Mainstreaming Payments/Incentives for Ecosystem Services in National and Regional Planning/Policy Dimensions

1
Mainstreaming Payments/Incentives for Ecosystem
Services in National and Regional Planning/Policy
Dimensions

• Alice Ruhweza,
• Consultant
• UGANDA

2
Introduction

• Ecosystem services are those valuable, ongoing
  streams of benefits provided by thriving
  ecosystems e.g
• Watershed services flow, quality,
• mitigation of floods and droughts
• Detoxification and decomposition of wastes
• generation and renewal of soil and soil fertility
  
• pollination of crops and natural vegetation
• maintenance of biodiversity
• stabilization of climate - moderation of
  temperature extremes and the force of winds and
  waves
• support of diverse human cultures - beauty and
  spiritual sustenance etc etc

3
Intro - contd

• There is growing awareness of services and
  effects to society that result from loss of such
  services e.g landslides, floods, climate change,
  etc However, In developing countries business
  case is not yet fully developed In developed
  countries where science and legal/Instn framewks
  are stronger, payment schemes have evolved.
• E.g New York City - water purification services
  provided by the Catskills watershed. When the
  municipal system began to deteriorate in the
  1990s, the City faced a choice between investing
  up to 8 billion in a state-of-the-art treatment
  system or about 1.5 billion to protect and
  restore the Catskills watershed. In this case,
  the choice to protect the watershed was made
  essentially because of the economic benefits
  provided by the watersheds stream of ecosystem
  services.

4
Why mainstream payments/incentives for ecosystem
services?

• Ecosystem degradation has continued. Water
  quality, soil productivity and habitat are
  impaired
• Enable people to understand their actions in
  terms of their effects on ecosystem functions
• Need to place value on ecosystem functions in a
  way that creates incentives for maintaining them
  e.g provide financial incentives for farmers to
  weigh cost/benefit of maintaining native
  vegetation vs. cash crops

5
Why payments?-contd

• Need to ensure beneficiaries pay for the env.
  services they receive. E.g land holders are
  compensated for services they provide - income
  can be used to finance on-ground works reward
  good land mgt practices/ecosystem stewardship
• Encourage monitoring of ecosystem services
• Penalise adverse impacts on environment
• traditional regulatory approaches have not worked
• protected areas have limitations
• Poverty reduction strategies/sustainability

6
Focus Forest Ecosystem services

• STATUS OF UGANDAS FORESTS
• 50 reduction in forest cover (FAO 1995)
• Causes of degradation-
• MARKET FAILURE timber pdcts traded in local
  area sometimes bartered. Lack of mkt
  information values poor access roads
  underpricing of natural resources no water
  tarrifs this reduces incentive to conserve
• POLICY FAILURE Decentralisation without
  matching increase in human and financial
  resources
• POVERTY - forest dependence, resource depletion
• Despite all these, studies show there is great
  potential!

7
Value of Ugandas Forests (Plumptre et al 2004)

• Source of water for local communities- Value
  could be estimated by considering the cost of
  providing an alternative source e.g mkt costs for
  boreholes
• Soil Fertility source of fuel wood.
  Uncontrolled over exploitation results in
  decrease of wood stock causing households to
  resort to crop residues. Loss of crop residues
  and nutrients to the agric. system will result
  into further degradation of the soil. Value of
  soil fertility can be estimated by looking at the
  cost of replacing nutrients in the farm with
  chemical fertilisers which are available on local
  markets

8
Value contd

• Carbon storage carbon sink at global level
  help reduce GHG and regulate climate change.
  Estimates by various studies show the value of
  UGs forested areas (forests, woodlands,
  grasslands) to carbon sequestration to be 56.4
  billion UGX(app. 34M USDex 1670UGX/1USD)
• Biodiversity Option Values- Promising returns
  expected from development of plant based
  pharmaceuticals. Several studies using number of
  endemic plant species per hectare and patent
  rights to estimate the potential value of
  undiscovered plant based drugs show a value of
  0.1 to 3 per hectare.

