IADB, November 19 th, 2007 Richard Huber Claudia S. de Windt Poverty and Environment Partnership-PEP Meeting: Infrastructure, Growth and Poverty Reduction: The Role of Ecosystems and Natural Resources Private Sector Views and Experiences on Ecosystem Services, Environment and Poverty, Session 2: What Division of Labor among Main Stakeholders would foster private sector investment in environment and livelihoods?

Conversion of forests to farmlands in Santa Cruz, Bolivia 1975: Forested landscape 2003: Large corporate agricultural fields transform the landscape

Shrimp farms replacing mangroves in Gulf of Fonseca, Honduras : shrimp farms and ponds have mushroomed, carpeting the landscape around the Gulf of Fonseca, Honduras, in blocks of blue and black shapes

Regulators The Law Plants Government: Create Market Conditions and Climate for Investment. Regulator/Mediator Regulatory Standards n Market-based Instruments n Legal Liability State

u Power u Social Norms u Negotiations u NGOs Maximize Impact on people and specific groups and information awareness NGOs Plants Citizens Community …and Other Actors are Important

u Reputation u Profits Consumers Investors Plants Markets

State Markets Community The New Model: Multiple Agents, Multiple Incentives

Payments for Ecological Services: Trends in the Americas u Database compiled from Rainforest Alliance Eco- Index, Katoomba Group, Ecosystem Marketplace u Original Transation sources like FONAFIFO (Costa Rica) and PSA-H (Mexico), Chicago Carbon Exchange. F Tries to assess PES trends in the marketplace – Price paid/HA/year, price/ton/yr # projects/country/year, type of project, are # of projects increasing or decreasing/country.

PES Trends in the Americas

Momentum or stagnation?

4 Countries have more proposals than ongoing.

Are Governments creating the right conditions for PES schemes to be profitable and sustainable? n Detailed country Analysis u Bolivia u Chile u Costa Rica u Colombia u DR u Ecuador u Panamá u Perú n Laws and Public Policies that facilitate or inhibit PES n Environment n Forest management, n Water resources management, biodiversity and protected areas n Fiscal and tax Laws n Public utilities, n Property rights

Are Governments creating the right conditions for PES schemes to be profitable and sustainable?

Are Governments creating the right conditions for PES schemes to be profitable and a sustainable approach to conservation?

Next Steps: n Conceptual and Policy discussion on enabling conditions n Need to refine concepts on property rights, legal nature of ecosystem/environmental services and parties to a PES agreement (Institutional Framework) n Lack of systematic information (Valuation) n Need to remove perverse incentives n Private Sector Trends and role n Best Practices n Hemispheric Approach?

Thank You!