Financial mechanisms in support conservation biology

Financial Mechanisms in Support Biodiversity Conservation An Introduction Why is finance important? • Declining biodiversity trends at global level - OECD Environmental Outlook to 2050 projects a further 10% loss by 2050 under business as usual Yet benefits of biodiversity and ecosystem service are high • Resulting adverse impacts to environment, health, economic growth human well-being Financial mechanisms Widely recognized that 2010 biodiversity targets were not met CBD COP10 led to agreement on 2011-2020 Aichi Targets  Will need to significantly scale up biodiversity outcomes CBD refers to six “innovative financial mechanisms”: • Environmental fiscal reform • Payments for ecosystem services • Biodiversity offsets • Markets for green products • Biodiversity in climate change funding • Biodiversity in international development finance What is an Ecosystem? An ecosystem is the combination of living organisms and their non-living environment People are part of ecosystems The health and wellbeing of people depends upon the services provided by ecosystems What is an Ecosystem Service? Benefits that humans receive from nature:  Provisioning Services  Regulating Services  Cultural Services  Supporting Services Guess the Ecosystem Service? Threats to Ecosystems  Ecosystem loss and fragmentation  Invasive species  Overexploitation  Pollution  Global climate change Payments for Ecosystem Services (PES) Payments for Ecosystem Services (Wunder 2005) is:  a voluntary transaction in which  a well-defined ecosystem service  is bought by at least one ecosystem service buyer  from a minimum of one ecosystem service provider  if the provider continues to supply that service Who are Ecosystem Service Buyers?  Industries (e.g hydropower, timber)  Conservation organizations (local or international)  Special interest groups (e.g sport hunters)  Governments and municipalities  Consumers (e.g ecotourists or buyers of certified products Case studies PES in Lam Dong  key buyers: hydropower, water supply, tourist  Total PFES revenue: million USD  Disbursement of the PFES payment to eligible groups in 2009 and 2010  202,251 of forest, 7,997 households (via contract with 18 forest users)  Average payment: 350-400,000 VND/ha/year (17-20 US) Case study PES in Quang Nam  A Winrock International funded project  Potential buyer would be a hydropower plant that was operational, with the production capacity of not less than 30 MW  The local area where illegal logging still existed  Forestland contracting to local households could be agreed upon by local authorities  There were local households nearing near the watershed area  Ma Cooih commune of Dong Giang district of the province was selected for the piloting  A Vuong hydropower plant belonging to Electricity of Vietnam Case study PES in Son La  379,272 under payment scheme  Two hydropower plants + water supply  45,000 households  6,000 hh groups and communities  1,000 locally-based organizations  Average payment: 350,000 VND/ha/year  Payment delayed in 2010-2011 5/26/16 30 Issue Land tenure  Clearly defined rights are very important for the success of PES  Land tenure in Vietnam is not always clear  PES/REDD+ operates within the current tenure structures: marginalise the poor  Local elite capture? Issue Buyers  Hybrid between public and private, thus powerful buyers (e.g Hoa Binh hydro/EVN)  Payment is not performance-based, but made because “Prime Minister requests”  The lack of institutional and policy framework for facilitating carbon market, thus risks for investors Issue Service providers  forest user groups with different quality of forest, thus different payment levels  Ownership right: government  Unequal distribution of PES/REDD+ benefits among users   Potentials for conflicts Difficulties in protecting the forest  Payment to whom?  Payment mode: individual households, group of households, or community?  How is payment used within community? Issue Intermediaries  Government as intermediaries, connecting buyers and sellers  Government decide level of payment, how the payment is made on what basics  The government regulates carbon transaction  Local government: socioeconomic indicators are important for deciding how payment is made Issue Institutions  The lack of policy framework for accommodating carbon investment  Weak coordination among government agencies (e.g MARD, MONRE)  Weak coordination between government and private sector, government and other stakeholders  The lack of capacity and human resources within the government and non-government sector Biodiversity Offsets: Definition What are biodiversity offsets?  “Conservation actions intended to compensate for the residual, unavoidable harm to biodiversity caused by development projects, so as to ensure no net loss of biodiversity.   Before developers contemplate offsets, they should have first sought to avoid and minimize harm to biodiversity.”    Insight & IUCN, 2004 Biodiversity Offsets: Benefits Potential conservation benefits of biodiversity offsets   More in situ conservation activity than occurs now   Better conservation outcomes by focusing on high biodiversity value habitat and conservation priorities instead of highly compromised sites  A mechanism to integrate conservation into development planning and biodiversity into the investment plans of companies  Greater economic value to biodiversity  New source of finance for biodiversity conservation Biodiversity Offsets: Benefits Government:  Companies make increased contributions to conservation, without necessarily requiring elaborate new rules  Development projects planned in the context of sustainable development  Better balancing of the costs and benefits of conservation and economic development Biodiversity Offsets: Benefits Communities:  Ensure developers leave a legacy of rehabilitated project sites and additional conservation benefits in the surrounding area  Negotiate optimal environmental, economic and social outcomes at a community or landscape scale   Identify pre-project biodiversity and ecosystem benefits and ensure important ecosystems remain functioning and productive during and after development projects Biodiversity Offsets: Risk Offsets are no substitute for “no go” areas:   Where development is not appropriate, the question of offsets should not even arise.    