Equity workshop: Balancing equity and efficiency in Payments for Ecosystem Services (PES)

1. Balancing equity and efficiency in PES Expert Workshop on Equity, Justice and Well-being in Eco- system Governance; March 26/27th, 2015; IIED, London Meine van Noordwijk, Beria Efficient FairEfficient Fairly efficient Efficiently fair Fair Meine van Noordwijk, Beria Leimona, Sara Namirembe, Peter Minang

2. Reciprocity Fairness Equity Proportionality Compensation Rewards Payments Referring to Past Present Efficiency Rights CBDR FPIC Indigeneity Equity Quid-pro-quo Co-investmentReferring to Future Efficiency Effectiveness Shared Goals (SDG’s) Joint strategies FPIC = Free and Prior Informed Consent CBDR = Common But Differentiated Responsibility SDG = Sustainable Development Goal Strategic behaviour Altruism Intrinsic values

3. Monetaryfungibility Fairness/efficiency: 5 scales of economics Individual & household decisions on scarce resources Behavioural economics: really internalizing externalities at emotional core of decision making Annu. Rev. Environ. Resour. 37, 389-420 $$ don’t buy real happiness Monetaryfungibility on scarce resources National scale decisions on scarce resources Environmental economics: internalizing externalities of individual decisions for common goods Ecological economics: planetary boundaries put hard constraints $$ don’t get us a new planet

4. Payments for Environmental Services: Evolution Toward Efficient and Fair Incentives for Multifunctional Landscapes

5. DIVERGENT model of Territorial configuration Cheap massive, profitable urban housing Low-cost, low- quality food provisioning Control of Water excess and scarcity Elite suburban residence Rural-urban migrants UrLand Quality Segregate vs Integrate at societal level Luis García-Barrios et. al. 2009. Bioscience and 2010 La Jornada del Campo. Fortress type conservation against masses Rural poor Cheap massive, profitable) industrial agribussinessElite orga- nic food Wage laborers Elite ecotourism Control of erosion & Water excess and scarcity Eco- servants Off-farm suppliers AgLandNatLand Quality Rural-Urban (Desa- Kota) Matrix Land- scapes and Livelihoods

6. Income Entreprise Social relations ID Identity, self- realization Marketable goods & services People are complex entities… Their decisions are influenced by many aspects of a ‘well-being’ or Maslow pyramid, representing Physical security, shelter Food & water security Health Income many aspects of a ‘well-being’ or Maslow pyramid, representing their ‘basic needs’, their social relations within evolving local institutions, and human capital.

7. Income Entreprise Social relations ID SDG4 (Continuous learning), SDG5 (Gender, social inclusion) SDG8 (Employment, decent jobs) SDG810 (Less inequality),SDG16 (Accountability),SDG17 (Partnership) SDG1 (End poverty) The 17 Sustainable Development Goals (SDG’s) address all levels of a ‘human well-being’ or Maslow pyramid* Physical security, shelter Food & water security Health Income SDG1 (End poverty) SDG3 (Health), SDG12 (consumption), SDG15(conservation) SDG2 (Food), SDG6 (Water), SDG7(Energy), SDG14 (Oceans) SDG9 (Infrastructure), SDG11 (Cities), SDG13 (Climate change) * The specific formulation of many SDG’s makes clear that they typically involve more than one level, e.g. Gender includes physical security

8. Income Entreprise Social relations ID Identity, self- realization Human Socialcapital Financialcapital Physical security, shelter Food & water security Health Income Human capital Socialcapital Natural capital Financialcapital Built-up capital The ‘well-being’ or Maslow pyramid relates to all of the 5 asset (capital) types of the ‘livelihood analysis’. It can help us understand the multiple dimensions of ‘poverty’. Financial capital (and lack of income definitions of poverty) focus on middle of the diagram.

