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Aichi Target 3 on positive incentives: Can 
Payments for Ecosystem Services deliver? 
Romain Pirard (CIFOR), Renaud Lapeyre (IDDRI) 
Tree Diversity Day, CDB COP12 
PyeongChang, South Korea, 10 October 2014
10 romain-p irard-aichi-target3-payments for ecosystem services-tree-diversity-day-2014-cop12
OBJECTIVE 
What are the governance challenges for PES 
to deliver on resource mobilization and incentivizing? 
POLICY RELEVANCE 
(Resource mobilization + Positive incentives) 
• Item 12: “Understanding behavioral change and the performance of economic 
instruments, as well as improved guidance and tools to develop positive incentives”; 
“exploration of innovative financial mechanisms, inter alia payments for ecosystem 
services” 
• Item 14: “mobilization of all sources to increase international and domestic 
financial flows, inter alia from private sources, public sources and innovative 
financing mechanisms”
INDONESIAN CASE STUDIES
LOMBOK 
3 successive PES: voluntary, tax, internalization 
Focus on evolution of the scheme governance 
CIDANAU 
One water company as funder, heavy support by donors 
Extensive household surveys on governance, analysis of 
incentives (theory of signals)
Governance studied from various angles 
 Role of Multi-stakeholder agencies 
 Targeting of service providers as participants 
 Transmission of the economic signal
MULTI-STAKEHOLDER AGENCIES 
AS INTERMEDIARIES
000 
LOMBOK 
PES 2 
000 
60 to 70% 
for activities 
Regional district 
administration 
Restoration of recharging area and 
Former voluntary payment 
independent from water bill 
upstream community strengthening programs 
PDAM 
Regional public water 
supply company 
IMP 
Multi-stakeholder 
agency 
75% to IMP 
25% allocated to 
regional budget 
PDAM’s 
operational costs 
internalized in 
price of water 
External supports 
(UNDP, Ford Foundation) 
Before 
Now 
Regional tax added on the 
price of water in the water bill 
Water consumers 
Bestari Community Fund 
Former intermediary body 
PES 1 
5 to 15% to cover 
IMP’s costs (new) 
Arrows: money flows 
In italic: useful information 
Boxes: actors 
PES 3
CIDANAU 
Farmer groups 
Contractual payment 
Water collecting private 
company: PT Krakatau Tirta 
Water bills 
Capacity building and information 
External supports 
(LP3ES, GTZ, IIED) 
Regional public water 
supply company 
(PDAM) 
Intermediary: Multi- 
Stakeholder Cidanau 
Catchment 
Communication Forum 
(FKDC) 
Approx 120 industrial 
users (in Cilegon) 
Industry (KTI) 
Contractual payment 
NGO: Rekonvasi Bhumi 
Capacity building and information 
Watershed services: replanting 
and conserving trees upstream
 No guarantee of equal power in decision 
making 
 Effectiveness affected by political purposes
TARGETING OF SERVICE PROVIDERS 
 Social connections as most decisive factor 
(e.g. through farmer group leader and previous schemes) 
 Hydrological studies are not used at full potential 
(selection more on practical reasons) 
 Additionality is unlikely 
(e.g. 88% had previous motivations such as productive trees)
IS THE SIGNAL LOST IN TRANSLATION? 
 Motivations much more than financial 
(e.g. 35% display social motivations: pressure, external choice, 
do like neighbor, good reputation…) 
 Significant problems of information sharing 
(Rules are partially known, but payment aspects remain confused) 
 What about procedural equity? 
(Lack of ownership, responsibilities associated to farmer group leader)
LESSONS 
 Local PES complex and expensive… a credible source 
of funding? 
 Qualified market-based… yet governance is a great 
challenge for implementation (additionality and incentivizing) 
 Mandatory approaches prove valid for funding… but innovative 
approaches not to be dismissed
FURTHER READING 
Pirard R., de Buren, and R. Lapeyre, 2014, Do PES improve governance of forest 
restoration?, Forests, 5 (3), pp. 404-24. 
Pirard, R. and R. Lapeyre, 2014, Classifying market-based instruments for ecosystem 
services: A rough guide to the literature jungle, Ecosystem Services, 9, pp. 106-14. 
Lapeyre, R. and R. Pirard, 2013, Payments for environmental services and market-based 
instruments: next of kin or false friends? IDDRI Working Paper N°14/13, 
Institute for Sustainable development and International Relations (IDDRI), Paris. 
Pirard, R., 2012, Payments for Environmental Services (PES) in the public policy 
landscape: “Mandatory” spices in the Indonesian recipe, Forest Policy and Economics, 
18, pp. 23-29. 
Pirard, R., 2012, Market-based instruments for biodiversity and ecosystem services: A 
lexicon, Environmental Science & Policy, 19-20, pp. 59-68. 
Pirard, R., Billé, R. and T. Sembrés, 2010, Upscaling Payments for Environmental 
Services (PES): Critical Issues, Tropical Conservation Science, 3(3), pp. 249-61.
10 romain-p irard-aichi-target3-payments for ecosystem services-tree-diversity-day-2014-cop12

