The restoration of natural capital and the development of payments for ecosystem services in South Africa: An opportunity for sustainable natural resource management and use? Christo Marais Department of Water Affairs and Forestry, South Africa

The market for ecosystem services relevant to the Southern African context Water regulation and supply 2. Carbon sequestration and maintenance 3. Natural landscapes (biodiversity) for recreation and bequest value.

Water regulation and supply

Environmental and Social Cluster of the Expanded Public Works - Promoting Socio-Economic Development and Improved Livelihoods Working for Water - manages invasive alien plants to enhance the sustainable use and conservation of our natural resources 2. Working for Wetlands - champions the protection, rehabilitation and sustainable use of South Africa's wetlands 3. Working on Fire - enhance the sustainability and protection of life, livelihoods, ecosystem services and natural processes through integrated fire management 4. Working for Woodlands - regain woodland composition, structure and function.

Working for Water - manages invasive alien plants to enhance the sustainable use and conservation of our natural resources

The Opportunities in the Water Sector Yield (utilizable water), Retention (maximize low flows), Water quality (minimize the loss of top soil, siltation of water infrastructure, damage to water services and human health risks) and Risk (minimize impacts of floods and droughts).

Yield (utilizable water),

Retention (maximize low flows),

Water quality (minimize the loss of top soil, siltation of water infrastructure, damage to water services and human health risks) and

Risk (minimize impacts of floods and droughts).

The Water Pricing Strategy - Clearing of Invasive Alien Plants (IAP’s) The full cost of control of certain IAP’s may be charged to affected water users. … . in consultation with affected stakeholders, … the control of IAPs is the best and most cost effective action possible to increase long term water security and availability. Once agreement is reached …, the total cost of control must be communicated to all affected stakeholder organisations. These costs may be supported by subsidy where available and appropriate.

The full cost of control of certain IAP’s may be charged to affected water users.

… . in consultation with affected stakeholders, … the control of IAPs is the best and most cost effective action possible to increase long term water security and availability.

Once agreement is reached …, the total cost of control must be communicated to all affected stakeholder organisations. These costs may be supported by subsidy where available and appropriate.

Photograph courtesy: Ms. Terry Everson Impact of Sedimentation on the Siltation of Dams and Water Quality

Photograph: Courtesy Prof. Rudi van Aarde

Photograph: Courtesy Prof. Rudi van Aarde

Photograph: Courtesy Prof. Rudi van Aarde

Dry Season

Dry Season

Opportunities in the Carbon Market: Working for Woodlands in the Eastern Cape Thicket Restoration Programme

Degradation of Albany Thicket Biome

The good - 300,000 ha Semiarid solid thicket (characterized by a dense canopy of tall shrubs and a Portulacaria afra Jacq. component)

The bad - 600,000 ha Moderately degraded by injudicious goat-farming

The ugly - 800,000 ha Severely degraded by injudicious goat-farming

Comparing Carbon storage in Semi-arid and Arid Systems with Lilliputian (Rain) forest Lechmere-Oertel et. al. (2006) Austral Ecology

Above ground 40 ± 3 7 ± 1 Litter 11 ± 1 1 ± 0.4 Roots 25 ± 1.3 11 ± 0.7 Soil 133 ± 27 95 ± 15 and falling? Total 209 ± 28 114 ± 14 t C ha -1 Mills et. al. (2005) Austral Ecology

Krompoort (MAP 300 mm yr -1 ) 27 years growth 4.2 ± 0.08 t C ha -1 yr -1 = 15.4 t CO 2 ha -1 yr -1 Mills & Cowling (2006) Restoration Ecology

Financial overview Goat farming $7 – $30 income ha -1 yr -1 Spekboom farming Implementation costs: $400 – $700 ha -1 - based on large-scale DWAF project in Baviaanskloof Potential turnover (inclusive of transaction costs): @ $3 $30 ha -1 yr -1 @ $20 per credit $200 ha -1 yr -1 present carbon price: $5-$10 - 2006 high: approximately $ 40 (energy credits) 10 t CO 2 ha -1 yr -1 - conservative Mills & Cowling (2006) Restoration Ecology: 15.4 t CO 2 ha -1 yr -1

