Overview of Payment for Ecosystem Services (PES)

1. Overview of Payment for Ecosystem Services (PES) Building Multi-Sectoral Stakeholders to access PES

2. Context for Payment for Ecosystem Services & Products • Land tenure mechanisms for communities to protect ecosystems and coordination with government • Responsibility (protection services) and Rights (opportunity to earn) • Increased interest from private sector, gov’t to invest. But how???

3. What is Payment for Ecosystem Services (PES) • Ecosystem services (products too!) can include water, soil, biodiversity, carbon/carbon sequestration, flooding control, eco-tourism. Products can include forest and pasture products, fuel wood, food, medicine, etc. • Payment can include cash payments as well as other types of benefits such as land tenure, social services, technical assistance to improve livelihoods and incomes. • PES = benefit (cash or other) provided to purchase one or more ecosystem services or products

4. Categories of Payments/Rewards for Ecosystem Services • Grants, donations from donors/individuals (development projects to support conservation, climate adaptation, poverty alleviation) • Investment by the private sector for specific ecosystem services (carbon credits, water, biodiversity) • Local tax revenues and legal rights directed to communities that conserve watersheds and other critical ecosystems needed by a broad range of citizens • Product buying linked to conservation and/or fair trade (goods and services purchased by companies and consumers often using a certification mechanism)

5. Types of PES and Example Standards & Markets • Carbon – We have trees/forest so how do we get money for the carbon sequestration. Could be international carbon markets – REDD and REDD Plus through Voluntary Carbon Standard • Biodiversity – Philippines is a biodiversity hotspot, how can we be compensated for conserving this unique biodiversity? - Climate, Community and Biodiversity (CCB) • Energy products and changes in agriculture practices – Clean Development Mechanism (CDM) and Gold Standard • Water – We are watershed management groups, how do we get compensated for protecting the watershed that provides water for lowland communities? – Philippines Local Government Authorities. • Forest Products (timber and non-timber forest products – Are there sustainable enterprises we can pursue? - Traditional grant and local bank credits. Certification programs.

6. Goal of this Presentation One can see the types of PES and range and complexity of markets cannot be fully addressed today. Instead our goal is to introduce everyone to the concept and types of markets we plan to explore with all the stakeholders over the course of the project.

7. Product Examples Linked to Certification and Branding Pros Growing demand among buyers - traceability Creates Specialty Products Promotes higher product, conservation and governance standards Positions groups for ecosystem services markets Cons Third party audits, expensive to maintain Heavy up front capacity building

8. Nepal NTFP Enterprises and Community Forestry Communities obtain Forest Stewardship Council (FSC) Certification • $737,049 in product sales in 2009 from FSC certified forests • Strategic partnerships with Aveda, S&D Group, and two others being negotiated • Sustainable Himalayan BioTrade Group formed – consortium of private sector community owned businesses that hold FSC certification • Companies raising profile for PES in international forums, trade shows, and industry events • A total of 32,429 Community Forestry members including 10,502 women have received training in forest management, certification and enterprise development

9. PES Linked to Local Tax Revenues and Tenure Rights - Philippines • Implementation of community forestry land tenure rights (CBFM program) • Inclusion of CBFM representatives on government task forces - access to tax revenues and infrastructure development • Local “grants” mechanism of Provincial governments • Voice to articulate importance of ecosystems services and explore other tax-based revenue

10. Philippines “local taxes” PES Example • 312,135.97 hectares in 133 CBFM sites in Region 2 and Palawan protected • Php 8 Million for CBFM activities tied to ecosystem services including biodiversity conservation

11. Investment by the private sector for specific ecosystem services (carbon credits, water, biodiversity) • Carbon: REDD, REDD Plus, VCS, CDM (few formal deals worldwide, but dozens of informal deals, most of which will not meet emerging formal market standards. Deals going forward need to meet VCS or CDM standards. • Water: Deals often with local and regional water authorities or government entities. • Biodiversity: CCB standard, but finding markets still an effort

12. Grants, donations from donors/individuals (development projects to support conservation, climate adaptation, poverty alleviation) • Thank you USAID – Philippines! This project is helping to provide the much needed technical assistance to bring the stakeholders together, put in place improved NRM and explore and access conservation markets, including PES mechanisms. • Grants, donations, and donor/individual support are still the major sources of funded to get PES deals organized and moving.

13. Conclusion • Payment for ecosystem services involve fundamental shifts in nature, wealth and power dynamics (stakeholders have to collaborate in new ways) • Long term horizon needed to shift the dynamics and access full range of markets, but case evidence shows it is possible • Need to combine four major categories of PES • donor, • local government tax revenues, and • market based traditional services/product sales (includes certification programs – FSC, Wildlife Friendly, etc.), and • Newer PES marker; e.g. carbon markets

14. Conclusions ContinuedTo access PES markets: • Take time to bring stakeholders together and conduct careful facilitation; some stakeholders will be reluctant – be persistent! • Help the stakeholders to better understand, prioritize, and coordinate activities to abate threats to forests and access PES markets. • Strategize on ways to abate threats and become attractive to PES markets; trust grows as stakeholders work together on threats and market opportunities. • Produce permanent functioning multi-stakeholder groups who have the authority and clear and informed consent of the stakeholders to negotiate PES deals. • Don’t forget business basics. Evaluate any PES deal based on projects costs, revenues, and risks.