Post on 27-Mar-2015
Ecosystem services, business and payments for ecosystem services
Janet Ranganathan
World Resources Institute
Presentation overview
• Ecosystem services – an introduction
• Business and ecosystem services
• Payments for ecosystem services
A few definitionsA few definitions
EcosystemEcosystem
BiodiversityBiodiversity
Ecosystem Ecosystem servicesservices
• The variability among living organismsThe variability among living organisms– Within species & populationsWithin species & populations– Between speciesBetween species– Between ecosystemsBetween ecosystems
• The benefits people obtain from ecosystemsThe benefits people obtain from ecosystems• The “services of nature”The “services of nature”
• A dynamic complex of plant, animal, and micro-A dynamic complex of plant, animal, and micro-organism communities and the non-living organism communities and the non-living environment interacting as a functional unitenvironment interacting as a functional unit
World Resources Institute
Provisioning services: Goods produced or provided by ecosystemsProvisioning services: Goods produced or provided by ecosystems
World Resources Institute
Regulating services: Benefits obtained from control of natural processes by Regulating services: Benefits obtained from control of natural processes by ecosystemsecosystems
World Resources Institute
Cultural services: Non-material benefits obtained from ecosystemsCultural services: Non-material benefits obtained from ecosystems
• 20% of coral reefs lost and more 20% of coral reefs lost and more than 20% degraded over last several than 20% degraded over last several decadesdecades
• 35% of mangroves lost in the last two 35% of mangroves lost in the last two decadesdecades
• Amount of fresh water in reservoirs Amount of fresh water in reservoirs quadrupled since 1960quadrupled since 1960
• More than half of synthetic fertilizer More than half of synthetic fertilizer ever used on planet occurred since ever used on planet occurred since 19851985
• Species extinction rates now 100 – Species extinction rates now 100 – 1,000 times background rate 1,000 times background rate
Millennium Ecosystem Assessment findingsMillennium Ecosystem Assessment findings
Degraded Mixed Enhanced
Provisioning Capture fisheries Wild foods Wood fuel Genetic resources Biochemicals Fresh water
Timber Fiber
Crops Livestock Aquaculture
Regulating Air quality regulation Regional & local
climate regulation Erosion regulation Water purification Pest regulation Pollination Natural hazard regulation
Water regulation (e.g., flood protection)
Disease regulation
Carbon sequestration
Cultural Spiritual & religious values Aesthetic values
Recreation & ecotourism
Source: Millennium Ecosystem Assessment, 2005
Condition of the world’s ecosystem services
World Resources Institute
Presentation overview
• Ecosystem services – an introduction
• Business and ecosystem services
• Payments for ecosystem services
Business and ecosystems are inter-relatedBusiness and ecosystems are inter-related
Business contributes to ecosystem changeBusiness contributes to ecosystem change
Business depends on ecosystem servicesBusiness depends on ecosystem services
PharmaceuticalPharmaceutical
InsuranceInsuranceComm. real estateComm. real estate
TourismTourism
AgribusinessAgribusinessElectric utilityElectric utility
TourismTourism
BeverageBeverageElectric utilityElectric utilityAgribusinessAgribusiness
Provisioning Provisioning Provisioning Provisioning
Regulating Regulating Regulating Regulating
Cultural Cultural Cultural Cultural
CropsCropsLivestockLivestockAquacultureAquaculture
Carbon sequestrationCarbon sequestration
Capture fisheriesCapture fisheriesWild foodsWild foodsWood fuelWood fuelGenetic resourcesGenetic resourcesBiochemicalsBiochemicalsFresh waterFresh water
Air quality regulationAir quality regulationClimate regulationClimate regulationErosion regulationErosion regulationWater purificationWater purificationPest regulationPest regulationPollinationPollinationNatural hazard regulationNatural hazard regulation
Spiritual & religiousSpiritual & religiousAesthetic valuesAesthetic values
TimberTimberFiberFiber
Water regulationWater regulationDisease regulationDisease regulation
Recreation & ecotourismRecreation & ecotourism
EnhancedEnhanced DegradedDegraded MixedMixed
Examples of industries with high dependence on Examples of industries with high dependence on ecosystem servicesecosystem services NOT EXHAUSTIVE
WRI, WBCSD and Meridian Institute are pilot testing a methodology for helping corporate managers proactively identify business risks and opportunities arising from their company’s dependence and
impact on ecosystem services
Getting business focused on ecosystem change
Road testersRoad testers
5. Develop strategies
Steps in a corporate ecosystem services reviewSteps in a corporate ecosystem services review
4. Identify business risks and opportunities
3. Analyze trends in priority services
2. Identify priority ecosystem services
1. Determine scope
Ecosystem services: a guide for policy makers
Forthcoming – Dec 2007
Presentation overview
• Ecosystem services – an introduction
• Business and ecosystem services
• Payments for ecosystem services
Microenterprises in Guatemala
Source – Equilibrium Fund
Supplier – community-based microenterprisesPurchaser – multiple private companiesService – Maya nutsScale – local
Supplier – farmers Purchaser – CompanyService – Freshwater Scale – Local
The Forest Climate Alliance
Strategic Advice to National Policy Initiatives
Biodiversity Offsets
Supplier – Forest ownersPurchaser – GovernmentService – water regulation, erosion control Scale – National
Mexican PSAH
Supplier – private sector/governmentsPurchasers – multiple – GHG emittersService – climate regulation Scale - global
Reduced deforestation offsets market
PSAH 2003
PSAH 2004
PSAH 2005
PSAH 2006
Very High Marginality
Over exploited aquifers
High water scarcity municipa
High risk of deforestation
Source: Wunder, S. 2007. “Experiences with Pro-Poor Payments for Environmental Services”. CIFOR Presentation: PES Copenhagen 2007.
