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Reducing emissions from deforestation and land degradation (REDD) is only allowed under the voluntary market and only a few REDD projects in the world (eg, Noel Kempff Climate Action Project, Bolvia; Makira protected area, Madagascar), using their own methodologies.

Several approaches in the development of REDD methodologies. E.g:

CATIE and Climate Focus are developing a nested approach to allow projects to develop while awaiting government guidelines;

Greenpeace, released a proposal for a “Tropical Deforestation Emission Reduction Mechanism” independent from CDM, trading in “Tropical Deforestation Emission Reduction Units”;

World Bank Carbon Finance Unit’s Forest Carbon Partnership Facility is also developing a framework for piloting activities to reduce carbon dioxide emissions from deforestation and forest degradation);

Ugandan Carbon Bureau currently developing a methodology for Ugandan REDD projects- great potential for Africa (also on the land degradation side, given the forest cover and rate of deforestation/degradation and conduce weather to regeneration).

Payments for Environmental Services from Agricultural Landscapes- PESAL Capacity-building workshop, FAO- CARE Tanzania Dar es Salaam 4-6 February 2008 Final Report

3.7 Potential for Biodiversity Conservation in East Africa- (Nature Kenya’s PES Activities) Enock W. Kanyanya, Nature Kenya, Nairobi

The presentation focused on the Arabuko Sokoke Schools and Ecotourism Scheme (ASSETS):

• It contributes to the conservation of Arabuko sokoke Forest and Mida Creek, both important biodiversity areas with high potential for ecotourism;

• All beneficiaries are expected to refrain from taking part in any illegal extractions or harvesting of forest products and are encourage to engage in habitat restoration (all beneficiaries are provided with seedlings to establish their own woodlots);

• Financial assistance with school fees reduces pressure on parents to exploit the natural resources;

• In long term, promoting education increases chances of employment which reduces poverty and consumption of natural resources within the forest and the creek;

• So far, about 41,000USD (Kshs 2.8 million) has been distributed to children attending over 37 secondary schools.

3.8 The Biorights Approach: Resource Conservation and Sustainable Management James Musunguzi, Uganda Wildlife Education Center In areas of high biodiversity value and high poverty rates, the biorights approach is being implemented as an incentive for the protection, regeneration and sustainable use of natural resources. The incentive lies in granting micro-credits for agriculture improvements whose repayment rules depend on compliance with environmental commitments. These can include participation in the enforcement of conservation measures such as ban on hunting or assisting the regeneration of important habitats such as mangrove stips and peat swamp forests.

This approach works best where the potential of the current activity to generate substantial income is low as the communities require a smaller incentive to change into less destructive and more promising income generating activities. It is also important that the scheme benefits all community members equally to secure commitment from the entire community and avoid internal tensions.

So far, funding for these schemes comes from NGOs and donors interested in biodiversity conservation and/or poverty alleviation. Examples of application of this approach are in Box 10. Future opportunities include tapping into sales of carbon credits or certified products (Forest Stewardship Council- FSC or Marine Stewardship Council- MSC) and granting other benefits such as tax exemptions.

Box 10: Application of the BioRights approach Inner Niger Delta, Mali – financial support to local women groups to develop alternative sources of income (poultry breeding, wool weaning, rice trade, fish smoking) in exchange for quitting water bird trade and report offenders.

Sumatra and Kalimantan, Indonesia - encouraging local communities to replant mangrove strips (for biodiversity, CC mitigation and storm protection functions) and peat swamp forests in exchange for micro-credits- the loan may become a grant if 70% of the trees survive the first 3 years.

See also http://www.bio-rights.org/cases.html, www.Bio-rights.org and www.wetlands.org

4. Supply assessment and engaging demand (day 2) The goal of this working group session was to allow the participants to have an overview of the possibilities and obstacles in developing a PES scheme, from considering the environmental services being provided and potential trade-offs of increasing their provision in relation to other land use options and potential support for this investment coming from beneficiaries of this improvement.

The participants focused on the methodological aspects of PES implementation: the use of a “market assessment” procedure for assessing PES feasibility was demonstrated, together with a tool to make a case for PES to present to buyers (“the business case”). In working groups, the participants carried out Payments for Environmental Services from Agricultural Landscapes- PESAL Capacity-building workshop, FAO- CARE Tanzania Dar es Salaam 4-6 February 2008 Final Report a supply and demand assessment of ES (Box 11) and tested the methodology presented by applying it to different landscapes selected as case studies (two hypothetical scenarios, one in an upland area and another in a lakeside situation; the case in the Kagera river basin illustrated a riverside case).

Box 11: Guidelines for the work group discussion (day 2)

A. Supply assessment

- Which ecosystem services are being provided in the area?

- Which services are threatened and why (relate back to environmental characteristics)?

- Who are the suppliers of the services?

- What land use changes are needed to enhance the services?

- Which changes are feasible (costs, biophysical, social, tenure) for which kind of supplier?

- Which services can provide new economic opportunities?

o Which are the best options from the supply side?

–  –  –

To facilitate the working groups a number of presentations provided input into the group work.

4.1 Identifying market opportunities for landscape ecosystem services- A Field Practitioner’s Toolkit Thomas Oberthur, Ecoagriculture Partners This presentation provided an overview of possible steps to follow in order to identify new environmental services market opportunities to assess their possible demand, and to identify

opportunities for new ES business. Steps included:

- understanding the landscape supply potential o evaluating landscape performance through a scoring system comparing the different ES possible (noting also the different temporal dimensions) o constructing a future landscape: actual and potential services

- assessing the marketable value of the different services, to their prospective buyers To facilitate the matching of these two dimensions, a matrix was used to compare the different combinations of provisioning services (or products) and regulating and supporting services on one hand, and, on the other hand, the different issues to look into when considering the marketing potential of the selected options.

