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Compensation and Rewards for Environmental Services
Major findings and conclusions of the Pan-Tropical Scoping Study on Ecosystem Services
Country Name: KenyaAuthor: Carina Bracer(i), Josefina Brana(ii) and Brent Swallow(iii) In the beautiful port city of Cartagena, Colombia at the end of February 2007, the Minister of Environment of Colombia asked representatives from key productive industries, environmental organizations and government agencies for input concerning Colombia's new national strategy for ecosystem services. Meanwhile on the outskirts of Nairobi, Kenya, a consortium of organizations are designing a wildlife lease system that rewards Maasai herders for leaving grazing land open for wildlife to move in and out of the Nairobi National Park. These examples are indicative of the many efforts by land managers and governments around the world to protect ecosystems using a novel and complex tool: Compensation and Rewards for Environmental Services (CRES)1, or PES (Payment for Ecosystem Services), as it is commonly known. The global trend toward the use of CRES mechanisms has the potential to impact ecosystem management in all tropical countries. Based on this recognition, many donor agencies and international organizations have commissioned studies to understand how these land-based transactions might affect ecosystem health and the world's poor. The Pan-Tropical Scoping Study on Ecosystem ServicesFrom January 2006 to March 2007, the World Agroforestry Centre led a consortium of seven organizations from around the world in a pan-tropical scoping study of compensation and rewards for environmental services (CRES) http://www.worldagroforestry.org/es/CES/Default.asp. The scoping study was commissioned by the Rural Poverty and Environment Programme (RPE) of the International Development Research Centre (IDRC), and it sought to identify critical issues affecting the development, operation, impacts and institutionalization of mechanisms linking beneficiaries of ecosystem services with those stewarding them. Particular attention was paid to the potential for compensation and rewards for ecosystem services to alleviate or exacerbate the multiple dimensions of poverty: rights to productive assets, streams of income and consumption, and vulnerability to shocks. The scoping study involved the development of several multi-authored issue papers, plus regional workshops in 2006 in Latin America (Quito, April), Asia (Bangalore, May) and Africa (Nairobi, June). Over 200 participants in the regional workshops presented and discussed practical experiences with compensation and reward for ecosystem services from across the developing world, experiences which informed and challenged the synthesis discussions in cross-cutting issue papers. A series of 9 working papers prepared by multi-author groups (linked at the end of this article) are now ready for dissemination. The expected audience is wide, including development agencies, policy makers, donors and practitioners interested in the potential of CRES mechanisms. Here we summarize the major findings and conclusions. CRES is Here to StayGrowing interest in CRES mechanisms in the tropics is part of an overall trend toward flexible, negotiated and market-based environmental policy across the world. The trend is primarily driven by growing resource scarcities, dissatisfaction with regulatory approaches, liberalization of utility and tourism markets, the rise of consumer sovereignty, adoption of the multi-lateral environmental agreements (esp. the United Nations Framework Convention on Climate Change), and support from international organizations and networks. Across the tropics, overall experience with CRES mechanisms is most advanced in Latin America, followed by Southeast Asia, East and Southern Africa, South Asia, and West and North Africa. Interest and experimentation with CRES mechanisms is likely to grow in all regions of the tropics, with different levels of resistance and support from government regulatory agencies and civil society lobby groups. Concerns about the potential negative impacts on the poor are legitimate, although it appears that there is some potential to customize CRES mechanisms to minimize those risks and accentuate the positive benefits for the poor. While CRES mechanisms will not be a major solution to the world's rural poverty problems, there is a lot that can be done to use CRES to empower communities and landowners to manage their resources to benefit themselves and others. There is Much to LearnBecause of their apparent potential, and shortcomings of alternative environmental policy approaches, CRES tools are gaining traction with national and regional organizations, and many governments in the tropics are giving increasing priority to using CRES tools as a principal market based approach. Much of this action is taken without an adequate base of background information, best practice advice, or analytical tools. Depending upon the design and 'targeting' of participants in CRES projects, compensation and reward mechanisms have potential to help or hurt large numbers of the rural poor in developing countries. Many gaps in global knowledge exist regarding how best to benefit the poor while maintaining the advantages of CRES mechanisms. Terminology is ImportantThe results of the global scoping study suggest the adoption of the term "compensation and rewards for environmental services", although Payment for Ecosystem Services, or PES is still commonly used. For many analysts the term PES implies a quid pro quo exchange of services for money that is difficult to conclude for environmental services that are typically characterized by externalities, public goods problems, and long time lags because cause and effect. On its own, the term "compensation" has a connotation in legal parlance that cannot easily include mechanisms that provide land users with incentives to forego or undertake particular land uses beneficial to others. While some will continue to use PES and CES, compensation and rewards more clearly denotes the broader set of mechanisms that exist in practice. The key defining characteristics of CRES mechanisms are the extent to which they are realistic, voluntary, conditional and pro-poor (as defined in Working Paper 37). The results also suggest adoption of the term compensation and rewards for environmental