Patrick ten Brink of IEEP TEEB PES UNECE meeting 4 July 2011 final


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presentation by Patrick ten Brink of IEEP on Payments for Ecosystem Services PES at UNECE workshop on PES and Green Economy July 2011

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Patrick ten Brink of IEEP TEEB PES UNECE meeting 4 July 2011 final

  1. 1. The Economics of Ecosystems and Biodiversity Rewarding benefits through payments and markets Patrick ten Brink TEEB for Policy Makers Co-ordinator Head of Brussels Office Institute for European Environmental Policy (IEEP) UNECE Workshop, 4-5 July 2011 Payments for Ecosystem Services: What role for a green economy ? Palais des Nations Salle VIII, Geneva 4-5 July 2011 1
  2. 2. TEEB‟s Genesis, Aims and progress G8+5 “Potsdam Initiative – Biological Diversity 2010” Potsdam 1) The economic significance of the global loss of biological diversity Importance of recognising, demonstrating & responding to values of nature Engagement: ~500 authors, reviewers & cases from across the globe TEEB End User Reports Brussels Interim Climate 2009, London 2010 Report Issues Update TEEB TEEB CBD COP11 Synthesis Books Delhi National TEEBEcol./Env. WorkEconomicsliterature Sectoral CBD COP 9 Input to TEEB Bonn 2008 UNFCCC 2009 work India, Brazil, Belgium, Et al. Japan & South Africa Sept. 2010 Rio+20 Brazil CBD COP 10 Nagoya, Oct 2010 TEEB Reports: Summaries (in range of languages) and chapters
  3. 3. Valuation and policy making: from valuing natural assets to decisions“I believe that the great part of miseries of mankind are brought uponthem by false estimates they have made of the value of things.”Benjamin Franklin, 1706-1790 “There is a renaissance underway, in which people are waking up to the tremendous values of natural capital and devising ingenious ways of incorporating these values into major resource decisions.” Gretchen Daily, Stanford University
  4. 4. TEEB for Policy Makers The Global Biodiversity Crisis • Nature’s assets & biodiversity loss • Economic values and loss • Social dimension Measuring what we manage • Indicators • Accounts • Valuation • Assessment Available Solutions • Markets/pricing/incentives :PES • Regulation: standards • Regulation: planning, protected areas • Investment (man-made & natural capital)Book announcement: The Economics of Ecosystems and Transforming our approach toBiodiversity in National and International Policy Making now available from Earthscan natural capital
  5. 5. Ecosystem services - different types of value in our economic and social systemsProvisioning services Market values• Food, fibre and fuel• Water provision Potential Market values• Genetic resources – eg water supply PES; -eg ABSRegulating Services Potential Market values• Climate /climate change regulation – eg REDD & water purification PES• Water and waste purification - Avoided cost of purification• Air purification Health: social value• Erosion control• Pollination Lost output or• Biological control cost of alternative service providerCultural Services• Aesthetics, Landscape value, recreation Market values – some tourism and tourism• Cultural values and inspirational services Social value – identity et al Some are private goods (eg food provisioning), others public goods that can become (part) private (eg tourism, pollination), others are pure public goods (eg health, identify)
  6. 6. Many ecosystem services from the same piece of land Benefits local to global Benefits are spatially dependent PES need to take these different dimensions into account
  7. 7. PES: They exist, they work, learning by doing• The underlying principle of PES - „beneficiary / user pays‟ principle + service providers get paid for their service• PES aim to change the economics of ecosystem service provision by improving incentives for land use and management practices that supply such services• Instrument growing in applications – 300 PES programmes globally, range of ecosystem services (Blackman & Woodward, 2010) – Broad estimate for global value: USD 8.2 billion (Ecosystem Marketplace, 2008) – USD 6.53 billion in China, Costa Rica, Mexico, the UK and the US alone. (OECD 2010) – Increasing by 10-20% per year (Karousakis, 2010) – Dynamic field – new support (e.g. Natural England White Paper), potential solution to challenges (e.g. public payments for public goods and EU CAP reform), new tool flood control (Eg Danube – exploring options)• Big and small – E.g. 496 ha being protected in an upper watershed in northern Ecuador – eg. 4.9 million ha sloped land being reforested by paying landowners China. See also Chapter 5 TEEB for Policy Makers
  8. 8. Public (municipal, reg., nat.) & private (eg Vittel (Fr), Rochefort (B), Bionate (D)for quality water & mixedLocal (e.g. New York, Quito), Regional (e.g. Niedersachsen) , national (e.gCosta Rica, Mexico and Ecuador and international (e.g. REDD+, ABS)PES address a wide range of objectives• For Specific services - e.g. provision of quality water (NY, Ec, Mx), protect groundwater (J, D), cleanse coastal waters (Sw), carbon Storage (NZ, Uganda, CR), invasive alien species (SA - WfW), biodiversity (EU,AUS), traditional knowledge for bio-prospecting (India), flood control (exploring Danube)• Multiple services: e.g. Costa Rica’s PSA - carbon, hydrological services preserving biodiversity and landscape beauty. Germany and Bolivia for biodiversity and water• Multiple objectives - e.g. Mexico’s PSAH – hydrological services, deforestation, poverty „Men do not value a good deed unless it brings a reward‟ Ovid, B.C. 43 – 18 A.D.
