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Payments for Ecosystem Services in Rural Africa

Jennifer Austin

More and more agencies are expressing interest in the concept of payments for ecosystem services (PES) in rural Africa. The Ecosystem Marketplace finds out whether or not they are on to something.

More and more agencies are expressing interest in the concept of payments for ecosystem services (PES) in rural Africa. The Ecosystem Marketplace finds out whether or not they are on to something. Driving a few kilometers outside the congested capital city of Kampala, Uganda, the lush green of the countryside is striking—not what most expect of a land-locked African country situated on the Equator. The roadside is punctuated by vibrant displays of carefully stacked tomatoes, bright banana bunches, hanging pineapples and many other fruits and vegetables being sold by the local women. Further along, men hold out large fish recently pulled from lake Victoria. If anyone understands how critical natural resources are to human survival, it is the people living in rural African villages, some of whom depend directly on neighboring natural forests for as much as 35% of their annual income. While the dependence of rural African communities on natural resources is no secret, actually quantifying the value of the services derived from the surrounding environment is difficult. The concept of payment for ecosystem services (PES) is a way of giving economic value to the services ecosystems naturally provide. PES is growing in popularity among conservationists worldwide and has proven effective in many places as a conservation tool. One of the most commonly cited PES success stories is that of the New York City Water Department project, where an ecosystem and billions of dollars were saved by restoring a watershed's naturally purifying forests instead of building a costly water filtration plant (see Ecosystem Services in the New York City Watershed). The money-saving or moneymaking potential of PES has led some to consider it as a tool for promoting both conservation and development in third world countries (see Redefining 'Wealth' and Building Foundations for Pro-Poor Ecosystem Services in Africa). Early projects in Uganda suggest there is, indeed, a place for PES in rural Africa. Equally important, they point the way toward some of the biggest challenges facing those hoping to use PES to achieve conservation and poverty alleviation at the same time.

High Risk, High Return

Perhaps the biggest challenge when it comes to implementing PES programs in the rural areas of Africa is finding buyers for ecosystem services. Women and children who spend many of their waking hours walking to collect water from local springs do not have the money to pay for the natural water filtration services that they clearly rely on for clean, healthy drinking water. Successful PES programs in this setting must recruit another buyer who also benefits from the ecosystem and is willing and able to pay for its preservation or restoration. Where buyers exist, communities stand to benefit doubly from PES markets: first by earning money for protecting the ecosystem, and second by ensuring that today's survival does not jeopardize tomorrow's economic progress by depleting resources. Identification of buyers is just one step in the successful implementation of PES in developing countries. Start up capitol is needed for projects requiring an initial investment and transaction costs must be kept low enough to allow for small-scale involvement. Ecosystem services must be quantifiable and measurable so that a value can be agreed upon and payments can be made. PES requires a system of clear property rights, a mechanism for certifying and monitoring service delivery and a way of making payments. Despite these hurdles, there is a lot of enthusiasm for PES for in Africa and a sense that it could be a better tool than government or donor funded projects in the long run. "We have these [donor funded] projects that come and go. PES is a long-term solution," says Byamukama Biryahwaho, the Program Officer for Special Projects at Ecotrust Uganda, a grant-making environmental organization that has recently launched a carbon credit funded reforestation project in rural Uganda. Linking the economic incentives directly to the outcome of the project helps keep people involved. "With donor or government funded projects, people can just say they are planting trees. Here payments are made based on the success of the project. If a tree dies, the person is going to replant to get the money." Byamukama explains. "There is no obligation to plant a certain number of trees, they continue to plant because they see they can make money. The key is consistency in monitoring and follow up."

