Download Why is it important to focus on buyers?

Payments for Ecosystem
Services: Motivating Buyers
Ivo Mulder, Kerry ten Kate, Sara Scherr
Why is it important to focus on
buyers?
If beneficiary/user doesn’t pay….
• no disincentive for damaging behaviour and incentive for
conservation
• no market unless there’s demand as well as supply
• potential scale of PES limited
If only government payment….
• private sector not engaged
• potential scale of PES limited
• just shuffling existing public money – no additionality
• PES may not be most efficient/effective way to protect
ecosystem services
Kinds of buyers
Public:
• Central to local government
Private:
• Institutional – i.e. companies
• Retail - i.e. consumers / private households
Scope of “private PES”
1. Private entity pays for clear ES for business
motivation.
2. Payments made on behalf of the consumers /
households (eg higher water prices)
“Narrow” definition
ecosystem service
Ecosystem
Services
Private Sector
Payments
“Broad”
definition
ecosystem
service
“Narrow”
definition
private sector
payment
“Broad”
definition
private
sector
payment
1
3
2
4
Figure …: Schematic overview of differentiation in private
payments for ecosystem services.
3. Payments for an
ecosystem good
(eg NTFP,
genetic
resources);offset
s;
indirect payments/
conservation (eg
The private PES study
Phase I: existing buyers
• Assess the scale and nature of private PES of
four kinds: carbon, water, biodiversity,
landscape beauty
• Discuss with private buyers their motivation,
experience and appetite for PES
Phase II: potential buyers
• Assess the potential scale and nature of private
PES
• Assess prerequisites for private PES to take off
Motivations of buyers
Regulatory compliance
• Treaties (Kyoto/CDM and carbon; CBD and genetic resources)
• Cap-and-trade system
Benefits related to core business functions
• Business opportunity: new markets (carbon offsets) or marketing/“green”
branding
• Access to raw materials: secure, sustain or reduce costs of key natural
resource inputs (eg uncontaminated water for bottling, “Charismatic”
macrofauna for ecotourism)
• License to operate: better relations with regulators and local communities
• Value: Enhance or maintain the financial value of land, forest or other
assets belonging to the company
• Employees: staff pride and morale, recruitment and retention.
Benefits related to philanthropy/charity
• Community relations, good PR.
• Different budgets from core business, less reliable
What are buyers looking for?
• Clarity on the services.
• Clarity on the business case.
“What are we paying for and why?”
• Defined property rights.
• Policy support for markets.
• Something they don’t get for free already.
• Low transaction costs.
• Reliable and informed partners.
Can you help us?
• Do you know examples of private PES?
• Do you have opinions on the scope and
definition of private PES?
• Do you have views on the potential for
private PES?
Conclusions
• There’s no market without demand.
• PES research is dominated by supply-side
analyses.
• There is inadequate information on the
existing and potential demand for PES,
particularly from private buyers.
• Work in this area would help countries
establish their strategy and expectations
for PES.
Thank you
• Ivo Mulder
[email protected]
• Kerry ten Kate [email protected]
• Sara Scherr
[email protected]