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10 romain-p irard-aichi-target3-payments for ecosystem services-tree-diversity-day-2014-cop12

  • 1. Aichi Target 3 on positive incentives: Can Payments for Ecosystem Services deliver? Romain Pirard (CIFOR), Renaud Lapeyre (IDDRI) Tree Diversity Day, CDB COP12 PyeongChang, South Korea, 10 October 2014
  • 3. OBJECTIVE What are the governance challenges for PES to deliver on resource mobilization and incentivizing? POLICY RELEVANCE (Resource mobilization + Positive incentives) • Item 12: “Understanding behavioral change and the performance of economic instruments, as well as improved guidance and tools to develop positive incentives”; “exploration of innovative financial mechanisms, inter alia payments for ecosystem services” • Item 14: “mobilization of all sources to increase international and domestic financial flows, inter alia from private sources, public sources and innovative financing mechanisms”
  • 5. LOMBOK 3 successive PES: voluntary, tax, internalization Focus on evolution of the scheme governance CIDANAU One water company as funder, heavy support by donors Extensive household surveys on governance, analysis of incentives (theory of signals)
  • 6. Governance studied from various angles  Role of Multi-stakeholder agencies  Targeting of service providers as participants  Transmission of the economic signal
  • 8. 000 LOMBOK PES 2 000 60 to 70% for activities Regional district administration Restoration of recharging area and Former voluntary payment independent from water bill upstream community strengthening programs PDAM Regional public water supply company IMP Multi-stakeholder agency 75% to IMP 25% allocated to regional budget PDAM’s operational costs internalized in price of water External supports (UNDP, Ford Foundation) Before Now Regional tax added on the price of water in the water bill Water consumers Bestari Community Fund Former intermediary body PES 1 5 to 15% to cover IMP’s costs (new) Arrows: money flows In italic: useful information Boxes: actors PES 3
  • 9. CIDANAU Farmer groups Contractual payment Water collecting private company: PT Krakatau Tirta Water bills Capacity building and information External supports (LP3ES, GTZ, IIED) Regional public water supply company (PDAM) Intermediary: Multi- Stakeholder Cidanau Catchment Communication Forum (FKDC) Approx 120 industrial users (in Cilegon) Industry (KTI) Contractual payment NGO: Rekonvasi Bhumi Capacity building and information Watershed services: replanting and conserving trees upstream
  • 10.  No guarantee of equal power in decision making  Effectiveness affected by political purposes
  • 11. TARGETING OF SERVICE PROVIDERS  Social connections as most decisive factor (e.g. through farmer group leader and previous schemes)  Hydrological studies are not used at full potential (selection more on practical reasons)  Additionality is unlikely (e.g. 88% had previous motivations such as productive trees)
  • 12. IS THE SIGNAL LOST IN TRANSLATION?  Motivations much more than financial (e.g. 35% display social motivations: pressure, external choice, do like neighbor, good reputation…)  Significant problems of information sharing (Rules are partially known, but payment aspects remain confused)  What about procedural equity? (Lack of ownership, responsibilities associated to farmer group leader)
  • 13. LESSONS  Local PES complex and expensive… a credible source of funding?  Qualified market-based… yet governance is a great challenge for implementation (additionality and incentivizing)  Mandatory approaches prove valid for funding… but innovative approaches not to be dismissed
  • 14. FURTHER READING Pirard R., de Buren, and R. Lapeyre, 2014, Do PES improve governance of forest restoration?, Forests, 5 (3), pp. 404-24. Pirard, R. and R. Lapeyre, 2014, Classifying market-based instruments for ecosystem services: A rough guide to the literature jungle, Ecosystem Services, 9, pp. 106-14. Lapeyre, R. and R. Pirard, 2013, Payments for environmental services and market-based instruments: next of kin or false friends? IDDRI Working Paper N°14/13, Institute for Sustainable development and International Relations (IDDRI), Paris. Pirard, R., 2012, Payments for Environmental Services (PES) in the public policy landscape: “Mandatory” spices in the Indonesian recipe, Forest Policy and Economics, 18, pp. 23-29. Pirard, R., 2012, Market-based instruments for biodiversity and ecosystem services: A lexicon, Environmental Science & Policy, 19-20, pp. 59-68. Pirard, R., Billé, R. and T. Sembrés, 2010, Upscaling Payments for Environmental Services (PES): Critical Issues, Tropical Conservation Science, 3(3), pp. 249-61.

Notas del editor

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