Failure to deliver:   Even in the context of mandatory offset regimes, many conservation groups believe that the requirements for viable offsets have not been met.  Many feel wetland banking in the USA has failed to deliver “no net loss”.  Biodiversity Offsets: Risk Controversy:   Some conservation groups oppose the concept entirely.  Others feel the theory has not been delivered in practice.  At the same time, some developers feel offsets will cost more than they can bear.  Public skepticism that “no net loss” will be delivered in practice.  Stakeholder consensus is difficult.  Standards:  Credible and transparent standards, methodologies and guidelines for biodiversity offsets, if the approach is to be adopted more widely Biodiversity Offsets: Current status  Mainly used in North America: 15 programs operating and being developed  Central and South America: experimenting  Africa: South Africa and Namibia applying this concept to Urianium mining  Asia: Japan pioneering, Vietnam and Mongolia expressing interest  Biodiversity banks established  New Zealand: considering … [...]... resource owners  Individuals or groups who use or interact with natural resources / ecosystem services (e.g subsistence/commercial hunters)  Community organizations  Villages Case Study: Eld’s Deer Early PES program in Lao PDR (Svadlenak-Gomexz et al 2007)  ES: Conservation of Eld’s Deer  Transaction: Annual cash payment to stop hunting, maintain habitat, and become involved in conservation  Buyer:... continue to benefit from the targeted ecosystem service Can PES Reduce Poverty? Short-term benefits   Cash income for immediate consumption (food) or investments (education, health care) Training on sustainable resource use Potential long-term benefits  More reliable local ecosystems and flows of services   Increase in land productivity Revenue for long-term investments Risks to Sellers Prior to investing... (conservation organization)  Provider: 3 villages in Savannakhet Province  Results:  $ used for village development & to cover patrolling and education related to ES   Stabilization of deer population Increase in awareness of deer importance & data on deer population Valuing Ecosystem Services Economists measure the value of ecosystem services to people by estimating the amount people are willing... in 21 villages with locals receiving US$80-160/year Ex: Bundling Payments for Forests  Organization of payments for as many services as possible for sale as a single product Adapted from Pagiola et al 2002 Promoting PES in Lao PDR  Bring certainty to the ecosystem marketplace  Consider how PES relates to the other strategic plans  Review legal framework to determine PES applicability  Promote research... research on PES and related topics  Pilot PES projects at certain sites Limiting Factors PES programs are currently restricted by:  Limited access to information  Limited organization to attract buyers  Limited access to partners  Lack of money for initial costs  Lack of influence to shape or enforce contracts  Lack of financial protection against risks Ideal Conditions PES deals will be most successful... diminishing  Effective brokers and intermediaries are available  Contract laws exist and are enforced  Clear criteria exist for evaluating fair outcomes Enable conditions (3): Decree 99 Mechanisms 90% to contracted 10% management fee households Service buyers (hydro, water supply) Forest user as organization Min 85% as payment Vietnam Forest Fund (as 100%) Max 5 % contingent fee (reserve) Provincial... Issue 4 Institutions  The lack of policy framework for accommodating carbon investment  Weak coordination among government agencies (e.g MARD, MONRE)  Weak coordination between government and private sector, government and other stakeholders  The lack of capacity and human resources within the government and non-government sector Biodiversity Offsets: Definition What are biodiversity offsets?  Conservation. .. Sellers Prior to investing in a PES deal, potential sellers and their partners should undertake a risk assessment to understand the issues relevant to the specific site and context   Failure to understand what is being bought and sold Loss of access to services        Inability to harvest products Reduced land management activities Unfair sharing of revenues Increased competition in area Poorly designed...  The local area where illegal logging still existed  Forestland contracting to local households could be agreed upon by local authorities  There were local households nearing near the watershed area  Ma Cooih commune of Dong Giang district of the province was selected for the piloting  A Vuong hydropower plant belonging to Electricity of Vietnam Case study PES in Son La  379,272 ha under payment... Payment mode: individual households, group of households, or community?  How is payment used within community? Issue 3 Intermediaries  Government as intermediaries, connecting buyers and sellers  Government decide level of payment, how the payment is made on what basics  The government regulates carbon transaction  Local government: socioeconomic indicators are important for deciding how payment