Blake Lapthorn green breakfast with URS Global


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On Wednesday 6 November 2013, Blake Lapthorn's climate change hosted a green breakfast seminar. Guest Speaker Robert Spencer, Business Line Director - Sustainability at URS Infrastructure & Environment UK Ltd, talked about integrating eco system services and Natural Capital considerations into business planning and strategy.

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Blake Lapthorn green breakfast with URS Global

  1. 1. Payments for Ecosystem Services Robert Spencer, Business Line Director – Sustainability URS Infrastructure & Environment UK Limited Oxford Green Breakfast | 6th November 2013
  2. 2. Outline Background to Ecosystem Services Introduction to PES Existing PES Schemes and Case Studies Five step PES process
  3. 3. Background to Ecosystem Services
  4. 4. Ecosystem services “The benefits that people obtain from ecosystems” Millennium Ecosystem Assessment, 2005 Provision of Freshwater Ecosystem services include: Provisioning services – provision of food, water, timber, and fibre Regulating services – regulation of climate, water quality, and flood risk Cultural services – opportunities for recreation, tourism, and cultural development Supporting services – nutrient cycling, soil formation, and biodiversity Regulation of Pollination Recreation Opportunities Biodiversity Services
  5. 5. What is the ecosystem approach? Ecosystems are made up of key processes and structures such as trees which give rise to supporting services such as photosynthesis and soil formation) These underpin the services that provide benefits to people such as timber and lower flood risk The values people place on services reflect the benefits they receive The ecosystem approach requires that these benefits are included in decision making so that policy better reflects people’s values Ecosystem or  land cover type Biophysical  structure or  process Supporting  services   Final services Benefits Values Woodland Trees Water storage Flow regulation Lower flood risk Reduced damage
  6. 6. Traditional scenario Cut down trees – gain value from giving over land to development and some timber production Timber Value for  development Preserve woodland – less value to landowner
  7. 7. Ecosystem services scenario Carbon  sequestration Air quality  regulation Habitat for  wildlife Recreation Timber Noise attenuation Preserving the woodland provides habitat for wildlife, carbon sequestration, recreation, noise attenuation, local climate control etc.
  8. 8. What’s the problem? In 2005, the Millennium Ecosystem Assessment concluded that the majority of global ecosystem services have been degraded In 2010, The Economics of Ecosystems and Biodiversity report concluded that many ecosystems have been degraded to such an extent that they are nearing critical thresholds In 2011, the UK National Ecosystem Assessment concluded that around 30% of services are currently declining and many others are in a reduced or degraded state
  9. 9. Ecosystem services: a growing agenda Rio +20 ‘Green Economy’ ICMM ‘Good practice guidance for mining and biodiversity’ The Economics of Ecosystems and Biodiversity (TEEB) Intergovernmental Platform on Biodiversity and Ecosystem Systems (IPBES) Nagoya ‘Aichi Biodiversity Targets’ International Finance Corporation requires client projects to “maintain the benefits from ecosystem services” EU target to halt the loss of biodiversity and the degradation of ecosystem services in the EU by 2020 and restore them in so far as feasible UN Decade on Biodiversity US, Brazil, and Australian legislation mandate biodiversity offsets
  10. 10. Ecosystem services: closer to home Natural Environment White Paper (2011) “We must go beyond that, working together to safeguard ecosystem services and restore degraded ecosystems through more cost-effective and integrated approaches” National Planning Policy Framework (2012) “The planning system should contribute to and enhance the natural and local environment by recognising the wider benefits of ecosystem services” A Living Wales (2010) “Ensure that Wales has increasingly resilient and diverse ecosystems that deliver economic, environmental and social benefits” Defra Ecosystems Approach Action Plan (2010) “Ensure that the value of ecosystem services is fully reflected in policy and decision making in Defra and across Government at all levels” Revised European EIA Directive (2012) “A description of the aspects of the environment likely to be significantly affected by the proposed project, including, in particular… biodiversity and the ecosystem services it provides…” Applying an Ecosystem Approach in Scotland: A Framework for Action (2010) “An ecosystem approach implies…a change in the way that human activities affect ecosystems by integrating ecosystem values into the drivers of these activities”
  11. 11. Drivers for engagement “Declines in biodiversity and ecosystems could have a $10bn to $50bn impact on business” UNEP 2010 Financial risks Environmental risks and assets increasingly affecting share price and ability to secure funding Regulatory risks Penalties from new policies such as pollution taxes and moratoria on natural resource extraction Reputational risks Exposure from media and NGO campaigns, shareholder resolutions and changing customer preferences Operational risks Increased scarcity and cost of raw materials, disruptions to business caused by natural hazards Competitive advantages Growing markets for certified sustainable products, efficiency improvements, increased supply chain resilience
  12. 12. Ecosystem approach for business “The world's biggest corporations responsible for $2.15 trillion in environmental costs in 2008…institutional investors with a $100m holding in a typical diversified equity fund could ‘own’ $5.6m in external costs” UNEP Ecosystem services playing an increasingly important role in the private sector Corporate level e.g. Puma’s Natural Environment Accounting Operations level e.g. impact and risk assessments to meet growing lenders standards
  13. 13. Introduction to PES
  14. 14. Ecosystem markets “Understanding the links between biodiversity and a wider range of ecosystem services is rapidly improving… and we are increasingly able to place values on such services… The urgent and logical next step is to develop markets that enable these values to be realised for services such as water quality, flood risk management, climate regulation and other benefits” Making Space for Nature: A review of England’s Wildlife Sites and Ecological Network (the ‘Lawton Review’)
  15. 15. ‘Environmental policy toolkit’ Regulation Provision of services by Government (e.g. publicly owned green infrastructure) Voluntary efforts by business, communities and individuals Incentive or market-based mechanisms Charges (e.g. taxes and user fees) Tradable permits (e.g. emissions trading) Certification schemes (e.g. eco-labels) Payments for Ecosystem Services (PES) Jack, B.K., Kouskya, C. and Simsa, K.R.E. (2008). Designing payments for ecosystem services: Lessons from previous experience with incentive-based mechanisms. PNAS 105(28): 9465-9470.