From this exercise a few “new ES markets” should emerge, where the increase in regulating and supporting ES provision (such as biodiversity conservation, watershed management and carbon sequestration) is matched by interest and willingness to pay from the demand side, with relatively low development costs.

The matrices used, and the background information provided to each group about their hypothetical case-study, with different possible combinations of new environmental service markets are presented in the PESAL website, under Materials/Workshop Tanzania/Working group materials.

4.2 Environmental Services Assessment in Practice – the Kenya experience Mohammed Said, International Livestock Research Institute (ILRI), Kenya As a practical example of the initial stages of this process- mapping ES and their users- this presentation made an overview of the work done in Kenya, building on the Millennium Ecosystem Payments for Environmental Services from Agricultural Landscapes- PESAL Capacity-building workshop, FAO- CARE Tanzania Dar es Salaam 4-6 February 2008 Final Report Assessment thinking, by the World Resources Institute, the Nairobi-based International Livestock Research institute and partners.

The assessment showed the relation between ecosystem services’ provision and human well-being, particularly highlighting the dependence of poorer groups upon these services (water availability, food production potential) and the impacts that changes in ES can have in their livelihoods. One of the aims of this assessment was to make this information available to policy makers to enhance their national poverty reduction and natural resource management policies.

4.3 Building a “Business Case” for Payments for Watershed Services in the Ruvu Catchment, Tanzania Mark Ellis-Jones, CARE Tanzania / CARE Kenya This presentation described the steps to be followed for engaging the beneficiaries of specific ES, inform them about their value and turn their eventual willingness to pay into regular contributions that can fund investment in improved management and protection of the ecosystems on which their continued supply depends.

Specifically, the work described a set of arguments to engage with the potential buyers of improved water quality in the Ruvu River (Tanzania), demonstrating the value of the environmental benefits of their possible investment (see also section 2.5 above). In this case, a reduction in water treatment costs and insurance against a potential future need to arrange alternative water supply.

In addition to preparing this “business case”, the team also assessed the legal environment to understand how feasible a PES scheme would be (in terms of transfer of funds between different levels of administration, and public-private partnerships) and conducted a livelihoods analysis to see how the scheme would eventually affect the providers. The process and lessons learned for engaging buyers (box 12) are summarized in the paper “Equitable Payments for Watershed Services- Feasibility Study Methodology for “A business case approach” Box 12: Tips to engage with buyers, stemming from CARE Tanzania’s experience in PES development for the Ruvu River

- keep it simple- the more likely it is to work because transactions costs are lower

- potential buyers may understand the interest in investing, but to get them to really pay is harder

- focus on specific individuals within the company- get allies that are already in to it

- the company targeted must have enough money to put at risk

- re-calculate cost if needed- go back to the business with a new proposal, more in line with their expectations, they are open to well crafted negotiations

- voluntary one to one agreements need not be very regulated in legal terms

- water quality is a public good and free riding is a problem

- greatest risk is if the changes in land use do not return the expected benefits- but if the initial cask outlay is low, and buyers are advised of the risk, will be easier to accept it

5. Establishing an enabling environment for pro-poor PES development (day 3) This work group session aimed to build on the work of the previous day - when a few examples of possible PES development scenarios were identified - and focused on the enabling environment for their implementation, with a particular focus on institutions and legislation that can help designing and implementing pro-poor PES schemes.

World Resources Institute; Department of Resource Surveys and Remote Sensing, Ministry of Environment and Natural Resources, Kenya; Central Bureau of Statistics, Ministry of Planning and National Development, Kenya; and International Livestock Research Institute. 2007. Nature’s Benefits in Kenya, An Atlas of Ecosystems and Human Well-Being. Washington, DC and Nairobi: World Resources Institute. Available for download at http://www.wri.org/publication/natures-benefits-in-kenya# Document available in though the PESAL website, under Materials/Workshop Tanzania Payments for Environmental Services from Agricultural Landscapes- PESAL Capacity-building workshop, FAO- CARE Tanzania Dar es Salaam 4-6 February 2008 Final Report Divided in groups by country (Tanzania, Kenya, Uganda and Kagera region), the participants shared their views on what institutions and legislations are already present or missing in relevant areas of Natural Resources Management in their respective countries, on which an eventual PES scheme could draw and build on (Box 13). Since the participants of this workshop were from different backgrounds, they all had a contribution to make regarding their sphere of influence and specific knowledge.

Box 13: guidelines for the work group discussion (day 3) What are the institutions in the area on which we can draw?

• supply side: farmers groups, NGOs, community organizations

• demand side: NGOs, business councils, communities/cities, donors/ODI

• brokers & facilitators: NGOs, government organizations, research institutions What institutions are missing?

• What are existing laws, incl. tenure that enable PES?

• What are legal, regulatory barriers?

• What kinds of coordination mechanisms needed?

• In which sectors does awareness be enhanced?

• Is there research support? What is needed additionally?

• How can monitoring arrangements be set up?

• How to minimize risk on the supplier and the buyer side?

Cross cutting issues:

• How to ensure transparency and accountability?

• How take into account risk and uncertainty of transaction?

• How to ensure longevity of the PES scheme?

• How to ensure efficiency of the PES scheme?

• How to make PES schemes equitable and pro-poor, if possible?

• Background information and expert advice to guide the group discussions was provided to the participants, by means of the following presentations.

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