Pagiola, World Bank, 2009 1 Payment for Ecosystem Services International parliamentary hearing on forest protection and the model of Payment for Ecosystem Services Earth University, Costa Rica, 5-7 June 2009 Financing Forest Conservation The REDD Initiative Stefano Pagiola World Bank 1818 H Str NW Washington DC 20433 USA [email protected]The opinions expressed in this presentation are the author’s own and do not necessarily represent those of the World Bank Group. The materials in this presentation may be freely reproduced with appropriate credit to the author and the World Bank. Stefano Pagiola Latin America and Caribbean Sustainable Development Department World Bank
30
Embed
Pagiola, World Bank, 2009 1 Payment for Ecosystem Services International parliamentary hearing on forest protection and the model of Payment for Ecosystem.
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Pagiola, World Bank, 2009 1
Payment for Ecosystem ServicesInternational parliamentary hearing on forest protection and the model of Payment for Ecosystem Services
Earth University, Costa Rica, 5-7 June 2009
Financing Forest ConservationThe REDD Initiative
Stefano PagiolaWorld Bank1818 H Str NWWashington DC [email protected]
The opinions expressed in this presentation are the author’s own and do not necessarily represent those of the World Bank Group.
The materials in this presentation may be freely reproduced with appropriatecredit to the author and the World Bank.
Stefano PagiolaLatin America and Caribbean Sustainable Development DepartmentWorld Bank
Pagiola, World Bank, 2009 2
Financing Forest ConservationThe REDD Initiative
Payments for environmental services (PES) Strengths and limitations of current financing
sources Payments for water services Payments for biodiversity conservation Payments for carbon sequestration
REDD financing for forest conservation Potential Challenges Learning by doing through the FCPF
Pagiola, World Bank, 2009 3
Why deforestation?
Benefits to land users
• Water• Biodiversity• Carbon
Costs to downstream populations
Deforestation and use for
pasture
Conservation
Pagiola, World Bank, 2009 4
The logic of Payments for Environmental Services (PES)
Benefits to land users
• Water• Biodiversity• Carbon
Costs to downstream populations
Deforestation and use for
pasture
Conservation
Payments must be annual So must funding
Payment
Conservation with payment
for service
Cannot depend on donors!
Pagiola, World Bank, 2009 5
Payments for water services
Government-financed national PES programs Costa Rica PSA Mexico PSAB China SLCP
User-financed programs local PES programs Hydroelectric power producers Domestic water supply systems Industrial users Irrigation
Pagiola, World Bank, 2009 6
User-financed PES for water services
Hydropower producer
Domestic water supplyBottler
Irrigated agricultureHotel
10
15/30
40
45+22
45
(US$/ha/yr):Total 18,000ha
ca US$500,000/year
40
40
45
45
Energía Global (renewed twice)
Platanar S.A.
CNFL/Río Aranjuez
CNFL/Río Balsa
CNFL/Río Laguna Cote
Florida Ice & Farm and Heredia ESPH
Azucarera El Viejo
Hidroeléctrica Agua Zarcas
Misc
0ha 2,000 ha 4,000 ha 6,000 ha
Costa Rica: Payments by water users
Pagiola, World Bank, 2009 7
Guatemala: Watersheds with hydroelectric power plantsGuatemala: Watersheds with large-scale irrigationGuatemala: Watersheds with domestic water use (>1000 hhs)
Payments for water services are spatially specific
Source: Pagiola, Zhang, and Colom, 2007
Guatemala: Watersheds with significant potential for water PES
1.9 million ha
Pagiola, World Bank, 2009 8
Payments for water services are spatially specific
Source: Zhang and Pagiola, 2008
Costa Rica: Watersheds with water concessions
Pagiola, World Bank, 2009 9
Amounts of payments for water services
vary substantially
Source: Pagiola, Zhang, and Colom, 2007
Guatemala: Watersheds with hydroelectric power plants
High potential for payments Low potential
for payments
Pagiola, World Bank, 2009 10
Amounts of payments for water services
vary substantially
Source: Zhang and Pagiola, 2008
Costa Rica: Watersheds with PES funding from water tariff
Pagiola, World Bank, 2009 11
Payments for biodiversity services
Few examples Bioprospecting has disappointed Tourism
Few examples of voluntary user payments (Tanzania) Some examples of government-imposed fees (Belize) Industry generally too fragmented
Conservation organizations Generally limited to short-term funding
