patrick ten brink of ieep teeb pes unece meeting 4 july 2011 final

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The Economics of Ecosystems and Biodiversity Rewarding benefits through payments and markets Patrick ten Brink TEEB for Policy Makers Co-ordinator Head of Brussels Office Institute for European Environmental Policy (IEEP) UNECE Workshop, 4-5 July 2011 Payments for Ecosystem Services: What role for a green economy ? Palais des Nations Salle VIII, Geneva 4-5 July 2011 1

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presentation by Patrick ten Brink of IEEP on Payments for Ecosystem Services PES at UNECE workshop on PES and Green Economy July 2011

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Page 1: Patrick ten Brink of IEEP TEEB PES UNECE meeting 4 July 2011 final

The Economics of Ecosystems and Biodiversity

Rewarding benefits through payments and markets

Patrick ten Brink TEEB for Policy Makers Co-ordinator

Head of Brussels Office

Institute for European Environmental Policy (IEEP)

UNECE Workshop, 4-5 July 2011

Payments for Ecosystem Services: What role for a green economy ?

Palais des Nations

Salle VIII, Geneva 4-5 July 2011

1

Page 2: Patrick ten Brink of IEEP TEEB PES UNECE meeting 4 July 2011 final

TEEB‟s Genesis, Aims and progress

“Potsdam Initiative – Biological Diversity 2010”

1) The economic significance of the global loss of biological diversity

Importance of recognising, demonstrating & responding to values of nature

Engagement: ~500 authors, reviewers & cases from across the globe

Interim

Report

India, Brazil, Belgium,

Japan & South Africa

Sept. 2010

TEEB

Synthesis

CBD COP11

Delhi

National

TEEB

Work

Sectoral

TEEB

work

Et al.

Rio+20

Brazil

Climate

Issues Update

Ecol./Env. Economics literature

G8+5

Potsdam

TEEB End User

Reports Brussels

2009, London 2010

CBD COP 9

Bonn 2008 Input to

UNFCCC 2009

CBD COP 10 Nagoya, Oct 2010

TEEB

Books

TEEB Reports: http://www.teebweb.org/ Summaries (in range of languages) and chapters

Page 3: Patrick ten Brink of IEEP TEEB PES UNECE meeting 4 July 2011 final

Valuation and policy making: from valuing natural assets to decisions

“I believe that the great part of miseries of mankind are brought upon

them by false estimates they have made of the value of things.” Benjamin Franklin, 1706-1790

“There is a renaissance underway, in which people are waking up to

the tremendous values of natural capital and devising ingenious

ways of incorporating these values into major resource decisions.” Gretchen Daily, Stanford University

Page 4: Patrick ten Brink of IEEP TEEB PES UNECE meeting 4 July 2011 final

The Global Biodiversity Crisis • Nature’s assets & biodiversity loss

• Economic values and loss

• Social dimension

Transforming our approach to natural capital

Available Solutions • Markets/pricing/incentives :PES • Regulation: standards

• Regulation: planning, protected areas

• Investment (man-made & natural capital)

Measuring what we manage • Indicators

• Accounts

• Valuation

• Assessment

TEEB for Policy Makers

Book announcement: The Economics of Ecosystems and

Biodiversity in National and International Policy Making now

available from Earthscan

Page 5: Patrick ten Brink of IEEP TEEB PES UNECE meeting 4 July 2011 final

Provisioning services • Food, fibre and fuel • Water provision • Genetic resources Regulating Services • Climate /climate change regulation • Water and waste purification • Air purification • Erosion control • Pollination • Biological control

Cultural Services • Aesthetics, Landscape value, recreation

and tourism • Cultural values and inspirational

services

Market values

Potential Market values

– eg REDD & water purification PES

- Avoided cost of purification

Potential Market values

– eg water supply PES; -eg ABS

Lost output or

cost of alternative service provider

Market values – some tourism

Social value – identity et al

Health: social value

Some are private goods (eg food provisioning), others public goods that can become (part) private (eg tourism, pollination), others are pure public goods (eg health, identify)