9. Marketable goods & services People (land users) Land is used by people to satisfy their own needs within emerging local institutions, but once they find externalbut once they find external markets for products and services, this feeds back to their land use decisions

10. Marketable goods & services Influence & lateral flows Climate Water Geomorphology *erosion/sedi- mentation *landslides People elsewhere including neighbours and ‘teleconnections’ Income Entreprise Social relations ID Identity, self- realization *landslides Nutrients Fire Vegetation & flora Fauna Biogeography Externality of decision making Land use, however, has environmental effects that affect the land users directly, but also impact on people elsewhere Physical security, shelter Food & water security Health Income

11. SupportingEvolutionary Marketable goods & services Influence & lateral flows Climate Water Geomorphology *erosion/sedi- mentation *landslides RegulatoryCulturalProvisioning Ecosystem services* People elsewhere including neighbours and ‘tele-Income Entreprise Social relations ID Identity, self- realization SupportingEvolutionary *landslides Nutrients Fire Vegetation & flora Fauna Biogeography RegulatoryCulturalProvisioning * Environmental Services (ES) equals ecosystem services (ES*) minus market-based provisioning bours and ‘teleconnections’ The terminology of ecosystem and environmental services reflect these impacts on others, as externalities of LU decision making Externality of decision making Physical security, shelter Food & water security Health Income

12. SupportingEvolutionary Marketable goods & services Influence & lateral flows Climate Water Geomorphology *erosion/sedi- mentation *landslides RegulatoryCulturalProvisioning Ecosystem services* Income Entreprise Social relations ID Identity, self- realization Income Entreprise Social relations ID Identity, self- realization SupportingEvolutionary *landslides Nutrients Fire Vegetation & flora Fauna Biogeography RegulatoryCulturalProvisioning * Environmental Services (ES) equals ecosystem services (ES*) minus market-based provisioning The various ES affect people at all levels of their well-being pyramid. To deal with negative effects of declining ES, they have 6 options: Externality of decision making’ Physical security, shelter Food & water security Health Income Physical security, shelter Food & water security Health Income

13. Option 1: move to a clean place elsewhere SupportingEvolutionary Marketable goods & services Influence & lateral flows Climate Water Geomorphology *erosion/sedi- mentation *landslides RegulatoryCulturalProvisioning Income Entreprise Social relations ID Identity, self- realization Income Entreprise Social relations ID Identity, self- realization SupportingEvolutionary *landslides Nutrients Fire Vegetation & flora Fauna Biogeography RegulatoryCulturalProvisioningHuman history is full of shifting loci of culture, but now there’s nowhere left to go; global impacts affect any place on this planet Externality of decision making’ Physical security, shelter Food & water security Health Income Physical security, shelter Food & water security Health Income

14. Option 2: forbid pollution, regulate land use SupportingEvolutionary Marketable goods & services Influence & lateral flows Climate Water Geomorphology *erosion/sedi- mentation *landslides RegulatoryCulturalProvisioning Income Entreprise Social relations ID Identity, self- realization Income Entreprise Social relations ID Identity, self- realization SupportingEvolutionary *landslides Nutrients Fire Vegetation & flora Fauna Biogeography RegulatoryCulturalProvisioningThis option depends on power relation and may require strong enforcement; it breaks down under more democratic governance Externality of decision making’ Physical security, shelter Food & water security Health Income Physical security, shelter Food & water security Health Income

15. Option 3: engineer to reduce ES dependence SupportingEvolutionary Marketable goods & services Influence & lateral flows Climate Water Geomorphology *erosion/sedi- mentation *landslides RegulatoryCulturalProvisioning Income Entreprise Social relations ID Identity, self- realization Income Entreprise Social relations ID Identity, self- realization SupportingEvolutionary *landslides Nutrients Fire Vegetation & flora Fauna Biogeography RegulatoryCulturalProvisioning Engineering Engineering can help with e.g. water and water-related issues (floods, landslides), but tends to be high-cost and rigid (sunk costs) Externality of decision making’ Physical security, shelter Food & water security Health Income Physical security, shelter Food & water security Health Income

16. Option 4: payments for environmental services Marketable goods & services People (land users) ES metric Marketable goods & services Influence & lateral flows People elsewhere including neighbours and ‘teleconnections’ Income Income PES (payment for environmental services) Buyers Sellers metricIncome Income PES emerged as a ‘simple’ solution to financially intenalize externalities

17. Option 5: boycott products without certification SupportingEvolutionary Marketable goods & services Influence & lateral flows Climate Water Geomorphology *erosion/sedi- mentation *landslides RegulatoryCulturalProvisioning Income Entreprise Social relations ID Identity, self- realization Income Entreprise Social relations ID Identity, self- realization SupportingEvolutionary *landslides Nutrients Fire Vegetation & flora Fauna Biogeography RegulatoryCulturalProvisioning * Environmental Services (ES) equals ecosystem services (ES*) minus market-based provisioning Boycotts help to increase awareness and can lead to ‘ecocertification’ as response, but this may have high transaction costs for all Externality of decision making’ Physical security, shelter Food & water security Health Income Physical security, shelter Food & water security Health Income

