Wednesday 2and September 2009REDD Workshop - Oasis, Morogoro 31st-3rd Sept'09 1 Payment for Environmental Services (PES) and REDD Prof Kassim Kulindwa (UDSM), Prof Yonika Ngaga (SUA) and L. Makarios (SUA)

Wednesday 2and September 2009REDD Workshop - Oasis, Morogoro 31st-3rd Sept'09 2 Outline of the presentation Background to PES Genesis and Rationale for PES Types of PES schemes Public and Private Covering various ecological services Conditions for Success of PES Schemes Experience around the World Experiences in Tanzania PES Link to REDD Prospects for PES in Tanzania Conclusions

Wednesday 2and September 2009REDD Workshop - Oasis, Morogoro 31st-3rd Sept'09 3 Background to PES Markets for Environmental Services (MES) approach integrate economic growth and ecological integrity Environmental services (ES) represent the flow of goods and services derived from nature i.e Ecological functions (carbon sequestration, microclimate regulation, habitat, etc PES concept has emerged in recent years as a potential financing mechanism for achieving ecosystem conservation and improving the livelihoods of communities.

Wednesday 2and September 2009REDD Workshop - Oasis, Morogoro 31st-3rd Sept'09 4 …cont/ Background PES came into being after the failure of the former conservation approaches and initiatives Command-and-control approaches Lack of resources by government to manage natural resources (environmental goods and services)

Wednesday 2and September 2009REDD Workshop - Oasis, Morogoro 31st-3rd Sept'09 5 Typology of PES Schemes Public schemes Basin wide, or users of public amenity e.g water Private schemes Hydropower operators Water bottlers Different types of services e.g. Carbon sequestration Watershed protection Landscape aesthetics Biodiversity conservation

Wednesday 2and September 2009REDD Workshop - Oasis, Morogoro 31st-3rd Sept'09 6 Conditions for Success of PES Schemes The establishment of a PES scheme must start with the identification and quantification of the demand for the service. The PES schemes should be designed in a such a way so as expected and actual benefits exceed inconveniences and costs imposed by the scheme At the same time net benefits to the paying party should exceed those before the scheme

Conditions for Success of PES Schemes PES systems must be designed in such a way so as operate independently of external financial resources after a previously determined period to ensure sustainability. Monitoring is essential the smooth operation of a PES scheme. It must include the establishing of a base line, as well as the socio-economic and environmental impact of the project. Wednesday 2and September 2009REDD Workshop - Oasis, Morogoro 31st-3rd Sept'09 7

Conditions for Success of PES Schemes Users and providers of the service as well as the service itself must be clearly defined. PES schemes for ecological services have greater potential of effectively improving resource management if there is a direct relationship between providers and users of the service. Wednesday 2and September 2009REDD Workshop - Oasis, Morogoro 31st-3rd Sept'09 8

EXPERIENCE AROUND THE WORLD United States: Good water quality and sustainable water supplies for various uses in New York (Catskils Municipal scheme –public saved US$ 7- 9 billion for 10 years). Costa Rica: Contribution financially by water users to the protection and maintenance of adequate forest cover so as to enable catchment infiltration and recharge (public) Ecuador: A fund for catchment forest management for water, catchment conservation fees, which are included in urban water bills (public scheme) Lao PDR: Payment to protected areas from HEP plant in order to ensure sustainability of water flow by HEP operator (Private –Public) Wednesday 2and September 2009REDD Workshop - Oasis, Morogoro 31st-3rd Sept'09 9

EXPERIENCES IN TANZANIA Not yet in full swing in the country Studies for WTP by water users in Pangani and Rufiji have been conducted and show promise There are pilot projects in Uluguru Mountains under WWF-TPO and CARE Tanzania, Think Global Act Local Research Project Wednesday 2and September 2009REDD Workshop - Oasis, Morogoro 31st-3rd Sept'09 10

PES LINK TO REDD PES initiatives motivates communities to conserve catchment and protected areas and therefore addressing REDD objective PES has direct link with climate change mitigation/adaptation and thus embracing CDM and REDD PES implementation means adhering the Kyoto protocol which advocate reduction of carbon emission Wednesday 2and September 2009REDD Workshop - Oasis, Morogoro 31st-3rd Sept'09 11

Challenges and Limitations Poorly defined property rights are the most common reason for failure in implementing PES schemes The complexity and diversity of land tenure systems Protected land, forest reserves, village forests reserves Uncertainty of benefits to poor communities How to minimize transaction costs Negotiating agreements, monitoring and enforcing them across communities is a costly exercise. Wednesday 2and September 2009REDD Workshop - Oasis, Morogoro 31st-3rd Sept'09 12

Challenges PES schemes may offer perverse incentives to land users. Generally PES programmes and activities have been disseminated poorly among the local population. Wednesday 2and September 2009REDD Workshop - Oasis, Morogoro 31st-3rd Sept'09 13

PROSPECTS FOR PES IN TANZANIA Government is working on water resources regulations in which PES is recognized PES has the potential to contribute substantially to REDD Pilot projects in Uluguru and feasibility studies in Pangani, Rufiji and Wami Ruvu basin indicates future potential Programmes such as PFM and WMA could become PES projects in the near future Wednesday 2and September 2009REDD Workshop - Oasis, Morogoro 31st-3rd Sept'09 14

Wednesday 2and September 2009REDD Workshop - Oasis, Morogoro 31st-3rd Sept'09 15 Conclusions PES systems present a series of advantages and opportunities which make them a promising mechanism to improve the conditions of ecological services since they can: Be used for sensitizing the participating population about the value of natural resources. Facilitate the solution of conflicts and the obtaining of consensus among the involved actors.

Wednesday 2and September 2009REDD Workshop - Oasis, Morogoro 31st-3rd Sept'09 16 ….cont/- Conclusions Improve the efficiency in the allocation of natural, social and economic resources. Generate new sources of funding to conserve, restore and value natural resources. Transfer resources to socially and economically vulnerable sectors, which offer environmental services.

Wednesday 2and September 2009REDD Workshop - Oasis, Morogoro 31st-3rd Sept'09 17 Thanks for your attention