Presentation made by Andy Jarvis from the Decision and Policy Analysis Program of the International Centre for Tropical Agriculture (CIAT). Delivered at the COCOON meeting in CIAT, Colombia in September 2009.

1. Payment for Ecosystem Services (PES) as a means of
sharing environmental benefits: How numbers
provide the basis for dialogue in water-based
payment schemes in the Andes
Andy Jarvis, Marcela Quintero, Nathalia
Uribe, Ruben-Dario Estrada, Jorge Rubiano

2. Contents
• The importance of
information
• Our principles
• Three examples of
science-based
establishment of water-
based PES in the Andes
– Chingaza
– Moyobamba
– Fuquene
• Outlook

3. CIAT’s work on Ecosystem
services
• Very focussed on externalities
• ES that have a national, regional or international
market
– Aboveground carbon
– Water
• Putting the numbers on ES flows in an integrated
manner
• Learning from broad range of cases
• Enabling the poor to engage and benefit from
emerging ES market opportunities

4. Reasons for Failures in PES
• High failure rate of PES, though Latin
America has been a test-bed
• Unreal expectations for PES
• Lack of equity in benefit sharing
• Poor or inappropriate governance
structures
• Low perceived impact in terms of ES
benefits
• High potential to create
conflict, rather than resolve it
Numbers as a basis for dialogue

5. Externalities
• An externality is the beneficial
or damaging effect caused on
a third party by the decision of
other(s)
• Those who cause the effect do
not receive any compensation
for the generated benefit, or
do not assume the cost of the
damaging effect
• Environmental externality is
determined by the
environmental effects of a
human activity Example: Watershed services:
• When the effect is positive the regulation of streamflows and
retention of sediments achieved by
externality is considered as an land uses and management
environmental service

6. Extreme poverty is as bad or worse than 25 year ago
Poverty and Extreme Poverty in rural zones
(Percentage of total rural population)
70
60
50
40
30
20
10
0
1980 1990 1994 1997 1999
Poverty % 59.9 65.4 45.1 63 53.7
Extreme poverty % 32.7 40.4 40.8 37.6 38.3
Source CEPAL: Panorama Social de América Latina, 2000-2001.
PES that promote natural, economic
and social benefits

7. CHINGAZA
COLOMBIA

8. 1. Antecedentes
i. Hay una pérdida histórica de cobertura vegetal en las
cuencas abastecedoras de la EAAB.
ii. Cambios en el uso de la tierra con efectos adversos a
los servicios ambientales.
iii. Ahorro en costos de tratamiento y conservación:
Caso Nueva York y Caso Quito.

9. i. Pérdida histórica de cobertura vegetal de las cuencas
abastecedoras en el Parque y Sistema Chingaza.
1977 2001
Aumento de Pasturas
18,9%
Fuente: Ciat, 2007, Estudio contratado por TNC, EAAB, Patrimonio Natural & Parques

10. The numbers behind a Payment for Ecosystem Services (PES)
Scheme
50.0
Agua y sedimentos producidos en Chingaza
40.0
Cantidad agua
toneladas/ha/año
Cantidad de sedimentos
m3/ha/año
30.0
20.0
1000
Pasto "natural" 10.0
800
Hectarias Intervenidas
0.0
600
Conservado Uso actual (con Uso fuera parque
política ambiental) (sin política
ambiental)
400 Vegetación
páramo
200
Papa
Pasto tecnificado
0
Uso actual (con política ambiental) Uso fuera parque (sin política
ambiental)
Fuente: Ciat, 2007, Estudio contratado por TNC, EAAB, Patrimonio Natural & Parques

11. Proyecciones
Áreas Prioritarias – Opciones 1, 2, 3
Area a intervenir (Has)
Costo Aprox ($millones)
Ahorros potenciales ($millones)/Año
70.000
60.000
50.000
40.000
30.000
20.000
10.000
0
Opcion 1 Opcion 2 Opcion 3
Opcion 1 Opcion 2 Opcion 3
Area a intervenir (Has) 24.000 40.000 60.000
Toneladas sedimentos evitadas (Millones) 1 1,5 2
Costo Aprox ($millones) 7.400 11.600 16.600
Ahorros potenciales ($millones)/Año 3.500 5.000 7.000

