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The Value of Forests: Payments for Ecosystem Services in a Green Economy

Paper by UNEP, UNECE and FAO, 2013

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This publication is a joint effort of UNEP, UNECE and FAO and discusses the concept of Payment for ecosystem services(PES) which is a tool to enable a forest owner or owners to capture the financial benefits from the positive externalities derived from forest ecosystem services and encourage them to continue to provide these services to another party or society at large. This paper also discusses the various approaches, applications and resulting benefits of the PES in the UNECE region. It also covers some negatives that could occur without good policy in place. It uses lessons learned to provide guidance on what is needed for the success of PES schemes and their possible future.

Food and Agriculture
Organization


of the United Nations


TheValue of Forests
Payments for Ecosystem Services in a Green Economy


UNITED NATIONS






ECE/TIM/SP/34


Forestry and Timber Section, Geneva, Switzerland


GENEVA TIMBER AND FOREST STUDY PAPER 34


THE VALUE OF FORESTS
Payments for Ecosystem Services in a Green Economy


UNITED NATIONS
Geneva, 2014




Note


The designations employed and the presentation of material in this publication do
not imply the expression of any opinion whatsoever on the part of the secretariat of the
United Nations concerning the legal status of any country, territory, city or area, or of
its authorities, or concerning the delimitation of its frontiers or boundaries. Moreover,
the views expressed do not necessarily represent the decision or the stated policy of
the United Nations, nor does citing of trade names or commercial processes constitute
endorsement.


Abstract


Payments for Ecosystem Services (PES) describes the situation where the user of an
environmental service, such as water purification, pays the landowners who provide that
service. For PES to exist, there must be a clearly defined user and supplier, as well as
a number of other necessary conditions, which are defined in this document using a
summary of current sources. Particular attention is paid to how these conditions currently
obtain within the UNECE region. The range of forest environment services is explored
through fourteen detailed case studies, which examine best practice in promoting
PES. Political and public relations implications of PES are discussed at length, and
recommendations include the need for clarity about where PES may be a useful tool in
moving towards a green economy and where other methods may be more appropriate.


Keywords


Biodiversity, ecosystem, environmental, erosion, forest policy, forest services, green
economy, habitat, leakage, monitoring, payment for ecosystem services, PES, private,
protective functions, public, recreation, subsidies, tenure, timber, tourism


ECE/TIM/SP/34


UNITED NATIONS PUBLICATION


ISSN 1020 2269
ISBN 978-92-1-117071-9


e-ISBN 978-92-1-056451-9




iii


PREFACE
What is the value of sitting under a forest tree’s shade, and enjoying a cool drink of


water or lunch? What is the value of a vista of a pristine grove of conifers or a stand of
hardwood trees in full autumn colour? And how do we place a value on wildlife habitat;
protection from floods, landslides, avalanches; and perhaps most important of all, clean
water, air and climate? Our forests provide many critical services to humanity. We have
long valued the forest for things that have very tangible monetary worth, such as wood
and wood products, but we have not been able to demonstrate and capture the values
of its services that are difficult to measure or even priceless.


It is not that we don’t recognise these services from our forests. We have long
understood the importance of the key ecosystem services that our forests provide, but
we have been slow to realize that these things could be worth paying for; especially
when the costs and responsibility for stewardship of the forest are not in the public
sector. Payment for ecosystem services (PES) is a tool to enable a forest owner or owners
to capture the financial benefits from the positive externalities derived from forest
ecosystem services and encourage them to continue to provide these services to another
party or society at large.


This publication is a joint effort of UNEP, UNECE and FAO (through the joint UNECE/
FAO Forestry and Timber Sections in Geneva) and discusses the concept of PES, as well
as the various approaches, applications and resulting benefits in the UNECE region. It
also covers some negatives that could occur without good policy in place. It uses lessons
learned to provide guidance on what is needed for the success of PES schemes and their
possible future.


UNEP, UNECE and FAO express their appreciation to all those who have played a part
in the production of this timely publication and hope that it will highlight the critical role
that forests play in maintaining our environment and contributing to a green economy.




iv


ACKNOWLEDGEMENTS
This paper was drafted originally by the UNECE/FAO Forestry and Timber Section, in


cooperation with the Finnish Environment Institute (SYKE); the UNECE Water Convention;
FAO; the United Nations University Institute for Water, Environment and Health (UNU-
INWEH); UNEP and IUCN. The original authors were: Douglas Clark and Franziska Hirsch
(UNECE/FAO Forestry and Timber Section); Petteri Vihervaara and Eeva Primmer (Finnish
Environment Institute (SYKE); Arnaud Brizay, Eve Charles and David Ellul (UNECE/FAO
Forestry and Timber Section). Paola Deda, Dominique Reeb and Matthew Fonseca
(UNECE/FAO Forestry and Timber Section) reviewed the paper together with Ingunn
Lindeman and Nicolas Bertrand of UNEP; Lucilla Spini of UNU-INWEH and GECHH; David
Huberman of IUCN; Dr. Markus Lehmann of CBD and Sibylle Vermont, of the Swiss Federal
Office for the Environment BAFU. Jenny Heap, consultant, provided technical and copy
editing services.


Douglas Clark revised the paper and undertook some updating, following which it
was peer-reviewed by Pat Snowdon of the Forestry Commission (UK); Gregory Valatin of
Forest Research (UK) and D. Evan Mercer of the USDA – Forest Service’s North Carolina
Forest Research Station. Ivonne Higuero (UNEP) reviewed and provided guidance for the
final version.




v


TABLE OF CONTENTS
1. Ecosystem Services .............................................................................................................. 3


1. General ecosystem services ................................................................................... 3


1.2 Categories of Forest Ecosystem Services .......................................................... 4


1.3 Commitments towards forest-related PES schemes in the
UNECE Region ............................................................................................................. 6


1.4 Green economy, the economics of ecosystems and their services ......... 8


2. Valuation of Ecosystem Services .................................................................................... 11


3. PES schemes in the UNECE region ................................................................................. 13


3.1 Public schemes ........................................................................................................... 14


3.2 Private schemes ......................................................................................................... 16


3.3 Public-private schemes ........................................................................................... 18


3.4 Trading schemes and conservation banking/offsets ................................... 19


3.5 PES schemes at the regional level ....................................................................... 24


4. Ecosystem services at the policy level: enabling conditions ................................ 27


4.1 Legislative and institutional framework ............................................................ 27


4.2 Forest tenure rights .................................................................................................. 29


4.3 Motivation and responsibilities of landowners .............................................. 30


4.4 Stakeholders and negotiations ............................................................................ 31


4.5 Monitoring, enforcement and compliance ...................................................... 32


4.6 Permanence and avoiding negative impacts .................................................. 34


5. What role can PES play in moving towards a green economy? .......................... 37


5.1 Expanding PES schemes: towards a green economy ................................... 37


5.2 PES as a complement to regulation and other measures ........................... 38


5.3 The Politics of PES ...................................................................................................... 39


6. Future directions and recommendations.................................................................... 43


6.1 Recommendations .................................................................................................... 44


7. References .............................................................................................................................. 45


Background references ...................................................................................................... 49


Annex 1: Overview of valuation methods ............................................................................... 51


Annex 2: PES schemes in UNECE countries. Overview of survey results. ..................... 56


Annex 3: Excerpt from draft Action Plan on “Forests and a Green Economy” on
“Valuation of and Payments for Forest-related Ecosystem Services” ......... 75




Fotalia, 2014




Introduction 1


INTRODUCTION
There are a number of definitions for the term ‘Payment for Ecosystem services’ (PES),


but in general it refers to situations where a specific, usually local, agreement is made
for users of an ecosystem service to pay the providers of that service. It is distinct from
environmental payments such as taxes, subsidies, grants and penalties, because the
payment is agreed in advance between the user and provider, and the monies paid go to
the provider, not into a general public purse.


So, for example, a firm needing pure drinking water, such as the Coca-Cola® bottling
plant at the Tagua Reservoir, Portugal, agrees to pay local forest owners to maintain
their forests in good condition so the plant may continue to draw pure water from the
reservoir. This successful example is the kind of ‘win/win’ solution which PES can give,
whereby both parties benefit in a way which would not have been the case if the PES
option had not been available (Bulgaho, Presentation to ThinkForest Conference, 2012).


PES is generally based on a “user pays” rather than a “polluter pays” principle. Broadly
speaking:


User Pays: Under this arrangement, the beneficiary of an environmental service
provides payment, whether this is directly for an environmental service such as water
purification, maintaining biodiversity, or storage of carbon.


Polluter Pays: In this situation, the parties responsible for damaging the environment
are taxed or fined for doing so.


With PES, the fact that the money goes directly to the provider helps ensure that
the service will continue to be supplied. This payment can be used to strengthen that
particular ecosystem against pressures that may affect it, including climate change. As a
voluntary agreement, rather than a tax or fine, it is hoped that there is more willingness to
comply from the paying party (though at present no evidence is available to substantiate
this) leading to lower transaction costs.


At the time of writing, the majority of PES schemes are unique, often innovative and
do not fit easily into subsidy/tax programmes such as the EU Common Agricultural Policy
(EU CAP). PES projects are particularly effective tools for rural development, especially
where they succeed in bringing together public and private partners. Financing
through a PES scheme secures long-term commitments to provide ecosystem services,
which may otherwise be hard to achieve, especially in an economic recession. In some
situations, PES schemes may be used as an instrument for poverty alleviation, if they
provide employment and income for impoverished populations. The local nature of
agreements may also be an effective tool for raising awareness about environmental
concerns among a local community, although, as mentioned in section 5, partnership
agreements of this kind are a change from a more traditional environmental message




The Value of Forests2


in which natural biomes are left untouched, so this awareness-raising will have to be
carefully managed.


PES has come to prominence in the past decade as a possible solution to
environmental problems. As a relatively new cooperative tool for environmental
protection, it is important that it is used carefully, as early failures could bias the public
against a useful solution. The following sections examine what is meant by ecosystem
services; how they can be valued; what kind of PES agreements have been used so far;
the conditions necessary for their success, and possible future directions for PES.


Fotalia, 2014




Ecosystem Services 3


1. ECOSYSTEM SERVICES
Before discussing how they can be paid for and what types of schemes are available,


it is important first to define ecosystem services and the context in which they are found.
This section defines what ecosystems are, their different categories, and how these relate
to forest ecosystems. It goes on to examine the commitments that have been made
towards forest-related PES schemes in Europe.


1. General ecosystem services


The Convention on Biological Diversity (1992) defines an ecosystem as “a complex of
living organisms and the abiotic environment with which they interact in a specified location.”
In other words it is a local network of interacting plants and animals, and the landscape
in which they live. An ecosystem service therefore, is a direct, measurable benefit from an
ecosystem, for example, prevention of soil erosion by forests.


The concept of local agreements to pay for such services was clarified by Wunder
(2005) who defined basic principles of PES projects:


z Participation in PES schemes must be free and voluntary.


z The compensated ecosystem service, or land-use, likely to provide the service
is well defined.


z At least one provider is involved.


z At least one buyer exists.


z The ecosystem service provider guarantees the availability and conservation of
the particular ecosystem service. This proviso is called conditionality: the buyer
needs to know they will continue to get what they have paid for.


The UNECE defines PES as “a contractual transaction between a buyer and a seller
for an ecosystem service, or a land use/management practice likely to secure that
service.” (UNECE, 2007). PES therefore covers a variety of arrangements through which
the beneficiaries of ecosystem services pay the providers of those services. (Gutman,
2006). It is a range of financing arrangements for the conservation and sustainable
use of natural ecosystems, such as forests, to ensure that the cost to the environment is
paid for. It is not, therefore, one model to be universally applied, but rather a series of
schemes which can be considered for application to particular circumstances, whether
or not they exactly conform to the CBD or UNECE definition.


Recent increased promotion of PES has been due, in part, to new research by the UN-
sponsored Millennium Ecosystem Assessment (hereafter MA) (Vihervaara et al., 2010).
This report assessed the state of the world’s ecosystems and examined 24 essential
ecosystem services in the context of “benefits people obtain from ecosystems.” It found




The Value of Forests4


that over the past 50 years, only four of these services have shown improvement whereas
fifteen have shown serious decline, with the remainder under stress in some parts of the
world. Practical measures such as PES, that may reverse this tendency, are therefore of
great interest to the UNECE.


1.2 Categories of Forest Ecosystem Services


The MA classifies ecosystem services into four types, which apply to forest ecosystems
as follows:


Provisioning: Useful physical products of the forest such as food, wood, fibre and
fuel.


Regulating: These are the ‘preventative’ benefits of forests: their role in erosion
control, flood prevention, climate regulation, carbon sequestration and water
purification. As will be shown, this last has been one of the most common areas for PES
schemes, partly because benefactors of water purification services are often easier to
identify.


Cultural: Forests are sources of aesthetic and spiritual regeneration as well as
providing recreation and education, which supplies services for the tourism industry.


Supporting: This describes the role of ecosystems as a ‘nursery’ for other
environmental benefits, such as nutrition cycling and soil formation. Biodiversity services
such as species and habitat conservation fall into this category.


The relationships between these different ecosystem services, and their contribution
to human well-being, are set out in the diagram below:




Ecosystem Services 5


Figure 1: Linkages between Ecosystem Services and Human Well-being.


CONSTITUENTS OF WELL-BEING


Freedom
of choice


and action
OPPORTUNITY
TO BE ABLE TO
ACHIEVE WHAT
AN INDIVIDUAL
VALUES DOING


AND BEING


Security
■ PERSONAL SAFETY
■ SECURE RESOURCE


ACCESS
■ SECURITY FROM


DISASTERS


Basic material
for good life
■ ADEQUATE LIVELIHOODS
■ SUFFICIENT NUTRITIOUS


FOOD
■ SHELTER
■ ACCES TO GOODS


Health
■ STRENGTH
■ FEELING WELL
■ ACCESS TO CLEAN AIR


AND WATER


Good social relations
■ SOCIAL COHESION
■ MUTUAL RESPECT
■ ABILITY TO HELP


OTHERS


Source: Millennium Ecosystem Assessment


ECOSYSTEM SERVICES


Supporting
■ NUTRIENT


CYCLING
■ SOIL


FORMATION
■ PRIMARY


PRODUCTION
■ ...


Provisioning
■ FOOD
■ FRESH WATER
■ WOOD AND FIBER
■ FUEL
■ ...


Regulation
■ CLIMATE REGULATION
■ FLOOD REGULATION
■ DISEASE REGULATION
■ WATER PURIFICATION
■ ...


Cultural
■ AESTHETIC
■ SPIRITUAL
■ EDUCATIONAL
■ RECREATIONAL
■ ...


LIFE ON EARTH - BIODIVERSITY


Source: Millennium Ecosystem Assessment. Ecosystems and Human Well-being. A synthesis. p.vi


Forests fit the Wunder’s condition of being well-defined areas, and also provide all
four ecosystem services:


Provisioning: Models for extraction of provisions from forests have varied widely
across the world, from complete deforestation, to commercial schemes which follow
a model similar to PES where the goods extracted are paid for directly whilst still
contributing to forest well-being. For example, sustainable forest management has been
practiced for many decades in Europe and has been shown to lead to healthier forests.


Regulating: Whilst there seems to be a high awareness of the key role of forests in
carbon sequestration and purification of water (World Bank/WWF, 2003), their role in
climate regulation, flood control, air purification and land stabilization, especially in
mountainous areas, (FAO Forest Resources Assessment (FRA), 2005) are ecosystem services
which are rarely paid for by the industries and communities which benefit from them.


Cultural: Forests are treasured natural assets for society in general, but in particular
are vital to the cultural activities of indigenous societies. Furthermore, modern cultural
trends such as ecotourism can also be seen as a cultural service (Millennium Ecosystem
Assessment, 2005, p.7), as these generate income for those involved in their promotion.
It is not just ecotourism that benefits, however; most non-urban tourist industries would
not exist were it not for the natural beauty (rivers, woodlands) that is part of the service
they sell.




The Value of Forests6


Supporting: Forests are extraordinarily abundant in life; they provide biodiversity
protection, acting as habitats for over half the world’s known terrestrial plant and
animal species (Millennium Ecosystem Assessment, 2005 p.587). Given that this is half
of the genetic and biological wealth of the planet, this may also be an area for future
development of PES.


Such is the interest in the potential profitability of PES that stakeholders in forest
management and services have formed consortia to collect data and develop models.
The recent Newforex conference in Copenhagen, for example, ran workshops considering
new methods of cost and valuation of PES, as well as its benefits and pitfalls (Newforex
2012, Copenhagen).


PES schemes may help to maintain or enhance forest ecosystem services where
markets and incentive mechanisms are lacking. These schemes are most commonly
linked to carbon, water, or biodiversity.


z For example, PES can be used to:


z Enhance biodiversity and to conserve healthy vital forests and other wooded
land.


z Strengthen the provision of non-wood forest products.


z Improve water quality.


z Mitigate climate change by sequestering and storing carbon.


z Mitigate flood risk.


PES can be a tool to help maintain the multi-functional role of forests. Forests may
be at risk from increased demand for renewable energy, environmental damage and the
effects of climate change. Forest ecosystem services and resilience become more crucial,
and PES is an important method by which direct payments can be made to maintain
these services.


1.3 Commitments towards forest-related PES schemes in the UNECE Region


Within Europe, protecting forests has been rising on the political agenda. The
government ministers at the Forest Europe Oslo Conference 2011 called for a legally
binding agreement to ensure continuity of all environmental, economic and social forest
functions. This built on earlier work, beginning with the Fourth Ministerial Conference
on the Protection of Forests in Europe, held in Vienna in May, 2003, which recognized the
essential benefits that forests provide. The signatory countries committed to promote
incentives that have positive impacts on sustainable forestry, and also to the removal of
incentives that have negative impacts. At the Fifth Ministerial Conference, held in Warsaw
in 2007, signatory countries and the European Community recognized the vital role that
sustainable management of forests plays in protecting water quality, and committed




Ecosystem Services 7


themselves to implement tools for securing water-related services provided by forests,
such as payments for ecosystem services. They also agreed to:


z Enhance the protective role of forests for water and soil as well as mitigating
local water-related natural disasters.


z Assess forestation programmes for their effects on quality and quantity of wa-
ter resources, flood alleviation and soil maintenance.


z Develop and improve policies for forest and water resource management con-
tributing to the maintenance of sustainable ecosystems.


z Assess the economic value of forest services related to quality and quantity of
water resources and flood alleviation.


z Incorporate the economic valuation of water-related forest services into poli-
cies and strategies on forest and water.


z Facilitate the implementation of measures, including payments for ecosystem
services, to diversify the financial basis for sustainable forest management.


z Maintain the protective function of forests.


At the international level, the Strategic Plan for Biodiversity 2011-2020, adopted at
the 10th Conference of the Parties to the Convention on Biological Diversity (COP-10) in
Nagoya, Japan contained the following goals:


Goal A: Address the underlying causes of biodiversity loss by mainstreaming
biodiversity across government and society.


Goal B: Reduce the direct pressures on biodiversity and promote sustainable use.


Goal C: Improve the status of biodiversity by safeguarding ecosystems, species and
genetic diversity.


Furthermore the Convention on Biological Diversity (CBD) mapped out twenty
global targets to be achieved by 2020. The following are particularly relevant:


z The integration of biodiversity values into national/local development plans,
poverty reduction strategies and planning processes, and incorporation into
national accounting and reporting systems as appropriate (target 2).


z The elimination, phase-out or reform of incentives, including subsidies, harmful
to biodiversity, and the development and application of positive incentives for
the conservation and sustainable use of biodiversity (target 3).


z Taking steps to achieve, or have implemented, plans for sustainable production
and consumption and to have kept the impacts of the use of natural resources
well within safe ecological limits (target 4).




The Value of Forests8


z The sustainable management of areas under agriculture, aquaculture and for-
estry, ensuring conservation of biodiversity (target 7).


Other initiatives are also relevant, such as those related to the implementation of
the United Nations Convention to Combat Desertification (UNCCD), on the economics of
desertification, and on land degradation.


As can be seen from the above, commitment to, the concept of PES is strong in the
UNECE region, and many of the conditions (outlined in Section 4) are already in place.


1.4 Green economy, the economics of ecosystems and their services


The Action Plan for the Forest Sector in a Green Economy, developed under the
auspices of the ECE Committee on Forests and the Forest Industry and the FAO European
Forestry Commission, refers to the need to protect the welfare of all forest stakeholders,
with particular reference to compensating suppliers, wherever possible. Payment for
Ecosystem services is a possible mechanism for this, and different approaches to the
compensation process are addressed.


