UN says payments for ecosystem services can work – but a code of conduct is needed
A new UN report on payments for ecosystem services (PES) says they can protect forests and play a role in tomorrow’s green economies, but only within the right legislative frameworks.
The report defines PES as payments made by a user of an environmental service to a landowner who provides that service. For example, the Coca-Cola bottling plant at Tagua Reservoir, Portugal, needs clean drinking water, and has agreed to pay local forest owners to maintain their forests in such a way that they continue to filter water and are not subject to potentially polluting development. This creates a mutually sustainable management system for business, biodiversity and local landowners.
The UN paper says such industrially symbiotic forest-based payment systems cannot alone protect forest or grow economies. For that, PES programmes need accompanying legislation to control payments and define consensus on what is paid for, by whom, and how forest is protected and maintained in return.
Crucially, says the paper, these laws must be locally based, reacting to how forest use and land tenure vary from region to region and across different countries and cultures. In Austria, Finland, France, Iceland, Norway, Slovenia and the UK more than a quarter of forest is privately owned. But elsewhere, ownership is unclear, especially in developing countries. Without clarity on tenure, PES cannot work.
For these reasons, global PES will need a proliferation of different projects rather than universal adoption of a single model, the report advises. To date, PES schemes have tended to be government financed, like agri-environment schemes where the government pays farmers for more environmentally sensitive farming on behalf of the public.
Drivers for PES
PES success has precedent. In 2011, across North America, Europe and Central Asia, 78 PES schemes were successfully operating, with 13 under development. Of these 78 schemes, 37 were focused on forest and biodiversity, 28 were watershed-related, and 13 were water quality trading programmes.
“According to the OECD there were more than 300 PES or PES-like programmes in place around the world in 2010 at national, regional and local levels,” says Steven Smith, technical director at URL Infrastructure and Environment UK, which advises the UK government on PES. “The impetus for developing PES schemes should increase as we better identify and value the benefits we derive from natural capital and ecosystem services.”
Legal drivers too are on the horizon. Within Europe, protecting forests is rising on the political agenda. Government ministers at the Forest Europe Oslo Conference 2011 called for a legally binding agreement to protect the environmental, economic and social functions of forests. Forty-six European countries are signatories to Forest Europe, a pan-EU ministerial forum that since 1990 has created 19 EU resolutions.
In November 2012, a Forest Europe Work Programme meeting concluded that a “regulative framework is necessary for PES to be implemented”. This is the same principle endorsed in the UN’s recent paper. The latest EU work towards such a framework will be presented on 6-7 November in Cuenca, Spain, at Forest Europe’s next Ministerial conference. If adopted, EU law giving PES traction could come into place in October 2015.
Globally, United Nations Environment Programme data from 2010 estimates the total value of all ecosystem services may run to trillions of dollars annually. The UN report categorises PES by financial type; publicly funded schemes at local, national and sub-regional levels, private self-organised deals, mixed public-private schemes and trading schemes. Paying to maintain or enhance the services an ecosystem provides, and paying to rescue forest services at risk, or prevent a change of land-use with negative impacts are the commonest types of PES today.
Challenges and the future
The UN report says member states should support the development of PES and a Code of Conduct guiding when to use PES, valuation, monitoring systems and ways to ensure all stakeholders are involved, especially local indigenous communities. Some governments are already supportive. In May 2013, the UK’s Department for Environment, Food & Rural Affairs published a best practice guide on PES, pre-empting the UN’s call.
“As companies begin to think about their dependencies on ecosystem services this should help gather momentum behind concepts such as corporate ‘natural capital accounting’ as well as PES,” says Smith.
The UN’s report fails to predict PES trends, or commercial uptake of the concept, but refers to the Albania Assisted Natural Regeneration Project (AANRP), fully approved in 2013, as a useful case study for PES development.
AANRP, funded by the World Bank, will reforest badly degraded Albanian land covering 6,317 hectares through community-based management. In return for cash payments, the communities will no longer allow goats to graze, letting forest regrow, which is expected to sequester a total of 140,000 tonnes of CO2 equivalent by 2012 and about twice that by 2017.
AANRP’s regenerated forest will then improve water quality and watershed capacity and reduce siltation of watercourses and reservoirs. It will help an estimated 80,000 people, who will gain firewood, timber, fruit and fodder from regenerated woods, in addition to today’s PES cash.
Public schemes: Komet Programme, Sweden
With a 2011 budget of 11m SEK (£1m), the voluntary Komet scheme, initiated by the Swedish Government, partnered three government bodies, and covered 9% of Sweden’s forest land. Landowners receive fixed-rate payments spanning periods of between one year and 50 years, compensating constraints on forest management in the interests of nature conservation.
Private schemes: Vittel PES Scheme, France
Nestlé Waters entered 30-year contracts with 26 large farm operators in the Vittel region, agreeing to pay off farmers’ land-ownership debts and fund new farm equipment and building modernisation up to a value of €150,000 per farm, in exchange for land practices protecting Nestlé’s water source.
After 12 years, the programme covered 92% of local land, reducing the baseline nitrogen load of the spring’s source waters. Nestlé paid about €200 per hectare per year for seven years to cover farmers’ reduced profitability resulting from changed land management practices.
Despite these successes, PES face challenges. “Manufacturing and service-based businesses are one or more steps removed from the natural environment and don’t perceive themselves to be dependent on ecosystem services,” says URL’s Steven Smith.
ecosystem ecosystem services PES UN Environment Programme UN report