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Making Nature Count: enhancing payments for environmental service initiatives in Ecuador and Colombia

This project, scheduled to run from January 2007 to December 2008, is being funded by the John D. and Catherine T. MacArthur Foundation. It is a joint initiative between CIFOR (PI Dr Sven Wunder) and Ohio State University’s Faculty of Latin American Studies (Co-PI Dr Douglas Southgate) and focuses on emerging payments-for-environmental-services (PES) schemes in Ecuador and Columbia. This region has remarkably high biodiversity by global standards, but much of it is threatened by habitat loss and degradation through logging, transformation to pasture, and expanding small-scale agriculture. Various approaches are being tried to reverse this, including recently different forms of PES and other economic incentives and innovative conservation financing mechanisms. Many of the initiatives are emerging in isolation, with little opportunity for those involved – buyers, sellers and intermediaries – to share experiences and build a broader body of knowledge and understanding.

The overall goal of the project is to build national capacity in Ecuador and Colombia on how best to implement payments for environmental services (PES). This will be done by distilling and disseminating information on best practices in PES in support of planned, nascent and ongoing PES initiatives. In gathering, analysing, exchanging and circulating knowledge about PES among conservation practitioners, researchers and decision makers, the project will also enhance capacity among conservation stakeholders and make them better informed about PES implementation. This should help to make PES a more effective tool for biodiversity conservation and a source of benefit to local people.

The specific objectives are:

1. To analyze four to five existing PES schemes in depth in the field to extract key lessons about the factors influencing success or failure in different circumstances, so as to be able to offer hands-on advice and suggestions on strategic choices in the design and adaptation of PES.

2. To assist in starting-up one or two new PES initiatives by assessing the feasibility of these initiatives, making specific suggestions for PES design through field support and mentoring, and possibly supplying or helping to secure strategic financial resources for pilot payments.

3. To establish a forum for information exchange and capacity building through holding two workshops (one in each country) and strengthening and extending an existing PES e-listserve (RISAS), to disseminate results, as well as through encouraging the use of pre-tested frameworks for coherent PES analysis.

One aim of the proposed comparative work is to clarify under what conditions different approaches to paying for environmental services work best for biodiversity conservation. There are two broad approaches. First, one can target the conservation of biodiversity directly by paying landowners to preserve wildlife habitat, or to restore degraded habitat, thereby creating more habitat. This generally requires ongoing payments over the long-term. Second, the payments could target the provision of other environmental services that are also compatible with protecting biodiversity.

For example, this indirect approach is being tried where landowners are being paid to protect cloud forest and páramo (high-altitude alpine grassland) to secure their functioning in producing plentiful amounts of good quality water for users downstream. In some cases, the landowners are paid directly and regularly for their services. In others, the money collected from users is aggregated into an investment fund, income from which can be used to finance traditional upper watershed management projects, improved protected area management, and integrated conservation and development initiatives.

So the research is designed to address the following questions:

• Under what conditions do direct payments or, alternatively, investments in indirect synergies, work best for biodiversity conservation?

• Are continuous payments preferable to short-term incentives designed to encourage a transformation in production activities?

• Is compensating the landowners’ recurrent opportunity costs more promising than trust funds to finance punctual project interventions?

• When is there a case for self-organized, local-scale payments, and when should the public sector be involved?

• When can different services be sold “bundled”, instead of concentrating only on the single most important?

Answers to these questions will help to guide future conservation investments inside the two countries, and beyond.

Locations

Seven potential study sites have been identified in conjunction with CIFOR’s partners in Colombia and Ecuador. However, at this stage no final site selection has yet been made. Five of the candidate sites fall within one or other of the four MacArthur Foundation’s priority landscapes in the region.

Ecuador

1. Cordillera del Cóndor (Morona-Santiago Province, S Ecuador). This is a remote, highly biodiverse and forest-rich area, with current threats from mining, small-scale logging and gradual agricultural expansion by Shuar and Ashuar indigenous groups. In conjunction with GTZ-Ecuador and Conservation International (CI), CIFOR will assist by doing a pre-feasibility study of the viability of different pro-conservation incentive schemes.

2. Chachis (Esmeraldas Province, W Ecuador): This community conservation incentive agreement, negotiated with CI and GTZ, involves using money from private biodiversity investors to set up a trust fund that will provide yearly returns. These will be used in turn to pay indigenous communities to prevent logging of their pristine forests. CIFOR will help with socioeconomic assessments and in setting up baselines to evaluate the efficiency of the conservation effort.

3. Pimampiro (Imbabura, N Ecuador): This 6-year old PES scheme is one of the oldest in the region. It involves municipal water users paying farmers in Nueva América in the upper watershed to conserve the catchment, something that also generates clear biodiversity benefits. Working with a local NGO, EcoCiencia, CIFOR is undertaking a hydrological study and analysing the changes in the service provider’s conservation opportunity costs.

4. Cuenca – Cajas NP (Azuay Province, S Ecuador): 3% of the fees paid by water users in Cuenca, Ecuador’s third largest city, are earmarked for watershed management, part of which is allocated to improving the management of Cajas National Park in the upper watershed. CIFOR will work with ETAPA (Empresa Publica Municipal de Telecomunicaciones, Agua Potable y Alcantarillado) in Cuenca to investigate if this is an efficient mechanism for both watershed protection and biodiversity conservation.

Colombia

5. Chaina (near Villa de Leyva): Under this payments-for-watershed-protection-services scheme, prepared by Instituto Humboldt acting as a PES intermediary, municipal water beneficiaries will pay upland farmers to change land-use practices. The scheme is ready to be implemented. CIFOR will assist the Institute during implementation to test and adapt different types of incentives.

6. Chingaza (E of Bogotá): This is a watershed PES under development, to be implemented in 2007. A local NGO, Ecoversa, working with the Corporación Autónoma Regional del Guavio (Corpoguavio), a regional public-sector environmental entity, together plan to use hydroelectrical payments and Bogotá drinking water benefits to raise funds to pay potato producers in the Guasca region to conserve páramo grasslands.

7. La Vieja (Quindío): Fundación CIPAV, a Cali-based NGO, is running a PES scheme in which temporary payments (2-4 years) from the GEF (Global Environmental Facility) are being used to pay for planting agroforestry trees on tree-less pastures, a move that should also help restore biodiversity in these areas. CIFOR will help incorporate a watershed-protection perspective into this initiative, to make this a case of “bundled” PES that might allow payments to be extended beyond the initial 2-4 years.

Collaborating partners in this project

Both CIFOR and OSU have a strong network of committed partners in the two countries. These include Conservation International (Andes Region), GTZ-Ecuador, the Ecuadorian PES network RISAS (Red de Información sobre Pagos por Servicios Ambientales, the Alexander von Humboldt Biological Resources Research Institute in Bogotá (Colombia), the Faculty of Economics of the University Los Andes in Bogotá (Colombia), and the NGOs Fundación CIPAV in Cali (Colombia), Fundación Ecuatoriana de Estudios Ecológicos (EcoCiencia) and Fundación Antisana (both in Ecuador).

Contact persons

• Dr. Sven Wunder (s.wunder@cgiar.org)

• Dr. Douglas Southgate (southgate.1@osu.edu)