Workshop-seminar
Payment for Ecosystems Services in
Kazakhstan: Best Practices and Lessonslearned in Watershed Management in the
U.S. and Central Asia
7-8 October, 2010
Simon Charré and
Mariya Genina
I) What are Payments for
Ecosystem Services?
Payment for Ecosystem Services is
based on the concept of Ecosystem
Services
• Definition of the United Nations: “ES are the
benefits that ecosystems provide to humans”.
• 4 types of ES have been identified, they concern:
–
–
–
–
provision (production of food and water)
regulation (control of climate and disease)
Support (nutrient cycles and crop pollination)
Culture (spiritual and recreational benefits)
What are the ES provided in the case of
water resources?
Upstream land uses can be:
• agriculture
• Industry
• forestry
They affect the quantity, quality, and timing of
water flows.
Forests
Agricultural
lands
Downstream beneficiaries can
be:
• Domestic water use
• Irrigated agriculture
• Fisheries
• Recreation
• Downstream ecosystems
Outcomes of this situation:
• Upstream land are beneficiaries
from the situation. Their practices
are not sustainable but they are
the less expensive for them.
• Downstream population face
problems with water resources,
which impacts their standard of
living.
→ A change in practices affects positively downstream populations, but
decrease the benefits of upstream land users, that’s the reason why they are
often not really willing to change without incentive.
Current situation
Benefits to
land users
Costs to
downstream
populations
New practices
How to solve this situation?
The Payment for Ecosystem Services
mechanism is a win-win answer to this
situation. A financial relation between ES
providers (sellers) and beneficiaries (buyers) is
developed on a voluntary basis:
Buyers pay an incentive to the sellers if
they commit themselves to change their
practices toward more sustainable ones.
Forests
Agricultural
lands
Upstream land users =
Ecosystem Services sellers
Payment
flow
Ecosystem
Services flow
Downstream water users =
Ecosystem Services buyers
The Payment of the PES can have different natures according to
the situation: mainly cash or in-kind. In any case, to be
sustainable, it must:
• Be affordable for the buyer
• Covers the cost of changing practices and provide an incentive for the seller
• Be repeated every year, as long as the Ecosystem Services are provided
Current situation
New practices +
payment
Payment
Benefits to
land users
(sellers)
Costs to
downstream
populations
(buyers)
Who are the stakeholders involved in
the PES?
The stakeholders designing and implementing the
PES scheme can be…
• Non-governmental organizations such as NGOs
or associations
• Governmental bodies, at the local or national
level
• Private companies
…and those involved in the mechanism itself, i.e.
buyers, sellers and the intermediate organization
can be:
• Governmental bodies
• Private companies
• The population, from small farmers to inhabitants
of important cities
Types of PES
Depending on the stakeholders involved as buyers and
sellers, the PES is considered as:
• Public-Public
e.g., a state-owned hydropower plant pays the national forest
agency to increase reforestation in a watershed;
• Public-Private
e.g., a city administration pays farmers to adopt environmentally
friendly practices in order to ensure a good quality of water;
• Private-Private
e.g., a private company that needs clean water pays private land
users to encourage them to change their practices.
The essential role of
governmental bodies
To be implemented and work efficiently, the PES
needs to be developed in a favorable
institutional framework. Thus, governmental
bodies have to act at global or local level in
order to:
• Allow the creation of a fund thanks to the
money collected among sellers
• Allow the financial transaction buyers/sellers
• Allow the establishment of a contract
between public and private stakeholders
Necessary conditions for the
sustainability of PES schemes:
– The institutional framework allows this type of
mechanism
– The payment is affordable for buyers and covers sellers
expenses (opportunity cost): need to conduct scientific
assessments
– Transaction costs are as low as possible
– The financial support is mainly provided by buyers and
other local organizations and not by NGOs or external
donors
– The conditions of the PES are established after a multistakeholders negotiation and are written down in a formal
contract
– Capacity building and awareness raising for stakeholders
These conditions must be met to ensure the sustainability of
the PES scheme.
II) Key steps of design and
implementation of a PES scheme:
STEP 1
• Identification of a pilot territory
where:
– The geographic situation allow the
implementation of this kind of mechanism
– Local authorities are involved in the local
development
– Economic activities are highly dependent
of the furniture of one or several ES
– Populations are willing to pay for the
provision of ES
STEP 2
• First discussions with local stakeholders:
– Presentation and clarification of the concept of
PES
– Discussions on the interest of the mechanism in
the territory
– Creation of a coordination committee to lead the
design of the PES
The awareness of local stakeholders and their willingness to be
involved in the scheme is crucial for having positive results
STEP 3:
Identifying Ecosystem Services
ES Demand:
•
•
•
•
What specific services?
Type of measurement?
Who benefits from these services?
How much benefit do they receive?
Need a multidisciplinary work
ES Supply:
• How are these services generated?
• How much more or less of these services
would they receive if land use changed?
• Who generates these services?
ES have to be evaluated at several levels
• What is the influence of the land uses on water
resources?
• What is the link between water resources and the
welfare of downstream population?
• What new land use practices could improve the
welfare of downstream population?
The answers to these questions need the intervention of
specialists in: biology, hydrology, economy, sociology
These assessments, because they are objective,
strengthen the trust of local stakeholders in the scheme
Finally, scientific assessments have to show the two
limits of the possible payment:
• The Opportunity Cost (minimum acceptable payment for sellers)
• The Value of Benefits (maximum acceptable payment for buyers)
Current
situation
New practices
Benefits to
land users
Minimum payment
Costs to
downstream
populations
Maximum payment
New practices +
payment
Payment
The monitoring has two impacts on the
PES operation:
• Ensures confidence in the system
• Allows to adjust the scheme if the
environmental situation or the relation
between buyers and sellers change
This monitoring is a key point for the
sustainability of the system and has to be
elaborated before the implementation of the
scheme, in consultation with all the
participants.
STEP 4
• Training activities:
– Disseminate new practices and monitoring
among the upstream land users
– Give them important information for the next
activity, i.e. the negotiation of the contract (price
of change of practices, different natures for the
payment)
Example: Training to disseminate new pasture use
practices among farmers.
STEP 5
• Negotiation of the contract:
This step establishes the relation
between buyers and sellers
(conditionality, payment,
monitoring)
– It brings together buyers, sellers
and the intermediate organization
– The output is the agreement and
signature of the PES contract
Content of the PES contract
• Nature, amount and recurrence of
the payment
• Conditionality of the payment
• Nature and recurrence of the
monitoring
• Conditions for the extension or
renegotiation of the contract
STEP 6
• Monitoring:
The monitoring, realized by independent
experts, aims to:
– Show the effectiveness of the chosen
practices: Do changes in land use generate
the desired services?
– Show the Impact on participants: is the
welfare of participants improved?
– Verify that ES sellers are following the
conditional practices
STEP 7
• Extension or reevaluation of the contracts:
– The monitoring shows whether the
characteristics of the contract are adapted to
the local situation
– After the end of each contract, a meeting
present the results of the monitoring
– During this meeting, according to the results
of the monitoring and the remarks of the
participants, the contract can be amended
– Contracts can be extended as long as ES are
provided
Conclusion
• The PES tool is adaptable to a large range of natural, economic
and social contexts
• It deals both with nature protection and development of
economic activities
• It ensures a long term provision of Ecosystem Services
beneficial for buyers
• It ensures long-term incomes for sellers
• It relies on multistakeholder cooperation
The PES tool is therefore an interesting opportunity
for Central Asia to protect natural resources and
support rural development
References
• The figures were taken from the presentation
of Mr. S. Pagiola “PES for Dummies”