1. Division of Environmental Conventions Challenges and opportunities for payments and markets for ecosystem services based on MEAs and pro-poor approach

2. Division of Environmental Conventions Pro-Poor Markets for Ecosystem Services 10-12 October, LSE, London, UK Developing countries are providing enormous services to the world for which they are not compensated, such as the environmental services and preservation of biodiversity. One of those services is in the area of greenhouse gases. Measured by mechanisms included in the Kyoto Protocol, the value of the carbon services provided by the tropical countries exceeds $60 billion a year. Developing countries now propose that they would submit themselves voluntarily to the provisions of the Kyoto Protocol if they received compensation for environment services. This needs innovative financing to make it work. – Joseph Stiglitz, Nobel Laureate in Economics

3. Division of Environmental Conventions Why Pro-Poor? Why Now? Trade-offs within the MDGs –Millennium Ecosystem Assessment report, May 2005 Environment not mainstreamed beyond MDG-7 –UNDP report on implementation of MDGs in 100 countries, June 2005 Development of new MDG-based PRS/SDS –Millennium Project Report, January 2005 –2005 Summit Outcome Document, June-Sept 2005

4. Division of Environmental Conventions MES- What are they? Markets for Ecosystem Services – Markets designed to support positive environmental externalities of a given activity through the transfer of financial resources (the payment) from beneficiaries (the demand side) of the ecosystem services (the service) to those who provide these services (the supply side)

5. Division of Environmental Conventions MES- Their Potential (1/3) More than 300 MES have been inventoried Last 10 years –multi-million dollar markets in carbon, wetlands, water pollution and biodiversity Markets established for 4 categories of ecosystem services: –Carbon sequestration –Water quantity and quality –Biodiversity protection –Landscape beauty

6. Division of Environmental Conventions MES- Their Potential (2/3) MES have grown outside the framework of the MEAs –Exception: UNFCCC-CDM MES categories and MEAs –Carbon: UNFCCC –Biodiversity: CBD –Water: Ramsar –Land quality per se has not been the subject of reported transactions, but some existing markets support the objectives of the UNCCD through their impacts on agricultural practices –Bundled/stacked: Other MEAs

7. Division of Environmental Conventions MES- Their Potential (3/3) Promise –Markets for ecosystem services (MES) are promising for attracting private contributions –If done using a pro-poor approach, could contribute to the MDGs Opportunities –Development of MES within the framework of MEAs and their institutional and financial mechanisms –Take a pro-poor approach and have the MES contribute towards achieving the MDGs

8. Division of Environmental Conventions MES- Issues (1/2) Markets and nature of public goods Non-linearity of ecosystems –Regime changes can shift ecosystems drastically and with little warning Spatial variations of ecosystems and this their values –MES are easy to develop if issues are homogeneous MEA goals and MES does not necessarily coincide –Other instruments might be more relevant Equity issues –Benefit sharing, intra-generational issues

9. Division of Environmental Conventions MES- Issues (2/2) Finding right costs –Issues related to subsidies Need sometime for anti-market mechanisms –In some instances, anti market mechanisms are needed instead Inter-section between private and public sectors –Very few opportunities for interaction

10. Division of Environmental Conventions MES- Challenges from the Field (1/2) Raising awareness for both the buyers and sellers –Finding buyers –Defining the beneficiaries Roles of governments Forms of payments Willingness to pay and willingness to do Political support at all levels

11. Division of Environmental Conventions MES- Challenges from the Field (2/2) Good governance Building of capacity Need for partnerships Working with the media Understanding the hydrology Keeping things simple Honest brokers

12. Division of Environmental Conventions What’s Next? (1/2) Platform for partnership (eg.Bring MEAs, other actors to discuss areas of synergies in the development of PES/MES using a pro-poor approach) Identify elements for the promotion of synergies in the use of PES/MES for MEAs –What ecosystems? - Bundling, homogeneity, aligning MEA goals with economic instruments, non-linearity –Market issues

13. Division of Environmental Conventions What’s Next? (2/2) Identify elements for the promotion of a pro- poor approach –Equity, Compensation mechanisms (forms of payments), Targeting the poor, Role of government Create a pilot process such as: –Ecosystem level pilot for pro-poor MES, Identifying countries, Identifying ecosystem services and the bundle (provisioning, regulating/supporting, and cultural) Identifying Guiding Principles –Elements of good practice, Replication, Scaling up, Lessons, etc.

14. Division of Environmental Conventions For more information http://www.unep.org/dec/