Ecosystem services - different types of value in our economic and social systems

Page 6: Patrick ten Brink of IEEP TEEB PES UNECE meeting 4 July 2011 final

Many ecosystem services from the same piece of land

Benefits local to global

Benefits are spatially dependent

PES need to take these different dimensions into account

Page 7: Patrick ten Brink of IEEP TEEB PES UNECE meeting 4 July 2011 final

• The underlying principle of PES - „beneficiary / user pays‟ principle + service

providers get paid for their service

• PES aim to change the economics of ecosystem service provision by

improving incentives for land use and management practices that supply

such services

• Instrument growing in applications

– 300 PES programmes globally, range of ecosystem services (Blackman & Woodward, 2010)

– Broad estimate for global value: USD 8.2 billion (Ecosystem Marketplace, 2008)

– USD 6.53 billion in China, Costa Rica, Mexico, the UK and the US alone. (OECD 2010)

– Increasing by 10-20% per year (Karousakis, 2010)

– Dynamic field – new support (e.g. Natural England White Paper), potential solution to challenges (e.g. public payments for public goods and EU CAP reform), new tool flood control (Eg Danube – exploring options)

• Big and small

– E.g. 496 ha being protected in an upper watershed in northern Ecuador

– eg. 4.9 million ha sloped land being reforested by paying landowners China.

See also Chapter 5 TEEB for Policy Makers

PES: They exist, they work, learning by doing

Page 8: Patrick ten Brink of IEEP TEEB PES UNECE meeting 4 July 2011 final

• For Specific services - e.g. provision of quality water (NY, Ec, Mx), protect groundwater (J, D), cleanse coastal waters (Sw), carbon Storage (NZ, Uganda, CR), invasive alien species (SA - WfW), biodiversity (EU,AUS), traditional knowledge for bio-prospecting (India), flood control (exploring Danube)

• Multiple services: e.g. Costa Rica’s PSA - carbon, hydrological services preserving biodiversity and landscape beauty. Germany and Bolivia for biodiversity and water

• Multiple objectives - e.g. Mexico’s PSAH – hydrological services, deforestation, poverty

PES address a wide range of objectives

„Men do not value a good deed unless it brings a reward‟ Ovid, B.C. 43 – 18 A.D.

Public (municipal, reg., nat.) & private (eg Vittel (Fr), Rochefort (B), Bionate (D)

for quality water & mixed

Local (e.g. New York, Quito), Regional (e.g. Niedersachsen) , national (e.g

Costa Rica, Mexico and Ecuador and international (e.g. REDD+, ABS)

Page 9: Patrick ten Brink of IEEP TEEB PES UNECE meeting 4 July 2011 final

Multiple Objectives : PSAH Mexico

PES to forest owners to preserve forest

Manage and not convert forest

• e.g. cloud forest US$ 40 per ha/year;

• e.g. other tree-covered land US$ 30 per ha/year

Hydrological services: Aquifer Recharge;

Improved surface water quality,

Reduce frequency & damage from flooding

Munoz 2010); Muñoz-Piña et al. 2008; Muñoz-Piña et al. 2007.

Reduce Deforestation Address Poverty

Page 10: Patrick ten Brink of IEEP TEEB PES UNECE meeting 4 July 2011 final

Multiple Objectives : PSAH Mexico

Balance of priorities varied over time

An instrument can evolve and respond to

changing needs

Munoz 2010); Muñoz-Piña et al. 2008

Aquifers

Water scarcity

Deforestation

Poverty

P

A

WS

D

Page 11: Patrick ten Brink of IEEP TEEB PES UNECE meeting 4 July 2011 final

PSAH Mexico

Source Munoz 2010); Muñoz-Piña et al. 2008

Year in which forest is signed into the program …

2003 2004 2005 2006 2007 2008 2009 Total

Surface incorporated into the program (‘ooo ha)

127 184 169 118 546 654 567 2,365

Forest owners participating (individuals + collectives)

272 352 257 193 816 765 711 3,366

Total payment to be made over 5 years (US$ m)

17.5 26.0 23.5 17.2 84.2 100.9 87.4 303

Results: PSAH reduced the rate of deforestation from 1.6 % to 0.6 %.

18.3 thousand hectares of avoided deforestation

Avoided GHG emissions this equates 3.2 million tCO2e.