A number of different economic valuation approaches have been developed
to determine the value of ecosystem services and biodiversity. The study on “The
Economics of Ecosystems and Biodiversity” hosted by UNEP and financed by the
European Commission and other country donors, was launched at the 10th Conference
of the Parties to the Convention on Biological Diversity (CBD) in Nagoya, Japan in 2010
and compares different valuation approaches (TEEB, 2010). It also estimates that the
global value of ecosystem services may run to several trillions of dollars annually. TEEB
presents recommendations to policy makers and the business community at national,
international, regional and local levels on how to take proper account of the value of
ecosystem services and biodiversity in decision making.


Labelling, certification, and payments for ecosystem services can complement
regulation, by encouraging consumers of ecosystem services to recognize and pay for
their value. PES should change the economics of ecosystem management to support
biodiversity-friendly practices that benefit society as a whole (TEEB).


To be in line with the Action Plan, payments for ecosystem services must encourage
resource owners to adopt management practices that maximize social benefits within
existing regulations and market incentives. PES may offer an opportunity, therefore, to
increase the profitability of conservation, with benefits for both the private landowner
and for society. In the absence of PES, landowners might not choose to conserve their
land or to maintain a specific ecosystem service unless other incentives, such as tax
incentives, or other instruments such as regulation, were in place (TEEB).




Ecosystem Services 9


Fotalia, 2014




source: Pölkky Oy, 2013




Valuation of Ecosystem Services 11


2. VALUATION OF ECOSYSTEM SERVICES
Agreeing a level of payments for ecosystem services is essential for any PES


scheme. A wide range of different methods are available for this, and there will always
be differences of opinion between the ‘buyer’ and ‘seller’ of an environmental service
as to which is the most appropriate. The monetary value of ecosystems depends on the
potential payers as well as several other factors, including the long-term sustainability
of the service.


With any type of scheme in which market-based instruments are being used for
ecosystem services (cap-and-trade, subsidy, fines or PES), defining the ‘true’ value of
ecosystem services is a major challenge. There is no accepted universal method but
instead a range of approaches. Annex 1 presents a consolidated overview of these.


More specific information on different valuation methods can be found in the
CBD Technical Series 28 “An exploration of tools and methodologies for valuation of
biodiversity and biodiversity resources and functions” (CBD, 2007), and the TEEB 2010
report “Ecological and Economic Foundations.” This also includes an overview of forest
services and the valuation methods most suitable for different ecosystem services (Table
A2.1b Conceptual matrix based on forest ecosystem services, benefits/value types and
valuation approaches).


A more recent document with much useful information on valuing forest services
is that of the Advisory Group on Finance Collaborative Partnership on Forests of 2012.
The minutes of the June 2012 ‘Kick-off Meeting’ of the Forest Europe Expert Group also
contain useful approaches, especially from a European perspective.


Whilst all of the above are useful in enabling parties to bring bids to the table, a
perfect method of valuation is not always necessary for establishing successful PES.
Valuation can be used to discover how much a buyer would be willing to pay and to
develop a payment mechanism – after all, the important point is that all parties agree
on the valuation, not that it can be scientifically proven beyond all doubt. In the forestry
sector, for example, payments have sometimes been based on opportunity cost linked
to foregone timber sales, a method which can be effective even if ‘true’ value is more
complex to ascertain. Ultimately, no matter what figures the different PES partners start
with, they will have to agree some type of compromise, influenced by factors such as
impact on other ecosystems and sustainability.


As a final point, traditionally, timber production is an environmental service paid
for by conventional means, but could continue even where a PES might be considered
beneficial to maintain another ecosystem service provided by the forest. If biodiversity
is a key priority, it may not necessarily be in conflict with timber production: thinning
forest stands can be beneficial as it introduces more light and could help to promote
long term stability of the standing trees. Allowing an owner in a PES scheme to produce




The Value of Forests12


timber may well provide the funds for the type of management that will help to protect
some of the other key ecosystem services that the forest provides as well as reduce the
size of PES payments needed.


A direction for future work might be to clarify how valuation studies carried out by
environmental economists are, or are not, used in future in designing PES. It may be that
less academic approaches will be needed to help those setting up PES schemes.


source: UNECE/FAO




PES schemes in the UNECE region 13


3. PES SCHEMES IN THE UNECE
REGION


A 2011 literature search focused on the UNECE region, North America, Europe and
Central Asia, to identify PES schemes. The search found 78 PES schemes were in operation,
with 13 under development (Annex 2). Of these 78 schemes, 37 were focused on forest/
biodiversity, 28 were watershed-related, and 13 were water quality trading programmes.
The PES schemes in operation or being developed were found from:


z The “Web of Science” database (Web of Science, 2013).


z Environmental ministries.


z The internet, using various search terms.


z A review of literature.


z The PES case studies brought to the attention of the secretariat.


The number of PES schemes increases year by year. Many PES programmes are
located in Latin America, but there are also numerous schemes in Europe and North
America, particularly in forest/biodiversity programmes. It is unlikely that the literature
review has identified all the PES schemes, which are in use in the UNECE region. The
search does, however, show different types of schemes throughout the region, covering
a range of ecosystem services, which may rely on funding from public, private, mixed
public/private sources, or trading.


The search uncovered two main approaches to PES:


z Paying to maintain or enhance the services that an ecosystem provides.


z Paying to rescue those services at risk, or prevent a change of land-use with
potential negative impacts.


These divided into four main types of financial arrangements:


z Publicly-funded schemes at the local, national and sub-regional levels.


z Private self-organized deals.


z Mixed (public-private schemes).


z Trading schemes.




The Value of Forests14


3.1 Public schemes


In these, a public body, such as a municipality, national or local government is the
primary buyer of the ecosystem service, generally a land-use or management practice in
the general interest whilst also benefiting local concerns. Public funds are administered
and paid out to the service providers (UNECE, 2007, p. 33).


Prominent forest sector examples in Europe include the Southern Finland Forest
Biodiversity Programme (METSO) and the KOMET Programme for forest conservation in
Finland and Sweden, both of which increased the share of protected forest area (see
Examples 1 and 2). These public schemes were instituted by the government to conserve
biodiversity and change management practice.


Example 1: The Southern Finland Forest Biodiversity Programme (METSO)


The Southern Finland Forest Biodiversity Programme (METSO) was launched in 2002 to
protect forest land in Southern Finland, where most forests are in commercial use by small-
scale non-industrial private landowners. The pilot programme introduced new voluntary
conservation measures, under which landowners could


– Contract their land for a fixed period.


– Establish a private protected area.


– Sell the land to the state.


This ‘nature values trading’ mostly led to 10-year contracts and became the flagship
instrument of the METSO pilot. Implementation emphasized nature values, which the
compensation incentivized protecting.


After the successful pilot, it was extended across the country in 2008 through the
METSO II programme, excluding only the northernmost parts of the country, where
conservation was already good. The criteria for eligible sites were defined in more detail,
and administrators were trained in standardized interpretation of them. Compensation
was based on lost timber income only (a good example of the ‘opportunity cost’ approach
mentioned above) and nature values became simply eligibility criteria, not influencing the
payments. In Finland, landowners have the right, and sometimes even responsibility, to
produce timber and the compensation is for giving up a part of this (Primmer et al., 2010).


Example 2: KOMET Programme, Sweden


This voluntary scheme, initiated by the Swedish Government and introduced in spring
2010 was a partnership of three government bodies with a budget of 11 million SEK in 2011
for administrative costs and covering 9% of Sweden’s forest land. It aimed to raise owners’
awareness of the conservation value of biologically important forest, and encouraged them
to enter nature conservation agreements or other forms of protection for them. Agreements
may last for between 1 to 50 years, depending on the site’s significance. Owners receive
fixed-rate payments to compensate for limitations placed on their management in the
interests of nature conservation. For habitat protection sites and nature reserves, owners
receive full compensation plus an additional 25%.




PES schemes in the UNECE region 15


Other countries have established voluntary forest conservation schemes to increase
the protection of biodiversity and related ecosystem services. In Norway, the Ministry of
Environment along with the largest private forest owners’ association, identified forests
eligible for conservation contracts. In addition, individual forest owners could propose
their own land. The government negotiated to purchase eligible forests to establish
forest reserves, banning all extractive uses. As in the case of METSO, compensation was
for the value of timber, which would otherwise have been sold, and uses a standard
formula (Zanderson et al., 2009).


In public payment schemes a public body is responsible for implementation, so
there is a need to show public demand for the service and the cost-effectiveness of the
mechanism. An ad hoc working group on non-wood forest goods and services under
the Standing Forestry Committee of the European Commission found that, “it may
be possible to increase the number and value of such schemes through innovative
approaches, ideally based on revealed preferences to more convincingly demonstrate
the public value of forest goods and services” (Standing Forestry Committee, November,
2008).


Incentive payments also allow governments to support smaller-scale PES schemes.
These could take the form of grants for footpath maintenance, as well as third-party
transactions such as the ‘sale’ of tourist services (for example, guided walks through a
forest) with a portion of the income channelled to the forest owner. In the Netherlands,
for example, an entrance fee is paid to visit some natural sites. In Latvia, entrance fees
are charged for the use of special trails or enclosed areas for game watching (Standing
Forestry Committee, November, 2008).


As well as payments for conservation, governments can institute fiscal mechanisms
such as dedicated taxation. In the United States, the Catskills watershed management
was publicly funded through higher water fees which were earmarked to protect the
quality of drinking water supplies to New York City.


In the water sector, public schemes usually target services to secure supply (quality
and quantity), flood protection and erosion control, usually by the provision of financial
incentives to encourage more sustainable land-use. The New York City’s Catskills
programme is an example of a local-level public scheme (The Catskills/ Delaware
Watershed Protection programme (New York) Stanton et al. 2010; FAO 2010 web pages)
but public water schemes are often related to improving agricultural practices beyond
legal requirements and normal practice. For example, the nitrate strategy of Switzerland
encourages farmers to enhance the environment of their farmland (UNECE, 2007, pp. 38-
40). Similar schemes also used to pay for the maintenance of forest areas and afforestation
or reforestation to ensure high quality drinking water supply for municipalities, such as
the canton of Basel (see Example 3).




The Value of Forests16


Public schemes tend to be more significant in terms of volume so it is particularly
important that their permanence is assessed, ensuring that the ecosystem service
continues to be maintained, especially in cases where there is a one-time payment to
cancel debt or improve the land.


3.2 Private schemes


In private schemes, privately owned bodies (such as companies, farmers’
associations, cooperatives or private individuals) compensate a private landowner for
the maintenance of an ecosystem service. The agreement of the Coca-Cola® bottling
plant with local forest owners in Portugal is a good example. Payments were made for
the owners to maintain their forests in good condition to keep the Tagua Reservoir pure.
The bottling plant paid via a voluntarily-negotiated contract. Another example is Vittel
(see Example 4 below), where the mineral water company compensates farmers for
using sustainable agricultural practices compatible with maintaining water quality. The
private funding ensures a steady income flow for maintaining the service.


Typically there is a management entity which administers the contract, collecting
the funds from the buyers, disbursing them to the sellers and holding them accountable
for the provision of the service (UNECE, 2007).


Privately funded schemes tend to be linked to water as good quality water has a
commercial value which is relatively easy to calculate. This is not always so easily done
with forest ecosystem services where the protection of soil quality or a key habitat for
wildlife, for instance, does not easily translate into a cash value.


Privately funded water-related PES projects therefore abound. Two examples are the
cases of Henniez SA., Switzerland (Example 5) and Bionade GmbH, Germany (Example
6). In the first, the forested land is owned by a private company. In the second, external
landowners are part of the scheme, both public and private. These examples are included
to showcase forest-related examples, which may be replicable to other situations where
the maintenance of a sustainably-managed forest is crucial for water quality.


Example 3: Payments for drinking water from forested catchments Canton Basel-Stadt,
Switzerland


Forest covers 12% of the canton of Basel-Stadt. The broadleaf-dominated stands cover
an area of 429 hectares, of which 90 hectares are the property of 330 private forest owners.
Approximately half of the drinking water for the canton of Basel-Stadt is supplied from the
Langen Erlen catchment area. In this area, water from the Rhine is purified in a natural and
sustainable way by forest stands. Among other good practices, this also required changes
in species composition, such as replacing hybrid poplars, which have damaged the soil,
with willows and Prunus avium (wild cherry tree).


In addition, water consumers pay for the sustainable management of forests belonging
to the city of Basel through an extra charge in their water bill.


(http://www.waldwissen.net/wald/boden/wsl_wald_wasser/index_DE)




PES schemes in the UNECE region 17


Example 4: Vittel PES Scheme, France


This is one of the most successful examples of a privately initiated PES system. Nestlé
Waters, owner of the Vittel brand of bottled water, entered into long-term (30-year)
contracts with the 26 largest farm operations in the watershed. Nestlé Waters agreed to
abolish the farmers’ land-ownership debt, cover the cost of all new farm equipment and
assist in modernization with up to 150,000 Euros per farm.


The farmers agreed to follow the management plans prescribed by Agrivair, the
environmental consulting firm established by Vittel to oversee the programme. By 2004,
after 12 years of operation, the programme succeeded in incorporating 92 percent of the
basin’s hectares and reducing the baseline nitrogen load of the spring’s source waters. The
value of direct payments to farmers was concentrated in the first seven years of operation
and has decreased afterwards as the programme reached its goal of enrolling all farms
in the target watershed service area. Vittel paid $230 per hectare/year for seven years to
cover the reduced profitability resulting from the changed management practices. Threats
to water quality have now shifted from the rural to the urban areas, and Agrivair is moving
its focus to programmes targeting pollution from storm- and waste- water management.
(Ecosystem Marketplace, 2010)


Example 5: Henniez SA, Switzerland


Henniez, a mineral water company in Switzerland, extracts water from a natural spring
nestled in quiet, secluded woodland, comprising more than 70,000 trees. The forest is
partly located in a natural park, the “Domaine d’Henniez”: 100 hectares with no intensive
agriculture. The forest plays a regulating role for the quality and purity of the natural mineral
water. Until the end of the 1970s, the area around the source was used as arable and pasture
land but, in the early 1980s, Henniez bought the land, halting arable production to protect
its mineral water from pollutants such as nitrate, chloride and pesticides. From 1984, the
company planted 200 hectares of new forest in the surrounding area to form a protective
belt around the remaining natural meadows in the source area. This has the positive effect
of limiting the nitrate content of the mineral water.


(Waldwissen 2013), (Henniez, 2013)




The Value of Forests18


Example 6: The “Drinking water forest” (Trinkwasserwald® e.V.), and its cooperation
with BIONADE Corporation, Germany


Starting in 1995, the German NGO Trinkwasserwald®e.V. (Drinking Water Forest)
brought together forest owners and privately owned companies to create range of
environmental education initiatives. The main goal was the creation of “Drinking water
forests” under the Trinkwasserwald®e.V.-slogan: “We plant drinking water”. This required
the conversion of conifer plantations to deciduous broadleaved forest. The effect has been
that, after10 to 12 years, on average there has been an increase in the annual volume of
available water of the order of 800,000 litres per hectare. Trinkwasserwald® e.V. organizes
the process of creating new drinking water forests together with public or private forest
owners. Private contracts are signed between Trinkwasserwalde.V. and the public or private
forest landowners for a period of more than 20 years.


In April 2008, Trinkwasserwald®e.V. (Drinking Water Forest Association) started a
project with the BIONADE Corporation for sustainable regeneration of drinking water.
BIONADE Corporation, a privately owned German company situated in Bavaria in a
Biosphere Reserve, needs good quality water for “BIONADE”, an organically manufactured
non-alcoholic refreshment drink. The partnership between BIONADE Corporation and the
NGO Trinkwasserwald® e.V. has resulted in more than 63 hectares of “drinking water forests”
throughout Germany. Through its financial support of Trinkwasserwald® e.V., BIONADE
Corporation has sustainably generated 50 million litres of additional ground water and
drinking water. This action has compensated for the total amount of drinking water used in
the “BIONADE” product each year.


The BIONADE Corporation has covered most of the costs of converting the forest land
from conifers to broadleaves, including the costs of ground preparation, nursery stock,
planting and fencing, possible re-plantings, as well as on-going care and maintenance over
several years. The NGO Trinkwasserwald® e.V. is actively acquiring further partners
for similar projects across Germany.(www.trinkwasserwald.de Final report study on the
Economic value of groundwater and biodiversity in European forests:


http://ec.europa.eu/environment/forests/pdf/grounwater_report.pdf )


3.3 Public-private schemes


In these, the seller is a private entity whilst the buyer (or one of the principal buyers)
is also a private individual, but represented by a public body. The PES contract is usually
administered by a third-party PES-management entity (UNECE, 2007, p.34), similar to
many private schemes.


The Catskills project referenced above could be seen as a scheme of this kind, where
the public body acts as a broker between the New York taxpayers and the forest owners, but
a better example is the Copenhagen Energy PES scheme (Example 7). The environmental
service of improved groundwater quality is assured by a private forest owner agreeing
not to use pesticides, as well as by private farmers who sell their land so that it can be
afforested. These private persons are compensated by other private persons, the customers
of Copenhagen Energy who consume the supplied water, and contribute to Copenhagen
Energy’s fund. Copenhagen Energy plays the role of an intermediary by collecting money
from the clients then investing it to give incentives to private land owners to change forest
management practices or to sell their agricultural land.




PES schemes in the UNECE region 19


Example 7: Copenhagen Energy PES scheme


During the last 20 years, Copenhagen Energy Corporation, which delivers drinking
water to around one million consumers around Copenhagen, has seen a reduction in
supply of about 14 million m³ of groundwater per year. One of the largest groundwater
bodies used by Copenhagen Energy is the Vigersted Well Field from which also 5 million m³
per year are taken, equal to a year’s consumption by 100,000 Copenhageners. Copenhagen
Energy has therefore needed to protect this groundwater body through afforestation
measures and the designation of well-head protection zones with no pesticides. Two
forest-groundwater PES schemes have been developed to have two main effects:


- A change from agriculture to forests through afforestation of mainly broadleaf
species.


– Restrictions on the use of fertilizers or pesticides in existing forest areas, and
in some cases also replacing conifer stands with broadleaf tree species, to increase
groundwater recharge.


To maintain quality of groundwater in the privately-owned forest adjacent to the
Vigersted Well Field, Copenhagen Energy pays the private owner not to use pesticides on
95 hectares of the forest. In addition, Copenhagen Energy was able to buy 530 hectares
of farm land on which broadleaf trees were then planted. Afforestation activities were
implemented and managed by the state and local municipalities.


(Final report study on the Economic value of groundwater and biodiversity in European
forests: http://ec.europa.eu/environment/forests/pdf/grounwater_report.pdf )


3.4 Trading schemes and conservation banking/offsets


These usually occur where compensation for the provision of an environmental
service comes from funds generated in markets in which permits, quotas or other rights
can be exchanged. Among these are “cap-and-trade” schemes, where governments set
a cap for the delivery of a particular service and suppliers can either accept the capping
level, or trade permits so that others deliver the obligations on their behalf. This includes
emissions trading through voluntary and compliance market credits for Reducing
Emissions from Deforestation and Forest Degradation (REDD) and water and pollution
trading schemes. For example, environmental pollution quotas for nitrate, phosphorus
and/or salt discharges can be traded by low polluters to high polluters for whom the
buying of permits is cheaper than installing anti-pollution technology. Despite initial
difficulties, projects like the Clean Development Mechanism (CDM) where carbon credits
can be generated through afforestation and sold in existing markets indicate a possible
way forward on this.




The Value of Forests20


Example 8: Moldova Soil Conservation Project


The Moldova Soil Conservation Project, implemented as a Clean Development
Mechanism (CDM) project is afforesting and reforesting 20,290  ha of degraded state-
owned or communal agricultural lands throughout the country.


The project is expected to sequester about 1.22  million tonnes of CO2-equivalent
(tCO2eq) by 2012 and about 2.51 million tCO2eq by 2017. The World Bank BioCarbon Fund
will purchase emission reductions of 600,000 tCO2eq, while the Prototype Carbon Fund
purchased 1.3 million tCO2eq under a separate agreement in 2002. In addition to the
World Bank and Moldsilva (the Republic of Moldova’s Forestry Agency), 384 local councils
represent the participating rural communities.