10
20
30
40
50
010
20
30
40
50
010
20
30
40
50
0
Be careful about adding on side objectives to PES
Payments for ecosystem services - key success factorsPayments for ecosystem services - key success factors
Clear buyer(s)Clear buyer(s)
Robust “business case” or Robust “business case” or driver of demand (voluntary, driver of demand (voluntary, regulatory)regulatory)
DemandDemand
NOT EXHAUSTIVE
Possible business cases for buyersPossible business cases for buyers
Business • Decrease operational risk cost-effectivelyDecrease operational risk cost-effectively• Lower regulatory riskLower regulatory risk• Strengthen reputation / brandStrengthen reputation / brand• Meet CSR goals Meet CSR goals • Satisfy regulationsSatisfy regulations
Government • Improve environmental quality for citizensImprove environmental quality for citizens• Foster rural sustainable livelihoodsFoster rural sustainable livelihoods• Implement lower cost option vs. engineered solutionImplement lower cost option vs. engineered solution• Try alternative approach to regulationTry alternative approach to regulation
NGOs / foundations • Fulfill missionFulfill mission
SupplySupply
Clear buyer(s)Clear buyer(s)
Robust “business case”Robust “business case”
Correct scienceCorrect science
Agreed, measurable unit of tradeAgreed, measurable unit of trade
Trusted quantification methodologyTrusted quantification methodology
Monitoring & verificationMonitoring & verification
Legal/regulatory framework (e.g., Legal/regulatory framework (e.g., tenure)tenure)
Low transaction costsLow transaction costs
Awareness & capacityAwareness & capacity
Benefits of PES must exceed Benefits of PES must exceed opportunity cost of other opportunity cost of other usesuses
DemandDemand Supporting Supporting infrastructureinfrastructure
NOT EXHAUSTIVE
Payments for ecosystem services - key success factorsPayments for ecosystem services - key success factors
Thank youThank you
Janet RanganathanJanet RanganathanDirectorDirector
People & Ecosystems ProgramPeople & Ecosystems Program202-729-7656202-729-7656
janetr@wri.orgjanetr@wri.orgWorld Resources Institute
Source: Malavasi,. E.O. and J. Kellenberg, “Program for Payments for Ecological Services in Costa Rica” 2003.
Supplier – landownersPurchaser – Company/GovernmentService – erosion regulation Scale – Costa Rica, watershed
Fiber
Food
Spiritual & religious
Freshwater
Genetic Resources
Climate regulation
Water purification
Disease regulation
Flood/Fire regulation
Recreation & tourism
Aesthetic
Economic Value ($)
Private Benefit Capture
Difficult
Easy
?
?
?
?
?
?
?
?
?
?
?
Many services are public goods
Adapted from MA, 2004
Quantification
Difficult
Easy
Source: Wunder, S. 2007. “Experiences Experiences with with Pro-Poor Payments for Environmental Services”. CIFOR Presentation: PES Copenhagen 2007.
Targeting Poverty – The Mexican Scheme
0%
20%
40%
60%
80%
100%
PSAH2003
PSAH2004
PSAH2005
PSAH2006
NATIONAL(forests)
% d
e la
s l
oc
alid
ad
es
ru
rale
s
.
Very High High Middle Low Very Low
Opportunities for businesses in light of ecosystem Opportunities for businesses in light of ecosystem
changechange
New marketsNew markets • Carbon tradingCarbon trading• Water quality/nitrogen tradingWater quality/nitrogen trading• Certified sustainable productsCertified sustainable products• Wetland bankingWetland banking• Endangered species bankingEndangered species banking
New businessesNew businesses • Environmental asset finance and brokerageEnvironmental asset finance and brokerage• Ecosystem restorationEcosystem restoration
New technologies New technologies and practicesand practices
• SubstitutesSubstitutes• Mitigate or reverse degradationMitigate or reverse degradation• Improve efficiency of ecosystem useImprove efficiency of ecosystem use
OpportunityOpportunity ExampleExample
NOT EXHAUSTIVE
New revenue New revenue streams for assetsstreams for assets
• Payments for ecosystem servicesPayments for ecosystem services
Allegheny Energy, Canaan Valley, WV
First mover First mover advantagesadvantages
• Enhanced imageEnhanced image• Operational or cost advantages by recognizing Operational or cost advantages by recognizing
trends earlytrends early