Natural capital accounting receives another boost as a UK water utility becomes the first of its kind to develop an environmental profit & loss account. Payments for ecosystem services (PES) received a boost as well, with passage of Peru’s PES law establishing a framework for compensation regarding ecosystem services.
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2 July 2014 | Greetings! Earlier this month, the same week that US President Barack Obama unveiled a national climate action plan that opens the door to cap-and-trade in the power sector, Peru’s National Congress passed the country’s ground-breaking Payments for Ecosystem Services Law (Ley de Mecanismos de Retribucií³n por Servicios Ecosistémicos). The law passed with 83 votes in favor and none against, with no abstentions, according to a press release issued by the Ministry of Environment (MINAM).
The law sets out a framework for compensation for ecosystem services (like clean water or carbon storage) between land stewards and beneficiaries, including civil society, businesses, and municipal governments. Contracts will still be voluntary agreements between these parties, which means the government’s role is limited, according to those familiar with the law. It boils down to ecosystem services management and providing regulatory certainty for contracts – though the government will also help to identify payers and administer the compensation process.
“It’s a voluntary agreement between private parties with a private contract, but the state often owns the natural resources at the center of the contract,” explains Jose Luis Capella, Director of the Forestry Program in the Peruvian Society of Environmental Law (SPDA).
Examples of ecosystem services contracts in Peru are plentiful, like a project to restore degraded lands in the Rumiyacu-Mishquiyacu micro-watersheds, located among the jungles of Peru’s San Martin region. Residents in the city of Moyobamba agreed to finance sustainable land management through a monthly payment on their water bill. The Watershed Services Incubator, a collaborative initiative between Forest Trends (publisher of Ecosystem Marketplace) and MINAM, among other institutions, is a larger-scale effort to provide a capacity-building platform for developing water projects based on a payments for ecosystem services (PES) model.
Ultimately, Peru’s law aims to coordinate all of these activities by providing a simplified framework for PES to increase the mechanism’s use. It’s based on a simple idea that isn’t particularly innovative: those who help maintain and improve ecosystem services establish an agreement with those who are voluntarily willing to compensate for those services.
Other big stories this month: Yorkshire Water becomes the first water company to develop an environmental profit & loss statement reflecting its impacts on natural capital. India’s Sanjay Ghandi National Park is now part of Mumbai’s “natural infrastructure” system with the announcement of watershed management plans for the park to protect city drinking water supplies. And the latest installment in our series on the water-energy-food nexus offers a background look at what the concept, and why it’s so important to put nature in the nexus.
Ã¢â‚¬â€ The Ecosystem Marketplace Team
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