18. Option 6: Link the institutions and identities SupportingEvolutionary Marketable goods & services Influence & lateral flows Climate Water Geomorphology *erosion/sedi- mentation *landslides RegulatoryCulturalProvisioning Income Entreprise Social relations ID Identity, self- realization Income Entreprise Social relations ID Identity, self- realization SupportingEvolutionary *landslides Nutrients Fire Vegetation & flora Fauna Biogeography RegulatoryCulturalProvisioning * Environmental Services (ES) equals ecosystem services (ES*) minus market-based provisioning Creating a shared sense of identity, moral standards of acceptable behaviours can internalize externalities of LU decisionmaking Externality of decision making’ Physical security, shelter Food & water security Health Income Physical security, shelter Food & water security Health Income

19. Income Entreprise Social relations ID Identity, self- realization Income Entreprise Social relations ID Identity, self- realization SupportingEvolutionary Marketable goods & services Influence & lateral flows Climate Water Geomorphology *erosion/sedi- mentation *landslides RegulatoryCulturalProvisioning Ecosystem services* ES metric Physical security, shelter Food & water security Health Income Physical security, shelter Food & water security Health Income But, the PES reality is more complex… SupportingEvolutionary *landslides Nutrients Fire Vegetation & flora Fauna Biogeography RegulatoryCulturalProvisioning Engineering * Environmental Services (ES) equals ecosystem services (ES*) minus market-based provisioning PES (payment for environmental services) Buyers ‘Sellers’ Intermediaries metric Externality of decision making

20. Income Entreprise Social relations ID Identity, self- realization Income Entreprise Social relations ID Identity, self- realization SupportingEvolutionary Marketable goods & services Influence & lateral flows Climate Water Geomorphology *erosion/sedi- mentation *landslides RegulatoryCulturalProvisioning Fairnessperception Efficiency Physical security, shelter Food & water security Health Income Physical security, shelter Food & water security Health IncomeSupportingEvolutionary *landslides Nutrients Fire Vegetation & flora Fauna Biogeography RegulatoryCulturalProvisioning Engineering * Environmental Services (ES) equals ecosystem services (ES*) minus market-based provisioning Fairnessperception Efficiency Green accounting Fairness & efficiency Externality of decision making Access, LU regulation Payments, rewards, incentives, tax Respect, recognition, suasion Natural capital and ES monitoring

21. Three PES-related paradigms • Commodification of environmental services A. packages of ES become tradable commodities, B. ecocertification of existingB. ecocertification of existing commodities; • Compensation for foregone ES-unfriendly but legal opportunities; • Coinvestment in environmental stewardship.

22. Drivers A2. LU rights (e.g. community forest mngmnt) Response/ feedback Actors/ agents Land use/cover Conse- quences & Livelihoods, provisioning & profitability A1. Land use policies, spatial development planning, roads GG G Institutions, identity, pride Drivers B1. Incentive structure through policy change (tax, subsidy etc) B2. PES and conditional ES incentives feedback options Biodiversity, Watershed functions, GHG emissions, Landscape beauty agents use/cover changes quences & functions Modified from: Van Noordwijk, M., B. Lusiana, G. Villamor, H. Purnomo, and S. Dewi. 2011. Feedback loops added to four conceptual models linking land change with driving forces and actors. Ecology and Society 16(1): r1. [online] URL: http://www.ecologyandsociety.org/vol16/iss1/resp1/ C. Suasion and institutional support G G G = Potential gender specificity of analysis & targeting of interventions

23. Fairness vs Efficiency Giga-fairness vs Giga-efficiency Macro-fairness vs Macro-efficiency Meso-fairness vs Meso-efficiency Both Fairness & Efficiency reach and connect across scales Tradeoff only in short term Procedural fairness may seem inefficient, but it isn’t // legitimacy is key to success Meso-fairness vs Meso-efficiency Micro-fairness vs Micro-efficiency Pico-fairness vs Pico-efficiency

24. Post-scriptum Entreprise Social relations ID 3 equity dimensions: Recognition Procedure Physical security, shelter Food & water security Health Income Distribution of costs & benefits

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Equity workshop: Balancing equity and efficiency in Payments for Ecosystem Services (PES)

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