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  • The social impacts of payments for environmental services in Costa Rica

    A quantitative field survey and

    analysis of the Virilla watershed

    Miriam Miranda Ina T Porras

    Mary Luz Moreno

    ENVIRONMENTAL ECONOMICS PROGRAMME

    October 2003

  • International Institute for Environment and Development (IIED)

    IIED is an independent, non-profit research institute working in the field of sustainable development. IIED aims to provide expertise and leadership in researching and achieving sustainable development at local, national, regional, and global levels. In alliance with others we seek to help shape a future that ends global poverty and delivers and sustains efficient and equitable management of the worlds natural resources. Environmental Economics Programme

    The Environmental Economics Programme (EEP) seeks to develop and promote the application of economics to environmental issues in developing countries. This is achieved through research and policy analysis on the role of the environment and natural resources in economic development and poverty alleviation. Forestry and Land Use Programme

    IIEDs Forestry and Land Use (FLU) programme has the goal of improving peoples livelihoods from forest and land use on the basis of equity, efficiency and sustainability, focusing on key arenas where the decision-making that matters for better forestry and land use actually takes place. The Authors

    Miriam Miranda and Mary Luz Moreno are researchers at the Centro Internacional de Poltica Econmica para el Desarrollo Sustenible (CINPE) of the National University of Costa Rica. Ina Porras is a research associate in the Environmental Economics Programme at the International Institute for Environment and Development (IIED). They may be contacted at: Miriam Miranda CINPE Apartado Postal 555-3000 Heredia Costa Rica Tel: 506 260 16 00 Fax: 506 261 8733 e-mail: mmiranda7@racsa.co.cr; mmiranda@una.ac.cr

    Mary Luz Moreno CINPE Apartado Postal 555-3000 Heredia Costa Rica Tel: 506 263 45 50 Fax: 506 260 12 70 e-mail: mmoreno@una.ac.cr

    Ina T. Porras IIED 4 Hanover Street Edinburgh EH2 2EN Tel: (0)131 226 6875 Fax: (0)131 624 7050 e-mail: ina.porras@iied.org.uk

  • Acknowledgements

    The authors are indebted to the many people who provided information for this report. Special thanks are due to the National Power and Light Company (CNFL) and representatives of the Plama-Virilla project, the Heredia Public Services Company (ESPH), Florida Ice & Farm, the Foundation for the Development of the Central Volcanic Range (FUNDECOR), the National Forestry Fund (FONAFIFO) and the Ministry of Environment and Energy (MINAE). We are grateful to all the households who took part in the survey, providing the key reference material for the study, and who offered us a warm welcome on rainy days. Finally, we would like to thank James Mayers and Natasha Landell-Mills for their valuable input to the study and for their comments on earlier drafts, and Josh Bishop and Maryanne Grieg-Gran for their contribution to this project. Financial support for this research was provided by the UK Department for International Development (DFID) as part of a larger project: "Markets for watershed protection services and improved livelihoods", coordinated by IIED and involving work in Ecuador, Brazil, the Caribbean, Indonesia, India, and South Africa. Funding for the production and publication of this report was provided by the Royal Danish Ministry of Foreign Affairs (Danida), the Swiss Agency for Development and Cooperation (SDC), and the Shell Foundations Sustainable Energy Programme. The opinions expressed in this report are the opinions of the authors and not necessarily those of IIED. Citation: Miranda, M., I.T. Porras and M. L. Moreno. 2003. The social impacts of payments for environmental services in Costa Rica. A quantitative field survey and analysis of the Virilla watershed. International Institute for Environment and Development, London. Permissions: The material in this report may be reproduced for non-commercial purposes provided full credit is given to the authors and to IIED. Copies of this report are available from: Earthprint Limited, Orders Department, P.O. Box 119, Stevenage, Hertfordshire SG1 4TP, UK; Email: orders@earthprint.co.uk. Enquiries: tel +44 (0)1438 748111; fax +44 (0)1438 748844; Email enquire@earthprint.co.uk. This report and its appendixes are available in pdf format at www.iied.org/eep or from enveco@iied.org.uk.

  • Contents Executive Summary i Acronyms and abbreviations vi

    1 Introduction...................................................................................................................................1

    2 Social, spatial, environmental and economic characteristics ....................................................3 2.1 The national context................................................................................................................3 2.2 Characteristics of the study area ............................................................................................4

    2.2.1 Physical and environmental description .........................................................................6 2.2.2 Socio-economic characteristics ......................................................................................8 2.2.3 Main environmental problems ........................................................................................9

    2.3 Markets for environmental services within the site............................................................... 10 2.3.1 Costa Rica-Norway Reforestation and Forest Conservation AIJ Pilot Project (carbon sequestration) and CNFL Project (watershed conservation) ....................................................... 11 2.3.2 Florida Ice & Farm Brewery Project (watershed protection) ...................................... 11 2.3.3 Empresa de Servicios Pblicos de Heredia and water use charges (watershed protection)..................................................................................................................................... 12