This will allow investment not previously possible due to financial and capacity
constraints of the state forest agency and local councils. The investment will prevent
soil erosion and restore degraded lands as well as promote biodiversity benefits from
the restored habitats of endangered flora and fauna. The newly forested area will
also produce fuel wood, timber and non-timber products to meet the needs of rural
communities as well as additional social benefits such as local employment in tree
cultivation. The active involvement of local councils, who own about half of the land
under the project, is likely to ensure sustainable management of the afforested lands
once transferred back to them.


The project has adopted a renewable 20-year crediting period, which is expected
to be extended for a further two consecutive 20-year periods, over a total project period
of 60 years. The implementation cost for the project during first 11 years (2002-2012), is
estimated at $18.74 million. Moldsilva financed the implementation costs during this
period andestablished all new plantations and maintained existing plantations on state-
owned land. On communal land, the new forests were returned to the municipalities under
long-term management contracts.


In October 2012 the United Nations Framework Convention on Climate Change
(UNFCCC) announced the first carbon credits generated by the Moldova Soil Conservation
Project. 851,911 temporary Certified Emission Reductions (tCER: a tCER is equal to one
metric ton of carbon dioxide) were issued, the largest number of carbon credits from a
reforestation project in the Accession Countries. The project was cited as “an excellent
example of how co-operation between a numbers of forestry actors in a large-scale project
can make a difference.” (Worldbank 2012)


The success of this project led to the development of a follow-up project – the
Moldova Community Forest Development Project, which aims to reforest 8,157 ha
of eroded and unproductive agricultural lands. The project, launched in November
2006, brings together Moldsilva and 265 communities with a total investment of
$21.7 million over the period 2006-2035. (http://cdm.unfccc.int/Projects/DB/SGS-
UKL1216031019.22/view)


(http://www.worldbank.org/en/news/press-release/2012/10/24/world-bank-helps-
moldova-restore-degraded-lands-and-earn-carbon-credits)




PES schemes in the UNECE region 21


Example 9: Afforestation with Hazelnut Plantations in Western Georgia


AgriGeorgia, a subsidiary company fully owned by the Ferrero Group, has developed
a project to sequester carbon on previously abandoned land in a poor rural region
near the Black Sea coast. The plan is to halt land degradation by creating permanent
forest cover, whilst providing local communities with sustainable and long-term income
opportunities.


The Samegrelo region was a primary supplier of fruit and nuts in Soviet times until
the 1990s when the region was left with a serious lack of capacity, including deteriorating
infrastructure and uncertain land tenure issues. Land abandonment and degradation
followed, aggravated over the last twenty years by slash and burn clearing for grazing
and small-scale crop cultivation, deforestation of wind-breaks and illegal waste dumping
leading to pollution. Investment in the region is also currently hampered by several risk
factors, including those of political, social and armed conflict.


Established in 2007, the project rehabilitates local soil, land and water resources, restoring
land production while generating necessary financing from the carbon credits. Afforestation
with hazelnut plantations represents a replicable model for the Samegrelo region, offering
significant environmental and economic opportunities, including higher employment,
income, transfer of technology and know-how. (http://www.carbonfix.info/HAP/)


(http://www.climateprojects.info/GE-HAP/)


Fotalia, 2014




The Value of Forests22


Example 10: Albania Assisted Natural Regeneration Project


The Assisted Natural Regeneration project aims to afforest and reforest badly
degraded land. Started in 2010, it will cover about 6,317 ha spread over 24 communes and
five regions as part of the Natural Resource Development Project (NRDP), a World Bank
loan project. This will establish or maintain sustainable, community-based natural resource
management in hilly or mountainous lands, prone to erosion and resource degradation.


Assistance for natural regeneration fits within the afforestation/reforestation definition
of the Marrakesh Accords. It also fits the ‘Additionality’ criterion, which refers to the need to
show that achieved levels of services would have not occurred in the absence of PES. In this
case natural regeneration was prevented by excessive grazing of goats, so the regeneration
can be shown to be additionality as a result of the PES scheme. The activities included in
the project are expected to sequester a total of 0.14 Mt CO2eq by 2012 and around 0.25 Mt
CO2eq by 2017. The reforestation will help to halt the degradation of forests, soil erosion
and loss of vegetative cover. It will also improve water quality and watershed capacity, and
reduce siltation of watercourses and reservoirs. The forests will provide valuable habitats
for a wide range of native flora and fauna, adding to natural biodiversity. #


The project provides an opportunity to bring critically needed sustainable revenue
streams directly to poor rural communities in exchange of public goods and services, and
can therefore have a significant impact on the populations’ livelihoods. Over 80,000 people
will benefit from this project through.


The restored forest serves as a sustainable source of firewood, timber, fruit, fodder and
other products for the local communities who currently have usufruct rights. This project
supports a participatory approach within the community to reach a common agreement
on the selection of sites and their protection from grazing, as well as the planning and
implementation of interventions needed to accompany this change. As the source of
funds in this case is a World Bank Loan, this example possibly stretches the definition of a
PES slightly, but from the point of view of the rural communities it operates in a ‘PES-like
fashion’ and can be used as a model for other, similar projects in future.


This is a comparatively recent project, only fully approved in 2013, and so can be seen
as a hopeful sign for future developments.


(http://cdm.unfccc.int/Projects/DB/TUEV-SUED1245851243.49/view)


Within the forestry sector there are also a few examples of public/private conservation
banking or offsetting. To explain terms:


Conservation banking is based on the concept that markets can deliver “offsets” to
those who need them.


Habitat banking is a type of conservation banking where the particular habitat
types are conserved through a compensation activity.


Species banking has the purpose of generating an increase in the population of a
particular species through the compensation activity.


The central idea behind conservation banking/offsetting is that ‘credits’ can be
bought by paying for environmental investment elsewhere. The goal of biodiversity
offsetting, for example, is to achieve “no net loss” and preferably a net gain of biodiversity




PES schemes in the UNECE region 23


Example 11: Conservation Banking in California, USA


To protect endangered species, California introduced conservation banking in 1995.
To receive approval to sell endangered species offset credits, agencies must agree to
conserve high quality habitats. In addition, a conservation easement, legally restricting
the usage of the land covered, must be signed. Normally a permanent endowment fund
is set up to pay for ongoing site management and maintenance. Credits can be sold to
compensate for public infrastructure projects and the impacts of private development.
Since the introduction of the policy, more than 100 conservation banks have been set up in
California. The annual market volume for the entire US has been estimated at $200 million.
(TEEB for local and regional policymakers. Chapter 8, p.158)


in habitat structure, species composition, ecosystem function, and land use practices
associated with biodiversity. “Currencies” can be used to determine biodiversity losses
(in destroyed areas) and gains (increases in biodiversity value of restored areas). To
determine these, area alone can be considered, or the area and quality of biodiversity.
Success can be determined by whether offsets achieved better conservation outcomes
than would have occurred if the offset had not taken place (TEEB ).


Example 11 refers to conservation banking linked to species protection, which could
inspire forest sector policy makers to start similar projects. It should be borne in mind
that this approach is only suitable for habitats that can be restored within a reasonable
time-frame as lengthy restoration processes may lead to contrary impacts, such as
ecological damage.


The EU Habitats Directive also allows for offset schemes. An innovative example exists
in France where, through a public bank, a type of trading scheme has been instituted.
The scheme, CDC Biodiversité, from the Caisse des Dépôts, a public institution, aims to
offset the residual impacts of construction work which could not be avoided or reduced.
Project managers subject to legal obligations to offset, or offsetting on a voluntary
basis, can be represented by CDC Biodiversité which can also organize environmental
operations such as creating “natural assets reserves” likely to be recognized as offsetting
measures for land development projects. The first project was launched in the Camargue,
on the Crau Plain in France.




The Value of Forests24


3.5 PES schemes at the regional level


The trans-boundary dimension of watersheds and water-related ecosystems can
easily apply to forests. Forest management measures in one region or country could lead
to environmental impacts in another, for example, floods caused by forest management
measures such as clear fell in the upstream part of a watershed. Existing trans-boundary
networks and protected areas might lend themselves to the consideration of PES scheme
development. In protected area networks, the type of protection status would need to
be assessed, together with the type of scheme, which could possibly be developed, for
example linked to biodiversity conservation or offsetting.


Third parties, other than governments or private institutions, often act as project
drivers for PES schemes, especially where they expand across national boundaries. This
role is often taken by NGOs such as Nature Conservancy in the USA, and the WWF.


Trans-boundary projects currently under development include a number of pilot
projects under the auspices of the UNECE Water Convention to implement the earlier
“Recommendations on Payments for Ecosystem Service in Integrated Water Resources
Management” (UNECE, 2007) in trans-boundary watersheds.


Example 12: Krygyzstan water project


In the area of Lake Issyk-Kul in Kyrgyzstan, a 2006 project led by the Central Asian
Regional Environmental Centre (CAREC) focuses on the development of five different PES
schemes. One pilot project focuses on improving land use practice within the runoff area
in the Chon-Aksuu river basin and the reconstruction of the water-pipeline network of
the Temir. The purpose of the project is to change water and land use practices through
the implementation of the ecosystem approach. The aim is to provide people with clean
drinking water by improving the conditions of water flow formation in the upstream water
catchment. The seller of the ecosystem service under this project is the forest located within
the water flow formation area of the Chon-Aksuu river basin. The water-user federation
along with the population pays the forestry unit for additional expenses caused by the
introduction of an ecosystem approach in forest and pasture management.


The project was begun in December 2006, continued and updated 2011, with
completion expected end 2013.


(http://www.carecnet.org/programmes-and-activities/environmental-management-
and-policy/payment-for-ecosystem-services/integrating-pes-and-reducing-emissions-
from-deforestation-and-degradation-redd-in-kyrgyzstan/?lang=en)


Similarly, in Ukraine, project partners are introducing payments for ecosystem
services in the border areas of the Tisza River Basin, including a draft toolkit to help
public authorities to introduce PES in the Ukrainian part of the river basin.




Fotalia, 2014




Fotalia, 2014




Ecosystem services at the policy level: enabling conditions 27


4. ECOSYSTEM SERVICES AT THE POLICY
LEVEL: ENABLING CONDITIONS


A number of preconditions for the implementation of PES emerge through the
literature and practical experiences. The following list, which is not exhaustive, illustrates
some key considerations:


z Legal and Institutional Framework


z Ownership and Tenure rights


z Stakeholders and Negotiations


z Monitoring, Enforcement and Compliance


z Ensuring Permanence and Avoiding Negative Impacts


4.1 Legislative and institutional framework


For PES to succeed, a number of legal and institutional frameworks need to be in
place, as well as a particular administrative culture (Primmer et al., 2010). A regulatory
framework is needed to:


z Allow deployment.


z Legal recognition of services.


z Enabling of contracts and payments.


z Avoid counterproductive or unintended distributional effects.


Rules and institutions must have mechanisms to enforce contracts based on
reliable contract law with good governance, and credible enforcement (IUCN, 2006, p.9).
Institutions are also important to:


z Facilitate transaction and reduce transaction costs


z Coordinate with other policies and mechanisms


z Set up insurance or other mechanisms to manage risks


z Provide related business services should the need arise


Furthermore, institutions define the roles of different actors in a PES scheme. Figure
2 below demonstrates the range of actors with a role in a PES mechanism, including its
establishment and in the maintenance of registers to keep track of payments (TEEB).




The Value of Forests28


Figure 2: Institutional actors involved in PES deals


Supportive
Policies


Regulatory
Agencies Buyer


&
Buyer
Orgs


Project
Design


Services


Business
Support
Services


Science of
Ecosystem


Services


3rd Party
Certifiers


3rd Party
Verifiers Registries


Supplier
&


Supplier
Orgs


Project
Developers


Technical
Support
Services


Brokers
Finance


for
DesignMarket Information


External actors & issues
affecting the PES System


Actors & issues within
the PES Deal


Source: Adapted from Bracer et al. 2007, TEEB for national and international policy makers. Chapter 5, p.20)


Institutions provide vital direction for the valuation, utilization and conservation
of ecosystem services (Vatn, 2010), helping to avoid conflict between the conservation
and use of natural resources. Integration of conservation and management can provide
traditional natural resource managers with new competencies, improve the sustainability
and public perception of their business, and maintain competitiveness (Primmer and
Wolf, 2009; Primmer and Karppinen, 2010).


Effective governance is needed to support the establishment of PES schemes via
legislation, for example laws to implement a new public payment scheme, which can
then be applied for as in the METSO pilot in Finland and KOMET in Sweden. Government
support can also enable changes in legislative practice, as has been the case for METSO
II in Finland. Legislation can also be amended to include provisions which facilitate PES
such as in Bulgaria where, since 2011, PES for forests is part of the forestry law (WWF
Danube Carpathian Programme).


Legislation also provides mechanisms to maintain ecosystem values that go
beyond PES schemes, for instance in protected areas. In Latvia, for example, a special
law regulates compensation for management restrictions on protected natural areas
and micro-reserves. In France, numerous fiscal mechanisms apply to protected areas,
including land tax exemptions in Natura 2000 areas, and land revenue tax reductions for
expenses for the preservation or restoration of protected areas. In Denmark, the private
forest sector receives an average of $10 - $15/ha in subsidies for specific management
changes, such as the introduction of native species, setting aside forests as nature
reserves and using environmentally friendly silvicultural techniques (Standing Forestry
Committee, November 2008). As the TEEB recognises agri-environment schemes of this
nature as PES schemes, these can also be considered as PES examples.




Ecosystem services at the policy level: enabling conditions 29


All the above create a legislative climate in which forest ecosystem services are
recognized as having value and in need of conservation/restoration, a necessary
prerequisite for forest-based PES schemes to develop.


Ensuring the existence of a supportive legal and regulatory context is, however,
only the first of the many steps in PES developments. Further steps can take the form
of a review of the existing framework and an assessment of the extent to which it is
supportive of PES, as well as establishing supporting organizations and targets. Figure 3
below highlights the main stages in PES development.


Figure 3: Main stages in PES development


Create Supportive Legal /
Regulatory Context
(includes establishing


tenure / rights)


Develop the Rules for
the Market or Trading


(includes determining
what is being sold, who
is paying for what, etc.)


Identify Services,
Buyers & Sellers


(includes assessment of
complementary goals /


motivations)


Negotiate
Deal Details


(includes contracts,
agreements,


verifications, etc.)


Markets
&


Payment
Services


Establish Supporting
Organizations &


Services
(includes verification


services, etc.)


Market
Development


Potential Deal
Identification


Agreement
Structuring


Implementation


Source: Adapted from Brand 2002, TEEB for national and international policy makers Chapter 5, p.18)


The exhaustive WWF survey of Serbian legislation: “Analysis of PES Needs and
Feasibility in Serbia” by Goran Seculic (funded by UNEP and GEF) is an excellent example
of the type of work referred to in this section. It summarises all the recent changes
in Serbian environmental laws (e.g. The Law on Waste), their allowances, penalties
funding arrangements (e.g. for forests) and implications for PES. The 2012 paper
“Paying for water-related forest services: a survey on Italian payment mechanisms” by
Pettenella, Vidale, Gatto and  Secco is a good example of a more specific work, examining
the impact of one part of a law on water-supply, which is necessary background for any
potential water-supply PES scheme.


4.2 Forest tenure rights


For PES to work, forest tenure must be clearly defined and recognized. Tenure is a
generic term referring to a variety of arrangements that allocate rights to, and often set
conditions on, those who hold land. Tenure regulates access to and use of resources.




The Value of Forests30


“Ownership” refers to a particular type of tenure in which strong rights are allocated
to the landholder. Tenure arrangements may involve exclusive access (when only one
person or group has access), or different types of access for different groups of people
at different times. In addition to inalienable title, there are many other forms of tenure.
Tenure theorists describe tenure as a “bundle of rights” (FAO, 2011). These rights need to
be effectively registered and administered (IUCN, 2006 PAY, p.9).


The ecosystem service provider must hold the rights to the service as a condition
for PES because if property or use rights are unclear, the buyer of the service cannot
define the conditions of payment. In situations where the land is ‘open access’ with no
clear private, public or communal owner, PES is not the solution. Instead, collectively
defined rules will need to be developed for the management and conservation of the
area concerned (Ostrom, 1990; Vatn, 2010). Where resource access and ownership are
disputed, “buyers” have little incentive to participate in a PES scheme as there is no
guarantee that they will get what they are paying for. (TEEB)


Forests throughout the UNECE region are governed by a range of different
ownership and tenure rights. In Europe, for example, approximately half the forested
area is privately owned, though this differs significantly from country to country. In
Austria, Finland, France, Iceland, Norway, Slovenia and the UK more than 25% of the
forested area is privately owned but public ownership is predominant in Bulgaria, the
Czech Republic, Lithuania, Poland, Romania, Sweden and Switzerland (Schmithüsen et
al., 2010). Similarly, diverse rights apply throughout the Russian Federation and North
America. As previously stated, PES schemes are applicable to all situations where
ownership is clear, however they are generally easier to apply to private forests and so
are currently used on a larger scale in countries with predominantly private ownership.
User-rights will also need to be respected, such as the right enshrined in the laws and
traditional practice in many countries in Central and Eastern Europe for the public to use
the non-wooden products and services of the forest.


4.3 Motivation and responsibilities of landowners


The success of PES is also influenced by the many socio-psychological and socio-
cultural factors behind the use and conservation of ecosystem services and their
valuation. For example, social motivations about ecosystem services may determine
whether PES will encourage further conservation or just supplant voluntary conservation
(Vatn, 2010).


It is also important to consider the legal management responsibilities of the
landowner in the establishment of PES. For example, if land owners are already
responsible for preserving specific trees, modifying this requirement to compensation
for setting aside entire habitat patches as part of a PES might face little resistance as
the precedent has already been made. However if the land owners have no such
responsibility the controls needed to enforce the new PES scheme may be substantial.




Ecosystem services at the policy level: enabling conditions 31


Wherever possible, existing rights of landowners should be maintained under
PES schemes (Vatn, 2010). For example, Finnish landowners have an exclusive right to
produce timber on their land, so their payment is for timber income loss rather than for
conservation. This reflects the Finnish cultural view that forest land is primarily for timber
production.


For the landowner the opportunity cost of changing practices as part of a PES
scheme must not be perceived as too high. It should be possible to improve the supply
of the ecosystem service through a change in resource use such as land set aside, and
the adoption of more sustainable practices such as the use of water-saving irrigation
techniques (Wunder et al 2008).


Much useful documentation is available on this topic, for example the 2012 CEPF
Statement on Payments for Ecosystem Services (presented at the 2012 Newforex
Conference) gives an excellent overview of the concerns of forest landowners across
Europe. Similarly, Gavriil Xanthopolous’s 2012 summary of issues affecting Greek forest
managers gives valuable insight into their concerns and motivations. (http://www.
thinkforest.efi.int/files/attachments/events/2012/xanthopoulos_-_statements_on_
pes_made_on_27-11-2012.pdf).


4.4 Stakeholders and negotiations


The forest ecosystem service and its provider must be fully understood for PES to
function. As well as being clear about who will benefit, there is a need to assess historical
and expected trends in demand and supply as well as other contextual factors. This is
vital in targeting payments to those who can actually deliver the desired service (TEEB).


The identification and participation of a number of key stakeholders is also necessary
when making a PES agreement in forestry. Figure 4 below presents the variety of forest
PES stakeholders and their interactions. As forests are frequently of value to the wider
community, or even the entire region, the social context also needs to be taken into
account, to identify the parties that need to be involved in the agreement’s negotiation.
As noted in the TEEB report, “wide participation in decisions relating to PES design and
implementation can help ensure transparency and acceptance and to avoid the covert
privatization of common resources” (TEEB). Forest stakeholder analysis could help guide
negotiations towards an agreement which is socially and politically acceptable as well as
institutionally feasible. (IUCN, 2006).


As forest stakeholders may include the general public, or specific groups within it,
capacity building and appropriate support are needed to ensure that these potentially
weaker-voiced stakeholders are able to participate in negotiations, as successful PES
schemes need a strong commitment by all parties. (TEEB). Advocates or representatives
will be needed to ensure that that changes to forest use are acceptable to them, and bad-
publicity repercussions thereby minimized. (IUCN, 2006, p10).




The Value of Forests32


Forest PES schemes are easier to implement where there is equal bargaining power
between stakeholders, especially the service providers and the beneficiaries. “This can
affect who is included in the scheme, the way the money is shared, the rate of payment
and the conditions set for service provisions and access” (TEEB).