9
Value contd

• Tourism/eco-tourism 6 national parks created
  from forest reserves Bwindi and Mgahinga
  mountain gorilla half of the worlds population.
  33 of revenues of Uganda Wildlife Authority from
  gate receipts not including downstream benefits
  from tourisms such as travel, hotel, handicrafts
• Timber Revenue sale of forest products
  concession fees taxes levied on charcoal makers
  rent for land in forest reserves permits for
  transport and trade

10
Implications for Policy

• People living near forests are forest dependent
  therefore policies that exclude them from using
  the forest run the risk of contributing to
  poverty
• Conversely policies that integrate people into
  mgt and use of forests have potential to
  contribute to livelihoods (user rights and
  adequate protection and monitoring of the
  resource required)
• Reducing access to forests may lead to poverty
  therefore alternative welfare measures are needed

11
Policy contd

• Capacity in terms of finance and expertise to
  become involved in broader devpt activites is
  limited Government must play a big role as
  principal direct buyer and catalyst for private
  sector direct payment schemes
• New financial mechanisms need to be identified
  and implemented eg finances from carbon offset
  schemes others should be investigated
• eg GEF/WB Carbon fund

12
Enabling environment for mainstreaming PES in
Uganda

• Laws and Policies exist
• National Environment Act
• National Forest Policy
• National Forest Sector Business Plan etc
• Integrated Natural Resource Management
• Poverty Reduction Strategy Papers/Poverty
  Eradication Action Plan -PEAP outlines national
  programmes for poverty reduction as the
  foundation for lending (PRSC) by WB and IMF

13
Enabling environment

• DECENTRALISATION direct involvement of local
  governance in PRSP reviews to adjust priorities
  in line with budget constraints occurs at
  national, sectoral, district level allows the
  unique opprtunity to integrate interventions like
  PES in sector plans, district plans, SDPs, SEAPs,
  PEAPs, DEAPs National Medium Term Expenditure
  Framework, budget framwework papers, sector
  investment plans
• Regional level - Cross border biodiversity
  shared ecosystems

14
Incentive mechanisms currently underway

• Land tenure - Long term land leases for tree
  planting on govt land/Permits to grow trees in
  forest reserves
• Eco Label Markets (FSC)/Certification still
  trying to work on this(organic certification has
  done well!!)
• Favorable tax regulations for overseas and local
  developers limited success
• Trust Funds Rwenzori Watershed Business Plan
  being developed to look at levying a conservation
  tax on downstream water users in return for
  catchment management
• Carbon Funds ECOTRUST Pilot Initiative has been
  relatively successfull

15
Case Study Value added from ECOTRUST Carbon
offsets trading scheme

• Marginal lands turned into productive areas for
  tree growing and income generation
• Farmers learnt to establish and manage tree
  nurseries. Some have taken up tree nursery
  establishment and management as a business
• Initiating a culture of farming as a business
  farmer doing cost benefit analysis of putting
  plots under tree growing vs. getting carbon funds
• Collective decision making - sale agreements
  signed by the both spouses

16
ECOTRUST value added

• Change of attitude farmers focus on
  biodiversity conservation with an incentive
• Generation of new ideas - traditional bee hives
  to site in the trees - generating multiple
  benefits.
• Access to basic needs - paying school fees for
  the children out of carbon funds
• Encouraging planning ahead of time - plant trees
  for 15 years - initiates forward planning
• Multiple benefits out of trees planted for carbon
  e.g. fruit trees, medicinal trees etc

17
Challenges

• Assessing and capturing value Price does not
  always capture value of other watershed services
• -Defining rights who will receive payments?
• -Effectiveness in enhancing environ. benefits
• -Efficiency compared to other approaches
• -Equity in the distribution of benefits
• -Relevance to protected areas
• -Lack of Information/Regional differences in ES
  which may require application of different
  tax/subsidy at every site - exchange rates?

18
Recommendations

• Raise awareness develop clear valuation tools
  in order to educate the public about many ways
  they depend on ES informed trade offs
• Define property rights certificates of
  ownership- set caps or limits on activities.
• Market survey make case for bettter market
  prices for timber and other ENR products

19
Recommendations

• Joint forest management controlled
  access/revenue sharing
• Mobilise and organize buyers for ES- Connect
  global and national action ForestTrends/Katoomba
  Group East Africa Meeting-September
• Encourage private sector invstmt payments must
  be structured to relate to conservation benefits

20
Policy Actions contd

• Further develop fiscal instruments
  environmental taxes, differential land use tax,
  taxes
• Charges permits and licenses bioprospecting
  (e.g pharmaceutical values access benefit
  sharing) hunting permits, research permits,
  ecotourism
• Liability systems-penalties for
  damage/performance bonds