  16. 16. What does PES look like? ‘beneficiary pays principle’ Land or resource managers Graphic © Forest Trends Services Service beneficiaries Payments
  17. 17. Definition A PES is: a voluntary transaction where a well-defined ES (or a land-use likely to secure that service) is being ‘bought’ by an (minimum one) ES buyer from a (minimum one) ES provider if and only if the ES provider secures ES provision (conditionality) Wunder S. (2005). Payments for environmental services: Some nuts and bolts. CIFOR Occasional Paper No. 42, Centre for International Forestry Research, Bogor, Indonesia
  18. 18. Key PES principle – ‘additionality’ “Payments should typically be for actions that are additional to what is usually expected of landholders – they should not be compensated for obeying the law, but rather for actions that society considers beyond the landholder’s responsibility” RSPB (2010). Financing nature in an age of austerity
  19. 19. How PES works
  20. 20. Scale of PES PES can be developed at a variety of spatial scales, e.g. International, e.g. REDD+, Green Development Mechanism, Ecuador Yasuni ITT Trust Fund National, e.g. Agri-environment schemes (tend to be public-financed) Catchment, e.g. downstream water users paying for watershed management on upstream land (tend to be private-financed) Local, e.g. residents collectively funding an NGO to manage local green space for biodiversity
  21. 21. Existing PES Schemes and Case Studies
  22. 22. Existing PES schemes “PES programmes are now being increasingly applied across developed and developing countries. There are today more than 300 PES programmes implemented worldwide, most of which have been set up to promote biodiversity, watershed services, carbon and landscape beauty” (OECD, 2010)
  23. 23. PES schemes: examples Pago de Servicios Ambientales, Costa Rica Pago por Servicios Ambientales Hidrológicos, Mexico Conservation Reserve Program (CRP), US Environmental Stewardship, UK Catskills Long-Term Watershed Protection Program, US Vittel Payments for Ecosystem Services, France Lake Naivasha Watershed Management Project, Kenya BEF’s Water Restoration Certificates, US Yasuni ITT Trust Fund, Ecuador Tasmanian Forest Conservation Fund
  24. 24. Upstream Thinking Buyer = South West Water (private water company) Sellers = Farmers in target catchments Intermediate = Westcountry Rivers Trust (charity) ES = water quality (plus water quantity, biodiversity) Encourages and/or incentivises farmers to implement land management actions to improve raw water quality, with many management measures locked into 10 or 25 year covenants South West Water and the Westcountry Rivers Trust worked together to develop an action plan for three target catchments
  25. 25. PES actors Buyers (individuals, communities, businesses or governments acting on their behalf) Sellers (land or resource managers whose actions can potentially secure production of the beneficial service) Intermediaries (‘honest brokers’ who can assist with scheme design and implementation) Knowledge providers (e.g. resource management experts, land use planners, economists, regulators and legal advisors who can facilitate scheme development)
  26. 26. ‘Packaging’ ecosystem services Adapted from Lau, Winnie W.Y. (2012). Beyond carbon: Conceptualizing payments for ecosystem services in blue forests on carbon and other marine and coastal ecosystem services. Ocean and Coastal Management (April 2012).