Structuring Payments

While practitioners of PES generally believe the model's greatest potential lies in its ability to engage the private sector in conservation, most PES schemes in Africa still depend on government or donor funding. In part, this is because very poor communities lack the start up capitol necessary to launch projects that are credible enough to attract non-government buyers. This can be overcome in a variety of ways. When EcoTrust began its reforestation project, they provided seedlings to the farmers for free, but it became clear that this was too costly to sustain. EcoTrust moved instead to a loan program in which seedlings were given to farmers in exchange for a promise to pay back the loan at the time of the first ecosystem payment. Now, in areas where the project is well established, private tree nurseries have sprung up based on the same model. Acknowledging that the lack of startup capital is a problem, Byamukama suggests that a contract farming type system could be set up for carbon credit markets. He suggests that this could parallel other production systems in which the buyer, usually a processor of raw goods, invests money in the farmers from whom it plans to buy. Once the ecosystem service payments began to flow, the investor would see a return on his investment in the form of a self-sustaining supply chain. Alice Ruhweza, Lead Agencies Coordinator at the National Environmental Management Authority (NEMA) in Uganda observes, however, that start-up capital isn't the only reason few private sector buyers have materialized in Africa. An equally important factor, she says, is that working with the many small service providers is a logistical challenge, making it tempting to enter instead into larger deals with governments. "It is easy to work with government and write one big check. The problem is, government is a bad buyer, often they do not follow up and there is no one checking to be sure they redistribute the money properly" for conservation and community development. Even the 'best buyers' often find it difficult to structure sustainable certification, monitoring and payment systems that don't entail huge transaction costs. EcoTrust has helped overcome this challenge in Uganda by developing innovative ways to facilitate payments between their large overseas corporate buyers and the many small farmers who are planting the trees. Payments are made to EcoTrust and then distributed to farmers through existing village banks. This has worked well, and farmers are clearly seeing the benefits. The banks have reported that the early payments are significant compared to other deposits usually made by the farmers. When paying farmers individually, property rights are clearly important, but the lack of a proper land title does not necessarily preclude PES programs from working. "Often the west holds lack of land titles as a major hang up and an insurmountable limitation across the board in developing countries," notes Byamukama. "This is not necessarily the case as long as local ownership is clear." EcoTrust insists on proof of ownership from all farmers enrolling in its reforestation program. This proof, however, can come in the form of a proper land title, or approval and endorsement by the local council. As long as ownership is firmly established within the structures of the local community there is no problem. Projects carried out on communal lands require a different payment mechanism, but they too can work. Uganda Wildlife Authority's cooperative management framework, for instance, shares 20% of all park entry fees with local communities. UWA has established Community Protected Area Institutions (CPIs) based on community leadership structures associated with local parishes. CPIs serve as an advisory body and liason between the community and UWA. They help communities identify development projects of interest and then present project proposals to the Chief Park Warden who allocates funds to the districts to implement projects. "The community leadership structures in place are strong enough for this system to work well," says Aggrey Rwetsiba, Monitoring and Research Coordinator at UWA. "The communities also take better care of the projects because they feel they own them. They have chosen what they want to spend the community money on and they know there isn't more money to come fix them or build them again." Communities around the more popular national parks are clearly benefiting from the tourist-generated income. Lillian Nsubuga, the Public Relations Manager at UWA explains. "These CPI's are most active around the more popular national parks, where the tourism is highest. These parks tend to be in the West, and if you take a drive out that way you can see that the lifestyle is improved. The communities have built better schools and clinics, implemented water projects and improved roads."

From Talking to Walking

UWA also runs another program called the Forest Certification Initiative. The initiative is an ongoing PES project promoting conservation stewardship around two of Uganda's national parks. It has helped restore natural ecosystems, clarify park boundaries, and raise local awareness of environmental conservation. At the same time, the program has provided employment and valuable skills to many local villagers. "Awareness raising and capacity building are two important elements of the program. The people this project has employed were picked from the villages. Now they feel a stronger attachment to the park, and are stronger workers. Many have gone back and become leaders in their villages. Some have private tree nurseries and trees of their own because now they know the value," says Rwetsiba. While successful on many levels, the project could be even more valuable if UWA were able to sell carbon credits and use the money for the restoration of other parks or implementation of community projects. Unfortunately, because the project was not originally designed as a Clean Development Mechanism (CDM) project under the Kyoto Protocol, it must now be modified and retrofitted to satisfy the rigid CDM criteria (see CDM for small, sustainable projects: Where is the value added?). UWA is not the lead agency in the country on CDM protocol; therefore figuring out how to do this involves many players from UNFCCC, Government of Uganda Department of Meteorology, NEMA and others, making the ongoing effort a slow and complicated process. In general, slow and complicated, still seem to be the most common adjectives when it comes to describing PES in Africa. There are many projects and proposals in the planning or early implementing phases, with few examples in which money has actually changed hands. Nonetheless, many of these early efforts look promising and are already yielding lessons about the feasibility of PES in a rural African setting. Based on experience, Byamukama and others involved in pilot projects are optimistic about the potential for PES in Africa. "There is a lot of interest. People see their neighbors being paid for restoring or protecting ecosystems, and they want to get involved," says Byamukama. "We need to get learning centers and more projects on the ground, otherwise we'll just keep talking." Jen Austin is a journalist for The New Vision, based in Kampala, Uganda. She may be reached at jaustin@newvision.co.ug. First published: March 15, 2006

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