Trust Funds convert short-term funding into long-term funding but only feasible for high-value cases (Monarch Butterfly Reserve, Mexico)
Some longer-term arrangements by Conservation International
Pagiola, World Bank, 2009 12
Payments for carbon sequestration services
Not eligible for EU ETS CDM market
Only for afforestation/reforestation (A/R) Limited total amounts Restrictive conditions
Voluntary (‘retail’) markets Weak requirements
Emerging certification standards
Lower prices (but very variable)
Potential for REDD Still being negotiated
Pagiola, World Bank, 2009 13
BioCarbon Fund projects
“Learning-by-doing” for CDM A/R projects through carbon purchase transactions
Tranche 1 Window 1: Afforestation & Reforestation
18 projects in 16 countries ERPAs for 5.7 MtCO2e by 2017 worth US$ 24 million First 7 of 10 approved CDM-approved methodologies First two CDM-approved A/R projects
Window 2: Forest Protection, Soil Carbon Management 3 projects in 3 countries ERPAs for 0.9 MtCO2e by 2017 worth US$ 2.7 million
BioCarbon Fund buys about 40% of project’s potential
Pagiola, World Bank, 2009 14
BioCarbon Fund: Costa Rica CoopeAgri
Joint project between FONAFIFO and CoopeAgri
Work with 600 farmers in Brunca region: 300 ha of reforestation 3,000 ha of assisted natural regeneration 180,000 trees in agroforestry systems
Purchase of 558,000 tCO2e by 2017 Contract signed in April 2006
Pagiola, World Bank, 2009 15
Reducing emissions from deforestation and forest degradation in developing countries (REDD)
Deforestation causes 20% of total GHG emissions
REDD could help reduce emissions at much lower cost than many alternatives
Stern Review (2007): US$1-2/tCO2
Kindermann and others (2008): US$10-21/tCO2
High additional benefits from biodiversity conservation, protection of water services
Likely to focus on different areas than water payments
Pagiola, World Bank, 2009 16
Challenges for REDD
How to establish a reference scenario (baseline) against which to measure reduced deforestation
How to monitor, report, and verify REDD How to address potential leakage issues How to address permanence Whether and project-based activities might
be included How to ensure forest-dependent peoples are
Not the silver bullet of development Main effectiveness criterion is emissions reduced
Partnership Developing (“REDD”) countries have equal voting rights with donors
and CF participants on Participants CommitteeVoluntary & country-driven Neutral to climate change negotiations
Capacity building Various performance-based financial approaches will be tested
Catalyst Large financial flows are necessary Private sector is needed for scaling up
National National strategies for REDD National reference scenarios Projects within national accounting approach “National” does not mean “governmental” only
Test, learn and disseminate Inputs to discussions at CoP15 (Dec.2009) and beyond
Pagiola, World Bank, 2009 19
FCPF governance
ReadinessFund
(World Bankas Trustee)
Carbon Fund
(World Bankas Trustee)
Participants Committee (PC)
Facility Management Team
(World Bank)
Ad Hoc Technical Advisory Panels
Carbon Fund Participants Committee
Participants AssemblyAll Eligible REDD Countries, Donors and Buyers
- Forum for exchange of information- Meets at least annually - Opportunity for ‘subgroups’ to meet and
discuss experiences, elect their representatives
Primary decision making body, including all policy issues
Decision making on specific carbon transactions
Observers
Pagiola, World Bank, 2009 20
FCPF: Two mechanisms
Readiness Mechanism
READINESS FUND
Capacity Building
(2008-2012)
Carbon Finance
Mechanism
CARBONFUND
Payments for Emission
Reductions(2009-?)~$150
million30 countries
~$200 million~ 5 countries
Pagiola, World Bank, 2009 21
FCPF Participating countries
AfricaCameroona
Central African Rep.c
Congo, Dem. Rep.a
Congo, Republicb
Equatorial Guineac
Ethiopiaa
Gabona
Ghanaa
Kenyaa
Liberiaa
Madagascara
Mozambiquec
Tanzaniac
Ugandab
Latin AmericaArgentinab
Boliviaa
Chilec
Colombiaa
Costa Ricaa
El Salvadorc
Guatemalac
Guyanaa
Hondurasc
Mexicoa
Nicaraguab
Panamaa
Paraguaya
Perua
Surinamec
AsiaCambodiac
Indonesiac
Lao PDRa
Nepala
Papua New Guineaa
Thailandc
Vanuatub
Vietnama
a Countries with access to total grantb Countries with access to $200,000 grant; access to further resources subject to availability of funding in the
Readiness Fund.c Countries whose access to grants is subject to availability of additional funding for the Readiness Fund.
