presentation by Patrick ten Brink of IEEP on Payments for Ecosystem Services PES at UNECE workshop on PES and Green Economy July 2011

1. The Economics of Ecosystems and Biodiversity
Rewarding benefits through payments and
markets
Patrick ten Brink
TEEB for Policy Makers Co-ordinator
Head of Brussels Office
Institute for European Environmental Policy (IEEP)
UNECE Workshop, 4-5 July 2011
Payments for Ecosystem Services: What role for a green economy ?
Palais des Nations
Salle VIII, Geneva
4-5 July 2011
1

2. TEEB‟s Genesis, Aims and progress
G8+5 “Potsdam Initiative – Biological Diversity 2010”
Potsdam
1) The economic significance of the global loss of biological diversity
Importance of recognising, demonstrating & responding to values of nature
Engagement: ~500 authors, reviewers & cases from across the globe
TEEB End User
Reports Brussels
Interim Climate
2009, London 2010
Report Issues Update
TEEB TEEB CBD COP11
Synthesis Books Delhi
National
TEEB
Ecol./Env. Work
Economics
literature
Sectoral
CBD COP 9 Input to TEEB
Bonn 2008 UNFCCC 2009 work
India, Brazil, Belgium, Et al.
Japan & South Africa
Sept. 2010 Rio+20
Brazil
CBD COP 10 Nagoya, Oct 2010
TEEB Reports: http://www.teebweb.org/ Summaries (in range of languages) and chapters

3. Valuation and policy making:
from valuing natural assets to decisions
“I believe that the great part of miseries of mankind are brought upon
them by false estimates they have made of the value of things.”
Benjamin Franklin, 1706-1790
“There is a renaissance underway, in which people are waking up to
the tremendous values of natural capital and devising ingenious
ways of incorporating these values into major resource decisions.”
Gretchen Daily, Stanford University

4. TEEB for Policy Makers
The Global Biodiversity Crisis
• Nature’s assets & biodiversity loss
• Economic values and loss
• Social dimension
Measuring what we manage
• Indicators
• Accounts
• Valuation
• Assessment
Available Solutions
• Markets/pricing/incentives :PES
• Regulation: standards
• Regulation: planning, protected areas
• Investment (man-made & natural capital)
Book announcement: The Economics of Ecosystems and
Transforming our approach to
Biodiversity in National and International Policy Making now
available from Earthscan natural capital

5. Ecosystem services - different types of value in our economic and social systems
Provisioning services
Market values
• Food, fibre and fuel
• Water provision Potential Market values
• Genetic resources – eg water supply PES; -eg ABS
Regulating Services Potential Market values
• Climate /climate change regulation – eg REDD & water purification PES
• Water and waste purification - Avoided cost of purification
• Air purification
Health: social value
• Erosion control
• Pollination Lost output or
• Biological control cost of alternative service provider
Cultural Services
• Aesthetics, Landscape value, recreation Market values – some tourism
and tourism
• Cultural values and inspirational
services Social value – identity et al
Some are private goods (eg food provisioning), others public goods that can become
(part) private (eg tourism, pollination), others are pure public goods (eg health, identify)

6. Many ecosystem services from the
same piece of land
Benefits local to global
Benefits are spatially dependent
PES need to take these different
dimensions into account

7. PES: They exist, they work, learning by doing
• The underlying principle of PES - „beneficiary / user pays‟ principle + service
providers get paid for their service
• PES aim to change the economics of ecosystem service provision by
improving incentives for land use and management practices that supply
such services
• Instrument growing in applications
– 300 PES programmes globally, range of ecosystem services (Blackman & Woodward, 2010)
– Broad estimate for global value: USD 8.2 billion (Ecosystem Marketplace, 2008)
– USD 6.53 billion in China, Costa Rica, Mexico, the UK and the US alone. (OECD 2010)
– Increasing by 10-20% per year (Karousakis, 2010)
– Dynamic field – new support (e.g. Natural England White Paper), potential solution to
challenges (e.g. public payments for public goods and EU CAP reform), new tool flood
control (Eg Danube – exploring options)
• Big and small
– E.g. 496 ha being protected in an upper watershed in northern Ecuador
– eg. 4.9 million ha sloped land being reforested by paying landowners China.
See also Chapter 5 TEEB for Policy Makers

8. Public (municipal, reg., nat.) & private (eg Vittel (Fr), Rochefort (B), Bionate (D)
for quality water & mixed
Local (e.g. New York, Quito), Regional (e.g. Niedersachsen) , national (e.g
Costa Rica, Mexico and Ecuador and international (e.g. REDD+, ABS)
PES address a wide range of objectives
• For Specific services - e.g. provision of quality water (NY, Ec, Mx), protect
groundwater (J, D), cleanse coastal waters (Sw), carbon Storage (NZ, Uganda,
CR), invasive alien species (SA - WfW), biodiversity (EU,AUS), traditional
knowledge for bio-prospecting (India), flood control (exploring Danube)
• Multiple services: e.g. Costa Rica’s PSA - carbon, hydrological services
preserving biodiversity and landscape beauty. Germany and Bolivia for
biodiversity and water
• Multiple objectives - e.g. Mexico’s PSAH – hydrological services, deforestation,
poverty
„Men do not value a good deed unless it brings a reward‟ Ovid, B.C. 43 – 18 A.D.

