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Markets for Ecosystem Services: An examination of alternative Payment for Ecosystem Services (PES) structures for Mui Ca Mau National Park . Linus Hasselström Enveco Ltd. 2013-10-15, Hanoi . Key questions. Why do we want markets? What is the role of policy?

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Markets for Ecosystem Services: An examination of alternative Payment for Ecosystem Services (PES) structures for MuiCa Mau National Park

Linus Hasselström

Enveco Ltd.

2013-10-15, Hanoi


Key questions
Key questions alternative Payment for Ecosystem Services (PES) structures for

Why do we want markets?

What is the role of policy?

What are the necessary preconditions?

What is the potential for markets in Mui Ca Mau?

What could be some promising options for wetland PES in Vietnam?


FORES 2012 Report alternative Payment for Ecosystem Services (PES) structures for

  • Reportfocuses on howtoexpand the use of markets

  • Published in June 2012

  • Was basis for a 90 minute roundtable discussion at the UNCSD (Rio+20) Conference

Scott Cole

[email protected]

+46702532883

www.eesweden.com

Linus Hasselström

[email protected]

+46704987820

www.enveco.se

Fanny Engkvist

[email protected]

+46701482835

www.fores.se

Tore Söderqvist

[email protected]

+46704937473

www.enveco.se


OUR PROJECT: alternative Payment for Ecosystem Services (PES) structures for

Piloting a model on payment for coastal wetland ecosystems of the Mui Ca Mau National Park in the context of climate change and contribute to reducing poverty for local community

PARTNERS:

BCA

ISPONRE

MONRE

FORWET

FORES

EnviroEconomics Sweden

(Enveco subcontracted by EES)

Daxam


Markets – alternative Payment for Ecosystem Services (PES) structures for whatarethey?

Transactionsbetweenbuyers & sellersthat benefit both

Twokeyfeatures:

Voluntary

Alignsincentives


  • H alternative Payment for Ecosystem Services (PES) structures for abitat/Conservation Banking in California (Madsen et al 2010)

    • BUYER: Developer that must compensate for environmental injuries (e.g., wetlands)

    • SELLER: Entrepreneur that invests in wetland restoration and sells the ”compensation credit” to developer or other organization


  • Market to address eutrophication alternative Payment for Ecosystem Services (PES) structures for in the Baltic Sea (Zandersen et al 2009)

    • BUYER: Wastewater treatment plant that must reduce Nitrogen emissions

    • SELLER: Mussel farmer that contributes to nitrogen uptake


  • Market for clean water in France alternative Payment for Ecosystem Services (PES) structures for (Perrot-Maitre, 2006)

  • BUYER: Mineral water producer that wants to avoid contaminated water sources

    • SELLER: Farmers that change their farming practices


  • Market for Forest Ecosystem Services alternative Payment for Ecosystem Services (PES) structures for (Lam Dong Province, Vietnam)

    • Payers: Hydropower, water supply, tourism industries

    • Service providers: Local landowners


Overview alternative Payment for Ecosystem Services (PES) structures for of policy instruments

Directregulation

Information

Support for research & development

Incentive-based instruments (”economic instruments”)

  • Markets for ecosystem services fall under Category 4.

  • …are one of many possible policy instruments

  • …and should complement rather than replace other instruments


Why markets? alternative Payment for Ecosystem Services (PES) structures for

  • Economicreasons

  • Rewards those who improve ES (e.g., planting trees)

  • Penalizes those who damage ES (cutting trees)

  • Provides environmentalprotection at lowestcosttosociety

  • Politicalreasons in Vietnam

  • Biodiversity Law, 2008

  • Decree 99 prefers market-basedapproaches, 2010

  • Vietnam’sBiodiversityStrategyto 2030


What creates and drives markets? alternative Payment for Ecosystem Services (PES) structures for

What creates and drives markets?


What creates and drives markets? alternative Payment for Ecosystem Services (PES) structures for

  • Compliance-driven

  • e.g., Habitat banking California, PFES in Vietnam

  • Based on gov’t regulations

  • Heavily dependent on level of env. objective set by the government


What creates and drives markets? alternative Payment for Ecosystem Services (PES) structures for

  • Kravuppfyllande

  • ex: Biodiversitetsmarknader i Kalifornien

  • Bygger på regleringar

  • Starkt beroende av de mål som sätts

  • Compliance-driven

  • e.g., Habitat banking California, PFES in Vietnam

  • Based on gov’t regulations

  • Heavily dependent on level of env. objective set by the government

  • Taxpayer-financed

  • e.g., subsidized mussel farming.

  • Heavily dependent on taxpayer funding


What creates and drives markets? alternative Payment for Ecosystem Services (PES) structures for

  • Kravuppfyllande

  • ex: Biodiversitetsmarknader i Kalifornien

  • Bygger på regleringar

  • Starkt beroende av de mål som sätts

  • Compliance-driven

  • e.g., Habitat banking California, PFES in VIetnam

  • Based on gov’t regulations

  • Heavily dependent on level of env. objective set by the government

  • Skattefinansiering

  • ex: blåmusselodlingar som subventioneras.

  • Starkt beroende av tillgängliga skattemedel

  • Taxpayer-financed

  • e.g., subsidized mussel farming.

  • Heavily dependent on taxpayer funding

  • Voluntary

  • e.g., drinking water in France

  • Dependent on that an ecosystemservice provides a private profit

  • Or benevolence & charity


Conclusions alternative Payment for Ecosystem Services (PES) structures for – Market pre-conditions

  • The report’s various conclusions underscore the importance of

  • Measurability

  • Clear markets rules (”social acceptance”)

  • Institutional capacity

  • Property rights


Policy Recommendations alternative Payment for Ecosystem Services (PES) structures for

  • Governments must clearly define market structure – both market goals and rules of the game .. Butletmature markets workwithouttoomuch intervention.

  • Report identifies 10 key things governments can do, including:

    • Stimulate Demand/Supply

    • Help reduce transaction costs

    • Maintain other regulatory policies

    • Inform market participants (about ES and about markets)

    • Create pilot studies/markets and evaluate outcomes before scaling up


  • Description of the project
    Description of the project alternative Payment for Ecosystem Services (PES) structures for

    Develop a livelihood model (20 HH)

    Develop a PES mechanism

    Improve capacity building & public awareness

    Create long-term partnership


    Partner contributions
    Partner Contributions alternative Payment for Ecosystem Services (PES) structures for

    FORWET (Vietnam)

    • Develop livelihood model & PES model

      FORES (Sweden)

    • Critic PES model & suggest PES alternatives

      • Identify ecosystem services & their value

      • Identify benefits of markets

      • Focus on MCMNPwith International PES experience


    Fores project deliverables
    FORES’ Project Deliverables alternative Payment for Ecosystem Services (PES) structures for

    • Capacity assessment (Activity 3.1)

    • Land use (Act 2.8)

    • Desk study of climate change impacts (Act 2.1)

    • Ecosystem service assessment (Act 2.6)

    • Valuation of ecosystem services (Act 2.7)

    • International PES case studies (Act 2.3)

    • Alternative PES Structures Report (Act 2.12)

      Draft  late Oct

      Final  Nov


    Alternative pes structures report
    Alternative PES Structures Report alternative Payment for Ecosystem Services (PES) structures for

    Objectives

    Propose alternative PES structures in MCMNP

    Identify economic criteria to evaluate PES

    Assess PES alternatives with criteria

    Provide recommendations for next phase in MCMNP


    How to identify alternative pes structures
    How to identify alternative PES structures? alternative Payment for Ecosystem Services (PES) structures for


    Our 4 alternative pes structures
    Our alternative Payment for Ecosystem Services (PES) structures for 4 Alternative PES structures:

    • PES #1a – Aquaculture & Agriculture livelihood

    • PES #1b – Eco-tourism/Homestay livelihood

    • PES #2 – Traditional with state as buyer

    • PES #3 – Carbon market

    • PES #4 – Eco-labeling


    Why these 4 pes alternatives
    Why these 4 PES alternatives? alternative Payment for Ecosystem Services (PES) structures for

    • IllustratePES possibilities

    • Illustratebuyer&sellerpossibilities

    • Cover manyEcosystem Services in MCMNP

    • Cover many different geographicscales

      • Local

      • National

      • Global

    • Illustratepossibilitiestocombine/layer PES structures


    Pes 1a aquaculture agriculture
    PES # alternative Payment for Ecosystem Services (PES) structures for 1a – Aquaculture & Agriculture


    Pes 1b ecotourism homestay
    PES # alternative Payment for Ecosystem Services (PES) structures for 1b – Ecotourism/homestay


    Pes 2 traditional state as buyer
    PES alternative Payment for Ecosystem Services (PES) structures for #2 – Traditional: State as buyer


    Pes 3 carbon market
    PES alternative Payment for Ecosystem Services (PES) structures for #3 – Carbon market


    Pes 4 eco labeling
    PES alternative Payment for Ecosystem Services (PES) structures for #4 – Eco-labeling


    Is pes 1a sufficient
    Is PES #1a sufficient? alternative Payment for Ecosystem Services (PES) structures for

    Seller

    Buyer

    Payment:

    Forest Protection

    • LUR to farmer

    • Tech assistance

    • Trees to plant

    • Small wage

    Ecosystem

    Services

    (ES)


    Is pes 1a sufficient1
    Is PES #1a sufficient? alternative Payment for Ecosystem Services (PES) structures for

    Seller

    Buyer

    Payment:

    Forest Protection

    • LUR to farmer

    • Tech assistance

    • Trees to plant

    • Small wage

    A good livelihood model … but:

    1. Many more beneficiaries out there …

    2. Need buyers who can can/will pay

    3. Sufficient incentive/income for HHsto protect forest?


    Let s introduce a new buyer
    Let’s introduce a new buyer … alternative Payment for Ecosystem Services (PES) structures for


    Buyer alternative Payment for Ecosystem Services (PES) structures for

    Buyer

    / Seller

    Seller

    PES

    Input #2:

    Knowledge

    Livelihood

    Ecosystem

    Services

    (ES)

    Eco-Label Shrimp

    Input #1:

    ES

    Now  HH has better economic incentive to protect forest


    Conclusions and recommendations 1
    Conclusions and Recommendations alternative Payment for Ecosystem Services (PES) structures for (1)

    • MCMNP is a strong candidate for PES

    • All PES structures should be “tested – evaluated – improved” repeatedly

    • Some PES structures more likely to succeed than others. Key criteria to be met:

      • Voluntary transactions

      • Additionality

      • Include maximum number of beneficiaries


    Conclusions and recommendations 2
    Conclusions and Recommendations alternative Payment for Ecosystem Services (PES) structures for (2)

    • PES #1b Eco-tourism

    • Should be expanded to include additional HHs

    • Strong focus on innovative marketing strategies

    • Potential effects on ES should be further discussed and evaluated

    • PES#2 (coastal protection) and PES #3 (carbon)

    • Suggest a PES structure that includes “layering” to improve income possibilities for HHs


    Conclusions and recommendations 3
    Conclusions and Recommendations (3) alternative Payment for Ecosystem Services (PES) structures for

    • Combine PES #1a and PES#4

    • PES#1a is a good first step but is expensive

    • PES#4 Eco-labeling is the logical next step, as it identifies more potential buyers and creates improved incentives for HHs to protect the forest.

    • Eco-labeling is promising because:

      • Current shrimp production already meets “eco” standards – very important (!)

      • Can rely on existing contracts between HHs & NP

      • Good opportunity for piloting this PES #4 in 2014 when re-newing contracts

      • Self financing (after initial investment)


    Recommended next steps
    Recommended next steps alternative Payment for Ecosystem Services (PES) structures for

    • Review PES #1a and #1b pilot before proceeding to next stage

    • Consider piloting our PES #4 alternative

    • Further investigation need for PES #2 and PES #3

    • Given trade-offs between PES alternatives, should consider the top policy priority:

      • Raising gov’t revenue?

      • Reducing poverty?

      • Improving ecosystem services?


    Thank you
    Thank you! alternative Payment for Ecosystem Services (PES) structures for

    Linus Hasselström

    Enveco Ltd. Sweden

    [email protected]

    +46 70 498 78 20


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