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Payments for Ecosystem Services: Motivating Buyers

Payments for Ecosystem Services: Motivating Buyers. Ivo Mulder, Kerry ten Kate, Sara Scherr. Why is it important to focus on buyers?. If beneficiary/user doesn’t pay…. no disincentive for damaging behaviour and incentive for conservation no market unless there’s demand as well as supply

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Payments for Ecosystem Services: Motivating Buyers

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  1. Payments for Ecosystem Services: Motivating Buyers Ivo Mulder, Kerry ten Kate, Sara Scherr

  2. Why is it important to focus on buyers? If beneficiary/user doesn’t pay…. • no disincentive for damaging behaviour and incentive for conservation • no market unless there’s demand as well as supply • potential scale of PES limited If only government payment…. • private sector not engaged • potential scale of PES limited • just shuffling existing public money – no additionality • PES may not be most efficient/effective way to protect ecosystem services

  3. Kinds of buyers Public: • Central to local government Private: • Institutional – i.e. companies • Retail - i.e. consumers / private households

  4. Ecosystem Services Private Sector Payments “Narrow” definition private sector payment “Narrow” definition ecosystem service “Broad” definition ecosystem service “Broad” definition private sector payment 1 3 2 4 Figure …: Schematic overview of differentiation in private payments for ecosystem services. Scope of “private PES” • Private entity pays for clear ES for business motivation. • Payments made on behalf of the consumers / households (eg higher water prices) • Payments for an ecosystem good (eg NTFP, genetic resources);offsets; indirect payments/ conservation (eg shade-grown coffee)

  5. The private PES study Phase I: existing buyers • Assess the scale and nature of private PES of four kinds: carbon, water, biodiversity, landscape beauty • Discuss with private buyers their motivation, experience and appetite for PES Phase II: potential buyers • Assess the potential scale and nature of private PES • Assess prerequisites for private PES to take off

  6. Motivations of buyers Regulatory compliance • Treaties (Kyoto/CDM and carbon; CBD and genetic resources) • Cap-and-trade system Benefits related to core business functions • Business opportunity: new markets (carbon offsets) or marketing/“green” branding • Access to raw materials: secure, sustain or reduce costs of key natural resource inputs (eg uncontaminated water for bottling, “Charismatic” macrofauna for ecotourism) • License to operate: better relations with regulators and local communities • Value: Enhance or maintain the financial value of land, forest or other assets belonging to the company • Employees: staff pride and morale, recruitment and retention. Benefits related to philanthropy/charity • Community relations, good PR. • Different budgets from core business, less reliable

  7. What are buyers looking for? • Clarity on the services. • Clarity on the business case. “What are we paying for and why?” • Defined property rights. • Policy support for markets. • Something they don’t get for free already. • Low transaction costs. • Reliable and informed partners.

  8. Can you help us? • Do you know examples of private PES? • Do you have opinions on the scope and definition of private PES? • Do you have views on the potential for private PES?

  9. Conclusions • There’s no market without demand. • PES research is dominated by supply-side analyses. • There is inadequate information on the existing and potential demand for PES, particularly from private buyers. • Work in this area would help countries establish their strategy and expectations for PES.

  10. Thank you • Ivo Mulder Ivo.Mulder@wur.nl • Kerry ten Kate Ktenkate@forest-trends.org • Sara Scherr sscherr@forest-trends.org

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