Financial overview

Goat farming $7 – $30 income ha -1 yr -1

Spekboom farming

Implementation costs: $400 – $700 ha -1

- based on large-scale DWAF project in Baviaanskloof

Potential turnover (inclusive of transaction costs):

@ $3 $30 ha -1 yr -1

@ $20 per credit $200 ha -1 yr -1

present carbon price: $5-$10

- 2006 high: approximately $ 40 (energy credits)

Large-scale project scenario 20, 000 hectares 417 people employed over 10 years Total cost: $26 million Potential annual earnings: @ $3 per credit $600,000 @ $20 per credit $4 million The Proviso There is no free lunch. Sellers must be capacitated to enter the market. There is money to be made but it needs proper regulation. A long term view Transaction costs can be a deal breaker!

Large-scale project scenario

20, 000 hectares

417 people employed over 10 years

Total cost: $26 million

Potential annual earnings:

@ $3 per credit $600,000

@ $20 per credit $4 million

The Proviso

There is no free lunch.

Sellers must be capacitated to enter the market.

There is money to be made but it needs proper regulation.

A long term view

Transaction costs can be a deal breaker!

Opportunities in Water, Carbon & Biodiversity: Integrated Veld and Forest Fire Management

Impacts of Fire on Biodiversity, Ecosystem Processes and Services Sprouting – a large proportion of plants in fire-prone areas have the ability to sprout after fire, Serotiny – some plants (for exam ple, proteas) hold their seeds in “fire-proof capsules” built from the remains of the flowers. Smoke-stimulated germination – the seeds of many plant species are stimulated to germinate by the chemical cocktails contained in smoke. Fire-stimulated flowering – many species are stimulated to flower, following fires, offering the best opportunity for seed production and germination of these plants. Flammability – “killing their neighbours”, and creating space for their own progeny to thrive. Dependence on fire-induced nutrient flushes - Some animals, such as Roan antelope, calve in the middle of the dry season, when green grass is scarce. The females need the protein flush that follows a fire to provide enough milk for their calves.

Sprouting – a large proportion of plants in fire-prone areas have the ability to sprout after fire,

Serotiny – some plants (for exam ple, proteas) hold their seeds in “fire-proof capsules” built from the remains of the flowers.

Smoke-stimulated germination – the seeds of many plant species are stimulated to germinate by the chemical cocktails contained in smoke.

Fire-stimulated flowering – many species are stimulated to flower, following fires, offering the best opportunity for seed production and germination of these plants.

Flammability – “killing their neighbours”, and creating space for their own progeny to thrive.

Dependence on fire-induced nutrient flushes - Some animals, such as Roan antelope, calve in the middle of the dry season, when green grass is scarce. The females need the protein flush that follows a fire to provide enough milk for their calves.

Two Major Impacts on Soil Movement and Related Ecosystem Services Fire (rotation and season) Unsustainable use (overgrazing and “nutrient mining”)

Fire (rotation and season)

Unsustainable use (overgrazing and “nutrient mining”)

Land Use & Management Options Unsustainable Fire Regimes

Conclusion There is potential for the development of a Payments for Ecosystem Services (PES) Market in South Africa The two most promising options at the moment are water regulation and carbon . It has the potential to have significant socio-economic benefits to the rural poor where up to 80% of the population are unemployed. Restoring Natural Capital and the development of PES could make significant contributions to the alleviation of poverty in developing countries all over the world.

There is potential for the development of a Payments for Ecosystem Services (PES) Market in South Africa

The two most promising options at the moment are water regulation and carbon .

It has the potential to have significant socio-economic benefits to the rural poor where up to 80% of the population are unemployed.

Restoring Natural Capital and the development of PES could make significant contributions to the alleviation of poverty in developing countries all over the world.

Thank You!