This presentation was given by Lini Wollenberg, Alliance of Bioversity & CIAT and the Gund Institute for Environment at the University of Vermont, on 11 November 2022 at COP27. The event, CompensACTION: Making compensation mechanisms work for small-scale agricultural producers, was hosted at the Food Systems Pavilion and organized by Clim-EAT. The G7 Food Security Working Group believes that agricultural producers, especially smallholders in developing countries, should receive adequate compensation for their services. This means creating incentive systems that complement revenues from market prices with compensation for generating positive externalities.

1. Compensating farmers for
ecosystem services
Lessons and an agenda for
innovation
Lini Wollenberg, Timm Tennigkeit, DhanushDinesh,
SophiaBaumert, FelicitasRöhrig,
Lisa Kirfel-Rühle, Leanne Zeppenfeldt
A collaboration of:
COP27 Nov 11, 2022

2. The opportunity
• Smallholder farmers can contribute to
multiple ecosystem services but are
rarely compensated
• Payments for ecosystem services (PES)
can improve farmers’ income while
incentivizing climate change action and
sustainability
• Demand for carbon credits is rising with
value of credits increasing 15X by 2030

3. PES innovation in agriculture
Rimba Collective, palm oil buyers and processorsin Indonesia
contribute to a conservation fund based on the level of palm oil they
procure.A collective allocates the funds to conservation and
reforestation projects
National PES law in Colombia enables companies to support
ecosystem service projects in exchange for their tax payments
.
ProSoil is facilitating the sale of carbon credits from
improved soil health to support sustainable agro-advisory
services in Kenya

4. Improve smallholder
farmers’ incomes
Incentivize resilient,
low-emission farm
practices and other
ecosystem services
Deliver co-benefits
such as ease access
to finance for
farmers
Attract international
climate finance
Diversify financial
instruments and
increase public and
private funding.
CompensAction Initiative objectives

5. What makes CompensACTION different?
Emphasis on improving
• Smallholder incomes from PES schemes
-Maximize benefits to smallholders though cost efficiency
• Climate change mitigation and adaptation in agriculture, and where
possible other ecosystem services
• The supply of robust carbon credits and other ecosystem services
for payments

6. Benefit
capture by
farmers
Readiness
Public-private
finance
• Set targets for farmer benefits, e.g., 90%
• Reduce MRV costs
• New businesses
• Bundling/stackingof ecosystem services
• Concessionary capital
• Guarantees/insurance
• Grant-funded technical
assistance, or design of
investment vehicles
• Regulatory environment
• Project implementation
capacity
• MRV
Areas for
intervention to
scale up PES

7. Recommendations

8. 1. Fostertechnicalinnovationanddisruptionin
PES andcarbonmarketsto supportlow-cost,
high-volumetransactions.
Examples
• IndigoAg
• Sustainable Futures Carbon Bank

9. 2. Increase
public-private
investment to
scale up PESand
carbonmarkets
Example
• Rimba Collective’s Sustainable
Commodities Conservation
Mechanism

10. 3. Support public policy reform
Policies can be used to establish
1) goals and targets for ecosystem services
2) institutions for distributing benefits
3) fair prices for ecosystem services
4) enabling conditions, especially legal rights
Examples
PES policy in CostaRica, Colombia, Peru
and Mexico

11. % PES benefits captured
by farmers
How to determine fair
prices for ecosystem
services?
% added income to
farmers from PES
How to standardize
accounting for multiple
ecosystemservices?
Research needs and indicators for success

12. bit.ly/CompensACTION

13. Thank you!
Contact: Lini.Wollenberg@uvm.edu
A collaborationof: