Marcela Quintero, gave this presentation to IFAD colleagues in Rome, in the context of sharing results from the 10 years of CPWF, CIAT and MINAM work on Payment for Ecosystem Services and Benefit Sharing Mechanisms, Sept. 11, 2013

1. Since 1967 / Science to cultivate change
Marcela Quintero* (CIAT)
Roger Loyola, Yolanda Puemape, (MINAM)
* m.quintero@cgiar.org
Designing PES in Peru: Putting research into use
Photo by Neil Palmer. CIAT

2. Since 1967 / Science to cultivate change
Payment for Ecosystem Services in
watersheds in South America*
• 14 cases identified in 2010 at
different implementation stages
• Most of them target activities that
are assummed a priori to have
positive impacts on ES
• Or are oriented to maintain
conserved areas (precautionary
principle)
* Quintero, M, ed. 2010. Servicios ambientales hidrológicos en la región andina. Estado del conocimiento, la acción y la política para asegurar su
provisión mediante esquemas de pago por servicios ambientales. Lima, IEP; CONDESAN. (Agua y Sociedad, 12; Serie Panorama Andino, 1)

3. Since 1967 / Science to cultivate change
Main motivations to promote PES in Latin America
• Benefit sharing: To make a transfer of resources from ES
beneficiaries to ES providers as a reward, for ES currently
provided.
– To tackle an uneven distribution of water-related ES benefits
• Cost sharing: To make a transfer of resources to improve
the provision of ES throughout the promotion of land
use/management changes

4. Since 1967 / Science to cultivate change
ES benefits redistribution within the society
• Poverty incidence in Peru: 60% in
the Andean region (22% in the
pacific coast region) (INEI, 2007)
• Most of the water use occurs in
the pacific coast region (85%) and
relies importantly from the
supply of water from the Andean
region
Source: ANA, 2009. Política y estrategia nacional de los recursos hídricos
en Peru.Lima. Perú.

5. Since 1967 / Science to cultivate change
Canete river basin: Ecosystem Services vs Poverty
Averaged
per capita
expenditures
(peruvian
soles)
Water Yield

6. Since 1967 / Science to cultivate change
20102009
MINAM chooses Canete Basin
as its pilot site for designing a
PES Scheme. CIAT, CARE and
WWF are invited to support this
initiative. CIAT is asked to
conduct respective hydrological
and economic analyses .
CIAT includes Canete as
the Peruvian study site in a
project supported by the
CPWF
CIAT conducted studies on
economic valuation and
hydrological priority areas
as inputs for PES design
TIMELINE
Key fact: The Canete PES scheme is
designated as the MINAM’s offical pilot
case
Key fact: The existence
of an explicit interest or
initiative to create a PES
schemes was a
precondition to select
study sites for the
project
January
Various meetings jointly
organized between MINAM,
CIAT and CARE with
multiple local stakeholders to
socialize and receive
feedback on the PES
initiative and research
results.
2011
MINAM disseminated the PES
initiative widely and kept
supporting it even after two
changes of Ministry and one
change of government
Consevation
InternationaI joined the
PES initiative supporting
the legal analysis for
implementing the
scheme in Canete
Key fact: Legal feasibility
in one of the main gaps
limiting the advance
towards PES negotiation

7. Since 1967 / Science to cultivate change
Upperbasin
(4000-5800
Ecosystem service provision
(Water yield (mm))
1111-1507
Middlebasin
(350–4000
51-256
Lowerbasin
(0-350)
0-50
Peruvian case study, Canete River watershed – Current situation
Upperbasin
(4000-5800
River flow use (m3/s)
0
(mostly from springs)
Middlebasin
(350–4000
250, 64
Lowerbasin
(0-350)
Upperbasin
(4000-5800
Water and land uses
Extensive degrading grazing, subsistence
agriculture
Middlebasin
(350–4000
Hydropower company
Shrimp growers
Lowerbasin
(0-350)
Urban dwellers
Water inefficient commercial agriculture
Tourists (rafting)