As a result of this, completing a forestry PES deal may take a long time. To
complete negotiations successfully all parties need to understand each other’s
interests, assets, capacities and powers. Throughout the negotiations, “the aim
should be to form an agreement that specifies the design and rules for operating
a payment scheme, which is effective, efficient, enforceable, transparent, equitable
and sustainable” (IUCN, 2006, PAY, p.  8). Given the strong emotional attachment
many regions have to their forests, early involvement of the right parties must be
ensured, with a mutually acceptable intermediary as facilitator, for example a well-
respected local NGO with a track record in forestry, or a community group or trusted
government agency.


4.5 Monitoring, enforcement and compliance


All of the forestry PES examples in this document involve long time scales (in some
cases, decades) or even permanent change in use. Therefore effective monitoring and
enforcement is necessary to ensure the continued functioning of the PES scheme, the
delivery of the intended service and its measurement. Payments need to be clearly linked
to service provision and should be withdrawn if users of the forest resource abandon
management practices associated with the service. Monitoring data of the services at
the site can help improve the targeting of payments (TEEB).


How compliance will be determined and monitored needs to be decided in advance.
For instance, if compliance is assessed through field inspections of forest conditions,


Governance Structure
● National/regional/local government/agencies
● Multi-actor organisations eg watershed authorities
● Committees eg including gov’t, NGOs, private sector etc


Ensure transparency and impartiality


Financing and payment Mechanism
● direct public payments
● direct private payments


(eg raised by % free on water rates)
● tax incentives
● voluntary markets (eg organic)
● certification programs (eg labels)
● etc


Beneficiaries


Mostly public sector (national/
regional/local government,
international bodies etc)
Private sector (usually at local
level)
Citizens / consumers
(via NGOs, public or private
sector)


Actor “providing”
service


(eg land user)


Single famers /
associations


Forestry owners /
workers


Communities


Figure 4: PES stakeholders and their interactions


Source: Adapted from Pagiola 2003, TEEB for national and international policy makers. Chapter 5, p. 10




Ecosystem services at the policy level: enabling conditions 33


the methods and procedures used, and access for the institutions involved, need to be
determined. Self-monitoring and monitoring by service sellers and buyers using agreed
procedures is also an option but, whatever the approach, it is crucial to clearly delineate
responsibilities for providing compliance and agree on sanctions in the event of non-
compliance (IUCN, 2006, PAY, p.9). As many of forestry PES schemes involve vast areas of
land, agreements on sampling and degree of non-compliance or delivery failure will also
have to be agreed.


Control systems are an essential part of any PES scheme. Where these are already in
place, for example to promote sustainable forest management or agro-environmental
schemes, establishing a PES can be easy. However, this is rarely the case and the
establishment of new control systems is often required, usually adapted from already
existing institutions and structures (Vatn, 2010) and shaped to the PES scheme (Corbera
et al., 2007; Primmer et al., 2010).


The effectiveness of forestry PES schemes is closely tied to the regulatory base and
enforcement process. The challenge is to work out how much forest owners might be
expected to undertake activities at their own expense and how much more they might
be willing to do with the support of a PES. This needs to take into account the allocation
of environmental rights and duties which may vary widely between different regions
and countries. For instance, where downstream populations assert a right to clean water,
it may be considered that upstream landowners, such as forest owners and managers,
should bear the cost of reducing pollution. On the other hand, if landowners enjoy


Fotalia, 2014




The Value of Forests34


unencumbered rights to manage their land as they see fit, it may be the beneficiaries
of the water services who have to bear the burden of paying them to modify their
practices (TEEB). TEEB states that “PES should ideally be used to reward good resource
management practices that go beyond legal requirements or customary norms.”
(TEEB). In the context of forest owners, it is important to understand the management
responsibilities which are already part of the forest management plan, so that PES is
used only where conservation and the sustainable management of land go beyond
obligations stipulated by law.


An example of the type of monitoring framework which needs to be in place for
PES scheme is the UK Woodland Carbon Code, instituted by the Forestry Commission
of Great Britain. Accreditation systems of this type do not create PES in and of
themselves, but are part of the monitoring/enforcement/compliance system which
needs to be in place for PES schemes, especially ‘cap and trade’ ones, to attract
serious investment.


4.6 Permanence and avoiding negative impacts


Permanence refers to the provision of an ecosystem service over the long term. This
may be undermined by unforeseen events such as fires, hurricanes and the invasion of
alien species, or illegal logging. These factors should be taken into account in the PES
conservation contract (OECD, 2010, p.52). In this context, climate change adaptation
strategies are crucial to ensure the continued provision of PES.


Maximizing the provision of one ecosystem service may have negative impacts on
the provision of others, in which case trade-offs will be involved (TEEB). One example
of such a trade-off would be the encouragement of a non-indigenous species for rapid
carbon sequestration at the expense of other species with higher biodiversity values.
Normally this would only be an issue if changes in ecosystem services provision occur


Example 13: The Forestry Commission of Great Britain Woodland Carbon Code


The Woodland Carbon Code is a voluntary code, which is designed to provide
reassurance to investors in woodland creation for purposes of carbon sequestration. A
number of British companies, including The Green Insurance Company and Marks and
Spencer have invested in creation of new woodland, as a result of the Code.


Landowners registered agree to provide independent verification of responsible
management of forests, and estimates of carbon sequestration, as well as meeting other
criteria. Full details of projects are submitted to the Forestry Commission with the above
information as well as long-term plans. In return, the project is registered and thereby its
attractiveness to investment increased.


The main focus on the code is on woodland creation, with the additional benefits to
biodiversity, recreation, timber and fuel production, soil and water protection and so on.


http://www.forestry.gov.uk/forestry/INFD-863FFL




Ecosystem services at the policy level: enabling conditions 35


outside the established PES monitoring and accounting framework, therefore, if the risk
is high, the monitoring framework would need to be extended beyond the geographic
boundaries of the PES programme, to be able to introduce measures to address it (OECD,
2010, p.51).


Other negative impacts include ‘leakage’ where a PES scheme relieves pressure on
one ecosystem, only for it to be moved to another. For example, where payments are
made to a forest owner for carbon sequestration, this is of little global use if other forests
are felled to make up the difference. The implication here is that further involvement
with extra stakeholders is needed, bodies outside the current agreement that will be
affected by leakage. It also has strong implications for monitoring to determine if the
demand that the PES scheme ‘thwarts’ is being taken up elsewhere in the region, or,
indeed, in the world. Leaving aside the obvious environmental problems of leakage, it
could also generate bad publicity that might destroy the chances of future schemes,
as it leaves PES schemes open to the accusation that they merely move a problem
elsewhere.


There is a similar problem with the concept of ‘additionality’. If the payment for an
environmental scheme is the sole cause of an environmental benefit, then it is said to
demonstrate additionality. However, forest schemes are notoriously multi-factorial, and it
can be problematic proving that such a benefit came entirely from actions undertaken
by the forest manager/owner as a result of payment, instead of from changes in the law
(especially as changes in environmental law are usually a prerequisite of PES schemes),
changes in practice that the manager/owner may have instituted anyway, or even knock-
on effects from other ecosystems. Once again, the bodies that monitor forest PES schemes
may have to cast their net wide to include similar schemes without benefit of PES that can
be used as ‘control’ studies, to demonstrate additionality has actually taken place.


Additionality is of particular concern in forestry as many landowners look after their
forests wisely and do not view them simply as purely commercial enterprises. In the
United Kingdom, for example, the Forestry Commission has adopted the approach of
combining regulation with education and incentives to encourage good forest practice.
To qualify for incentives for forest management, owners have to accept the minimum
standards laid down in a series of guidelines that cover water, habitats and biodiversity,
and archaeology, for instance. Some forest owners adopt higher standards in their forest
management than the minimum standards enshrined in the various guidelines. Many
other UNECE countries have worked to increase forest-owner awareness of the impact
of their activities on others who benefit from the existence of well-managed forests,
showing how low-cost changes in management practice may yield disproportionately
high benefits to forest stakeholders in terms of conservation and protection of the
woodland habitat. Introduction of a PES scheme when such awareness already exists
risks losing goodwill, and may have the effect of ‘rewarding’ landowners who have not
promoted good practice.




source: VAPO, 2013




What role can PES play in moving towards a green economy? 37


5. WHAT ROLE CAN PES PLAY IN MOVING
TOWARDS A GREEN ECONOMY?


The Action Plan for the Forest Sector of member states in the UNECE region in a
Green Economy (hereafter Action Plan) specifically refers to compensating suppliers for
providing ecosystem services wherever possible, and PES is a possible mechanism for
providing this. According to TEEB, “there is potential to scale up existing PES (from local
initiatives to national coverage), to implement PES in more countries, to make PES more
efficient and to address issues of permanence” (TEEB). The possibilities to apply PES at a
larger scale and the associated benefits for a green economy are further discussed in this
Chapter. The issues for consideration are:


z How expanding PES schemes could lead towards a green economy
z PES as a complement to regulation and other measures
z Political considerations in promoting PES as part of green economy measures


5.1 Expanding PES schemes: towards a green economy


The Action Plan recognizes the forest sector as making a maximal contribution to
human well-being through the supply of ecosystem services, and its necessary role in
creating a green economy. As has been discussed, implementation of PES is one way to
do this, through improving resource management practices beyond the legal minimum,
creating income and sustainable livelihoods for rural (and in some cases, urban) populations.


PES could, for example, provide additional income for sustainable forest management
practices if there is a willingness to pay for a service they provide. This promotes rural
development and ensures that populations maintain their income and livelihoods in
rural areas. PES schemes furthermore help to provide sustainable ecosystem services, as
the payment component introduces the notion of scarcity of the ecosystem service and
encourages its users not to over-use or under-value them.


Scaling up PES schemes would also result in improved, resilient ecosystems. Forest-
related PES schemes reduce forest degradation by providing economic incentives to
maintain forest ecosystems for their essential functions and services. Such schemes
may become increasingly important as the pressure on forests increases due to climate
change impacts such as pests, diseases and natural disasters. Further pressure may come
on wood resources from forests from renewable energy policies, as steep increases
in wood production are required to meet ambitious renewable energy targets. It is
increasingly important, therefore, to promote a debate on what is needed to ensure
that essential forest ecosystem services are available, in addition to their more widely
understood roles in biodiversity conservation and timber production. Discussion of PES
would be an essential part of this debate.




The Value of Forests38


5.2 PES as a complement to regulation and other measures


As a market-based approach, some commentators consider PES to be a more
effective policy tool than government intervention. Although PES schemes may be
viewed as a market solution to environmental problems (e.g. Engel et al., 2008), they
seldom operate as pure free markets, but rather as a mixed market-state-community
management configuration (Vatn, 2010). Others argue that PES can operate unethically
as a hidden subsidy to encourage compliance with existing laws, unfairly burdening
public expenses where schemes are entirely government funded. (TEEB). PES can also
be seen as a mechanism to enforce the “user-pays principle” which is the variation of
the polluter-pays principle calling upon the user of a natural resource to bear the cost of
using that resource (OECD, 1997, Glossary of Environment Statistics).


TEEB argues that PES can be more cost-effective than strict enforcement as well
as more progressive, in particular where benefits are provided beyond minimum legal
requirements. Clearly this depends on the specific national and local circumstances.
Voluntary PES agreements can be particularly promising when regulatory or enforcement
capacity is weak, or where little or no regulatory authority exists (FAO, 2010). Furthermore,
in many cases the buyer has a chance for a public relations gain when they are seen
as championing the environment, which would not have been the case if they merely
complied with legislation.


PES also has the flexibility to secure potential gains in cost-effectiveness when
compared to indirect payments or other regulatory approaches (OECD, 2010; Engel
et al., 2008). Voluntary agreements can be a useful alternative to government rules
and regulations, as they lead to a more inclusive solution through the involvement of
different stakeholders (FAO, 2010).


PES may also work as a temporary measure, motivating new management practices
and technologies, which may possibly become economic in their own right over time
(Johnstone, N. and Bishop, J. 2007, cited in TEEB for national and international policy
makers. Chapter 5, p. 10).


Other voluntary approaches such as certification or labelling may also reward a
landowner who practises sustainable land management above the legal minimum. These
may complement PES or provide an alternative mechanism. In fact there is an ongoing
debate on the extent to which labelling or certification may be considered a PES-type
mechanism. Governments could create conditions that favour certification schemes
through the adoption of appropriate laws and regulations and though independent
certification bodies. These independent bodies are essential to give credibility to ‘chain
of custody schemes’, for example, where goods may be handled by several different
organizations.




What role can PES play in moving towards a green economy? 39


5.3 The Politics of PES


Whilst the foregoing has made the case for the usefulness and application of PES, it
must be acknowledged that this approach does not exist in a vacuum and will need to ‘win
the hearts and minds’ of the governments, private sector and the general public in the
countries in which it is hoped it will be adopted. Other apparently benign environmental
approaches, such as renewable energy for wood, have turned out to be politically
explosive as commentators and eventually populations, have become increasingly
concerned about potential or supposed impacts on land for food production. It would
be unfortunate for similar bad publicity to engulf the idea of PES.


Much could be written on the possibly political/social impact of PES and how it will
be perceived by the public but the foregoing information has implications for the ‘public
relations’ side of PES, for good or ill.


On the plus side, the ‘selling points’ of PES are:


z Public relations boost for companies: being involved in a PES offers a publicity
boost for the companies involved: especially important for sales of products
such as bottled water and Coca-Cola®, where competition is intense. Undoubt-
edly these companies will present themselves as environmental champions, in-
cluding the information in advertising materials and so on. This is a benefit for
the company involved, but it may mean that the reputation of PES may rise or
fall with the reputation of these high-profile companies.


z Easy to understand: Funding for environmental protection in most countries
is done by complex systems of tax, subsidy, penalty and budget. PES makes
a simple link between the use of an environmental service and the payment,
which goes directly to providing it. Any system like this which can be easily
grasped by the public, the media and opinion formers can be immediately seen
to be ‘doing good’ in environmental matters: forests are saved, water supplies
are ensured.


z Raising Awareness: Linked to the above, the easily understood PES arrange-
ments have already been shown to be useful tools in raising awareness about
environmental issues with the general public. Whilst there are examples of this
effect within the UNECE region, the impact on public awareness only seems
to have been measured in a PES programme undertaken in Latin America,
specifically Peru.




The Value of Forests40


These three positives may seem unassailable, but there are three corresponding
negatives which may arise:


Paying for Damage: Whilst the emphasis of PES has always been on improving
the quality and permanence of environmental systems, it would be easy for media
commentators to label the contributions of companies as conscience money, paying
for irreplaceable environmental damage. It will be the job of any future PES scheme
to address and allay such fears which will undoubtedly arise. Trading schemes will be
particularly vulnerable to this criticism.


Seen as Public Relations stunt: one media-friendly aspect of PES projects is that
they are high profile with obvious and immediate gains. This very accessibility leaves
the projects open to accusations of simple good advertising or PR ‘stunts’ for the
company participating in them. Given the previous environmental record of some
private companies currently involved in PES projects, such an accusation could carry
considerable force: that the PES project is mere ‘window dressing’ for an unscrupulous
organization which is perfectly willing to despoil the environment elsewhere. Companies
such as Coca-Cola and Nestlé have previous environmental ‘strikes’ against them of this
kind, and whilst their wish to restore their environmental credibility is admirable, they
may be open to these types of accusations.


Diversion of funds: One of the ‘pluses’ of PES is that the money paid goes straight to
the environmental service provider. It is not gathered as a tax and redistributed across the
economy. This could be seen as a downside, however. It could be that the environmental
service paid in the PES scheme is not the most vulnerable, or most vital, service in the
region, however it will benefit due to its fortunate proximity to an identifiable user. For
example, PES tends to favour environments involved with populated regions rather than,
remote areas which may be under more environmental stress.


Example 14: ECOAN Project, Peru


ECOAN, a respected NGO worked with local communities to improve the quality of
Polyepsis forests, the wood of which had formerly been used as firewood by the local
community. In common with all good PES projects, stakeholders were consulted about
possible solutions, which eventually included the provision of more efficient wood-burning
stoves to the community, reducing the need for firewood.


In addition, a survey about the degree of the community’s environmental awareness
and concern before and after the project found that those parties directly involved in the
process, perhaps unsurprisingly, had more knowledge and commitment and were more
likely to change their actions as a result. Whilst it has been assumed that PES can lead to
greater environmental awareness of this kind, at the time of writing only this project seems
to have measured it.


Cranford, M., Mourato, S. (2011) Community conservation and a two-stage approach
to payments for ecosystem services. Ecological Economics. 71: 89–98




What role can PES play in moving towards a green economy? 41


It is also sometimes argued that PES schemes can be unfair and can provide perverse
incentives where payments go to those who have degraded or threaten to degrade their
land, rather than those already sustainably managing it.


There will be a need for more research and consideration of counters to the above,
plus careful forethought over such issues as to which private partners some PES schemes
may wish to be involved in. These political considerations need to be given just as much
heed as the funding and monitoring resources of a region considering a PES project.


Fotalia, 2014




Fotalia, 2014




Future directions and recommendations 43


6. FUTURE DIRECTIONS AND
RECOMMENDATIONS


All of the foregoing should make clear that forest-based PES schemes are not a
universal solution and do not respond to all needs. It is a complementary tool to legislation,
regulation and democratic accountability. Identifying the tipping point where payment
for a forestry environmental service would be used in preference to environmental
legislation is not an easy task: cost-benefit analysis and political temperature-taking will
be essential, especially given the strong attachment many regions have to their forests.
To operate, forest-based PES schemes nevertheless need appropriate legislative and
institutional frameworks as well as cost effective implementation. Bundling different
services together may help to diminish transaction costs.


As forest use and tenure is usually deeply rooted in a specific region’s culture, it seems
that PES will need a proliferation of different and larger projects rather than universal
adopting of a single model. With this, critical questions will appear that should be
addressed, such as negative impacts on the forest and other environments, permanence
and additionality. Capacity building is also necessary to implement this approach. Special
attention should be paid to securing tenure rights, because land-use is often the basis
for schemes which normally compensate a restriction of land-use (timber production for
example) or finance specific management measures on a specific type of land.


Some successful schemes have been developed from the demand side: where
society and business have been willing to pay for a forest-based environmental service.
In any case, consultations with all relevant stakeholders are critical, with special note
being taken of how far-flung these may be in the case of forest services. Communication
actions should not only be directed at ecosystem providers or buyers; they also should
target decision-makers and the general public because political support is often needed,
especially during the early phases of development. Pilot projects are often a good way to
demonstrate the relevance of PES and show results and, of course, performance should
be monitored in the widest sense, as outlined above, in order to win long-term support
from donors.




The Value of Forests44


6.1 Recommendations


The UNECE Member States should broadly support the development of PES as
a means of achieving some of the goals of the Action Plan. It can aid the successful
promulgation of PES by drawing up a Code of Conduct concerning:


1. When to Use: Where its use is appropriate, and where other methods of forest/
environmental protection would be more effective.


Method: Commissioning research on the topic, building on this general paper and
other UNECE/UN/FAO resources to come up with a clear questionnaire/guidance
document.


2. Valuation: Guidelines  on valuation of PES projects to aid stakeholders in
negotiating a fair settlement.


Method: Extending the materials in the Appendix to provide a set of guidelines
regarding appropriate valuation methods for different situations and making use
of the work currently developed by Forest Europe on Valuation of Forest Ecosystem
Services.


3. Monitoring: Guidelines on methods for monitoring compliance, leakage and
additionality in PES schemes, with information on which may be appropriate
for different schemes.


Method: Drawing on Forestry and Timber Section expertise concerning monitoring
of Forest Ecosystem Protection schemes.


4. Stakeholders: A range of techniques for ensuring the involvement of
stakeholders, especially those which may not otherwise be heard (people on
low-income, people indigenous to forest areas, the wider public).  There should
also be guidance on the appropriate level of effort that should be expended on
this.


Method: A survey of methods used in successful PES schemes and elsewhere.


5. In addition, a virtual expert network should be established and supported by
a virtual library of documents, valuation methods, case studies and projects on PES and
forests, with an up to date list of contacts.




References 45


7. REFERENCES
Advisory Group on Finance Collaborative Partnership on Forests. 2012. 2012 Study


on Forest Financing.


Appleton, A.F., 2002. How New York City Used an Ecosystem Services Strategy
Carried out Through an Urban-Rural Partnership to Preserve the Pristine Quality of Its
Drinking Water and Save Billions of Dollars and What Lessons It Teaches about Using
Ecosystem Services. November 2002. New York City. Paper presented at The Katoomba
Conference / Tokyo, November 2002. Available at: http://assets.panda.org/downloads/
pesnewyorkappetlon.pdf.


