Payment for Ecosystem Services (PES) as a means of sharing environmental benefits: How numbers provide the basis for dialogue in water-based payment schemes in the AndesAndy Jarvis, Marcela Quintero, Nathalia Uribe, Ruben-Dario Estrada

ContentsThe importance of numbersOur principlesThree examples of science-based establishment of water-based PES in the AndesChingazaMoyobambaFuqueneOutlook

CIAT’sworkonEcosystemservicesVeryfocussedonexternalitiesES thathave a national, regional orinternationalmarketAbovegroundcarbonWaterPuttingthenumberson ES flows in anintegratedmannerLearningfrombroadrange of casesEnablingthepoortoengage and benefitfromemerging ES marketopportunities

Reasons for Failures in PESHigh failure rate of PES, though Latin America has been a test-bedUnreal expectations for PESLack of equity in benefit sharingPoor or inappropriate governance structuresLow perceived impact in terms of ES benefitsHigh potential to create conflict, rather than resolve itNumbers as a basis for dialogue

ExternalitiesAn externality is the beneficial or damaging effect caused on a third party by the decision of other(s)Those who cause the effect do not receive any compensation for the generated benefit, or do not assume the cost of the damaging effectEnvironmental externality is determined by the environmental effects of a human activityWhen the effect is positive the externality is considered as an environmental serviceExample: Watershed services: regulation of streamflows and retention of sediments achieved by land uses and management

Extreme poverty is as bad or worse than 25 year agoPoverty and Extreme Poverty in rural zones (Percentage of total rural population)7060504030201001980199019941997199959.965.445.16353.7Poverty %32.740.440.837.638.3Extreme poverty %Source CEPAL: Panorama Social de América Latina, 2000-2001.PES that promote natural, economic and social benefits

CHINGAZA COLOMBIA

1. Antecedentesi. Hay una pérdida histórica de cobertura vegetal en las cuencas abastecedoras de la EAAB.ii. Cambios en el uso de la tierra con efectos adversos a los servicios ambientales. iii. Ahorro en costos de tratamiento y conservación: Caso Nueva York y Caso Quito.iv. Gestión ambiental aislada.

i. Pérdida histórica de cobertura vegetal de las cuencas abastecedoras en el Parque y Sistema Chingaza.19772001Aumento de Pasturas 18,9% Fuente: Ciat, 2007, Estudio contratado por TNC, EAAB, Patrimonio Natural & Parques

The numbers behind a Payment for Ecosystem Services (PES) Scheme Agua y sedimentos producidos en Chingaza Fuente: Ciat, 2007, Estudio contratado por TNC, EAAB, Patrimonio Natural & Parques

Resultados ECOSAUTOpportunity Costs through economic modelling

Social and economic benefits for the rural poor

FUQUENE COLOMBIA

Elements Percentage by Catchments

Potato growersMinimum tillageLess sediments, N, P, and more waterEconomic compensationSustainableCattle ranchersPotable water consumersPositive impact on environmental externalitiesEconomic CompensationParticipatory GamesFuquene Lake CaseAlternatives InterdependenciesUp streamDown stream

MOYOBAMBA PERU

Soil TypesDigital Elevation ModelLand UseHydrological Response UnitsService providing units

Moyobamba watershed (Peru)

Evaluation of land use alternatives for providing environmental servicesIncrease Net IncomeBetter environmental servicesEmployment generationFarmers acceptanceTrade off Analysis

Examples of land use evaluationEx ante analysis Conservation agriculture (Colombia)Increases net incomes, potato production, social benefits, sediment retention and employment; and reduce production costs.However the initial investment can not be afforded with current small farmers cash flows

Moyobamba (Peru)

Experimental economics to explore willingness to implement new management practices and to make “payments”Sc.1: Allowing communication between farmers and water users Sc 2. Without communication Sc.3. Applying small penaltiesSc 4. Applying high penalties Farmers willing to implement conservation agriculture practicesDownstream water users willing to transfer resources to upstream farmers implementing conservation agricultureSource: U.Javeriana. 2004. Análisis de la acción colectiva para el Manejo de cuencas. Estudio piloto-cuenca de la Laguna de Fúquene. Proyecto Cuencas Andinas GTZ CONDESAN

Where to invest for environmental AND social benefits (eco-efficiency)CARBON IN THE AMAZONÁreas prioritarias de inversión Áreas prioritarias con ahorros potenciales de tratamiento aguaÁrea prioritaria sin ahorros potenciales de tratamiento aguaFuentes de sedimentosMayoresMenores

Opportunity costs of REDD in threatened Brazilian Amazon forestsBörner et al. (submitted), Amazon Initiative (CIAT, CIFOR, ICRAF)

Opportunity costs of REDD in threatened Brazilian Amazon forestsBörner et al. (submitted), Amazon Initiative (CIAT, CIFOR, ICRAF)

Potential equity effects of different REDD payment scenarios by tenure categoryBörner et al. (submitted), Amazon Initiative (CIAT, CIFOR, ICRAF)Tradeoffs: Maximum environmental benefit at cost of rural smallholder poor?

CONCLUSIONSPES provide a new paradigm for natural resource management….…but also a new paradigm for addressing concerns of rural povertyEstablishment of schemes must be based on sound, integrative analysis of natural, social and economic benefitsIn CIAT we’re very interested in matching with partners to generate rural livelihoods through PES. We can provide natural, economic and social analysese, and you…..

A.JARVIS@CGIAR.ORG