12. Social and economic benefits for the rural
poor

13. FUQUENE
COLOMBIA

16. Elements Percentage by Catchments
P o rc e n ta je s d e E le m e n to s p o r S u b c u e n c a .
K rig in g .
3 5 .0 0
3 0 .0 0
2 5 .0 0
NO2
Po r c e n t a je s
2 0 .0 0 NO3
NH3
1 5 .0 0 P
P 2O5
1 0 .0 0
5 .0 0
0 .0 0
8 10 12 13 15 16 17 18 19
S ubcuencas

17. Participatory Games
Fuquene Lake Case
Alternatives Interdependencies
Up stream
Potato growers
Less
Minimum tillage
sediments, N, P,
and more water
Economic
compensation Sustainable
Cattle ranchers
Potable water
Positive impact
on consumers
environmental
externalities
Economic
Down stream
Compensation

18. MOYOBAMBA
PERU

19. Service providing units
Soil Types
Land Use
Hydrological Response Units
Digital Elevation Model

20. Moyobamba watershed (Peru)
URH No. Área (ha) Sed (Ton) / Sed (Ton)/5 yrs Contribution to the total
Ha/ 5 yrs watershed sediments (%)
18 9.1 903 8217 16.5
02 5.8 500 2902 5.8
06 0.9 396 356 0.7
09 0.9 323 291 0.6
12 1.2 261 313 0.6
22 2.2 374 823 1.7
03 1.9 292 555 1.1
19 1.1 239 263 0.5
Total 23.1 3289 13720 27.6

21. Evaluation of land use alternatives for
providing environmental services
Increase Net Income
Better environmental services
Employment generation
Farmers acceptance
Trade off Analysis

22. Examples of land use evaluation
Ex ante analysis
• Conservation Upper part Potato cropping/conservation
agriculture (Colombia) farming
– Increases net
Sediment yield (10 years) -39%
incomes, potato Net Income +18%
production, social Labor employment -14%
benefits, sediment
Social benefits +40%
retention and
employment; and Middle part Potato and cereals
cropping/conservation farming
reduce production costs. Sediment yield (10 years) -49%
– However the initial Net Income +1%
investment can not be Labor employment +62%
afforded with current Social benefits +111%
small farmers cash flows

23. Moyobamba (Peru)
Conventional Conventional Shade-coffee Tree
System System with plantations
live barriers
Sediments -50% -50% -44%
(ton/10 yr)
Agua -11% -14%
(m3/sec)
Net Income -9.7% +89% -5.3%
(USD)
Employement +77% -5%
Initial 9 13 176 470
investment
(USD)

24. Where to invest for environmental AND social
CARBON IN THE
benefits (eco-efficiency)
AMAZON
Áreas prioritarias de inversión
Áreas prioritarias con ahorros potenciales
de tratamiento agua
Área prioritaria sin ahorros potenciales
de tratamiento agua
Fuentes de sedimentos
Mayores
Menores

25. Opportunity costs of REDD in threatened Brazilian
Amazon forests
Börner et al. (submitted), Amazon Initiative (CIAT, CIFOR, ICRAF)

26. Opportunity costs of REDD in threatened Brazilian Amazon
forests
30
Opportunity cost R$/tCO 2
25
offset price for temporary emission reductions
offset price for permanent emission reductions
20
15
10
5
0
0 5000000 10000000 15000000 20000000
Deforestation avoided (ha)
Börner et al. (submitted), Amazon Initiative (CIAT, CIFOR, ICRAF)

27. Potential equity effects of different REDD payment
scenarios by tenure category
9000
8089
Fixed price
Biomass targeting
Quasi-auction
6000
Million R$
3212
2855
3000
1487 1183 1333
1277 1139
405 371 384 370
261 270 192
0
Largeholdings Smallholdings Settlements Indigenous Extractive
lands reserves
Börner et al. (submitted), Amazon Initiative (CIAT, CIFOR, ICRAF)
Tradeoffs: Maximum environmental benefit at cost of rural smallholder poor?

28. CONCLUSIONS
• PES provide a new paradigm for natural resource
management….
• …but also a new paradigm for addressing
concerns of rural poverty
• Establishment of schemes must be based on
sound, integrative analysis of natural, social and
economic benefits
• In CIAT we’re very interested in matching with
partners to generate rural livelihoods through
PES. We can provide biophysical, economic and
social analyses, and you…..

29. A.JARVIS@CGIAR.ORG