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Payments for Environmental Services Nancy, April 2012 Patrice Harou.

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Presentation on theme: "Payments for Environmental Services Nancy, April 2012 Patrice Harou."— Presentation transcript:

1 Payments for Environmental Services Nancy, April 2012 Patrice Harou

2 Plan The context of environmental instruments The environmental instruments Command and Control Economic instruments Payments for environmental services at the global level Efficiency of the instruments

3 The context of environmental instruments Global context National Context Macro-economic Policy Sector Policies Environmental policies Resources limitation Efficiency of the instruments


5 Global and National context Global issues: Climate changes (KOF SEI) National decision in a global context: Macro Sector Decision in a National context: Sector Environmental decision through all the sectors: NEAP Investment decisions in all the sectors: Micro Budgeting for Sustainable development

6 Environmental Instruments Non-economic-Instruments Economic Instruments Other instruments

7 Command and Control Laws and regulations Environmental standards Technology standards

8 Voluntary instruments Eco-certification FLEGT Lacey EUTR

9 Economic Instruments Taxes (Pigou) Subsidies Market creations: (Cap and Trade Program) Payments for environmental services: see below

10 Other Instruments Extension Research Sharing information

11 Payments for Ecosystem Services Ecosystems services are the benefits that people obtain from the ecosystems: fresh water, protection from natural hazard, erosion control, global climate regulation (greenhouse gaz) but also timber, non-wood forest products, better agriculture yield. A payment for ecosystem services is a financial incentive offered to encourage the supply of a given ecosystem service.

12 Payments for Ecosystem Services For a transaction between a buyer and seller to be considered a payment for environmental services, that transaction must be voluntary, and must be for a well defined environmental service. Examples: payments to farmers to adopt conservation practice, convert cropland eroding soils, polluters pay farmers to sequester their emitted carbon, a change in land use, …

13 Payments for Ecosystem Services Stacking Payments above break-even point Proper marginal analysis: additionality You can stack payments up to the break-even point and no more for the program to respond to the additionality criterion and to be efficient Above that point, it is just a transfer with no corresponding benefits

14 PES of the GEF Problems with application at the global level Non-compliance Poor administrative selection of providers of environmental services Spatial demand spillovers Adverse self-selection: people would have done it anyway (most important problem)

15 Conclusions Instruments have to be chosen for a specific context Many different instruments exist PES is one economic instruments One of the problems of PES is the inefficiency resulting from adverse self-selection Monitoring of results is needed and much easier when only two agents are involved (Coase theorem)

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