  9. 9. Multiple Objectives : PSAH MexicoPES to forest owners to preserve forestManage and not convert forest• e.g. cloud forest US$ 40 per ha/year;• e.g. other tree-covered land US$ 30 per ha/yearHydrological services: Aquifer Recharge;Improved surface water quality,Reduce frequency & damage from flooding Reduce Deforestation Address Poverty Munoz 2010); Muñoz-Piña et al. 2008; Muñoz-Piña et al. 2007
  10. 10. Multiple Objectives : PSAH MexicoBalance of priorities varied over time AquifersAn instrument can evolve and respond tochanging needs A Poverty Water scarcityP WS Deforestation D Munoz 2010); Muñoz-Piña et al. 2008
  11. 11. PSAH Mexico Results: PSAH reduced the rate of deforestation from 1.6 % to 0.6 %. 18.3 thousand hectares of avoided deforestation Avoided GHG emissions this equates 3.2 million tCO2e. Year in which forest is 2003 2004 2005 2006 2007 2008 2009 Totalsigned into the program …Surface incorporated into 127 184 169 118 546 654 567 2,365the program (‘ooo ha)Forest owners participating 272 352 257 193 816 765 711 3,366(individuals + collectives)Total payment to be made 17.5 26.0 23.5 17.2 84.2 100.9 87.4 303over 5 years (US$ m)Source Munoz 2010); Muñoz-Piña et al. 2008
  12. 12. PES are intended to reward good management practices that go beyond what is legally compulsory PES: Beneficiary pays vs. the polluter pays principle Pragmatism vs. principle ? Reducing emissions/impactsNo emissionsNo impact (i.e. withinassimilative capacity of ecosystem) Costs born by society PES (eg remaining pollution impacts)Environmental target(practical /politically feasible PES to foresters/farmers to helpenvironmental optimum at the time) pay for measures to meet PES objectives / targets beyond legislative requirementsPrivate solution withlegal requirements Costs of measures borne by(„reference level‟) PPP landowner – eg Polluter Pays Principle (partly implemented). Lesser societal costsPrivate Optimum (inabsence of legal requirements) Self-damaging (Damage) Costs to practice landowners and societyNo control on emissions
  13. 13. Key insights on PES noted in TEEB / summary• PES a tool with a growing track record in use, usefulness, effectiveness• PES programmes operate in both developed and developing countries and may focus on single or multiple services.• PES can be applied at different spatial scales• PES are highly flexible and can be established by different actors - Tools can be tailor-made to address the objective at hand• Many ways to structure PES schemes, depending on the specific service, scale of application and context for implementation• PES schemes can be designed to create or support other socio-economic objectives such as employment related to the provision of ecosystem services.• PES effectiveness and feasibility are closely tied to the regulatory baseline and its enforcement• Thin line between PES being a true payment for services and a subsidy. Pragmatism needed for progress. But care not to go to “polluters get paid”
  14. 14. • Wide participation in PES-related decisions can help ensure transparency and acceptance and avoid covert privatization of common resources.• PES are not appropriate everywhere. (e.g. where rights not defined; where major information or asymmetries in bargaining power)• careful design and preparation to ensure that PES schemes are effective and appropriate for local conditions …. below some OECD insights – remove perverse incentives; – clearly define property rights; – clearly define PES goals and objectives; – develop a robust monitoring and reporting framework. – identify appropriate buyers and ensure sufficient and long-term sources of finance; – identify sellers and target ecosystem service benefits; – consider opportunities for bundling or layering multiple ecosystem services; – establish baselines to ensure additionality; – reflect ecosystem service providers’ opportunity costs via differentiated payments; – address leakage (displacement of emissions); – ensure permanence. What are you‟re your experience? Lessons from practice? Plans and potentials for PES ?
  15. 15. Thank you TEEB Reports available on TEEB in Policy Making now out as an Earthscan book See also Patrick ten Brink, IEEP is an independent, not-for-profit institute dedicated to the analysis, understanding and promotion of policies for a sustainable environment Manual of EU Environmental Policy:
  16. 16. PES aim to change the economics of ecosystem service provision by improving incentives for land use and management practices that supply such services Intensive land use Biodiversity „friendly‟ land use Eg Private optimum Eg social optimum Potential new BENEFITS Cultural Services income from (eg tourism) differentTo date „unpaid‟ CS Regulating payments for RSecosystem services (eg ecosystem PSservices water quality) services Additional PS (other products, pollination) Income(Paid) Benefit to from provisioningland user - Income foregone Services (PS) Income fromprovisioning to landowner (in absence of PES) products inservices (eg farm marketsor forest products) COSTSCost to populationof pollution PES help in move to green economy/ improved social benefitSocial Benefit = Private benefit + public good (ESS) – pollution costs