services rather than ecosystem services. The term ecosystem services has been defined by the Millennium Ecosystem Assessment (MA) to include an array of goods, called provisioning services, that are readily traded on commodity markets. Environmental services imply services that are mediated by environmental processes to the benefit of larger social groups, generally characterized as externalities or public goods. CRES mechanisms offer opportunities for pro-poor outcomes from three perspectives: (i) designs that ensure that no harm is done to disadvantaged groups; (ii) generating benefits for disadvantaged groups as co-benefits with efficient environmental service conservation; and (iii) deliberately including poor and marginalized groups within CRES mechanisms to enhance the likely success of the mechanism. Three Environmental Services Likely to Become More ImportantDeforestation in the tropics continues to be a major source of global carbon emissions which simultaneously damage the world's atmosphere and reduce the productive capital available to farmers. The physical overlap between ecosystem-based carbon and the world's poorer communities imply that Reduced Emissions from Deforestation and Forest Degradation (REDD) can help to address the dual global challenges of reducing greenhouse gas emissions and alleviating poverty. Challenges exist for policy, development, and research to ensure that national-level targets don't turn into programs that hurt smallholder farmers and forest dwellers where REDD projects take place. Given the magnitude and trend of water quality problems around the developing world, and the relatively clear links between land use and water quality, environmental services schemes rewarding water quality improvements offer strong potential for positive outcomes. As many countries have instituted policy reforms to liberalize their hydro-power and water supply sectors, there has been strong growth in the number of CRES schemes in operation or development across the tropics. Valuable lessons and best practices can form a solid standard for future schemes. Conservation of utilized wildlife habitats that are critical for the continued survival of rare ecosystems and species offer an important area for developing environmental services experiences and expertise, in conjunction with poorer communities. Community-based eco-tourism has been growing rapidly in many countries, particularly in East and Southern Africa. Recommended Areas of Focus for CRES WorkThe quick pace of development and strong interest in the diverse CRES mechanisms led the Global Scoping Study team to make the following recommendations related to focusing investments and resources by those interested in supporting CRES. These are areas where CRES is expected to have strong impacts on the world's poorer populations: 1. Voluntary carbon market, expected to grow rapidly in the next few years. 2. Developing the practical foundations of a new international protocol on reduced emissions through reduction of deforestation and degradation. 3. Conditional property rights as a reward mechanism. 4. Eco-labelling to leverage the consumer interest and growing understanding in the implicit environmental impact of their purchases. 5. Geographically-focused CRES mechanisms for maintaining water quality. 6. Different types of land conservancies. Priority areas for CRES research and developmentThe team suggests the following principles to guide future research and development investments: (1) Consortia of institutions working in CRES and development donors can be most effective in building capacities and learning lessons from pilot activities; (2) As a relatively new field, capacity building activities should be closely linked to research, particularly when local stakeholders developing projects are clearly involved from start to end; (3) Because CRES mechanisms depend so much on the public policy and business context, it is important to involve the private and public sectors at all stages and levels; and (4) Multi-country and cross-regional activities and research in CRES are best suited to promote the transference of methods and rigorous tests of hypotheses. Investment priorities include the following:
Filling Key Knowledge GapsGlobal experience with CRES mechanisms is still relatively recent and limited, though growing quickly, and very little is systematically analyzed and documented. There still are important questions about the tradeoffs and synergies between environmental and human welfare objectives; the potential for CRES to mitigate conflicts between ecosystem stewards and beneficiaries; the spatial and temporal relationships of cause-effect that link land use and ecosystem services; the most appropriate mixture and linkages between regulatory and voluntary instruments; and the relative benefits of small, flexible instruments versus large state-run programs. Key criteria are offered to guide support to CRES projects and initiatives that are pro-poor, including i) well designed projects that incorporate lessons from current experiences and are built with explicit participation of all stakeholders, ii) clear monitoring and evaluation of outcomes and impacts, iii) documenting costs, benefits and processes used, and iv) contributing to peer-to-peer learning and widespread dissemination of results. The introductory paper and 5 multi-authored Working Papers that resulted from the Pan-Tropical Scoping Study (linked below) give both general and specific suggestions to address knowledge gaps via:
1The Consortium included the World Agroforestry Centre, World Conservation Union (IUCN), Forest Trends, United Nations Environment Programme, Institute for Social and Economic Change, Corporacion Grupo Randi Randi and African Centre for Technology Studies. (i) Carina Bracer works with the Tropical America Katoomba Group at Forest Trends. She can be reached at cbracer@forest-trends.org. (ii) Josefina Brana Works with Forest Trends and is finishing her studies at the University of Maryland. She can be reached at jbrana@forest-trends.org (iii) Brent Swallow is Principal Scientist and Theme Leader for the Environmental Services Theme - World Agroforestry Centre (ICRAF) Nairobi, Kenya, and can be reached at b.swallow@cgiar.org First published: July 16, 2007 Please see our Reprint Guidelines for details on republishing our articles.
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