Bugalho M. N. 2012. Using Payment for Ecosystem Services to promote the
responsible use of Mediterranean cork oak woodlands. ThinkForest Seminar, European
Parliament, Brussels, 27th November 2012


Corbera, E., Soberianis, C.G., Brown, K., 2009. Institutional dimensions of payments
for ecosystem services: an analysis of Mexico’s carbon forestry programme. Ecological
Economics 68, 743–761.


Convention on Biological Diversity, 2010. Global Biodiversity Outlook 3, SCBD –
Secretariat of the Convention on Biological Diversity, Montréal.


Convention on Biological Diversity, 2007. Technical Series 28 “An exploration of
tools and methodologies for valuation of biodiversity and biodiversity resources and
functions. Available at: http://www.cbd.int/doc/publications/cbd-ts-28.pdf


Cranford, M., Mourato, S. (2011) Community conservation and a two-stage approach
to payments for ecosystem services. Ecological Economics. 71: 89–98


Cuperus et al. 2001. Env.Man. 27(1): 75-89.


Engel, S., Pagiola, S. & Wunder, S., 2008. Designing payments for environmental services
in theory and practice: An overview of the issues. Ecological economics 65: 663-674.


FAO, 2010. Payments for environmental services within the context of the green
economy, September 2010, available at: http://www.fao.org/docrep/013/al922e/
al922e00.pdf.


FAO, 2005. Forest Resource Assessment.


Forest Europe. 2012. Draft Minutes of the Kickoff meeting. 28 June 2012, Madrid, Spain
http://www.foresteurope.org/sites/default/files/Minutes_KickoffMeeting_EGVFES.pdf


Forestry Commission Great Britain 2012. The Carbon Code. http://www.forestry.gov.
uk/forestry/INFD-863FFL




The Value of Forests46


Gutman, P., 2006. ‘PES: a WWF Perspective’. Presentation given at the Workshop on
Conservation Finance, Global Biodiversity Forum, Curitiba, Brazil, 25 March 2006. http//
assets.panda.org/downloads/peswwfmpo.pdf accessed 11 Nov. 2009.


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Fotalia, 2014




51Annex


Annex 1: Overview of valuation methods


Economic valuation is based on the concept of total economic value. Total economic
value can be looked at from two angles: use values and non-use values (see Table 1
below).


Table 1: Possible types of economic value commonly identified in the literature and
links to the classification of forest goods and services


Source: Standing Forestry Committee ad hoc Working Group on Valuation and Compensation Methods for Non-wood goods
and services, November 2008: http://ec.europa.eu/agriculture/fore/publi/sfc_wgi_final_report_112008_en.pdf).


Use value Non-use value


Direct use
value


Indirect use
value


Option value Existence
value


Bequest value


Extractive,
consumptive
or structural
value, mainly
derived
from goods
that can be
extracted,
consumed
or enjoyed
directly


Services
that the
environment
provides


Value attached
to maintaining
the possibility
of obtaining
benefits from
ecosystem
goods and
services at
a later date,
including from
ecosystem
services that
appear to
have a low
value now, but
could have a
much higher
value in future
because of new
information and
knowledge


Value people
derive
from the
knowledge
that
something
exists, even
if they never
plan to use it


Value derived
from the
desire to
pass on
ecosystems
to future
generations


Material
goods
Cultural and
amenity
services


Regulating
services
Supporting
services


All services All services Supporting
services




The Value of Forests52


Use values can be divided into direct use values, indirect use values and option values.


Direct use values can be derived from the actual price paid for an ecosystem service,
for example, timber. Economic valuation is thus often quite simply based on adding
up the many services that have direct-use and market prices (timber, food, fuel wood,
fishing etc.). In addition to commercial value, direct use can also involve non-commercial
activities, such as subsistence livelihoods.


Indirect use values are related to regulating and supporting ecosystem services, such
as of water cycling, nutrient cycling, filtration of pollutants, pollination, etc. They include
“indirect benefits derived from ecosystem services related to the maintenance and protection
of natural and human systems1”, such as the maintenance of water quality and flow, the
maintenance of forest biodiversity, recreation, aesthetic appreciation and spiritual values.


Option value is the value individuals place on retaining the possibility of benefiting
from ecosystems in the future. This includes ecosystem services that appear to have a
low value now, but could have a much higher value in the future, possibly because of
new information or knowledge. It could include the value of retaining biodiversity to
keep open the future possibility of identifying medicinal plants for pharmaceutical uses,
for instance.


Non-use values can be subdivided into existence values and bequest values.


Existence values refer to individuals’ willingness to pay to ensure the continued
existence of a given ecosystem. It is the value that people derive from the fact that a
certain forest or watershed exists, even if they do not use it directly.


Bequest value is the value derived from the desire to pass on the ecosystem intact
to future generations, leaving them the option to use the ecosystem in accordance with
their own preferences.


With the aim of calculating the total economic value of ecosystem services,
information is collected on individuals’ preferences as seen in their market transactions
relating directly to the ecosystem service (the direct market valuation approach). If
such information is not available, price information can be derived from other market
transactions indirectly associated with the service, or goods, to be valued (the revealed
preference approach). Where either direct or indirect price information is not available,
hypothetical markets can be created to elicit values (the stated preference approach).
Below is a brief synthesis of these different approaches which are presented more fully in
the Economics of Ecosystems and Biodiversity (TEEB) initiative2.


1 UNECE 2007, p. 26
2 More information on the different approaches, their application and their limitations can be found in the TEEB report “Ecological and


Economic Foundations” Chapter 5 “The Economics of Valuing Ecosystem Services and Biodiversity.” TEEB also presents examples of
the application of the different valuation approaches to forests and wetlands (Table 5.7, pp. 207-208, Table 5.8 pp. 210-211, “Matrix
Table for Wetland and Forest Ecosystems” (Annex Table A21a)) and an overview of the monetary value of ecosystems, e.g. by coastal
and inland wetlands (pp. 380, 382), lakes and rivers (p. 384), temperate and boreal forests (p. 388) and woodlands (p. 391).




53Annex


Direct market valuation approaches comprise the following:


z Market price-based approaches, which are often used in the case of provision-
ing services such as of timber or water.


z Cost-based approaches, which are essentially an estimation of the costs that
would be incurred if ecosystem service benefits needed to be substituted
through artificial means. This could comprise the avoided cost method (the
cost that would have been incurred in the absence of the ecosystem service,
for instance, the value of a flood control service is derived from the estimated
damage if flooding did occur); the replacement cost method (the cost incurred
in replacing the ecosystem service with artificial technologies, for instance, es-
timating the value of groundwater recharge from the cost of obtaining water
from an alternative source); and, the mitigation or restoration cost method (the
cost of mitigating the effects of the loss of ecosystem services, for instance, the
cost of installing flood defences in the absence of wetland areas, which would
have acted as flood-water receptors).


z Production function-based approaches, which estimate how much a given
ecosystem contributes to the delivery of another commodity or service traded
on an existing market, for instance, trees in agro-forestry systems act as wind-
breaks, resulting in raised crop productivity.


Revealed preference approaches are based on the observation of the choices
of individuals in existing markets that are related to the ecosystem service that is the
subject of the valuation. These comprise the following two methods:


z Travel cost method (TC), based on the logic that recreational experiences are
associated with a cost (the direct expenses and the opportunity cost3).This is
mostly relevant for determining recreational values related to biodiversity and
ecosystem services.


z Hedonic pricing (HP) approach, which uses information on what individuals’ are
willing to pay for an environmental attribute. For instance, the higher cost of
property in scenic, forested landscapes can be a proxy for assessing the benefits
of a certain recreation area. The value of a change in biodiversity or ecosys-
tem-based quality or service, such as clean air or aesthetic views is reflected in
the change of the price (value) of the property.


When undertaking revealed preference valuation studies, it is important to assess
whether surrogate markets exist, before deciding which of the two methods should be
used. Revealed preference approaches need quality data on transactions since market
imperfections and policy failures can distort the estimated monetary value. Revealed
preference approaches therefore tend to be expensive and time-consuming.


3 Opportunity cost here is what the individual would have been doing with the time, if not traveling.




The Value of Forests54


Stated preference valuation approaches, also referred to as “simulated valuation”
simulate a market and the demand for ecosystem services through surveys of hypothetical
changes in the provision of the ecosystem service. The three main techniques are:


z Contingent valuation, which uses questionnaires to ask people how much they
would be willing to pay to increase or enhance the provision of the ecosystem
service, or inversely, how much they would be willing to accept in compen-
sation for its loss or degradation. The approach, using either an individual`s
willingness to pay (WTP) or an individuals willingness-to-accept (WTA), can use
a range of survey formats to generate measurable pseudo-market values for
non-market resources. A questionnaire might, for example, ask respondents to
state their willingness to pay towards the cost of increasing the water quality in
a river or lake, to the extent that they might then be able to enjoy swimming
or fishing in it.


z Choice modeling, which attempts to model an individual’s decision-making
process by asking them to choose between various options (choice experi-
ments), to rank their preference for different things (contingent ranking) and to
choose between two different things (pair comparison).


z Group valuation, which combines stated preference techniques with elements
from political science.


Stated preference approaches are often used to estimate non-use values. The use of
hypothetical markets has raised questions with regard to the validity of estimates. Often
it is also difficult for the respondents to give accurate responses, as they have not always
fully thought out the issues.4


Valuation methods are usually site specific. It is important to carefully assess
their costs and benefits and to take into account the fact that many of the values are
proxy values, that is, valuations based upon the price of related goods or services or
hypothetical situations5.


A different valuation technique, which is not based on economic analysis is multi-
criteria analysis (MCA). In cases where multiple values of ecosystem services need to
be measured and compared, the use of MCA has been found to be a fruitful approach.
MCA allows formal integration of multiple values, after each of them has been assigned
a relative weight. Its output is a raking of preferences that serves as a basis for taking
decisions amongst different options.


Multiple use of forests is an illustrative example of successful application of MCA6. This
approach has the potential to be broadened to cover ecosystem services. For example, a
study of the estimates of forest benefits in Mediterranean and sub-Mediterranean areas


4 See TEEB Ecological and Economic Foundations, pp. 203-20
5 Standing Forestry Committee ad hoc Working Group report 2008
6 Kangas et al. 2008; Leskinen & Kangas 2005




55Annex


(total economic value) shows that the value of wood forest products, such as timber,
accounts for only a small portion of the total forest benefits and that other benefits such
as watershed protection are much more important. Recreation is also an important value
in the northern Mediterranean.7


In each context, the basis for the remuneration for the ecosystem service will need
to be assessed, with the choice of the most suitable method but also taking account of
the economic and socio-economic preferences and conditions of the targeted buyers of
the ecosystem services. Affordability considerations should be kept in mind in particular
since ecosystem services are often to be conserved and enhanced in rural, often poorer
areas. In some cases, there may not be the need to resort to complex valuation methods.
The cost of forest management to maintain a certain ecosystem service could, for
example, be a proxy for the remuneration to the forest owner. It will, however, in most
cases be difficult to differentiate the cost associated with each service from the expenses
incurred by forest management more generally.


The integration of biodiversity and ecosystem values into economic system and
national accounting frameworks (as stipulated by TEEB) are challenging projects, which
some governments have started to embark on. Developing an understanding as well
as definitions and measures of integrated land use management and planning is an
important first step in applying PES across the landscape, covering different ecosystems.


7 TEEB Ecological and Economic Foundations, pp. 389-390




The Value of Forests56


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S/
BD


fis
h


M
, H


M
ad


se
n


et
a


l.
20


10


Ca
na


da
W


et
la


nd
C


om
pe


ns
at


io
n


Ag
re


em
en


t B
et


w
ee


n
M


an
ito


ba
's


In
fr


as
tr


uc
tu


re


an
d


Tr
an


sp
or


ta
tio


n
Ag


en
cy



an


d
M


an
ito


ba
H


ab
ita


t
H


er
ita


ge
C


or
po


ra
tio


n


PF
S/


BD
w


at
er


sh
ed



se


rv
ic


es
M


M
ad


se
n


et
a


l.
20


10


Ca
na


da
Pr


ov
in


ci
al


W
et


la
nd



Co


m
pe


ns
at


io
n


pr
og


ra
m


(A
lb


er
ta


, N
ew


B
ru


ns
w


ic
k,



Pr


in
ce


E
dw


ar
d


Is
la


nd
, N


ov
a


Sc
ot


ia
)


PF
S/


BD
w


at
er


sh
ed


se
rv


ic
es


M
,H


M
ad


se
n


et
a


l.
20


10




The Value of Forests58


U
N


EC
E


co
un


tr
y/


re
gi


on


N
am


e
of


P
ES


Ty
pe



of


P
ES



sc


he
m


e:


Co
m


pe
ns


at
ed


/
im


pr
ov


ed


ec
os


ys
te


m
se


rv
ic


es


or
e


nv
iro


nm
en


ta
l


va
lu


es


G
ov


er
na


nc
e


st
ru


ct
ur


e
Co


m
pe


ns
at


io
n


m
ea


ns
Re


fe
re


nc
e


Ca
na


da
Br


iti
sh


C
ol


um
bi


a'
s


W
et


la
nd


s
M


iti
ga


tio
n


an
d


Co
m


pe
ns


at
io


n
St


ra
te


gy
(in


d
ev


el
op


m
en


t)


PF
S/


BD
bi


od
iv


er
si


ty
,


w
at


er
sh


ed


se
rv


ic
es


-
M


ad
se


n
et


a
l.


20
10


EU
H


ab
ita


ts
D


ire
ct


iv
e


(b
as


e
of


N
at


ur
a2


00
0)


PF
S/


BD
bi


od
iv


er
si


ty
H


di
re


ct


co
m


pe
ns


at
io


n,


un
ifo


rm


pa
ym


en
ts



fo


r g
iv


en


m
an


ag
em


en
t


pr
ac


tic
es


ht
tp


://
ec


.e
ur


op
a.


eu
/


en
vi


ro
nm


en
t/


na
tu


re
/le


gi
sl


at
io


n/
ha


bi
ta


ts
di


re
ct


iv
e/


in
de


x_
en


.h
tm


;
ht


tp
://


eu
r-


le
x.


eu
ro


pa
.e


u/


EU
Bi


rd
s


D
ire


ct
iv


e
(b


as
e


of


N
at


ur
a2


00
0)


PF
S/


BD
bi


od
iv


er
si


ty
H


di
re


ct


co
m


pe
ns


at
io


n,


un
ifo


rm


pa
ym


en
ts



fo


r g
iv


en


m
an


ag
em


en
t


pr
ac


tic
es


ht
tp


://
ec


.e
ur


op
a.


eu
/e


nv
iro


nm
en


t/
na


tu
re


/le
gi


sl
at


io
n/


bi
rd


sd
ire


ct
iv


e/
in


de
x_


en
.h


tm




59Annex


U
N


EC
E


co
un


tr
y/


re
gi


on


N
am


e
of


P
ES


Ty
pe



of


P
ES



sc


he
m


e:


Co
m


pe
ns


at
ed


/
im


pr
ov


ed


ec
os


ys
te


m
se


rv
ic


es


or
e


nv
iro


nm
en


ta
l


va
lu


es


G
ov


er
na


nc
e


st
ru


ct
ur


e
Co


m
pe


ns
at


io
n


m
ea


ns
Re


fe
re


nc
e


EU
En


vi
ro


nm
en


ta
l L


ia
bi


lit
y


D
ire


ct
iv


e
-


H
ht


tp
://


eu
r-


le
x.


eu
ro


pa
.e


u/


EU
H


ab
ita


t B
an


ki
ng


(in
d


ev
el


op
m


en
t)


PF
S/


BD
bi


od
iv


er
si


ty
M


, H
(?


)
bi


od
iv


er
si


ty
a


nd


ha
bi


ta
t b


an
ki


ng
M


ad
se


n
et


a
l.


20
10


Fi
nl


an
d


Fo
re


st
B


io
di


ve
rs


ity


Pr
og


ra
m


m
e


fo
r S


ou
th


er
n


Fi
nl


an
d


M
ET


SO
I


an
d


M
ET


SO
II


PF
S/


BD
bi


od
iv


er
si


ty


in
tr


in
si


c
va


lu
e,



de


ad
w


oo
d,


o
ld


-
gr


ow
th


c
ar


bo
n


st
or


ag
es


M
,H


, C
m


au
ct


io
n,



pa


ym
en


t,
di


re
ct



co


m
pe


ns
at


io
n


et
c.


M
ET


SO
I


w
eb



pa


ge
s1


1 ;
M


ET
SO


II
w


eb


pa
ge


s1
2 ;


Ex
am


pl
e


1


Fi
nl


an
d


Pr
ed


at
or


c
om


pe
ns


at
io


n
PF


S/
BD


G
ol


de
n


ea
gl


e
H


di
re


ct


co
m


pe
ns


at
io


n


Fi
nl


an
d


Fi
nn


is
h


N
at


ur
al


H
er


ita
ge



Fo


un
da


tio
n


PF
S/


BD
bi


od
iv


er
si


ty


in
tr


in
si


c
va


lu
e,


o
ld


-
gr


ow
th


fo
re


st
s,


cu
ltu


ra
l s


er
vi


ce
s


M
, C


m
se


lf-
fin


an
ci


ng


w
ith


d
on


at
io


ns
FN


H
F


w
eb


p
ag


es
13


Fr
an


ce
N


es
tle



V


itt
el


PW
S


w
at


er
q


ua
lit


y,


w
at


er
re


so
ur


ce
s


M
pa


ym
en


ts
v


ia


ne
go


tia
tio


ns
Za


nd
er


se
n


et
a


l.
20


09
; S


ta
nt


on
e


t a
l.


20
10


; O
EC


D
2


01
0;



Ex


am
pl


e
4




The Value of Forests60


U
N


EC
E


co
un


tr
y/


re
gi


on


N
am


e
of


P
ES


Ty
pe



of


P
ES



sc


he
m


e:


Co
m


pe
ns


at
ed


/
im


pr
ov


ed


ec
os


ys
te


m
se


rv
ic


es


or
e


nv
iro


nm
en


ta
l


va
lu


es


G
ov


er
na


nc
e


st
ru


ct
ur


e
Co


m
pe


ns
at


io
n


m
ea


ns
Re


fe
re


nc
e


Fr
an


ce
D


an
on


e


Ev
ia


n
PW


S
w


at
er


q
ua


lit
y,



w


at
er


re
so


ur
ce


s,
w


at
er


sh
ed



se


rv
ic


es


M
pa


ym
en


ts
v


ia


ne
go


tia
tio


ns
Ev


ia
n


w
eb


p
ag


es
14


;
St


an
to


n
et


a
l.


20
10


Fr
an


ce
Fr


en
ch


B
io


di
ve


rs
ity



Ba


nk
in


g
- C


D
C


Bi
od


iv
er


si



(in


d
ev


el
op


m
en


t)


PF
S/


BD
bi


od
iv


er
si


ty
M


bi
od


iv
er


si
ty



ba


nk
in


g
M


ad
se


n
et


a
l.