Page 12: Patrick ten Brink of IEEP TEEB PES UNECE meeting 4 July 2011 final

Private Optimum (in

absence of legal requirements)

Private solution with

legal requirements („reference level‟)

Environmental target (practical /politically feasible environmental optimum at the time)

No impact (i.e. within

assimilative capacity of ecosystem)

No emissions

Reducing emissions/impacts

No control on emissions

PES: Beneficiary pays vs. the polluter pays principle

Pragmatism vs. principle ?

PES are intended to reward good management practices that

go beyond what is legally compulsory

Costs of measures borne by landowner – eg Polluter Pays Principle (partly implemented). Lesser societal costs

PES to foresters/farmers to help pay for measures to meet objectives / targets beyond legislative

requirements

(Damage) Costs to landowners and society

Costs born by society

(eg remaining pollution impacts)

Self-damaging practice

PES

PES

PPP

Page 13: Patrick ten Brink of IEEP TEEB PES UNECE meeting 4 July 2011 final

• PES a tool with a growing track record in use, usefulness, effectiveness

• PES programmes operate in both developed and developing countries and may focus on single or multiple services.

• PES can be applied at different spatial scales

• PES are highly flexible and can be established by different actors - Tools can be tailor-made to address the objective at hand

• Many ways to structure PES schemes, depending on the specific service, scale of application and context for implementation

• PES schemes can be designed to create or support other socio-economic objectives such as employment related to the provision of ecosystem services.

• PES effectiveness and feasibility are closely tied to the regulatory baseline and its enforcement

• Thin line between PES being a true payment for services and a subsidy. Pragmatism needed for progress. But care not to go to “polluters get paid”

Key insights on PES noted in TEEB / summary

Page 14: Patrick ten Brink of IEEP TEEB PES UNECE meeting 4 July 2011 final

• Wide participation in PES-related decisions can help ensure transparency and acceptance and avoid covert privatization of common resources.

• PES are not appropriate everywhere. (e.g. where rights not defined; where major information or asymmetries in bargaining power)

• careful design and preparation to ensure that PES schemes are effective and appropriate for local conditions …. below some OECD insights

– remove perverse incentives;

– clearly define property rights;

– clearly define PES goals and objectives;

– develop a robust monitoring and reporting framework.

– identify appropriate buyers and ensure sufficient and long-term sources of finance;

– identify sellers and target ecosystem service benefits;

– consider opportunities for bundling or layering multiple ecosystem services;

– establish baselines to ensure additionality;

– reflect ecosystem service providers’ opportunity costs via differentiated payments;

– address leakage (displacement of emissions);

– ensure permanence.

What are you‟re your experience? Lessons from practice?

Plans and potentials for PES ?

Page 15: Patrick ten Brink of IEEP TEEB PES UNECE meeting 4 July 2011 final

Thank you

TEEB Reports available on http://www.teebweb.org/

& TEEB in Policy Making now out as an Earthscan book

See also www.teeb4me.com

Patrick ten Brink, [email protected]

IEEP is an independent, not-for-profit institute dedicated to the analysis, understanding and promotion of policies for a sustainable environment www.ieep.eu

Manual of EU Environmental Policy: http://www.earthscan.co.uk/JournalsHome/MEEP/tabid/102319/Default.aspx

Page 16: Patrick ten Brink of IEEP TEEB PES UNECE meeting 4 July 2011 final

PES aim to change the economics of ecosystem service provision by improving incentives for land use and management practices that

supply such services

(Paid) Benefit to

land user -

provisioning

services (eg farm

or forest products)

Intensive land use

Cost to population

of pollution

To date „unpaid‟

ecosystem

services PS

RS CS

Cultural

Services

(eg tourism)

Biodiversity „friendly‟ land use

Regulating

services (eg

water quality)

Potential new

income from

different

payments for

ecosystem

services Additional PS (other products,

pollination)

CO

ST

S

BE

NE

FIT

S

Income foregone

to landowner

(in absence of PES)

Income from

products in

markets

Income

from

provisioning

Services (PS)

Eg Private optimum Eg social optimum

PES help in move to green economy/ improved social

benefit Social Benefit = Private benefit + public good (ESS) – pollution costs