Sustainable development:
Economy and the environment

Hussein Abaza

Hussein Abaza, UNEP

Hussein Abaza is Chief of the Economics and Trade Branch (ETB) of UNEP.

Linkages between ecosystem services and constituents of well-being


Payments for ecosystem services

UNEP's work on payments for ecosystem services (PES) illustrates how Geneva provides the facility to explore new ideas without requiring formal negotiations and definitive conclusions from every meeting, while mapping out a path for future developments.

The many natural processes in the environment that are essential to human well-being are often referred to as «ecosystem services». The Millennium Ecosystem Assessment (MA), a comprehensive study of the state of the global environment, has warned that 60 to 70% of these ecosystem services are deteriorating, whether production of oxygen, purification of water and air, regulation of global climate, or maintenance of biological and genetic diversity.

The concept of Payments for Ecosystem Services (PES) - of establishing a compensation mechanism for beneficiaries of such services to pay local communities for maintaining these services - has received more and more attention in recent years from researchers, conservation NGOs, governments and the private sector. An increasing number of PES pilot projects are now being carried out in different parts of the world. However, there is also a growing need for a global framework within which these schemes can be institutionalized.

To explore ways to bridge this gap, a workshop on International Payments for Ecosystem Services took place in Geneva on 12 and 13 September 2006. Experts from academia, the private sector, governments, international organizations and NGOs came together to discuss implementing PES at the international level. The event was hosted jointly by the UNEP ETB and the World Conservation Union (IUCN), in close collaboration with the Convention on Biological Diversity (CBD), and supported by the German government. The objective was to identify actions - including research, international consultation and application - that could be taken collectively.

It was agreed that future work should focus on biodiversity, while maximizing the potential for bundling services together (for example, climate change mitigation through forest conservation).

The ethical and equity challenges of creating markets for ecosystem services will need to be adequately assessed, it was agreed: the cost to local communities is often not factored into the cost of conservation.

However, the high marketing value of biodiversity is seen as having significant potential for increasing private demand for ecosystem services, with the tourism industry a potential client. The establishment of an international network of protected areas has also been suggested as a promising way of attracting payments for biodiversity conservation.

Participants noted many opportunities for biodiversity conservation efforts to benefit from the PES model. Indeed, there is hope that the «carbon markets» resulting from the Kyoto agreement and setting quotas for national CO2 emissions might include qualitative criteria, providing stronger incentives for protecting forest areas that have high levels of biodiversity. Recent developments in climate change policy have given rise to several PES and PES-like projects. Emissions trading is becoming more widespread, and carbon sequestration projects are also becoming more common. Many have risen out of the Kyoto Protocol's Clean Development Mechanism (CDM) and Joint Implementation (JI) projects. As the global carbon market continues to grow and attract attention, many researchers and practitioners are attempting to apply the concept of PES to environmental challenges such as loss of biodiversity.

In its final session, the group drafted a plan of action for scaling up PES in the coming years to complement other incentive and control measures.