8. Since 1967 / Science to cultivate change
Desired situation: REWARDING for ES
Upperbasin
(4000-5800
Middlebasin
(350–4000
Lowerbasin
(0-350)
Transfer
part of their
benefits
Investment in
conservation
alternatives
Watershed’s
socioeconomic
asymmetries might
be balanced by this
benefit-sharing
mechanism

9. Since 1967 / Science to cultivate change
20102009
MINAM chooses Canete Basin
as its pilot site for designing a
PES Scheme. CIAT, CARE
and WWF are invited to
support this initiative. CIAT is
asked to conduct respective
hydrological and economic
analyses .
CIAT includes Canete as
the Peruvian study site in a
project supported by the
CPWF
CIAT conducted studies on
economic valuation and
hydrological priority areas
as inputs for PES design
TIMELINE
Key fact: The Canete PES scheme is
designated as the MINAM’s offical pilot
case
Key fact: The existence
of an explicit interest or
initiative to create a PES
schemes was a
precondition to select
study sites for the
project
January
Various meetings jointly
organized between MINAM,
CIAT and CARE with
multiple local stakeholders to
socialize and receive
feedback on the PES
initiative and research
results.
2011
MINAM disseminated the PES
initiative widely and kept
supporting it even after two
changes of Ministry and one
change of government
Consevation
InternationaI joined the
PES initiative supporting
the legal analysis for
implementing the
scheme in Canete
Key fact: Legal feasibility
in one of the main gaps
limiting the advance
towards PES negotiation

10. Since 1967 / Science to cultivate change
PES concept transformation…from theory to practice
• Since Wunder (2005) new PES definitions have emerged as a
response to what is being happening on the ground
• Current PES-type schemes in watersheds seems to be the result of
collective action and cooperation rather than the action of market
forces (supply vs. demand) (Quintero and Estrada, 2006)
• “Transfer of resources between social actors, which aims to create
incentives to align individual and/or collective land use decisions
with the social interest in the management of natural
resources”(Muradian et al., 2010)

11. Since 1967 / Science to cultivate change
Requirements for the RES schemes design
and implementation
• Targeting actions: What and where?
• Economic values of ES for the demand as a
reference value to negotiate contributions to a
ES Fund
• Willingness to pay
• Enabling the legal environment
• Enabling institutional environment

12. Since 1967 / Science to cultivate change
Research Highlights: Putting the pieces together for designing a PES
Where payments should be targeted to?
Identification of service providing areas using
hydrological modeling
What should be the payments amount to be made
by ES beneficiaries?
Estimation of economic value of watershed
services for different ES users:
Valuation of water-related ecosystem services*
Type of downstream
water user
Value of the
WES
Current price of
water
Irrigated Agriculture (US$
m3) 0.29512 0.023664
Tourism (US$/ind) 15.75 n.a.
Urban users
Domestic (US$ mon-1) 3.5 3.1 - 15
Commercial (US$ mon-1) 5 6.3 - 44.4
These values are reference values to
be used for anticipated negotiation
processes.
How payments should be used?
Ecosystem conservation measures and social
development projects.

13. Since 1967 / Science to cultivate change
No
9%
Si
91%
Creation of a trust fund to provide rewards and
incentives for conserving upper watershed ecosystems
Quienes deberia ser los aportantes? - Pobladores
56%
16%
13%
8%
4% 2% 1%
Agricultores
Industria - Comercio
Recaudación publica
Hidroeléctrica
M inería
Camisea
Turismo
Who should contribute to the trust fund?