    3 Methodology of analysis ............................................................................................................. 13 3.1 Main objective and purpose of the study............................................................................... 13 3.2 The Sustainable Livelihoods Approach as a framework....................................................... 13 3.3 Identification of stakeholders................................................................................................ 15 3.4 Sources of information and sample selection........................................................................ 16 3.5 Data collection techniques.................................................................................................... 17

    4 Socio-Economic Effects of the PES in the ACCVC.................................................................. 20 4.1 Introduction........................................................................................................................... 20

    4.1.1 The population and sample of landowners in the Virilla watershed............................. 20 4.1.2 Land use activities within the sample............................................................................ 22

    4.2 Impact on household assets................................................................................................... 24 4.2.1 Impact on financial assets............................................................................................. 24 4.2.2 Impacts on social assets ................................................................................................ 31 4.2.3 Impact on human assets ................................................................................................ 33 4.2.4 Impacts on natural assets.............................................................................................. 38 4.2.5 Impact on physical assets.............................................................................................. 42

    5 Conclusions and recommendations ........................................................................................... 43 5.1 Summary of impacts on household assets ............................................................................. 43 5.2 Limitations of and improvements to the PES programme .................................................... 45

    5.2.1 Financial aspects .......................................................................................................... 45 5.2.2 Education and capacity building .................................................................................. 46 5.2.3 Institutional and legal coordination.............................................................................. 46 5.2.4 Inclusion of riparian areas ........................................................................................... 47 5.2.5 Improving access for poorer households ...................................................................... 47 5.2.6 Other pressing issues .................................................................................................... 48

  • 6 References.................................................................................................................................... 49

    Annexe 1 - List of participants in the area

    Annexe 2 - The Survey

    List of Tables Table 2.1 Land use in the Upper Part of the Virilla Watershed ..............................................................7 Table 2.2. Socio-Economic characteristics of selected watersheds ........................................................8 Table 2.3. Gross power generation by hydroelectric plants in the Virilla Watershed, CNFL (MWh) .11 Table 2.4 ESPH water fee collections to date (US dollars) .................................................................. 12 Table 3.1. Adapting the SLA assets as a 'checklist' for the Costa Rican study..................................... 14 Table 3.2 Description of the survey questions ...................................................................................... 17 Table 4.1 Total area under PES (hectares in 2001)............................................................................... 20 Table 4.2 Detail of the sample .............................................................................................................. 21 Table 4.3 Ranking of economic activities within the property ............................................................. 23 Table 4.4 Average payments per property (2002 US$) ........................................................................ 25 Table 4.5 Proportion of income from PES, by property size ................................................................ 26 Table 4.6 How participants applied for the PES................................................................................... 29 Table 4.7 Waiting time to obtain PES.................................................................................................. 30 Table 4.8 Summary of schools that participate in the Environmental Education and Solid Waste

    Management Programme of Plama-Virilla (2001)....................................................................... 35 Table 4.9 Reasons for entering each programme.................................................................................. 41 List of Figures Figure 2.1 The Costa Rican PES Programme .........................................................................................3 Figure 2.2 Map of Virilla Watershed .....................................................................................................4 Figure 2.3 Map of the Ro Segundo Basin. 5 Figure 3.1 The Sustainable Livelihoods Approach............................................................................... 14 Figure 3.2 Main stakeholders in the Virilla Watershed PES scheme.................................................... 16 Figure 4.1 Number of landholders receiving payments (by category and area) ................................... 21 Figure 4.2 Number of households by property size .............................................................................. 22 Figure 4.3 Economic activities within the watershed (all households)................................................. 23 Figure 4.4 Main benefits of the PES scheme according to the survey.................................................. 24 Figure 4.5 Proportion of job creation by property size .........................................................................28 Figure 4.6 Forest Cover in Costa Rica (1950 to 2000) ......................................................................... 39 Figure 4.7 Proportion of area under each PES category ...................................................................... 40 Figure 4.8 Length of ownership of land .............................................................................................. 41 Figure 5.1 Principal limitations of the PES (non-participants) ............................................................ 47

  • i

    Executive Summary When Costa Rica set up its Payments for Environmental Services (PES) programme in 1995, it was widely praised for pioneering global efforts to introduce compensation systems for environmental services. The programme seeks to encourage forest protection and management by paying forest owners for four environmental services provided by their forests: carbon, biodiversity, watershed management, and landscape beauty. This programme was the result of a process of institutional capacity building initiated decades previously in which an institutional framework, with a solid legal, organisational and social base was established. Objectives and methodology Although the PES scheme is not a social welfare programme, from the outset the state and various social organisations assumed that it would contribute to rural poverty alleviation in Costa Rica. It became apparent that the programme was indeed having an impact on the quality of life of communities and individuals in rural areas. However, little was known about the impact on the poorer sections of the population. The aim of this study was to look at the impacts the PES programme has on poverty and other social factors, using as a basis for the analysis the Sustainable Livelihoods Framework, and examining the effects the programme has on financial, human, social, physical and environmental assets. The result is an analysis of the social effects of the PES in the Central Volcanic Mountain Range Conservation Area (ACCVC), with a particular focus on the Virilla watershed. The study area The area has been closely involved in the development of the PES programme since its commencement, and hosted the first international certifiable t...

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