Pagiola, World Bank, 2009 22
FCPF Participants Committee 2008-09
REDD COUNTRIESBoliviaDRC
GabonGhanaGuyana
MadagascarMexicoNepal
PanamaVietnam
DONORSAFD
AustraliaGermany
JapanNetherlands
NorwaySwitzerland
TNCUnited KingdomUnited States
OBSERVERSForest-Dependent Peoples, Private sector, International Organizations, NGOs, UNFCCC,
UN-REDD Programme
Pagiola, World Bank, 2009 23
FCPF Readiness Mechanism (1)
Reference Scenario Historical emissions
How many years and data points?
Future emissions? Adjustment coefficient applied to past emissions?
Based on national development policy?
Estimation of carbon stocks
Test various methodologies based on IPCC Good Practice Guidance and Guidelines
Pagiola, World Bank, 2009 24
FCPF Readiness Mechanism (2)
National REDD StrategyIn the countries interested in REDD, how will emissions be reduced? Where?When?At what cost? Economic analysisNational or sub-national implementation?Policies or projects?How will investment costs be financed?Who will participate in REDD activities?How will they be able to participate? Information, consultations, capacity
buildingWho will be allowed to sell? Legal frameworkHow will additional social and biodiversity benefits be recognized?
Valuation, monitoring
Sector strategies (environment, forestry, energy, transport, etc.) are the basis for the national REDD strategy, but the focus is the resulting emission reductions
The strategy must be nationalPublic sectorPrivate sectorCivil societyIndigenous peoples
Pagiola, World Bank, 2009 25
FCPF Readiness Mechanism (3)
National Monitoring System System design + implementation National accounting of emissions Link sub-national projects with national
system National registry including sub-national/private accounts
Monitor carbon and more?
Pagiola, World Bank, 2009 26
What does ‘ready’ mean?
National REDD strategy:1. REDD strategy: how to reduce emissions?2. REDD implementation framework3. Stakeholder consultations
Monitoring: 1. Design system2. Conduct forest inventory3. Capacity building4. Carbon stock assessment: different levels Using default factors/existing inventory data Finance additional inventories, permanent plots Full assessment for forest degradation
Governance:Implementation of Land-(use) reformsLegislative reformsInstitutional reforms Improve law enforcementFinancial sector reforms
Where to draw the
line between readiness
and investments
?
Emissions reference scenario
FCPF R
ead
iness
Pagiola, World Bank, 2009 27
Readiness + investments + payments
Incentivepayments for REDD
Reforms &investments for
REDD
REDDreadiness
FCFP Readiness Fund,UN-REDD, Australia, Norway, AFD, etc.
ODA, IBRD, GEF, private sectorForest Investment Program, etc.
FCPF Carbon Fund, Norway, private sector, etc.
Pagiola, World Bank, 2009 28
What does the Readiness Mechanism pay for?
1. Direct grants US$200,000 to assist country prepare R-Plan for
all REDD Country Participants Up to US$3.6 million (average) to help country
execute R-Plan Progress report at ~ US$2 million
2. Implementation support by WB country teams
3. Country advisory services4. REDD methodology support
Pagiola, World Bank, 2009 29
What would the Carbon Fund pay for?
• Emission Reduction (ER) generated by reducing deforestation and/or degradation
• ER = all rights, titles, and interests attached to a ton of CO2e of emission reduced
• ER delivered to the FCPF when verification report is received
• Performance-based payments • Carbon + other benefits• ERs distributed to Carbon Fund Participants
through internal registry
Pagiola, World Bank, 2009 30
Conclusions
PES is not a universal solution to all problems May not be applicable in some situations Will not solve all development problems
Within PES, many possible approaches Need to understand strengths and limitations of