Costa Rica
Pago por Servicios Ambientales Hidrológicos, Mexico
Conservation Reserve Program (CRP), US
Environmental Stewardship, UK
Catskills Long-Term Watershed Protection Program, US
Vittel Payments for Ecosystem Services, France
Lake Naivasha Watershed Management Project, Kenya
BEF’s Water Restoration Certificates, US
Yasuni ITT Trust Fund, Ecuador
Tasmanian Forest Conservation Fund
http://mptf.undp.org/yasuni
www.dse.vic.gov.au
24. Upstream Thinking
Buyer = South West Water
(private water company)
Sellers = Farmers in target
catchments
Intermediate = Westcountry
Rivers Trust (charity)
ES = water quality (plus water
quantity, biodiversity)
Encourages and/or
incentivises farmers to
implement land management
actions to improve raw water
quality, with many
management measures locked
into 10 or 25 year covenants
South West Water and the
Westcountry Rivers Trust
worked together to develop an
action plan for three target
catchments
25. PES actors
Buyers (individuals, communities,
businesses or governments acting on their
behalf)
Sellers (land or resource managers whose
actions can potentially secure production
of the beneficial service)
Intermediaries (‘honest brokers’ who can
assist with scheme design and
implementation)
Knowledge providers (e.g. resource
management experts, land use planners,
economists, regulators and legal advisors
who can facilitate scheme development)
26. ‘Packaging’ ecosystem services
Adapted from Lau, Winnie W.Y. (2012). Beyond carbon: Conceptualizing payments for
ecosystem services in blue forests on carbon and other marine and coastal ecosystem
services. Ocean and Coastal Management (April 2012).
30. 1. Identify a saleable
1. Identify a saleable
ecosystem service
ecosystem service
and prospective
and prospective
buyers and sellers
buyers and sellers
Are there specific land management actions that have
the potential to increase the supply of a particular
service (or services)?
•
•
•
A clear relationship exists between land or
resource management intervention (cause) and
ecosystem service provision (effect)
Changes in the level of service provision can
either be directly measured or assumed to have
taken place based on the interventions made
At present the cause and effect pathway is well
understood for some interventions and
ecosystem services, while for others there is
more uncertainty
31. 1. Identify a saleable
1. Identify a saleable
ecosystem service
ecosystem service
and prospective
and prospective
buyers and sellers
buyers and sellers
Is there a clear demand for the service in question and
is its provision financially valuable to one or more
potential buyers?
Beneficiary Analysis
•
•
•
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Marine Conservat rists l Authorities
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t
PB
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BUYERS
mu
nit
•
Who are the potential beneficiaries that
could be turned into buyers?
How many of them are there and how are
they connected?
Do they have sufficient capital to support
land or resource management changes?
To what extent are they engaged in the
issues?
How reliant are they on the ecosystem
service?
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Hydro-po
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Recreational
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Trusts
ildlife
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39. 4. Monitor, evaluate
4. Monitor, evaluate
and review
and review
implementation
implementation
Ecosystem
service
Water quality
Flood risk
regulation
Climate
regulation
Habitat for
wildlife
Tourism and
recreation
Measurable parameter
Nitrate levels in water
supply
Buffer strips to slow run-off
and intercept sediment
Ecological status of water
bodies (eg abundance of
indicator species)
Riparian trees planting
Synchronisation of water
flows
Flow rates
Floodplain water storage
capacity
Soil water storage capacity
Fluxes in atmospheric
gases (CO2, CH4, etc)
Tree planting
The Woodland Carbon
Code carbon lookup tables
Tree measurement
Wetland creation
Species richness and
diversity
Visitor numbers
Spending on nature-related
tourism
Direct
measurement
Modelling Indicator
(‘proxy’)
41. Opportunities for PES
where there is a deficit in the supply of an ES
where the supply of an ES is under threat
where there is opportunity to increase supply of an ES
where the science of ES provision improves and ‘causeand-effect’ becomes clear
where a beneficiary has a clear dependency on an ES
where the costs of an alternative means of securing the
supply of an ES exceed the costs associated with PES
where a change in government policy or regulation
increases the demand for an ES
where new means emerge to aggregate buyers and/or
sellers of ES
42. Opportunities for PES
Further opportunities for PES to emerge:
Catchment Based Approach
Nature Improvement Areas
Local Nature Partnerships
Spatial planning for ecosystem services
http://ecosystemservicesplanning.co.uk/