14. Since 1967 / Science to cultivate change
2011
Based on legal analysis
recommendations, PES
implementation actions
incorporated in the action
plan of the Natural
Reserve (upstream area).
Actors from multiple
disciplines came together to
be part of a ESS Law
discussion group led by
MINAM. CIAT/CPWF part of
the invitees
There is a final version of
the Law to be subject of
public consultation and
congress approval
2012
TIMELINE (2)
Key fact: Law discussion considered
lessons learnt from practice
including Canete regarding the
conceptual approach, institutional
bottle necks, legal constraints, etc.
Key fact: CIAT is
invited by IFAD and
MINAM to be part of
the project
formulation mission.
Technical-science-
based project results
are taken in to
account in this.
IFAD approached MINAM
with the purpose of
supporting the creation of a
Trust Fund to start up the
operation of the PES
scheme in Canete. A GEF-
IFAD project was formulated
(pending for approval)

15. Since 1967 / Science to cultivate change
Legal and institutional bottlenecks for implementing
PES in watersheds - Peru
0 2 4 6 8 10 12 14 16 18 20
Santa
Alto Mayo
Rumiyacu, Mishiyacu y Almendra
Gera
Cumbaza
Quiroz
San Alberto-La Colina
Nanay
Rimac
Cañete
Ica-Huancavelica
Piuray
Quanda y Botijas
Jequetepeque
Cachi
Chili
Tilacancha
PRELIMINAR DIAGNOSTICO DISEÑO NEGOCIACION IMPLEMENTACION
Quintero, M., Pareja, P., Rivera, G. 2013 (Forthcoming).

16. Since 1967 / Science to cultivate change
Legal bottlenecks
0.00
10.00
20.00
30.00
40.00
50.00
60.00
Porcentaje(%)
Sectores priorizados
• Inability to transfer voluntary
contribution from urban water
users to an indenpendent Fund
for PES
• How to channel public
resources of local governments
into PES funds?
• How to ensure sustainability of
the fund –voluntary vs
mandatory?

17. Since 1967 / Science to cultivate change
Legal and institutional bottlenecks
• Financial independence
• Lack of trust on current
organizations
• Lack of guidelines on how to
establish new institutions
for operating RES (rules and
organizations)
Quien debería ser el administrador del fondo - pobladores
EMAPA - Cañete
24%
Municipalidad
9%
Crear Nueva
66%
Otra existente
1%
Who should manage the ES trust fund?

18. Since 1967 / Science to cultivate change
RES implementation requires multisectoral
coordination for operating
• There is a lack of an institutional
structure for an integrated
watershed management
• National policy on water
resources proposed the creation
of watershed councils, however
the process of creation is
incipient and lack a specific
funding for its functioning
• How to articulate RES into future
watershed councils?
intersectorial coordination and
need for official guidelines
SERNANP:
National
Service of
Protected
Areas
Local water
authority /
National
water
authority

19. Since 1967 / Science to cultivate change
Overcoming bottlenecks for RES implementation
Proposed law
• Offical recognition of RES,
eventhough are voluntary
• Definition of RES: Rewards and
incentives
• Avoid perverse incentives
• Enable transfer of urban water
users contributions into RES funds
• Highlights the importance of
articulating PES with existing land
and water use/management plans
Remaining gaps
• How to become voluntary contributions in a
legally binding to ensure continuity
• Management design that guarantees
independency and transparency
Canete institutional arrangement for
implementation
• Creation of ad-hod watershed committee for
PES governance transition towards
watershed councils
• National organization that currently manages
conservation project will manage the PES
Fund
• High replicability potential

20. Since 1967 / Science to cultivate change
Final remarks
• One such recurrent issue is community dissatisfaction (to varying degrees)
about the uneven distribution of water-related ES benefits
• In this sense, claiming a transfer of resources from ES beneficiaries is
based in the current delivery status of ES and not necessarily in a need to
modify an negative environmental externality (rewards vs. compensation)
• This imposes changes in conceptual and methodological approach
• This is more an institutional innovation than a market-based solution in
the management of common goods in watersheds (ie.ES)
• Institutional and legal bottlenecks become crucial for enabling RES
implementation
• IFAD – CIAT/CPWF collaboration: A good example of R&D alliance…putting
research into use!