  27. 27. PES: A Best Practice Guide
  28. 28. 5 Step PES Process
  29. 29. Five phase approach to PES
  30. 30. 1. Identify a saleable  1. Identify a saleable  ecosystem service  ecosystem service  and prospective  and prospective  buyers and sellers buyers and sellers Are there specific land management actions that have the potential to increase the supply of a particular service (or services)? • • • A clear relationship exists between land or resource management intervention (cause) and ecosystem service provision (effect) Changes in the level of service provision can either be directly measured or assumed to have taken place based on the interventions made At present the cause and effect pathway is well understood for some interventions and ecosystem services, while for others there is more uncertainty
  31. 31. 1. Identify a saleable  1. Identify a saleable  ecosystem service  ecosystem service  and prospective  and prospective  buyers and sellers buyers and sellers Is there a clear demand for the service in question and is its provision financially valuable to one or more potential buyers? Beneficiary Analysis • • • Tou yG Marine Conservat rists l Authorities ion Loca Society al Bottled wa t Loc t er C us o mp sses l Tr ani e Busine iona s t PB r ou ps BUYERS mu nit • Who are the potential beneficiaries that could be turned into buyers? How many of them are there and how are they connected? Do they have sufficient capital to support land or resource management changes? To what extent are they engaged in the issues? How reliant are they on the ecosystem service? Na Co m • RS a sWoTrdulstnd ter Utilitie o Wa es Env iron Age ment ncy ta t s eE Insurers wer Hydro-po t ers a evelop Priv D Recreational fisheries Trusts ildlife W
  32. 32. Beneficiary analysis
  33. 33. 1. Identify a saleable  1. Identify a saleable  ecosystem service  ecosystem service  and prospective  and prospective  buyers and sellers buyers and sellers Is it clear whose actions have the capacity to increase supply of the service in question? • • • Is it possible to discern which land or resource managers are providing the ecosystem service you are interested in? How complex is the pattern of land or resource ownership and could consensus be established between managers? What scale might the PES scheme need to operate over in order to effectively secure the service(s) in question?
  34. 34. 1. Identify a saleable  ecosystem service  and prospective  buyers and sellers Assess the prospects for trade Establish the business case Consider how the scheme will be financed • Short-term design and capacity building costs • Longer term implementation costs • Transaction costs involved in delivering the PES scheme • Do payments need to be ‘frontloaded’?
  35. 35. 2. Establish PES  2. Establish PES  scheme principles  scheme principles  and resolve technical  and resolve technical  issues issues Establish PES scheme principles Ecosystem service(s): Eg water quality, climate regulation, habitat for wildlife, landscape aesthetics Buyer(s): Eg Private company, government agency, environmental NGO Seller(s): Eg farmers, private woodland owners Intermediary (where applicable): Eg environmental NGO, government agency Key knowledge providers: Eg regulator, research centres Geographical scale: Eg catchment, sub-catchment Contractual period: Eg ten years Agreed interventions: Eg buffer strips, hedgerows, tree planting, waste storage Measures to minimise trade-offs: Eg monitoring framework Any ‘packaging’ of ecosystem services: Eg bundling, layering Type of payment approach: Eg input- or output-based payments, uniform or differentiated payments
  36. 36. 2. Establish PES  2. Establish PES  scheme principles  scheme principles  and resolve technical  and resolve technical  issues issues Resolve technical Issues • • • • • • • • The geographical area covered The baseline Land ownership and property rights Opportunities assessment Risk assessment Identifying the right interventions Spatial targeting Building trust
  37. 37. Identifying the right interventions
  38. 38. 3. Negotiate and  3. Negotiate and  implement  implement  agreements agreements Negotiate payments and implement agreements • Negotiate payments: – – – – Basis for payments Nature of payments Level of payments Timing of payments • Draw up agreement • Implement agreement
  39. 39. 4. Monitor, evaluate  4. Monitor, evaluate  and review  and review  implementation implementation Ecosystem service Water quality Flood risk regulation Climate regulation Habitat for wildlife Tourism and recreation Measurable parameter Nitrate levels in water supply Buffer strips to slow run-off and intercept sediment Ecological status of water bodies (eg abundance of indicator species) Riparian trees planting Synchronisation of water flows Flow rates Floodplain water storage capacity Soil water storage capacity Fluxes in atmospheric gases (CO2, CH4, etc) Tree planting The Woodland Carbon Code carbon lookup tables Tree measurement Wetland creation Species richness and diversity Visitor numbers Spending on nature-related tourism Direct measurement Modelling Indicator (‘proxy’)
  40. 40. 5. Consider  5. Consider  opportunities for  opportunities for  multiple‐benefit PES multiple‐benefit PES Adapted from Lau, Winnie W.Y. (2012). Beyond carbon: Conceptualizing payments for ecosystem services in blue forests on carbon and other marine and coastal ecosystem services. Ocean and Coastal Management (April 2012).
  41. 41. Opportunities for PES where there is a deficit in the supply of an ES where the supply of an ES is under threat where there is opportunity to increase supply of an ES where the science of ES provision improves and ‘causeand-effect’ becomes clear where a beneficiary has a clear dependency on an ES where the costs of an alternative means of securing the supply of an ES exceed the costs associated with PES where a change in government policy or regulation increases the demand for an ES where new means emerge to aggregate buyers and/or sellers of ES
  42. 42. Opportunities for PES Further opportunities for PES to emerge: Catchment Based Approach Nature Improvement Areas Local Nature Partnerships Spatial planning for ecosystem services