Posts Tagged ‘PES schemes’

Refining the definition of PES schemes

Tuesday, March 13th, 2012

The original definition of Payment for Ecosystem Services (PES) schemes by Wunder et al. (2005) was recently modified to reflect variations in the implementation of real-life PES schemes.

Sven Wunder presented the modified definition at the CIVILand conference on payments for ecosystem services and their institutional dimensions organized in November 2011 by the Leibniz Centre for Agricultural Landscape Research (pdf of the presentation here).

The definition has been reformulated as follows (in italics):

1. voluntary transaction – to a variable extent on the buyer side; to full extent on provider side

2. a well-defined environmental service (ES) or a land-use proxy, or some bundle thereof

3. is being “bought” by a (min. one) ES buyer – which can be a public entity

4. from a (min. one) ES provider or a community

5. if and only if the ES provider continuously secures ES provision – i.e. conditionality has to be present to some extent in design and function

The institutional needs for PES schemes remain the same: cooperation & trust between providers, buyers, and regulators, land & resource rights, degradation rights, and low transaction costs.

Nature films: are broadcasters free riders?

Thursday, December 29th, 2011

Earlier this month, Paul Jepson of Oxford and his colleagues published a short article in Science Magazine advocating that the media should pay for nature conservation… Why?

Basically, they state that the industry extracts entertainment value from natural ecosystems and wild fauna and flora, but does not contribute to the cost of conserving these assets. Or at least not in an effective and transparent way.

Today, the media funds nature conservation actions through separate, voluntary initiatives (and the payment of filming fees in some protected areas). Nature conservation projects funded by the media don’t necessarily target the same areas or species used in the films or photography. There is also no mechanism to determine how much funding would adequately reflect the industry’s take. How much is that take anyway?

A key question is whether producers of wildlife content can afford to internalize the production costs of nature into their products.

The authors argue that a better mechanism would be to set up a trust fund, with the money coming from broadcasters on the basis of viewing (e.g. per viewer, or DVD sold etc.) and not as a percentage of production costs. Using common-place ratings and sales data to size payments would lower the cost of setting up the scheme. The trust would also come with a international governing body and transparent certification mechanism for establishing payment rates and monitoring payments.

The authors state that their scheme would ensure that:

  • Films that attract a large audience pay more than those who attract less viewers
  • Costs would be modest, and easy to set-up and monitor using common-place ratings and sales data
  • Sector leaders would have the opportunity to enhance their reputation or brand value
  • Deposits are linked to conservation actions targeting specific areas or species, where entertainment value is sourced
  • Payments are made by end-user broadcasters rather than less wealthy wildlife filming companies
  • Sends out the message that “by watching this, you are paying for conservation”
  • Unfortunately, the paper gives no details as to who would be involved in the governing body. It mentions an “international coalition of mass-membership NGOs, wildlife filmmaker associations, and the IUCN” but do not explain their choice. It is also unclear on what basis the certification process would establish the base rates (e.g. per viewer) for paying into the trust fund. The authors mention the need for “careful pricing” and “fair prices” but do not provide applicable solutions. Rather, they leave that difficult task to the NGOs (again!).

    leading environmental NGOs need to (…) introduce a PES-style mechanism

    Rather surprisingly, the paper has yet to receive the attention of the media outside academic circles. The authors are probably expecting responses. So should you.

    The principle of habitat substitutability

    Monday, November 14th, 2011

    Biodiversity offsets, whether they focus on species (and their habitat requirements), habitat types, ecosystem properties or ecosystem services, are all based on the idea that the elements they target are – to a degree – substitutable: e.g. the breeding habitat of a particular bird species here can be substituted by an “equivalent” habitat somewhere else.

    In an interesting article*, recently in-press in Biodiversity & Conservation, Kate Sherren and her former colleagues at ANU present survey results on how land-holders in rural Australia view the substitutability of different arrangements of trees and woodlands on their properties. This can be very important for aligning conservation policy such as offset schemes with the values and experience of the people they target.

    The rationale for the survey is that at the farm level, substitutions between these elements are made daily, albeit at a small scale: a patch is planted, scattered trees are cut-down etc. These decisions could reveal farmer’s views on their value and their substitutability. The survey found that farmers could be divided into three groups:

  • Farmers, mainly older and less educated, who valued a “tidy” farm but did not care for the specific arrangements of trees and woodlands
  • Farmers who strongly supported the need for a diversity of tree cover arrangements on their land. Because of limited financial or time resources, these views were only rarely translated into concrete action.
  • Farmers who preferred woodlands and connective strips over scattered trees. This group included those that also crop their land using machinery.
  • What can be done with this knowledge? Well, the authors argue that the main risk with widespread offsetting schemes is that tree cover arrangements will homogenize, towards wooded paddocks that are easier to create, maintain, monitor etc. This could have unintended consequences in terms of landscape-level heterogeneity in habitat for species or ecosystem services, especially those related to scattered trees.