20
10


G
eo


rg
ia


Sa
m


eg
re


lo
H


az
el


nu
t


aff
or


es
ta


tio
n


PF
S/


BD
,


PW
S


so
il,


la
nd



an


d
w


at
er



en


ha
nc


em
en


t
vi


a
ca


rb
on



se


qu
es


tr
at


io
n


M
tr


ad
in


g
sc


he
m


e
w


w
w


.c
ar


bo
nfi


x.
in


fo
/H


A
P;


E
xa


m
pl


e
8


G
er


m
an


y
G


er
m


an
y'


s
Im


pa
ct



M


iti
ga


tio
n


Re
gu


la
tio


ns


(E
in


gr
iff


sr
eg


el
un


g)


PF
S/


BD
H


se
ve


ra
l


M
ad


se
n


et
a


l.
20


10


G
er


m
an


y
N


or
th


R
hi


ne
-W


et
ph


al
ia



Pi


lo
t T


en
de


r
PF


S/
BD


gr
as


sl
an


d
co


ns
er


va
tio


n
M


pa
ym


en
ts


p
er



un


it
ar


ea
c


os
t,


vi
a


au
ct


io
n


O
EC


D
2


01
0




61Annex


U
N


EC
E


co
un


tr
y/


re
gi


on


N
am


e
of


P
ES


Ty
pe



of


P
ES



sc


he
m


e:


Co
m


pe
ns


at
ed


/
im


pr
ov


ed


ec
os


ys
te


m
se


rv
ic


es


or
e


nv
iro


nm
en


ta
l


va
lu


es


G
ov


er
na


nc
e


st
ru


ct
ur


e
Co


m
pe


ns
at


io
n


m
ea


ns
Re


fe
re


nc
e


G
er


m
an


y
Lo


w
er


S
ax


on
y


(N
ie


de
rs


ac
hs


en
, O


O
W


V
)


PW
S


w
at


er
&



w


at
er


sh
ed


s
H


, (
M


)
pa


ym
en


ts
o


f
co


m
pe


ns
at


io
n,



pa


ym
en


ts


on
v


ol
un


ta
ry



ag


re
em


en
ts


,
la


nd
fo


r
aff


or
es


ta
tio


n


IU
CN


2
00


9


G
er


m
an


y
Bi


on
ad


e
G


m
bH


/
Tr


in
kw


as
se


rw
al


d
N


G
O


PW
S


w
at


er
q


ua
lit


y
vi


a
fo


re
st


h
ab


ita
t


co
ns


er
va


tio
n


M
pr


iv
at


e
in


co
m


e
fr


om
s


ol
d


w
at


er
Ex


am
pl


e
6;


IU
CN



20


09


G
er


m
an


y
Ka


uf
er


in
g


PW
S


gr
ou


nd


w
at


er
q


ua
lit


y,


de
cr


ea
si


ng


ni
tr


at
es


b
y


in
cr


ea
si


ng


de
ci


du
ou


s
fo


re
st


s


H
, M


pa
ym


en
ts



(in


ce
nt


iv
es


) f
or



go


od
fo


re
st



m


an
ag


em
en


t
pr


ac
tic


es


IU
CN


2
00


9


G
re


ec
e


A
m


fis
sa


PF
S/


BD
la


nd
sc


ap
e


qu
al


ity
M


, H
un


ifo
rm



pa


ym
en


t
fo


r g
iv


en


m
an


ag
em


en
t


pr
ac


tic
es


, p
er



un


it
ar


ea


O
EC


D
2


01
0;


U
N


EC
E


20
05




The Value of Forests62


U
N


EC
E


co
un


tr
y/


re
gi


on


N
am


e
of


P
ES


Ty
pe



of


P
ES



sc


he
m


e:


Co
m


pe
ns


at
ed


/
im


pr
ov


ed


ec
os


ys
te


m
se


rv
ic


es


or
e


nv
iro


nm
en


ta
l


va
lu


es


G
ov


er
na


nc
e


st
ru


ct
ur


e
Co


m
pe


ns
at


io
n


m
ea


ns
Re


fe
re


nc
e


It
al


y
Co


m
pe


ns
at


in
g


th
e


la
nd


ow
ne


rs
in


(A
lp


in
e)



ca


tc
hm


en
ts


u
se


fo
r h


yd
ro


-
po


w
er


p
ro


du
ct


io
n


PW
S


co
m


pe
ns


at
in


g
w


at
er


sh
ed



se


rv
ic


es
o


f
hy


dr
op


ow
er



pr


od
uc


tio
n


H
, M


co
m


pe
ns


at
io


n
fo


r l
an


do
w


ne
rs


ht
tp


://
w


w
w


.
fe


de
rb


im
.it


/


It
al


y
N


at
io


na
l L


aw
o


n
W


at
er



re


gu
la


tio
n


PW
S


dr
in


ki
ng


w
at


er
H


co
m


pe
ns


at
io


n
fo


r m
ai


nt
en


an
ce



an


d
go


od
la


nd
-


us
e


pr
ac


tic
es


M
ad


se
n


et
a


l.
20


10


It
al


y
Ro


m
ag


na
A


cq
ue


A
ge


nc
y


(c
as


e)
PW


S
pr


om
ot


in
g


so
un


d
fo


re
st



m


an
ag


em
en


t
fo


r w
at


er
sh


ed


se
rv


ic
es


M
(?


)
ht


tp
://


w
w


w
.


ro
m


ag
na


cq
ue


.
it/


fo
nt


i_
id


ric
he


_
rid


ra
co


li-
d-


78
.h


tm
l


Ir
el


an
d


N
ei


gh
bo


ur
W


oo
d


Sc
he


m
e


PF
S/


BD
re


cr
ea


tio
n


H
, C


m
SF


C
ad


h
oc


W
G



20


08
; t


hi
s


re
po


rt


pa
ge


1
4


Ky
rg


yz
st


an
La


ke
Is


sy
k-


Ku
l


PW
S,



PF


S/
BD


w
at


er
q


ua
lit


y,


se
ve


ra
l f


or
es


t
se


rv
ic


es


M
, C


m
pa


ym
en


ts
,


se
ve


ra
l


w
w


w
.u


ne
ce


.o
rg


;
th


is
re


po
rt


p
ag


e
21





63Annex


U
N


EC
E


co
un


tr
y/


re
gi


on


N
am


e
of


P
ES


Ty
pe



of


P
ES



sc


he
m


e:


Co
m


pe
ns


at
ed


/
im


pr
ov


ed


ec
os


ys
te


m
se


rv
ic


es


or
e


nv
iro


nm
en


ta
l


va
lu


es


G
ov


er
na


nc
e


st
ru


ct
ur


e
Co


m
pe


ns
at


io
n


m
ea


ns
Re


fe
re


nc
e


La
tv


ia
G


am
e


w
at


ch
in


g
tr


ai
ls


PF
S/


BD
fa


un
a,


fl
or


a,


es
pe


ci
al


ly
g


am
e


M
en


tr
an


ce
fe


es
SF


C
ad


h
oc


W
G



20


08
; t


hi
s


re
po


rt


pa
ge


1
4


M
ol


do
va


So
il


Co
ns


er
va


tio
n


Pr
oj


ec
t


PF
S/


BD
se


ve
ra


l f
or


es
t


se
rv


ic
es


v
ia



aff


or
es


ta
tio


n/
re


fo
re


st
at


io
,


ca
rb


on


se
qu


es
tr


at
io


n


M
, H


, C
m


tr
ad


in
g


sc
he


m
e,



CD


M
w


w
w


.c
dm


.u
nf


cc
c.


in
t;


Ex
am


pl
e


7


N
et


he
rl


an
ds


In
te


gr
at


ed
W


at
er


R
es


ou
rc


e
M


an
ag


em
en


t
PW


S
w


at
er


sh
ed



se


rv
ic


es
H


U
N


EC
E


20
05


N
et


he
rl


an
ds


La
nd


sc
ap


e
Fu


nd
PF


S/
BD


fo
re


st
s


er
vi


ce
s


H
, C


m
su


bs
id


ie
s


U
N


EC
E


20
05


N
et


he
rl


an
ds


Fa
rm


in
g


fo
r N


at
ur


e
Pi


lo
t


pr
og


ra
m


W
Q


TP
w


at
er


q
ua


lit
y


M
, C


m
(?


)
St


an
to


n
et


a
l.


20
10


;
FN


P
pr


og
ra


m
e'


s
w


eb
p


ag
es


15


N
et


he
rl


an
ds


Ec
ol


og
ic


al
C


om
pe


ns
at


io
n


in
D


ut
ch


H
ig


hw
ay


P
la


nn
in


g
PF


S/
BD


bi
od


iv
er


si
ty


M
co


m
pe


ns
at


or
y


co
ns


er
va


tio
n


el
se


w
he


re


Cu
pe


ru
s


et
a


l.
20


01




The Value of Forests64


U
N


EC
E


co
un


tr
y/


re
gi


on


N
am


e
of


P
ES


Ty
pe



of


P
ES



sc


he
m


e:


Co
m


pe
ns


at
ed


/
im


pr
ov


ed


ec
os


ys
te


m
se


rv
ic


es


or
e


nv
iro


nm
en


ta
l


va
lu


es


G
ov


er
na


nc
e


st
ru


ct
ur


e
Co


m
pe


ns
at


io
n


m
ea


ns
Re


fe
re


nc
e


N
et


he
rl


an
ds


Fr
ie


nd
s


of
th


e
La


nd
sc


ap
e


(in
d


ev
el


op
m


en
t)


PF
S/


BD
la


nd
sc


ap
e


M
, C


m
M


ad
se


n
et


a
l.


20
10


N
et


he
rl


an
ds


W
ad


de
n


Se
a


Fu
nd


(in
d


ev
el


op
m


en
t)


PF
S/


BD
re


cr
ea


tio
n,


w
at


er


qu
al


ity
M


ad
se


n
et


a
l.


20
10


N
or


w
ay


Co
m


pe
ns


at
io


n
fo


r
co


ns
er


va
tio


n
of


fo
re


st
ry


PF
S/


BD
fo


re
st


s
er


vi
ce


s,
bi


od
iv


er
si


ty
H


, C
m


(?
)


co
m


pe
ns


at
io


n
fo


r v
ol


un
ta


ry


fo
re


st


co
ns


er
va


tio
n


Te
m


aN
or


d
20


09
:5


71
,


N
or


di
c


Co
un


ci
l


of
M


in
is


te
rs


,
Co


pe
nh


ag
en


.


Po
la


nd
Po


lis
h


N
at


io
na


l F
un


d
fo


r
En


vi
ro


nm
en


t P
ro


te
ct


io
n


&
W


at
er


M
an


ag
em


en
t


(N
FO


SI
G


W
)


(in
d


ev
el


op
m


en
t)


PF
S/


BD
w


at
er


, s
ev


er
al



se


rv
ic


es
M


, C
m


(?
)


N
FO


SI
G


W
w


eb


pa
ge


s1
6 ;


U
N


EC
E


20
05


Po
la


nd
Th


e
N


at
io


na
l E


co
fu


nd
(in


d
ev


el
op


m
en


t)
PF


S/
BD


M
, C


m
(?


)
Th


e
N


at
io


na
l


Ec
of


un
d'


s
w


eb


pa
ge


s1
7




65Annex


U
N


EC
E


co
un


tr
y/


re
gi


on


N
am


e
of


P
ES


Ty
pe



of


P
ES



sc


he
m


e:


Co
m


pe
ns


at
ed


/
im


pr
ov


ed


ec
os


ys
te


m
se


rv
ic


es


or
e


nv
iro


nm
en


ta
l


va
lu


es


G
ov


er
na


nc
e


st
ru


ct
ur


e
Co


m
pe


ns
at


io
n


m
ea


ns
Re


fe
re


nc
e


Sp
ai


n
G


ua
di


an
a


riv
er


b
as


in


(S
PU


G
)


PW
S


w
at


er
q


ua
nt


ity


aff
ec


te
d


by


irr
ig


at
io


n,
i.


e.


re
ch


ar
gi


ng


ov
er


ex
pl


oi
te


d
aq


ui
fe


rs
b


y
20


27
,


re
st


or
at


io
n


of


bi
od


iv
er


si
ty


,
en


ha
nc


in
g


to
ur


si
m


H
su


pp
or


tin
g


re
fo


re
st


at
io


n
IU


CN
2


00
9


Sw
ed


en
Ko


m
et


p
ro


gr
am


PF
S/


BD
bi


od
iv


er
si


ty


in
tr


in
si


c
va


lu
e,



de


ad
w


oo
d,


o
ld


-
gr


ow
th


c
ar


bo
n


st
or


ag
es


M
,H


, C
m


au
ct


io
n,



pa


ym
en


t,
di


re
ct



co


m
pe


ns
at


io
n


et
c.


Ko
m


et
's


w
eb



pa


ge
s1


8 ;
Ex


am
pl


e
2


Sw
ed


en
N


or
di


c
Sh


el
l H


ol
di


ng
s


PW
S


w
at


er
q


ua
lit


y
H


un
ifo


rm


pa
ym


en
ts



pe


r w
ei


gh
t


of
p


ol
lu


ta
nt


s
fil


te
re


d


O
EC


D
2


01
0




The Value of Forests66


U
N


EC
E


co
un


tr
y/


re
gi


on


N
am


e
of


P
ES


Ty
pe



of


P
ES



sc


he
m


e:


Co
m


pe
ns


at
ed


/
im


pr
ov


ed


ec
os


ys
te


m
se


rv
ic


es


or
e


nv
iro


nm
en


ta
l


va
lu


es


G
ov


er
na


nc
e


st
ru


ct
ur


e
Co


m
pe


ns
at


io
n


m
ea


ns
Re


fe
re


nc
e


Sw
ed


en
En


vi
ro


nm
en


ta
l O


ffs
et


s
in


fr
eq


ue
nt


ly


m
an


da
to


ry
M


ad
se


n
et


a
l 2


01
0


Sw
ed


en
Pr


ed
at


or
c


om
pe


ns
at


io
n


PF
S/


BD
w


ol
ve


rin
e,


G
ol


de
n


ea
gl


e
H


di
re


ct


co
m


pe
ns


at
io


n
Za


be
l &


H
ol


m
-


M
ül


le
r 2


00
8


Sw
itz


er
la


nd
O


rd
in


an
ce


o
n


th
e


Re
gi


on
al



pr


om
ot


io
n


of
Q


ua
lit


y
an


d
In


te
rli


nk
in


g
of


th
e


Ec
ol


og
ic


al
C


om
pe


ns
at


io
n


A
re


as


PW
S


ag
ri-


en
vi


ro
nm


en
ta


l
qu


al
ity


, n
itr


at
e


de
cr


ea
se


M
, H


un
ifo


rm


pa
ym


en
ts



fo


r g
iv


en


m
an


ag
em


en
t


pr
ac


tic
es


(z
on


al


sc
he


m
es


)


O
EC


D
2


01
0;


U
N


EC
E


20
05


, 2
00


7


Sw
itz


er
la


nd
Ca


nt
on


B
as


el
-S


ta
dt


PW
S


w
at


er
q


ua
lit


y,


fil
tr


at
io


n
H


ad
di


tio
na


l
ch


ar
ge


in
w


at
er



bi


ll


w
w


w
.w


al
dw


is
se


n.
ne


t;
Ex


am
pl


e
3


Sw
itz


er
la


nd
H


en
ni


ez
S


A
PW


S
w


at
er


q
ua


lit
y


vi
a


fo
re


st


co
ns


er
va


tio
n


an
d


de
cr


ea
se


d
ni


tr
at


e
in


pu
t


M
pr


iv
at


e
in


co
m


e
fr


om
s


ol
d


w
at


er
w


w
w


.w
al


dw
is


se
n.


ne
t;


Ex
am


pl
e


5




67Annex


U
N


EC
E


co
un


tr
y/


re
gi


on


N
am


e
of


P
ES


Ty
pe



of


P
ES



sc


he
m


e:


Co
m


pe
ns


at
ed


/
im


pr
ov


ed


ec
os


ys
te


m
se


rv
ic


es


or
e


nv
iro


nm
en


ta
l


va
lu


es


G
ov


er
na


nc
e


st
ru


ct
ur


e
Co


m
pe


ns
at


io
n


m
ea


ns
Re


fe
re


nc
e


U
ni


te
d


Ki
ng


do
m



of


G
re


at


Br
ita


in
a


nd


N
or


th
er


n
Ir


el
an


d


Sp
ec


ie
s


Ba
nk


in
g


PF
S/


BD
bi


od
iv


er
si


ty
M


M
ad


se
n


et
a


l.
20


10


U
ni


te
d


Ki
ng


do
m



of


G
re


at


Br
ita


in
a


nd


N
or


th
er


n
Ir


el
an


d


Ru
ra


l D
ev


el
op


m
en


t
Pr


og
ra


m
m


e
PW


S
ag


ri-
en


vi
ro


nm
en


ta
l


qu
al


ity


M
, H


un
ifo


rm


pa
ym


en
ts



fo


r g
iv


en


m
an


ag
em


en
t


pr
ac


tic
es


O
EC


D
2


01
0


U
ni


te
d


Ki
ng


do
m



of


G
re


at


Br
ita


in
a


nd


N
or


th
er


n
Ir


el
an


d


Ti
r G


of
al


(W
al


es
)


PW
S


ag
ri-


en
vi


ro
nm


en
ta


l
qu


al
ity


M
, H


un
ifo


rm


pa
ym


en
ts



fo


r g
iv


en


m
an


ag
em


en
t


pr
ac


tic
es


O
EC


D
2


01
0




The Value of Forests68


U
N


EC
E


co
un


tr
y/


re
gi


on


N
am


e
of


P
ES


Ty
pe



of


P
ES



sc


he
m


e:


Co
m


pe
ns


at
ed


/
im


pr
ov


ed


ec
os


ys
te


m
se


rv
ic


es


or
e


nv
iro


nm
en


ta
l


va
lu


es


G
ov


er
na


nc
e


st
ru


ct
ur


e
Co


m
pe


ns
at


io
n


m
ea


ns
Re


fe
re


nc
e


U
ni


te
d


Ki
ng


do
m



of


G
re


at


Br
ita


in
a


nd


N
or


th
er


n
Ir


el
an


d


Sc
ot


tis
h


Ch
al


le
ng


e
Fu


nd


(S
co


tla
nd


)
PF


S/
BD


fo
re


st
se


rv
ic


es
a


nd


co
ns


er
va


tio
n


M
, C


m
en


vi
ro


nm
en


ta
l


be
ne


fit
s


in
de


x
pe


r u
ni


t c
os


t,
vi


a
au


ct
io


n


O
EC


D
2


01
0


U
ni


te
d


Ki
ng


do
m



of


G
re


at


Br
ita


in
a


nd


N
or


th
er


n
Ir


el
an


d


N
or


th
Ir


el
an


d
- C


ou
nt


ry
si


de


M
an


ag
em


en
t S


ch
em


e
(N


IC
M


S)


PW
S


ag
ri-


en
vi


ro
nm


en
ta


l
qu


al
ity


,
bi


od
iv


er
si


ty
, w


at
er



qu


al
ity


, m
iti


ga
te



cl


im
at


e
ch


an
ge


,
im


pr
ov


e
so


il
qu


al
ity


, e
nh


an
ce



la


nd
sc


ap
e


M
, H


pa
ym


en
ts


fo
r


en
ha


nc
em


en
ts



an


d
m


an
ag


em
en


t
pr


ac
tic


es


St
an


to
n


et
a


l.
20


10


U
ni


te
d


Ki
ng


do
m



of


G
re


at


Br
ita


in
a


nd


N
or


th
er


n
Ir


el
an


d


U
K


Bi
od


iv
er


si
ty


O
ffs


et
s


(in
d


ev
el


op
m


en
t)


PF
S/


BD
bi


od
iv


er
si


ty
M


, H
M


ad
se


n
et


a
l.