9. Multiple Objectives : PSAH Mexico
PES to forest owners to preserve forest
Manage and not convert forest
• e.g. cloud forest US$ 40 per ha/year;
• e.g. other tree-covered land US$ 30 per ha/year
Hydrological services: Aquifer Recharge;
Improved surface water quality,
Reduce frequency & damage from flooding
Reduce Deforestation Address Poverty
Munoz 2010); Muñoz-Piña et al. 2008; Muñoz-Piña et al. 2007

10. Multiple Objectives : PSAH Mexico
Balance of priorities varied over time
Aquifers
An instrument can evolve and respond to
changing needs
A
Poverty Water scarcity
P WS
Deforestation
D
Munoz 2010); Muñoz-Piña et al. 2008

11. PSAH Mexico
Results: PSAH reduced the rate of deforestation from 1.6 % to 0.6 %.
18.3 thousand hectares of avoided deforestation
Avoided GHG emissions this equates 3.2 million tCO2e.
Year in which forest is 2003 2004 2005 2006 2007 2008 2009 Total
signed into the program …
Surface incorporated into 127 184 169 118 546 654 567 2,365
the program (‘ooo ha)
Forest owners participating 272 352 257 193 816 765 711 3,366
(individuals + collectives)
Total payment to be made 17.5 26.0 23.5 17.2 84.2 100.9 87.4 303
over 5 years (US$ m)
Source Munoz 2010); Muñoz-Piña et al. 2008

12. PES are intended to reward good management practices that
go beyond what is legally compulsory
PES: Beneficiary pays vs. the polluter pays principle
Pragmatism vs. principle ?
Reducing emissions/impacts
No emissions
No impact (i.e. within
assimilative capacity of ecosystem) Costs born by society
PES (eg remaining pollution impacts)
Environmental target
(practical /politically feasible PES to foresters/farmers to help
environmental optimum at the time) pay for measures to meet
PES objectives / targets beyond legislative
requirements
Private solution with
legal requirements Costs of measures borne by
(„reference level‟) PPP landowner – eg Polluter Pays Principle
(partly implemented). Lesser societal costs
Private Optimum (in
absence of legal requirements) Self-damaging (Damage) Costs to
practice landowners and society
No control on emissions

13. Key insights on PES noted in TEEB / summary
• PES a tool with a growing track record in use, usefulness, effectiveness
• PES programmes operate in both developed and developing countries and may
focus on single or multiple services.
• PES can be applied at different spatial scales
• PES are highly flexible and can be established by different actors - Tools
can be tailor-made to address the objective at hand
• Many ways to structure PES schemes, depending on the specific service,
scale of application and context for implementation
• PES schemes can be designed to create or support other socio-economic
objectives such as employment related to the provision of ecosystem
services.
• PES effectiveness and feasibility are closely tied to the regulatory
baseline and its enforcement
• Thin line between PES being a true payment for services and a subsidy.
Pragmatism needed for progress. But care not to go to “polluters get paid”

14. • Wide participation in PES-related decisions can help ensure
transparency and acceptance and avoid covert privatization of common
resources.
• PES are not appropriate everywhere. (e.g. where rights not defined; where
major information or asymmetries in bargaining power)
• careful design and preparation to ensure that PES schemes are
effective and appropriate for local conditions …. below some OECD insights
– remove perverse incentives;
– clearly define property rights;
– clearly define PES goals and objectives;
– develop a robust monitoring and reporting framework.
– identify appropriate buyers and ensure sufficient and long-term sources of finance;
– identify sellers and target ecosystem service benefits;
– consider opportunities for bundling or layering multiple ecosystem services;
– establish baselines to ensure additionality;
– reflect ecosystem service providers’ opportunity costs via differentiated payments;
– address leakage (displacement of emissions);
– ensure permanence.
What are you‟re your experience? Lessons from practice?
Plans and potentials for PES ?

15. Thank you
TEEB Reports available on http://www.teebweb.org/
& TEEB in Policy Making now out as an Earthscan book
See also www.teeb4me.com
Patrick ten Brink, ptenbrink@ieep.eu
IEEP is an independent, not-for-profit institute dedicated to the analysis, understanding
and promotion of policies for a sustainable environment www.ieep.eu
Manual of EU Environmental Policy:
http://www.earthscan.co.uk/JournalsHome/MEEP/tabid/102319/Default.aspx

16. PES aim to change the economics of ecosystem service provision by
improving incentives for land use and management practices that
supply such services
Intensive land use Biodiversity „friendly‟ land use
Eg Private optimum Eg social optimum
Potential new
BENEFITS
Cultural
Services income from
(eg tourism) different
To date „unpaid‟ CS
Regulating payments for
RS
ecosystem services (eg ecosystem
PS
services water quality)
services
Additional PS
(other products,
pollination)
Income
(Paid) Benefit to from
provisioning
land user - Income foregone
Services (PS) Income from
provisioning to landowner
(in absence of PES) products in
services (eg farm
markets
or forest products)
COSTS
Cost to population
of pollution PES help in move to green
economy/ improved social
benefit
Social Benefit = Private benefit + public good (ESS) – pollution costs