1 Payments for Ecosystem Services

Question 1

What are ecosystem services?

Answer 1

Benefits people derives from ecosystems/nature?

Question 2

What are the 4 categories of services?

Answer 2

Provisioning
Regulating
Supporting
Cultural

Question 3

What/when was the Millennium Ecosystem Assessment?

Answer 3

2001-2005

Assessed the condition and trends in the worlds ecosystems

Question 4

Why are our ecosystems degraded?

Answer 4

Due to the chronic failure of markets to internalise environmental externalities and free riding

Question 5

In what ways have we degraded our ecosystems?

Answer 5

Deforestation, pollution, habitat conversion and degradation, species loss

Question 6

What are the market failures associated with ecosystem degradation?

Answer 6

Open access resources
Unclear property rights
Lack of representation in the market
Free riding on public goods

Question 7

What is Payments for Ecosystem Services?

Answer 7

Incentive and market based scheme to internalise the externalities of ecosystem services, encouraging land owners to protect their nature through direct payments

Question 8

What are the two ways to achieve PES?

Answer 8

Beneficiary pays

Polluter pays

Question 9

Who introduced the polluter pays principle?

Answer 9

Pigou in 1920 - use of government taxes and subsidies to internalise externalities

Question 10

Who introduced the market based idea?

Answer 10

1950s Coase Theorem - externalities can be resolved through private negotiation in TCs are low and property rights clearly defined

Question 11

When/where the first evidences of PES?

Answer 11

1980s UK and USA

Question 12

Next came?

Answer 12

1990s Develping nations e.g. Costa Rica

Question 13

Then?

Answer 13

2000s mainstreaming with Bolivia, Mexico, Ecuador, China

Question 14

Finally?

Answer 14

Tropical countries through PES and REDD+

Question 15

Why was Costa Rica one of the first place for PES?

Answer 15

Once had the world’s highest deforestation rates

Question 16

Who manages the PES system?

Answer 16

FONAFIFO

Question 17

What are the types of payments?

Answer 17

Water service e.g. HEP
Biodiversity
Carbon

Question 18

What was the success of the CR PES?

Answer 18

By the end of 2005 there was 270,000 ha enrolled in the program (10% of forest area)
Limited success in charging for biodiversity and carbon

Question 19

More general limitations of PES?

Answer 19

Difficulty defining what services are for sale and who is buying/selling
Distributional effects
Efficiency and leakage?

Question 20

Why PES in China?

Answer 20

Economic development in China has led to a number of environmental costs
40% of rivers are seriously polluted
80% of lakes are suffering eutrophication

Question 21

An example of past PES in China?

Answer 21

Sloping Land Conversion Program
Compensated rural land owners for converting sloping croplands to forest/grassland
Prevented soil erosion in upstream regions of the Yangtze and Yellow rivers

Question 22

Main example of PES in China?

Answer 22

Transboundary Watershed Management on the Xin’an River

Question 23

What was the history that led up to the TWM?

Answer 23

1998 blue green algae outbreak in the Quiando Lake
2001 first compensation scheme
2007 first pilot project for trans provincial
2011 agreement reached and $40 million start up fund
2012 start of 3 year project

Question 24

What is the design of the TWM?

Answer 24

Beneficiary pays and polluter pays
Direct measurement of service and joint monitoring
Chinese central government provides the upstream province Anhui with $48 million/year for watershed management
If water quality is low Anhui pay downstream province Zhejiang $16 million/year
If water quality good Zhejiang pay $16 million/year for clean water