20
10




69Annex


U
N


EC
E


co
un


tr
y/


re
gi


on


N
am


e
of


P
ES


Ty
pe



of


P
ES



sc


he
m


e:


Co
m


pe
ns


at
ed


/
im


pr
ov


ed


ec
os


ys
te


m
se


rv
ic


es


or
e


nv
iro


nm
en


ta
l


va
lu


es


G
ov


er
na


nc
e


st
ru


ct
ur


e
Co


m
pe


ns
at


io
n


m
ea


ns
Re


fe
re


nc
e


U
ni


te
d


Ki
ng


do
m



of


G
re


at


Br
ita


in
a


nd


N
or


th
er


n
Ir


el
an


d


U
ni


te
d


Ki
ng


do
m



of


G
re


at


Br
ita


in
a


nd


N
or


th
er


n
Ir


el
an


d


‘S
lo


w
in


g
th


e
Fl


ow
’,


Pi
ck


er
in


g,
N


or
th


Y
or


ks
hi


re
PW


S
Fl


oo
d


pr
ot


ec
tio


n,


ca
rb


on


se
qu


es
tr


at
io


n


H
ht


tp
://


w
w


w
.


fo
re


st
ry


.g
ov


.u
k/


fr
/


IN
FD


-7
ZV


EQ
V


U
ni


te
d


Ki
ng


do
m



of


G
re


at


Br
ita


in
a


nd


N
or


th
er


n
Ir


el
an


d


W
as


te
to


W
oo


dl
an


ds
,


La
nc


as
hi


re
PF


S/
BD


Ca
rb


on


se
qu


es
tr


at
io


n
H


Pa
ym


en
ts


fo
r


w
as


te
tr


ea
tm


en
t


an
d


w
oo


dl
an


d
pl


an
tin


g


ht
tp


://
w


w
w


.
gl


ob
al


re
ne


w
ab


le
s.


co
.u


k/
co


nt
en


t/
co


nt
en


tP
ag


e.
as


p?
co


nt
en


tID
=


89
&


co
un


ty
l


D
=1


&
pg


ID
=1




The Value of Forests70


U
N


EC
E


co
un


tr
y/


re
gi


on


N
am


e
of


P
ES


Ty
pe



of


P
ES



sc


he
m


e:


Co
m


pe
ns


at
ed


/
im


pr
ov


ed


ec
os


ys
te


m
se


rv
ic


es


or
e


nv
iro


nm
en


ta
l


va
lu


es


G
ov


er
na


nc
e


st
ru


ct
ur


e
Co


m
pe


ns
at


io
n


m
ea


ns
Re


fe
re


nc
e


U
ni


te
d


Ki
ng


do
m



of


G
re


at


Br
ita


in
a


nd


N
or


th
er


n
Ir


el
an


d


W
es


t C
ou


nt
ry


R
iv


er
s T


ru
st


,
So


ut
hw


es
t E


ng
la


nd
PW


S,


PF
S/


BD
Fl


oo
d


pr
ot


ec
tio


n,


w
at


er
p


ur
ifi


ca
tio


n,


dr
ou


gh
t


m
an


ag
em


en
t,


ca
rb


on


se
qu


es
tr


at
io


n,


bi
od


iv
er


si
ty



co


rr
id


or
s,


re
cr


ea
tio


n


M
, H


ht
tp


://
w


w
w


.
w


rt
.o


rg
.u


k/
la


nd
.h


tm
l


U
ni


te
d


Ki
ng


do
m



of


G
re


at


Br
ita


in
a


nd


N
or


th
er


n
Ir


el
an


d


W
oo


dl
an


d
Ca


rb
on


C
od


e
PF


S/
BD


Ca
rb


on


se
qu


es
tr


at
io


n
M


St
an


da
rd


s
in


v
ol


un
ta


ry


m
ar


ke
t f


or
fo


re
st



ca


rb
on


w
w


w
.fo


re
st


ry
.g


ov
.


uk
/c


ar
bo


nc
od


e


U
ni


te
d


St
at


es
Th


e
Ca


ts
ki


lls
/ D


el
aw


ar
e


W
at


er
sh


ed
P


ro
te


ct
io


n
pr


og
ra


m
m


e
(N


ew
Y


or
k)


PW
S


w
at


er
q


ua
lit


y,


w
at


er
sh


ed


se
rv


ic
es


M
, H


, C
m


ta
xa


tio
n


A
pp


le
to


n
20


02
;


Pa
gi


ol
a


et
a


l.
20


04
;


St
an


to
n


et
a


l.
20


10
;


FA
O


2
01


0
w


eb


pa
ge


s;
E


xa
m


pl
e




71Annex


U
N


EC
E


co
un


tr
y/


re
gi


on


N
am


e
of


P
ES


Ty
pe



of


P
ES



sc


he
m


e:


Co
m


pe
ns


at
ed


/
im


pr
ov


ed


ec
os


ys
te


m
se


rv
ic


es


or
e


nv
iro


nm
en


ta
l


va
lu


es


G
ov


er
na


nc
e


st
ru


ct
ur


e
Co


m
pe


ns
at


io
n


m
ea


ns
Re


fe
re


nc
e


U
ni


te
d


St
at


es
Th


e
Co


ns
er


va
tio


n
Re


se
rv


e
Pr


og
ra


m
m


e
PF


S/
BD


a
nd



PW


S


ag
ri-


en
vi


ro
nm


en
ta


l
qu


al
ity


, B
D


,
ca


rb
on


, w
at


er


qu
al


ity


H
co


st
fa


ct
or



in


cl
ud


ed
in



en


vi
ro


nm
en


ta
l


be
ne


fit
s


in
de


x,


vi
a


au
ct


io
n


CR
P


w
eb


p
ag


e1
9 ;


O
EC


D
2


01
0


U
ni


te
d


St
at


es
U


S
Co


ns
er


va
tio


n
Ba


nk
in


g
PF


S/
BD


bi
od


iv
er


si
ty


,
fo


re
st


s
M


pa
ym


en
ts


fo
r


sp
ec


ie
s


ba
nk


in
g


CB
w


eb
p


ag
e2


0 ;
Ex


am
pl



11


U
ni


te
d


St
at


es
Th


e
W


et
la


nd
s


Re
se


rv
e


Pr
og


ra
m


(C
om


pe
ns


at
or


y
w


et
la


nd
m


iti
ga


tio
n)


PF
S/


BD
a


nd


PW
S


hy
dr


ol
og


ic
al



se


rv
ic


es
H


to
s


om
e


ex
te


nt


en
ro


lm
en


t o
n


ca
se


b
y


ca
se



ba


si
s


O
EC


D
2


01
0


U
ni


te
d


St
at


es
Re


co
ve


ry
C


re
di


t S
ys


te
m


PF
S/


BD
M


, H
M


ad
se


n
et


a
l.


20
10


U
ni


te
d


St
at


es
Bu


re
au


o
f L


an
d


M
an


ag
em


en
t M


iti
ga


tio
n


Po
lic


y


PF
S/


BD
H


M
ad


se
n


et
a


l.
20


10


U
ni


te
d


St
at


es
M


ar
yl


an
d'


s
fo


re
st


o
ffs


et
la


w
PF


S/
BD


H
M


ad
se


n
et


a
l.


20
10


U
ni


te
d


St
at


es
N


or
th


C
ar


ol
in


a'
s


Bu
ffe


r
M


iti
ga


tio
n


pr
og


ra
m


PF
S/


BD
H


M
ad


se
n


et
a


l.
20


10




The Value of Forests72


U
N


EC
E


co
un


tr
y/


re
gi


on


N
am


e
of


P
ES


Ty
pe



of


P
ES



sc


he
m


e:


Co
m


pe
ns


at
ed


/
im


pr
ov


ed


ec
os


ys
te


m
se


rv
ic


es


or
e


nv
iro


nm
en


ta
l


va
lu


es


G
ov


er
na


nc
e


st
ru


ct
ur


e
Co


m
pe


ns
at


io
n


m
ea


ns
Re


fe
re


nc
e


U
ni


te
d


St
at


es
Ac


re
s


fo
r A


m
er


ic
a


PF
S/


BD
M


M
ad


se
n


et
a


l.
20


10


U
ni


te
d


St
at


es
Ch


es
ap


ea
ke


B
ay


F
un


d
PW


S
w


at
er


, w
at


er
sh


ed


se
rv


ic
es


M
, H


, C
m


ca
p-


an
d-


tr
ad


e
w


at
er


s
ch


em
e


St
an


to
n


et
a


l.
20


10
; E


co
sy


st
em



M


ar
ke


tp
la


ce
w


eb


pa
ge


21
; E


xa
m


pl


10


U
ni


te
d


St
at


es
Q


ua
bb


in
a


nd


W
ac


hu
se


tt
W


at
er


sh
ed


s
(M


as
sa


sc
hu


se
ts


)


PW
S


w
at


er
, w


at
er


sh
ed



se


rv
ic


es
M


, H
St


an
to


n
et


a
l. 


20
10


U
ni


te
d


St
at


es
Ce


da
r R


iv
er


(W
as


hi
ng


to
n)


PW
S


w
at


er
, w


at
er


sh
ed



se


rv
ic


es
M


, H
St


an
to


n
et


a
l.


20
10


U
ni


te
d


St
at


es
H


et
ch


H
et


ch
y


(C
al


ifo
rn


ia
)


PW
S


w
at


er
, w


at
er


sh
ed



se


rv
ic


es
M


, H
St


an
to


n
et


a
l.


20
10


U
ni


te
d


St
at


es
Ag


ric
ul


tu
ra


l M
an


ag
em


en
t


A
ss


is
ta


nc
e


Pr
og


ra
m


(A
M


A
)


PW
S


w
at


er
, w


at
er


sh
ed



se


rv
ic


es
M


, H
St


an
to


n
et


a
l.


20
10


U
ni


te
d


St
at


es
Th


e
En


vi
ro


nm
en


ta
l Q


ua
lit


y
In


ce
nt


iv
es


P
ro


gr
am


(E
Q


U
IP


)
PW


S
w


at
er


, w
at


er
sh


ed


se
rv


ic
es


, a
gr


i-
en


vi
ro


nm
en


ta
l


qu
al


ity


M
, H


to
s


om
e


ex
te


nt


en
ro


lm
en


t o
n


ca
se


b
y


ca
se



ba


si
s


St
an


to
n


et
a


l.
20


10
;


O
EC


D
2


01
0




73Annex


U
N


EC
E


co
un


tr
y/


re
gi


on


N
am


e
of


P
ES


Ty
pe



of


P
ES



sc


he
m


e:


Co
m


pe
ns


at
ed


/
im


pr
ov


ed


ec
os


ys
te


m
se


rv
ic


es


or
e


nv
iro


nm
en


ta
l


va
lu


es


G
ov


er
na


nc
e


st
ru


ct
ur


e
Co


m
pe


ns
at


io
n


m
ea


ns
Re


fe
re


nc
e


U
ni


te
d


St
at


es
Co


ns
er


va
tio


n
St


ew
ar


ds
hi


p
Pr


og
ra


m
(C


SP
) [


ea
rli


er


Co
ns


er
va


tio
n


Se
cu


rit
y


Pr
og


ra
m


]


PW
S


w
at


er
, w


at
er


sh
ed



se


rv
ic


es
, a


gr
i-


en
vi


ro
nm


en
ta


l
qu


al
ity


H
to


s
om


e
ex


te
nt



en


ro
lm


en
t o


n
ca


se
b


y
ca


se
b


as
is


St
an


to
n


et
a


l.
20


10
;


O
EC


D
2


01
0


U
ni


te
d


St
at


es
EP


A'
s


31
9


Pr
og


ra
m


PW
S


w
at


er
, w


at
er


sh
ed



se


rv
ic


es
M


, H
su


bs
id


y
pa


ym
en


ts
o


r
gr


an
ts


St
an


to
n


et
a


l.
20


10


U
ni


te
d


St
at


es
W


at
er


Q
ua


lit
y


Tr
ad


in
g


Pr
og


ra
m


es
(1


1*
)


W
Q


TP
ph


os
ph


or
ou


s,
ni


tr
og


en
, w


at
er



te


m
pe


ra
tu


re


M
, H


St
an


to
n


et
a


l.
20


10


U
ni


te
d


St
at


es
H


ab
ita


t C
re


di
t T


ra
di


ng


Sc
he


m
e


(in
d


ev
el


op
m


en
t)


PF
S/


BD
M


M
ad


se
n


et
a


l.
20


10


U
ni


te
d


St
at


es
W


ill
ia


m
et


te
P


ar
tn


er
sh


ip
's


Ec
os


ys
te


m
M


ar
ke


tp
la


ce
(i


n
de


ve
lo


pm
en


t)


PF
S/


BD
M


M
ad


se
n


et
a


l.
20


10


U
ni


te
d


St
at


es
Ba


y
Ba


nk
(i


n
de


ve
lo


pm
en


t)
PF


S/
BD


M
M


ad
se


n
et


a
l.


20
10


A
bb


re
vi


at
io


ns
in


th
e


“T
yp


e
of


P
ES


s
ch


em
e”


c
ol


um
n


ar
e:


P
FS


/B
D


, p
ay


m
en


ts
fo


r f
or


es
t s


er
vi


ce
s


an
d/


or
b


io
di


ve
rs


ity
;


PW
S,


p
ay


m
en


ts
fo


r w
at


er
sh


ed
s


er
vi


ce
s;


a
nd


W
Q


TP
, w


at
er


q
ua


lit
y


tr
ad


in
g


pr
og


ra
m


.
A


bb
re


vi
at


io
n


in
th


e
“G


ov
er


na
nc


e
st


ru
ct


ur
e”


c
ol


um
n


ar
e:


M
, m


ar
ke


t (
re


fe
rr


in
g


m
ai


nl
y


to
p


riv
at


e
sc


he
m


es
);


H
, h


ie
ra


rc
y


th
at


is
to


s
ay


p
ub


lic
a


dm
in


is
tr


at
io


n
(r


ef
er


rin
g


m
ai


nl
y


to
p


ub
lic


s
ch


em
es


);
an


d
Cm


, c
om


m
un


ity
m


an
ag


em
en


t.
C


om
m


un
ity


m
an


ag
em


en
t i


s
in


te
rp


re
te


d
he


re
to


in
cl


ud
e


al
so


a
ct


io
ns


o
f N


G
O


s,
al


th
ou


gh
th


is
is


n
ot


e
xa


ct
ly


th
e


sa
m


e
as


fo
r c


om
m


on
o


w
ne


rs
hi


p
of


fo
re


st
s,


fo
r i


ns
ta


nc
e.



Th


e
PE


S
sc


he
m


es
p


re
se


nt
ed


m
ay


h
av


e
ch


ar
ac


te
ris


tic
s


of
s


ev
er


al
g


ov
er


na
nc


e
ty


pe
s,


bu
t t


he
se


a
re


n
ot


n
ec


es
sa


ril
y


in
cl


ud
ed


in
th


e
ta


bl
e.



Th


e
co


lu
m


n
on


“C
om


pe
ns


at
io


n
m


ea
ns


” i
nc


lu
de


s:
d


ire
ct


c
om


pe
ns


at
io


n,
p


ay
m


en
t,


au
ct


io
n,


ta
xa


tio
n,


s
ub


si
dy


, c
om


pl
ia


nc
e-


re
la


te
d,


c
om


m
un


ity
fu


nd
, s


el
f-fi


na
nc


in
g


et
c.




The Value of Forests74


8
W


W
F


w
eb


p
ag


es
, A


va
ila


bl
e


at
: h


tt
p:


//
w


w
f.p


an
da


.o
rg


/w
ha


t_
w


e_
do


/w
he


re
_w


e_
w


or
k/


bl
ac


k_
se


a_
ba


si
n/


da
nu


be
_c


ar
pa


th
ia


n/
ne


w
s/


?1
93


44
0/


Pr
om


ot
in


g-
Pa


ym
en


ts
-fo


r-
Ec


os
ys


te
m


-S
er


vi
ce


s-
in


-t
he


-
D


an
ub


e-
Ba


si
n


9
Fi


el
df


ar
e


w
eb


p
ag


es
, A


va
ila


bl
e


at
: h


tt
p:


//
w


w
w


.fi
el


df
ar


e.
bi


z/


10


Th
e


BT
AU


p
ro


je
ct


is
a


n
RS


PB
, E


ur
op


ea
n


Ce
nt


re
fo


r N
at


ur
e


Co
ns


er
va


tio
n,


a
nd


B
ird


Li
fe


In
te


rn
at


io
na


l c
on


so
rt


iu
m


p
ro


je
ct


w
hi


ch
s


ee
ks


to
c


re
at


e
‘P


ro
-B


io
di


ve
rs


ity
’ B


us
in


es
se


s
(P


BB
s)


th
ro


ug
h


de
di


ca
te


d
Bi


od
iv


er
si


ty
Te


ch
ni


ca
l A


ss
its


ta
nc


e
U


ni
ts


, o
ne


in
e


ac
h


of
th


e
fo


llo
w


in
g


co
un


tr
ie


s:
B


ul
ga


ria
, H


un
ga


ry
a


nd
P


ol
an


d.
B


TA
U


w
eb


p
ag


es
, A


va
ila


bl
e


at
: h


tt
p:


//
w


w
w


.s
m


ef
or


bi
od


iv
er


si
ty


.e
u/


de
ta


ils
.p


hp
?p


_
id


=7
0&


id
=7


5
11


M
ET


SO
I


w
eb


p
ag


es
, A


va
ila


bl
e


at
: h


tt
p:


//
w


w
w


b.
m


m
m


.fi
/m


et
so


/in
te


rn
at


io
na


l/
12


M
ET


SO
II


w
eb


p
ag


es
, A


va
ila


bl
e


at
: h


tt
p:


//
w


w
w


.m
et


so
np


ol
ku


.fi


13
Fi


nn
is


h
N


at
ur


al
H


er
ita


ge
F


ou
nd


at
io


n
w


eb
p


ag
es


, A
va


ila
bl


e
at


: h
tt


p:
//


w
w


w
.lu


on
no


np
er


in
to


sa
at


io
.fi


/e
ng


lis
h/


in
de


x
14


Ev
ia


n
w


eb
p


ag
es


, A
va


ila
bl


e
at


: h
tt


p:
//


w
w


w
.e


vi
an


-w
at


er
in


st
itu


te
s.c


om
/h


tm
l/_


co
m


/e
nv


iro
nn


em
en


t/
en


vi
ro


nn
em


en
t0


2.
ph


p
15


Fa
rm


in
g


fo
r N


at
ur


e
Pi


lo
t p


ro
gr


am
w


eb
p


ag
es


, A
va


ila
bl


e
at


: w
w


w
.b


oe
re


nv
oo


rn
at


uu
r.n


l
16


N
FO


SI
G


W
’s


w
eb


p
ag


es
, A


va
ila


bl
e


at
: w


w
w


.n
fo


si
gw


.g
ov


.p
l


17
Th


e
N


at
io


na
l E


co
fu


nd
w


eb
p


ag
es


, A
va


ila
bl


e
at


: w
w


w
.e


ko
fu


nd
us


z.
or


g.
pl


/u
s/


ec
oa


ct
.h


tm


18
Ko


m
et


p
ro


gr
am


w
eb


p
ag


es
, A


va
ila


bl
e


at
: h


tt
p:


//
w


w
w


.n
at


ur
va


rd
sv


er
ke


t.s
e/


sv
/A


rb
et


e-
m


ed
-n


at
ur


va
rd


/In
te


rn
at


io
ne


lla
-s


ko
gs


ar
et


-2
01


1/
Ko


m
et


pr
og


ra
m


m
et


/
19


Th
e


Co
ns


er
va


tio
n


Re
se


ar
ch


P
ro


gr
am


m
es


w
eb


p
ag


es
, A


va
ila


bl
e


at
: h


tt
p:


//
w


w
w


.fs
a.


us
da


.g
ov


/F
SA


/w
eb


ap
p?


ar
ea


=h
om


e&
su


bj
ec


t=
co


pr
&


to
pi


c=
cr


p
20


Co
ns


er
va


tio
n


Ba
nk


in
g


w
eb


p
ag


es
, A


va
ila


bl
e


at
: h


tt
p:


//
w


w
w


.fw
s.g


ov
/s


ac
ra


m
en


to
/e


s/
co


ns
_b


an
k.


ht
m



21


Ec
os


ys
te


m
M


ar
ke


tp
la


ce
’s


w
eb


p
ag


es
, A


va
ila


bl
e


at
: h


tt
p:


//
w


w
w


.e
co


sy
st


em
m


ar
ke


tp
la


ce
.c


om
/p


ag
es


/d
yn


am
ic


/a
rt


ic
le


.p
ag


e.
ph


p?
pa


ge
_i


d=
75


61
&


se
ct


io
n=


ho
m


e
*


A
lp


in
e


Ch
ee


se
C


om
pa


ny
/ S


ug
ar


C
re


ek
; B


ea
r C


re
ek


; C
ha


tfi
el


d
re


se
rv


oi
r t


ra
di


ng
p


ro
gr


am
m


e:
C


le
an


W
at


er
S


er
vi


ce
s/


T
ua


la
tin


R
iv


er
: L


on
g


Is
la


nd
S


ou
nd


N
itr


og
en


C
re


di
t E


xc
ha


ng
e


pr
og


ra
m


; G
re


at
M


ia
m


i
Ri


ve
r W


at
er


sh
ed


tr
ad


in
g


pi
lo


t;
M


in
ne


so
ta


ri
ve


r b
as


in
tr


ad
in


g
pr


og
ra


m
; N


eu
se


R
iv


er
b


as
in


to
ta


l n
itr


og
en


tr
ad


in
g


pr
og


ra
m


; P
en


ns
yl


va
ni


a
W


at
er


Q
ua


lit
y


tr
ad


in
g


pr
og


ra
m


; R
ed


C
ed


ar
R


iv
er


N
ut


rie
nt


tr
ad


in
g


pi
lo


t p
ro


gr
am


; S
ou


th
er


n
M


in
ne


so
ta


B
ee


t S
ug


ar
C


oo
pe


ra
tiv


e
pr


og
ra


m
.


8
W


W
F


w
eb


p
ag


es
, A




75Annex


An
ne


x
3:



Ex


ce
rp


t f
ro


m
d


ra
ft


A
ct


io
n


Pl
an


o
n


“F
or


es
ts


a
nd


a
G


re
en


E
co


no
m


y”
o


n
“V


al
ua


tio
n


of
a


nd
P


ay
m


en
ts


fo
r


Fo
re


st
-


re
la


te
d


Ec
os


ys
te


m
S


er
vi


ce
s”


22


4
Va


lu
at


io
n


of
a


nd


pa
ym


en
t


fo
r f


or
es


t
ec


os
ys


te
m



se


rv
ic


es


To
id


en
tif


y
an


d
va


lu
e


fo
re


st
fu


nc
tio


ns


an
d


to
e


st
ab


lis
h


PE
S


tr
an


sa
ct


io
ns


,


en
co


ur
ag


in
g


su
st


ai
na


bl
e


pr
od


uc
tio


n
an


d
co


ns
um


pt
io


n
pa


tt
er


ns
.