    Scattered trees in Australia

    To avoid this homogenization, specific policies could be devised that target the first two types of land-holders, to get them to increase heterogeneity on their land.

    This could be done by allowing land-holders to actively suggest measures in favour of tree cover (and bid for funding) such as “crash grazing”, adding coarse woody debris, weed control or planting of under-storey species… These different measures are conducive to improving the “quality” of existing woodland rather than focusing on area-based measures such as grazing exclusion which could tend to homogenize the landscape and have the major caveat of taking land out of production which could be called into question in the long-term.

    Measures targeting the management of existing trees and woodlands also have drawbacks. The main one is how long-lasting they can be made, and thus how long the binding contracts have to be made. The USDA’s Conservation Reserve Program is one long-lasting program that can provide inspiration for such renewable management-based contracts with land-holders.

    The Conservation Reserve Program - a long-lasting contract-based PES scheme

    Another difficulty with management based measures such as those outlined above is measuring the actual “gain” they generate, so that they can be sized adequately to offset impacts elsewhere. This probably requires a conservative approach – i.e. over-sizing of offsets – as well as further research on baseline trends and short- and long-term effects of these management changes.

    * Sherren K., Yoon H-J., Clayton H. & Schirmer J. (2011): Do Australian graziers have an offset mindset about their farm trees? Biodiversity & Conservation, in press.

    The nature of ecosystem service risks for business

    Wednesday, June 15th, 2011

    KMPG, a consultancy, recently published a report on ecosystem service related risks to business. The 20-pages report is available for free on the web (pdf here) and it provides some interesting insights into the business point of view.

    A complex issue that needs to be made more palatable
    The report mentions the need to demystify biodiversity and ecosystem services for business. This is probably central to any further consideration of these issues in the corporate world yet the report starts by mingling the complex and varied issues of biodiversity and ecosystem services into a single handy acronym “BES”. This is certainly helpful but such over-simplification could also generate confusion. Business leaders and decision-makers will be tempted to look for all-in-one solutions to all their “BES issues”, with little regard to differences in the specific issues they have to consider: land degradation, dynamics of species and natural habitats, natural resources (water, timber etc.), access to land…

    Risks : exposure x preparedness
    The report offers a nice summary of BES-related risks for businesses. These 5 risks are the same as those of the TEEB report but they come in handy:

  • Reputational risk, especially concerning access to funding
  • Regulatory risk, such as the expansion of protected areas or the strengthening of protected species legislation
  • Operational risk, concerning the sustained provision of key inputs (e.g. clean water) or ecosystem services
  • Legal liability risk, for example in the case of accidental damage to ecosystems or protected species
  • Systemic risk, when a business is overly dependent on a particular ecosystem service
  • The authors reviewed 11 published reports (which they claim to be “authoritative”) and consulted 5 experts to make a cross-sectoral analysis of business exposure to BES risks (exposure to each of the 5 risks above was rated on a scale of 1 to 3 and an average calculated) and their preparedness (which is a weighted average of scores given on a scale of 1 to 3 for the role of BES in a business’s competitive advantage, governance, policy/strategy and management/implementation). The report identifies three sectors as facing particularly high risk: food & beverages, mining and oil & gas. They also mention the banking sector because it is very unprepared.

    The report concludes by identifying three main areas for companies to focus on:

  • Their dependence on water
  • Their reputational risk, especially if their operations are associated with land conversion (= habitat destruction) or carbon (= green-house gas emissions)
  • Their dependence and impacts on BES throughout their value chain – why dependence on water was singled out as distinct from this broader issue is not explained.
  • Recommended actions and new opportunities (?)
    The report does not provide a new set of suggested actions for increasing a business preparedness regarding BES but instead lists those of the TEEB report. Among these is the recommendation to take action to “avoid, minimize and mitigate BES risks, including in-kind compensation (‘offsets’) where appropriate”. In this regard, it is interesting to note that the report mentions environmental markets as an opportunity for land intensive industries (i.e. extractive industries), if they make the effort to value ecosystem services within their land holdings to “identify potential assets as well as risk”.

    This recommendation, together with a widespread push in favour of payment for ecosystem services schemes and “conservation banking” (the latter is also mentioned in the report) is bound to stir concern in the nature conservation community : should a business be rewarded for owning land that harbours biodiversity or provides ecosystem services or should it be rewarded for actually acting in favour of BES, e.g. through proactive restoration or enhancement efforts?