Country Name: Kenya
Author: Alice Ruhweza and Sissel Waage

What has two years of research concerning payments for ecosystem services in East and Southern Africa revealed? The Ecosystem Marketplace finds out.



Over the past two years, Forest Trends has commissioned a series of country-level inventories of payments for ecosystem services (PES) in select East and Southern African nations. These inventories were designed to highlight the gaps that must be addressed in order to expand PES in the region. (You can read the full text of the inventories.) We invite you to use them to build on the many important efforts already underway.

One of the most important findings was that ecosystem service payments and environmental markets are already widespread in East and Southern Africa. We found PES programs currently operating in Kenya, Tanzania, Uganda, and South Africa. We catalogued no less than 17 carbon projects, 18 biodiversity projects and 10 water projects. Money has already exchanged hands in 5 carbon projects, 2 biodiversity projects and 2 water projects. In addition, there are several projects that are already offering non-monetary compensation (this is especially common in the biodiversity space).

A country-by-country summary of current markets and payments for ecosystem services is presented in Table 1. National laws and institutions conducive to PES are laid out in Table 2. Specific examples from each country are offered in Tables 3 and 4.

The Road Ahead

In addition to surveying current activity, we also sought insight into what the future of PES in Africa might look like. In particular, we focused on the obstacles that seem to be holding back current work. We identified four types of barriers that should be addressed to take PES to scale in this region.

Informational Barriers
Current information available in most countries is too global and generic for prospective buyers and sellers to use effectively. Most local sellers, for example, do not understand the Kyoto Protocol's Clean Development Mechanism (CDM) guidelines and whether or not they would qualify.

Potential buyers of ecosystem services (consumers, businesses, utilities, government agencies at all levels, and even conservation NGOs) are often unaware of their dependence on ecosystem services. In addition, potential sellers are not aware of ecosystem service payments and markets and few know how to find potential buyers. Further compounding the situation, few policymakers and regulators are knowledgeable about the policy requirements and implications of payments for ecosystem services. Finally, there is a shortage of service providers and project developers to assist with nascent PES deals.

As a result of these information gaps, most of the projects in the countries inventoried are ad hoc and do not follow any uniform guidelines. There is a clear need for designated national, and/or regional, institutions that can serve as repositories of information concerning guidelines, regulations, national priorities, and other key issues germane to PES practitioners in a given country and/or region.

Technical Barriers
Most countries inventoried lack individuals and organizations with the requisite knowledge to organize, design and implement payments for ecosystem services effectively. Even where sellers and buyers are aware of the ecosystem services around them, the technical skills needed for PES are seldom readily available. For example, sellers commonly lack a frame of reference for assessing the price that buyers will be willing to pay and sellers willing to receive. In addition, best practices have not yet been established through extensive on-the-ground experience and examples in the region. This gap increases the risks for buyers, both in terms of reputation and return on investment.

For prospective sellers—including land and resource owners as well as environmental stewards—the technical barriers are significant. Few have access to the specialized skills needed to assess the market potential of their resources or implement resource management options that would focus on restoring and maintaining ecosystem services. PES models that clearly work for low-income communities are hard to find and often unproven. And if low-income community members wish to go beyond carbon sequestration or watershed protection deals, particularly to consider multiple ecosystem services "bundled," they find that robust and proven models for biodiversity payments are especially weak.

Within government, policymakers and regulators often have inadequate understanding of PES to determine where, when and in what forms these market-based mechanisms are appropriate, particularly in relation to national or sub-national strategic priorities for conservation and development. Many prospective PES service providers and project developers lack the technical and business skills and knowledge specific to PES, including: market analysis, enterprise analysis, contract familiarity, project design, project implementation, and long-term monitoring.

To address these barriers, we recommend increased capacity building amongst buyers, service providers, and policy makers in most of the countries inventoried.

Policy and Regulatory Barriers
Unsupportive policy frameworks were identified as a principal barrier to expansion of effective PES throughout the region. For example, Tanzania cited one promising carbon project that has stalled due to lack of enabling policy support. In many cases, there is confusion about appropriate government roles in the development and operation of specific types of PES. In some cases, problems have arisen from an insistence by government officials that flows of funds should go through particular agencies. More fundamentally, there are conflicts between delivery of ecosystem services as "private goods" versus "public goods;" over existing rights to ecosystem services and the flow of benefits from their sale; and related to equity issues for low-income buyers or sellers of ecosystem services. Policy confusion also exists concerning whether or not ecosystem service payments should be 'bundled' so as to ensure that the full set of ecosystem objectives are met, or whether payment or market systems should focus on particular ecosystem services valued by interested buyers.

Nonetheless, the inventories showed that, in most countries, policies establishing rights to buy and sell ecosystem stewardship services have not been essential for pilot activity in PES. The lack of policy support is felt more at the expansion stage as well as, in some cases, reducing the prices buyers are willing to pay. That is, without policy and regulatory arrangements, potential PES buyers hesitate as the legal standing for purchases and the enforceability of contracts is unclear. Private sector buyers may also be unsure about the political and public acceptability of their role in PES, thereby increasing risks associated with engagement. In addition, both buyers and sellers may be uncertain about underlying tenure rights for land and resources, which in turn increases the risks of long-term ecosystem service agreements.

Addressing all of these policy and regulatory issues would require the establishment of "pro-poor" PES legislative and regulatory frameworks that take all the above issues into consideration.

Institutional Barriers
Most countries cited a lack of necessary institutions—such as certification bodies; financial intermediaries; national registries for ecosystem services; and so on— to support PES transactions across the value chain from seller to buyer. As a result, transaction costs are often unnecessarily high. PES-friendly institutional mechanisms are therefore essential to provide economies of scale and scope in finding and negotiating with buyers, bundling multiple ecosystem services for different markets, and achieving efficiencies in management, monitoring and certification.

Currently, most PES support in the countries inventoried is provided by international public sector contributions and/or by conservation-oriented non-governmental organizations. More private sector engagement is essential to scale up PES significantly in the region.


Overall, the inventories highlighted the need for clear, one-stop-shopping PES information repositories as well as policy support and technical capacity building. These elements together have the potential to scale up PES and enable prospective buyers and sellers alike to assess when and how these payments are most effective for addressing conservation and livelihood issues in the East and Southern Africa region.

Alice Ruhweza is the Coordinator for the East and Southern Africa Katoomba Group.
Sissel Waage is the Senior Coordinator for the International Katoomba Group.

First published: July 30, 2007

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