Re
vi


ew
a


nd
d


ev
el


op
a


pp
ro


ac
he


s
to


v
al


ua
tio


n
of


a
nd


p
ay


m
en


t f
or


d
iff


er
en


t f
or


es
t


ec
os


ys
te


m
s


er
vi


ce
s,


in
th


e
U


N
EC


E
re


gi
on


, i
nv


ol
vi


ng
re


se
ar


ch
a


nd
p


ol
ic


y
bo


di
es


.


4.
1


Va
lu


at
io


n
of


fo
re


st


ec
os


ys
te


m


se
rv


ic
es


To
s


up
po


rt
th


e
as


si
gn


in
g


of


ec
on


om
ic


v
al


ue
to



no


n-
m


ar
ke


te
d


fo
re


st


go
od


s
an


d
se


rv
ic


es


an
d


to
e


nh
an


ce


th
e


un
de


rs
ta


nd
in


g
an


d
re


co
gn


iti
on


o
f


th
e


pu
bl


ic
g


oo
ds



ge


ne
ra


te
d


by
fo


re
st


s.


Es
tim


at
e


fo
re


st
e


co
sy


st
em


v
al


ue
s


at
th


e
na


tio
na


l a
nd


re
gi


on
al


le
ve


ls
.


En
co


ur
ag


e
re


se
ar


ch
li


nk
ed


to
p


ol
ic


y
ob


je
ct


iv
es


o
n


th
e


va
lu


at
io


n
fo


r e
co


sy
st


em


se
rv


ic
es


, a
nd


p
os


si
bl


e
so


ur
ce


s
of


fi
na


nc
in


g
fo


r e
co


sy
st


em
s


er
vi


ce
s.


U
nd


er
ta


ke
a


c
om


pa
ris


on
o


f t
he


v
al


ue


of
m


ar
ke


te
d


an
d


no
n-


m
ar


ke
te


d
go


od
s


an
d


se
rv


ic
es


o
f t


he
fo


re
st


, a
nd



re


co
m


m
en


da
tio


ns
a


s
to


h
ow


a
ca


de
m


ic


va
lu


at
io


n
co


ul
d


be
tr


an
sf


or
m


ed
in


to


pa
ym


en
t s


ys
te


m
s.


O
rg


an
iz


e
a


po
lic


y
fo


ru
m


o
n


em
er


gi
ng



di


le
m


m
as


fo
r f


or
es


t m
an


ag
er


s
an


d
po


lic
y


m
ak


er
s,


fo
cu


si
ng


o
n


id
en


tif
yi


ng
c


rit
ic


al


tr
ad


e-
off


s
be


tw
ee


n
fo


re
st


fu
nc


tio
ns


.


U
nd


er
ta


ke
n


at
io


na
l r


ev
ie


w
o


f f
or


es
t


ec
os


ys
te


m
s


er
vi


ce
s


an
d


as
se


ss
th


ei
r


va
lu


es
u


si
ng


, a
s


ap
pr


op
ria


te
, t


he
re


su
lts


o
f


ex
is


tin
g


va
lu


at
io


n
st


ud
ie


s
(v


al
ue


tr
an


sf
er


)
an


d
po


ss
ib


ly
fr


om
o


th
er


s
ec


to
rs


.


En
co


ur
ag


e
th


e
pa


rt
ic


ip
at


io
n


of
re


se
ar


ch
er


s,


fo
re


st
m


an
ag


er
s


an
d


co
ns


um
er


s
of


fo
re


st


ec
os


ys
te


m
s


er
vi


ce
s


in
th


e
re


vi
ew


a
nd



as


se
ss


m
en


t o
f v


al
ua


tio
n


m
et


ho
ds


.


U
nd


er
ta


ke
a


nd
fu


nd
re


se
ar


ch
p


ro
je


ct
s


to
q


ua
nt


ify
a


nd
v


al
ue


(p
re


fe
ra


bl
y


us
in


g
in


te
rn


at
io


na
lly


c
om


pa
tib


le
m


et
ho


ds
) a


ll
fo


re
st


e
co


sy
st


em
s


er
vi


ce
s.


D
ev


el
op


m
ec


ha
ni


sm
s


fo
r i


nc
or


po
ra


tin
g


th
e


re
su


lts
o


f f
or


es
t e


co
sy


st
em


v
al


ua
tio


n
in


to


na
tio


na
l a


cc
ou


nt
in


g
fr


am
ew


or
ks


.




The Value of Forests76


O
rg


an
iz


e
a


po
lic


y
fo


ru
m


, b
as


ed
o


n
su


rv
ey


a
nd


a
na


ly
si


s,
le


ad
in


g
to


c
on


cr
et


e
re


co
m


m
en


da
tio


ns
o


n
th


e
va


lu
at


io
n


of
th


e
pu


bl
ic


g
oo


ds
p


ro
vi


de
d


by
fo


re
st


s
su


ch
a


s
hu


m
an


h
ea


lth
a


nd
w


el
l-b


ei
ng


.


C
oo


pe
ra


te
w


ith
o


th
er


c
om


m
un


iti
es



su


ch
a


s
he


al
th


, b
io


di
ve


rs
ity


, c
lim


at
e


ch
an


ge
, e


ne
rg


y,
a


gr
ic


ul
tu


re
to


e
xc


ha
ng


e
kn


ow
le


dg
e


on
v


al
ua


tio
n


m
et


ho
do


lo
gi


es
.


Es
ta


bl
is


h
an


d
m


ai
nt


ai
n


on
lin


e
pl


at
fo


rm
s


w
he


re
re


se
ar


ch
in


st
itu


tio
ns


c
ou


ld
v


al
id


at
e


an
d


ex
ch


an
ge


re
se


ar
ch


re
su


lts
o


n
th


e
va


lu
e


of
fo


re
st


s
an


d
fo


re
st


p
ro


du
ct


s.


Pr
om


ot
e


di
sc


lo
su


re
o


f v
al


ue
s


of
e


co
sy


st
em



se


rv
ic


es
a


t t
he


c
or


po
ra


te
le


ve
l.


4.
2


Pa
ym


en
t


fo
r f


or
es


t
ec


os
ys


te
m



se


rv
ic


es
:


m
ov


in
g


fr
om



th


eo
ry


to


pr
ac


tic
e


To
p


ro
m


ot
e


be
st



pr


ac
tic


e
to


d
ev


el
op



an


d
im


pl
em


en
t P


ES
to



en


su
re


th
e


co
nt


in
ue


d
pr


ov
is


io
n


of
fo


re
st



ec


os
ys


te
m


s
er


vi
ce


s.


Re
vi


ew
a


nd
c


om
pi


le
e


xp
er


ie
nc


e
on



pa


ym
en


t f
or


fo
re


st
e


co
sy


st
em


s
er


vi
ce


s,
an


d
m


on
ito


r p
ro


gr
es


s
, t


ak
in


g
in


to
a


cc
ou


nt


ex
is


tin
g


m
at


er
ia


l.


Re
vi


ew
a


nd
a


na
ly


se
re


le
va


nt
in


fo
rm


at
io


n
in


S
ta


te
o


f E
ur


op
e’


s
Fo


re
st


s.


Sh
ar


e
ex


pe
rie


nc
es


o
n


th
e


di
ffe


re
nt



en


ab
lin


g
co


nd
iti


on
s


am
on


gs
t c


ou
nt


rie
s,


in
cl


ud
in


g
on


o
w


ne
rs


hi
p


pa
tt


er
ns


a
nd



th


ei
r i


m
pl


ic
at


io
ns


fo
r P


ES
d


es
ig


n
an


d
im


pl
em


en
ta


tio
n.


Id
en


tif
y


op
po


rt
un


iti
es


fo
r p


ay
m


en
ts


fo
r


ec
os


ys
te


m
s


er
vi


ce
s.


Re
vi


ew
e


xp
er


ie
nc


e
an


d
in


co
rp


or
at


e
in


to
e


xi
st


in
g


st
ra


te
gi


es
, a


s
ap


pr
op


ria
te


.
D


is
se


m
in


at
e


in
fo


rm
at


io
n


on
P


ES
c


as
e


st
ud


ie
s


an
d


bu
ild


c
ap


ac
ity


fo
r P


ES


de
ve


lo
pm


en
t a


nd
im


pl
em


en
ta


tio
n.


En
ha


nc
e


po
lic


ie
s


an
d


in
st


ru
m


en
ts


fo
r


se
tt


in
g


th
e


fr
am


ew
or


k
fo


r P
ES


.


Id
en


tif
y


po
te


nt
ia


l f
un


di
ng


o
pt


io
ns


.


Pr
om


ot
e


pa
rt


ne
rs


hi
ps


b
et


w
ee


n
fo


re
st



ow


ne
rs


a
nd


o
th


er
a


ct
or


s/
st


ak
eh


ol
de


rs
,


fo
r i


ns
ta


nc
e


to
d


ev
el


op
fo


re
st


to
ur


is
m


/
ec


ot
ou


ris
m


.




77Annex


4.
3


Fo
re


st
s


an
d


hu
m


an


he
al


th


To
re


vi
ew


w
ay


s
in


w
hi


ch
fo


re
st


s
co


nt
rib


ut
e


to
h


um
an



he


al
th


a
nd


w
el


lb
ei


ng
,


an
d


as
ce


rt
ai


n
w


he
th


er


th
is


in
fo


rm
at


io
n


is


pr
op


er
ly


in
co


rp
or


at
ed



in


to
p


ol
ic


ie
s


an
d


pr
ac


tic
es


O
rg


an
is


e
a


re
gi


on
al


fo
ru


m
o


n
fo


re
st


s
an


d
hu


m
an


h
ea


lth
to


re
vi


ew
th


e
si


tu
at


io
n,



op


po
rt


un
iti


es
a


nd
c


ha
lle


ng
es


, a
nd


m
ak


e
re


co
m


m
en


da
tio


ns
fo


r f
ut


ur
e


w
or


k,
a


t
th


e
in


te
rn


at
io


na
l a


nd
n


at
io


na
l l


ev
el


. T
hi


s
w


ou
ld


c
on


st
itu


te
a


re
so


ur
ce


fo
r h


ea
lth


a
nd



pl


an
ni


ng
a


ut
ho


rit
ie


s
et


c.


St
ud


y
on


w
el


lb
ei


ng
in


w
oo


de
n


bu
ild


in
gs



vs


. b
ui


ld
in


gs
w


ith
o


th
er


s
tr


uc
tu


re
s.


(t
o


be
d


ev
el


op
ed


, n
ot


ab
ly


in
th


e
lig


ht
o


f
th


e
re


gi
on


al
fo


ru
m


o
n


fo
re


st
s


an
d


hu
m


an


he
al


th
)


22
Th


e
Ac


tio
n


Pl
an


h
as


b
ee


n
de


ve
lo


pe
d,


fo
llo


w
in


g
st


ak
eh


ol
de


r i
np


ut
b


y
th


e
U


N
EC


E/
FA


O
s


ec
re


ta
ria


t,
an


d
re


vi
ew


ed
w


ith
p


ar
tic


ip
an


ts
a


t t
he


S
ta


ke
ho


ld
er


m
ee


tin
g


on
fo


re
st


s
an


d
th


e
gr


ee
n


ec
on


om
y,


1
0-


11


M
ay


2
01


1.
It


w
ill


b
e


pr
es


en
te


d
at


th
e


jo
in


t s
es


si
on


o
f t


he
U


N
EC


E
Ti


m
be


r C
om


m
itt


ee
a


nd
F


AO
E


ur
op


ea
n


Fo
re


st
ry


C
om


m
is


si
on


in
A


nt
al


ya
, T


ur
ke


y,
1


0-
14


O
ct


ob
er


2
01


1.
T


he
fi


na
liz


ed
A


ct
io


n
Pl


an
w


ill
s


er
ve



as


a
re


gi
on


al
a


nd
s


ec
to


ra
l e


xa
m


pl
e


to
b


e
pr


es
en


te
d


at
th


e
Ri


o+
20


s
um


m
it


on
s


us
ta


in
ab


le
d


ev
el


op
m


en
t i


n
Ri


o
de


Ja
ne


iro
, B


ra
zi


l,
Ju


ne
2


01
2.




source: UNECE/FAO, 2013




79UNECE/FAO Publications


UNECE/FAO PUBLICATIONS


Geneva Timber and Forest Study Papers


The Value of Forests: Payments for Ecosystem Services in a Green
Economy ECE/TIM/SP/34


Forest Products Annual Market Review 2012-2013 ECE/TIM/SP/33


The Lviv Forum on Forests in a Green Economy ECE/TIM/SP/32


Forests and Economic Development: A Driver for the Green Economy
in the ECE Region ECE/TIM/SP/31


Forest Products Annual Market Review 2011-2012 ECE/TIM/SP/30


The North American Forest Sector Outlook Study 2006-2030 ECE/TIM/SP/29


European Forest Sector Outlook Study 2010-2030 ECE/TIM/SP/28


Forest Products Annual Market Review 2010-2011 ECE/TIM/SP/27


Private Forest Ownership in Europe ECE/TIM/SP/26


Forest Products Annual Market Review 2009-2010 ECE/TIM/SP/25


Forest Products Annual Market Review 2008-2009 ECE/TIM/SP/24


Forest Products Annual Market Review 2007-2008 ECE/TIM/SP/23


Forest Products Annual Market Review 2006-2007 ECE/TIM/SP/22


Forest Products Annual Market Review, 2005-2006 ECE/TIM/SP/21


European Forest Sector Outlook Study: 1960 – 2000 – 2020,
Main Report ECE/TIM/SP/20


Forest policies and institutions of Europe, 1998-2000 ECE/TIM/SP/19


Forest and Forest Products Country Profile: Russian Federation ECE/TIM/SP/18


(Country profiles also exist on Albania, Armenia, Belarus, Bulgaria,
former Czech and Slovak Federal Republic, Estonia, Georgia, Hungary,
Lithuania, Poland, Romania, Republic of Moldova, Slovenia and Ukraine)
Forest resources of Europe, CIS, North America, Australia, Japan and
New Zealand ECE/TIM/SP/17




The Value of Forests80


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Fax: + 1 212 963 3489
E-mail: publications@un.org
Web site: https://unp.un.org


Fotalia, 2014




81UNECE/FAO Publications


Geneva Timber and Forest Discussion Papers


Swedish Forest Sector Outlook Study ECE/TIM/DP/58


The Importance of China’s Forest Products Markets to the UNECE
Region ECE/TIM/DP/57


Good Practice Guidance on Sustainable Mobilisation of Wood:
Proceedings from the Grenoble Workshop *ECE/TIM/DP/56


Harvested Wood Products in the Context of Climate Change Policies:
Workshop Proceedings - 2008 *ECE/TIM/DP/55


The Forest Sector in the Green Economy ECE/TIM/DP/54


National Wood Resources Balances: Workshop Proceedings *ECE/TIM/DP/53


Potential Wood Supply in Europe *ECE/TIM/DP/52


Wood Availability and Demand in Europe *ECE/TIM/DP/51


Forest Products Conversion Factors for the UNECE Region ECE/TIM/DP/49


Mobilizing Wood Resources: Can Europe’s Forests Satisfy the
Increasing Demand for Raw Material and Energy Under Sustainable
Forest Management? Workshop Proceedings. January 2007 *ECE/TIM/DP/48


European Forest Sector Outlook Study: Trends 2000-2005
Compared to the EFSOS Scenarios ECE/TIM/DP/47


Forest and Forest Products Country Profile: Tajikistan *ECE/TIM/DP/46


Forest and Forest Products Country Profile: Uzbekistan ECE/TIM/DP/45


Forest Certification – Do Governments Have a Role? ECE/TIM/DP/44


International Forest Sector Institutions and Policy Instruments
for Europe: A Source Book ECE/TIM/DP/43


Forests, Wood and Energy: Policy Interactions ECE/TIM/DP/42


Outlook for the Development of European Forest Resources ECE/TIM/DP/41


Forest and Forest Products Country Profile: Serbia and Montenegro ECE/TIM/DP/40


Forest Certification Update for the UNECE Region, 2003 ECE/TIM/DP/39


Forest and Forest Products Country Profile: Republic of Bulgaria ECE/TIM/DP/38




The Value of Forests82


Forest Legislation in Europe: How 23 Countries Approach the
Obligation to Reforest, Public Access
and Use of Non-Wood Forest Products ECE/TIM/DP/37


Value-Added Wood Products Markets, 2001-2003 ECE/TIM/DP/36


Trends in the Tropical Timber Trade, 2002-2003 ECE/TIM/DP/35


Biological Diversity, Tree Species Composition and Environmental
Protection in the Regional FRA-2000 ECE/TIM/DP/33


Forestry and Forest Products Country Profile: Ukraine ECE/TIM/DP/32


The Development of European Forest Resources, 1950 To 2000:
a Better Information Base ECE/TIM/DP/31


Modelling and Projections of Forest Products Demand, Supply
and Trade in Europe ECE/TIM/DP/30


Employment Trends and Prospects in the European Forest Sector ECE/TIM/DP/29


Forestry Cooperation with Countries in Transition ECE/TIM/DP/28


Russian Federation Forest Sector Outlook Study ECE/TIM/DP/27


Forest and Forest Products Country Profile: Georgia ECE/TIM/DP/26


Forest Certification Update for the UNECE Region, summer 2002 ECE/TIM/DP/25


Forecasts of Economic Growth in OECD and Central and
Eastern European Countries for the Period 2000-2040 ECE/TIM/DP/24


Forest Certification update for the UNECE Region, summer 2001 ECE/TIM/DP/23


Structural, Compositional and Functional Aspects of Forest
Biodiversity in Europe ECE/TIM/DP/22


Markets for Secondary Processed Wood Products, 1990-2000 ECE/TIM/DP/21


Forest Certification Update for the UNECE Region, summer 2000 ECE/TIM/DP/20


Trade and Environment Issues in the Forest and Forest Products
Sector ECE/TIM/DP/19


Multiple Use Forestry ECE/TIM/DP/18


Forest Certification Update for the UNECE Region, summer 1999 ECE/TIM/DP/17


A summary of “The competitive climate for wood products
and paper packaging: the factors causing substitution with
emphasis on environmental promotions” ECE/TIM/DP/16


Recycling, Energy and Market Interactions ECE/TIM/DP/15




83UNECE/FAO Publications


The Status of Forest Certification in the UNECE Region ECE/TIM/DP/14


The Role of Women on Forest Properties in Haute-Savoie (France):
Initial research ECE/TIM/DP/13


Interim Report on the Implementation of Resolution H3 of
the Helsinki Ministerial Conference on the Protection of Forests
in Europe (results of the second enquiry) ECE/TIM/DP/12


Manual on Acute Forest Damage ECE/TIM/DP/7


* Web downloads only.


The above publications are available free of charge from:


UNECE/FAO Forestry and Timber Section
United Nations Economic Commission for Europe
Palais des Nations
CH-1211 Geneva 10, Switzerland


Fax: +41 22 917 0041
E-mail: info.ECE-FAOforests@unece.org


Downloads are available from: www.unece.org/forests




Payments for Ecosystem Services (PES) describes the
situation where the user of an environmental service,
such as water purification, pays the landowners who
provide that service. For PES to exist, there must be a
clearly defined user and supplier, as well as a number of
other necessary conditions, which are defined in this
document using a summary of current sources. Particular
attention is paid to how these conditions currently obtain
within the UNECE region. The range of forest
environment services is explored through fourteen
detailed case studies, which examine best practice in
promoting PES. Political and public relations implications
of PES are discussed at length, and recommendations
include the need for clarity about where PES may be a
useful tool in moving towards a green economy and where
other methods may be more appropriate.


Further information about forests and forest products, as
well as information about the UNECE Committee on
Forests and the Forest Industry and the FAO European
Forestry Commission is available on the website


www.unece.org/forests.html


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USD 18
ISBN 978-92-1-117071-9


Printed at United Nations, Geneva
GE.13-25881–March 2014–1,512


ECE/TIM/SP/34


United Nations publication
Sales No E.14.II.E.2




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