Towards a framework for peatland Payments for Ecosystem Services            Andrew Moxey    “VNN workshop on assessing &  ...
Introduction• Markets neglect most ecosystem services      need to correct for various, overlapping market failures• Range...
PES in theory• Voluntary provision• Beneficiaries pay (bundling, layering, piggy-backing)• Service providers paid directly...
PES in practice?• Conditional on actions not outcomes• Intermediaries take/make payments• Publicly rather than privately f...
Conditionality?• Uncertain causality   – complex relationships   – distant outcomes, both spatially & temporally• Payment ...
Use of public intermediaries• (Often) Many providers, many beneficiaries   – diffuse effects   – transaction costs of nego...
Additionality• Uncertain causality & asymmetric information• Inadequate monitoring   – poor baselining   – leakage   – mea...
Spatial coordination• ES delivery affected by scale & connectivity     Coordination/collective action problem• Possible na...
Voluntary provision?• Freedom of entry & exit   – take-up may not be as hoped for   – ES gains may be reversed if market s...
Property rights, reference pointsReference point ofsocietal expectations    Regulatory obligations          Voluntary prov...
Regulatory approach?• Avoid uncertainty/reversibility of voluntary provision• Direct state management of peatland   – ala ...
Agri-environmental schemes• Different terminology & structures across UK• Upfront capital payments plus annual payments• L...
Effectiveness?• Based on best management practices, but...• Critical evaluation by European Court of Auditors• Lack of rou...
Still, a tempting pot of cash...• Total UK CAP expenditure c.£3500m/yr• CAP & SSSIs c.£10m/yr across UK peatlands   – some...
Towards Peatland PES?• Need greater acceptance of ideas   – awareness raising   – involve providers & beneficiaries in des...
Towards Peatland PES?• Need better incentive structures   – data on opportunity and transaction costs   – ES values rather...
Pro-PES regulation?• Establishing compliance markets• Allowing voluntary arrangements   – CSR, water company deals with la...
Conclusions• PES need to overcome various market failures   – information, coordination, free rider problems• Technical an...
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Towards a framework for peatland PES

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Talk by Andrew Moxey at VNN peatland workshop, Leeds 18th January 2012

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Towards a framework for peatland PES

  1. 1. Towards a framework for peatland Payments for Ecosystem Services Andrew Moxey “VNN workshop on assessing & valuing peatland ecosystem services” Presentation on 18/01/2012, Leeds
  2. 2. Introduction• Markets neglect most ecosystem services need to correct for various, overlapping market failures• Range of policy options: Carrots, Sticks and Sermons – pros & cons of each• PES is one topical option; lure of private funding...
  3. 3. PES in theory• Voluntary provision• Beneficiaries pay (bundling, layering, piggy-backing)• Service providers paid directly• Additionality• Conditionality
  4. 4. PES in practice?• Conditional on actions not outcomes• Intermediaries take/make payments• Publicly rather than privately funded – e.g. agri-environment schemes (PES-like)• Voluntary additionality uncertain and reversible
  5. 5. Conditionality?• Uncertain causality – complex relationships – distant outcomes, both spatially & temporally• Payment on result is an inadequate incentive – risk of poor outcome through no fault of land manager – timelag on payment won’t cover immediate costs payment for actions more commonplace
  6. 6. Use of public intermediaries• (Often) Many providers, many beneficiaries – diffuse effects – transaction costs of negotiating contracts/payments – governance issues• Public funding – novelty of PES (i.e. private sector unfamiliarity) – public good nature of many (but not all) ES – free rider problems
  7. 7. Additionality• Uncertain causality & asymmetric information• Inadequate monitoring – poor baselining – leakage – measurement, reporting & verification problems• Often uncoordinated spatially – patchy take-up, poor targetting – individual sites rather than landscape scale
  8. 8. Spatial coordination• ES delivery affected by scale & connectivity Coordination/collective action problem• Possible natural landscape unit for water-based ES• Less obvious for GHG emissions or biodiversity• Administrative transboundary/sectoral issues – government failures in promoting integrated land use
  9. 9. Voluntary provision?• Freedom of entry & exit – take-up may not be as hoped for – ES gains may be reversed if market signals change• Incentive structures? – opportunity costs – transaction costs (inc. unfamiliarity) – asymmetric information – risks & timeframes – capacity?
  10. 10. Property rights, reference pointsReference point ofsocietal expectations Regulatory obligations Voluntary provision (Polluter pays) (Beneficiary pays) Increasing desired ES delivery
  11. 11. Regulatory approach?• Avoid uncertainty/reversibility of voluntary provision• Direct state management of peatland – ala Forestry Commission?• Pro/prescribed private peatland management – site designations? – cross compliance?• High political & economic costs?
  12. 12. Agri-environmental schemes• Different terminology & structures across UK• Upfront capital payments plus annual payments• Limited duration & subject to political whim• Not value of ecosystem services delivered• Income forgone & costs incurred (inc. transaction) – WTO constraint, politically difficult to get relaxed
  13. 13. Effectiveness?• Based on best management practices, but...• Critical evaluation by European Court of Auditors• Lack of routine, comprehensive monitoring• Vague descriptions/recording of actions• Targeting & spatial coordination design issues• High administrative costs...
  14. 14. Still, a tempting pot of cash...• Total UK CAP expenditure c.£3500m/yr• CAP & SSSIs c.£10m/yr across UK peatlands – some way short of perceived funding needs• Current CAP proposals unlikely to increase this?• Private funds via PES an alternative?
  15. 15. Towards Peatland PES?• Need greater acceptance of ideas – awareness raising – involve providers & beneficiaries in design process – build confidence & capacity (inc. within govt)• Need greater market confidence in delivery – better data on causality – better monitoring (avoiding “lemons”) – greater permanance (e.g. long term easements) – (public or NGO) proof of concept demonstrations
  16. 16. Towards Peatland PES?• Need better incentive structures – data on opportunity and transaction costs – ES values rather than income foregone – creation of intermediary bodies• Need better spatial coordination – facilitation of neighbour interaction – agglomeration bonuses? – insights from cooperative models in other sectors?
  17. 17. Pro-PES regulation?• Establishing compliance markets• Allowing voluntary arrangements – CSR, water company deals with land managers• Setting monitoring & performance standards• Rewarding value rather than income foregone• Promoting integrated land use – (e.g.) spatial planning processes? Joined-up govt?
  18. 18. Conclusions• PES need to overcome various market failures – information, coordination, free rider problems• Technical and social remedies needed – better data on site conditions, costs, performance etc. – stakeholder engagement, social learning, governance• Public sector role – direct funding – promoting/demonstrating feasibility – supporting market creation through pro-PES regulation

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