Compensation and incentives for the maintenance of ecosystem services

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by Ivan Bond, Senior Researcher, International Institute for Environment and Development

by Ivan Bond, Senior Researcher, International Institute for Environment and Development

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  • The emphasis given to this study by the Minister is noted.


  • 1. Compensation and incentives for the maintenance of ecosystem services: A review of current knowledge. Ivan Bond, Sheila Wertz Kanounnikoff and Peter Hazlewood Funded by the Ministry of Foreign Affairs (Norway)
  • 2. Three summary messages
    • The drivers and the causes of landuse change are well known, but they are complex, dynamic, varying over time and space
    • Payments for ecosystem services are new, but largely unproven tools
    • Resolving rights is a necessary but not sufficient step for the management of forests and woodlands
  • 3. Methods and the scope of our review
    • Landuse change in four regions; Amazon, Congo, Miombo Woodlands and South East Asia
    • Lessons from payments for ecosystem services
    • Cross cutting technical issues
  • 4. Absolute and relative landuse change
  • 5. Key lessons on landuse change
    • Drivers of landuse change:
      • Non-timber commodity prices
      • Timber prices (logging, legal & illegal)
      • Limited off-farm opportunities and poor economic growth
    • Causes:
      • Infrastructure (roads)
      • Public policies
      • Weak regulation / governance
    • Both drivers and causes vary over time and space.
    • Economic drivers assuming dominance
  • 6. A simple model for payments for ecosystem services Landuse systems Financial benefits Financial costs Current landuse Desired land-uses
    • Carbon
    • Watershed services
    • Bio-diversity
    Source: Engel et al. 2008 Review extended beyond Wunder’s definition
  • 7. PES definitions -- between hardcore and periphery PES Core “ PES-like” Schemes PES Core PES Core 5 criteria Theory & some private PES “ PES-like” Schemes: Some of 5 criteria Public agro-environmental schemes; eco-labels (e.g. ecotourism), etc. Other Economic Incentives: Any “payment” for any “environmental service” by “anybody” ICDPs, park-ranger salaries, reforestation subsidies, etc. Source: Sven Wunder, 2008 Other Economic Incentives “ PES-like” Schemes PES Core
  • 8. Sample of PES Projects
    • Latin America
        • Noel Kempf, Bolivia
        • PSA-H, Mexico
    • Congo
        • Ibi Bateke Carbon Sink, DRC
    • Miombo
        • Communal land conservancies, Namibia
        • CB Forest Management (Tanzania)
    • South-east Asia
        • Singkarak, Indonesia
        • Ulu Masen, Indonesia
  • 9. Some constraints to lesson learning
    • PES mechanisms are a relatively recent innovation
    • Scarce data and very little strictly comparable data
    • Major regional differences
    • Definitional issues
  • 10. Characteristics of PES Schemes
    • Sources of finance
        • Government – large schemes
        • User-funded – smaller pilot projects
        • Mixed funding – users, governments, donors
    • Payments
        • Cash
        • Kind
        • Allocation of Rights
    • Price discovery
        • Payments not markets (except CBNRM)
  • 11. What are the major lessons
    • Effectiveness
      • Limited effectiveness to date
      • Challenges of the underlying / basic science
      • Design / data problems
    • Efficiency
      • Generally non market, not efficient
      • Targeting is rare
      • Transaction costs
  • 12. What are the major lessons
    • Additionality
      • Very unclear as to whether additional
      • Very unclear as to permanence
    • Equity
      • Livelihood impact low
      • Not harmful though
  • 13. Some major challenges to REDD from the PES lessons
    • Is there a legal and policy framework that allows payments to landholders / managers or to other agents of landuse change?
    • Are there community organisations who are ready to receive, use and/or disburse payments?
    • What are the main drivers and causes of landuse change in the region or area?
    • What is the role of government at national and local levels?
    • Are there strong technical support agencies with experience in this kind of work?
  • 14. Recommendations for Norway’s REDD Programme
    • Immediately
        • Start pilot initiatives at sites where there is existing community architecture
        • Develop robust M&E systems so that we reduce the dependence on case studies and anecdotes
        • Ensure that the science is right
        • Target areas of high rates of landuse change
  • 15. Recommendations for Norway’s REDD Programme
    • Medium term
      • Work to develop the right legal and policy frameworks
      • Build the capacity of government, civil society and community based organisations
      • Organisational innovation (new stakeholders)
      • Work to eliminate perverse policies
      • Improve governance
      • Conditionality can be negotiated, but then must be applied