91234 GEF INVESTMENTS ON Payment for Ecosystem Services SCHEMES Foreword Earth’s ecosystems have provided humans with goods and services for millennia. Every one of us depends in one way or another on renewable natural resources to fulfill basic needs like food and water, the maintenance of healthy crops, as well as climate regulation and disease control. Nature has also provided spiritual fulfilment and aesthetic enjoyment to millions around the world. Dr. Naoko Ishii The ecosystems that have supported human development over CEO and Chairperson Global Environment Facility the centuries are changing rapidly. Increasing consumption per capita by a growing human population is putting enormous pressure on many of these systems. Environmental indicators continue to decline, and some of these systems no longer provide sufficient resources to sustain previously stable human populations and cultures. The degradation in the health of some of these ecosystems is so severe that they are approaching the point were recovery will be difficult, expensive and time consuming. These trends must be reversed. The Global Environment Facility (GEF) has engaged in pioneering development of mechanisms that reward good stewardship of natural resources, including the structuring of Payment for Ecosystem Services (PES) schemes. For the GEF, the concept of PES includes a variety of arrangements through which the beneficiaries of ecosystem services compensate those providing the services. This publication summarizes the investments of GEF in PES from a variety of institutional, thematic and geographic perspectives. The publication also highlights some of the trends and opportunities for the establishment of PES schemes to generate global environmental benefits. Investments have ranged from global projects aiming at building the human and institutional capacity necessary to establish PES schemes, to stand-alone agreements between buyers and sellers in watersheds of high biodiversity value. I invite you to read this publication and explore what GEF is supporting in PES schemes in an effort to provide solutions to reverse the current degradation of Earth’s life support systems, while at the same time allow humans to explore the full potential of their natural and cultural inheritance. This publication summarizes the investments of the Global Environment Facility (GEF) since its inception in projects Payment for Ecosystem involving Payment for Ecosystem Services (PES). Services at GEF The following review is based on an analysis of 57 GEF projects in which PES is the core objective of the project or there is an explicit PES component/subcomponent in the project’s design. These 57 projects were chosen through a screening of the results frameworks of more than 500 GEF projects in GEF-1 to –5, which were in turn selected from the GEF Project Management Information System (PMIS) using key words closely related to PES. The 57 projects include most of those in the FAO publication (FAO 2007), the review of the financial mechanisms in GEF Land Degradation projects (Reed 2009), and those either listed by the GEF Agencies on their web sites (World Bank) or provided by the agencies for the purpose of this review (UNEP’s Division for GEF Coordination). This report does not cover GEF investments in financial mechanisms such as trust funds, ecotourism or certification schemes, unless there is an explicit reference to PES. GEF investments in PES projects have been significant. GEF has invested $70 million in 14 projects where PES is central to the project’s design, and leveraged an additional $395 million in co-financing. GEF has also supported 15 projects where PES is part of the project design but not a core element (GEF $73 million and $281 million in co-financing), and another 28 projects where PES is only a minor element in the project (GEF $82 million and $918 million in co-financing). Only a very small portion of the budget for projects in these last two groups targeted the PES elements. 2 THE GLOBAL ENVIRONMENT FACILITY Introduction Ecosystem Services (ES) biodiversity loss and ecosystem degradation. In TEEB’s Report for Policymakers, PES schemes are listed as poten- The Millennium Ecosystem Assessment (MEA), The tially useful mechanisms to compensate those who main- Economics of Ecosystems & Biodiversity study (TEEB) and tain the flow of ecosystem services. The study emphasizes the Intergovernmental Platform on Biodiversity and that PES schemes offer considerable potential to raise new Ecosystem Services (IPBES) provide a comprehensive and funds for biodiversity or to use existing funding more effi- useful framework to understand human dependence on ciently, and that both the public and private sectors can ecosystem services and how best to protect these services play a role in establishing PES in different contexts. in perpetuity. In these three authoritative studies, payment for ecosystem services (PES) is listed as one of the mecha- nisms that should allow societies to pay for the mainte- Payment for Ecosystem nance of these services. Services (PES) The MEA (2005), a project funded by the GEF in early 2000, defines ecosystem services (ES) as “the benefits people The definition of payment for ecosystem services (PES) obtain from ecosystems.” These benefits are the multiple varies widely, from narrow market-based definitions with commodities that are supplied by natural ecosystems as a direct transactions between providers and beneficiaries result of their structure and function; the conditions and pro- (including schemes where private buyers and sellers cesses through which nature “sustains human life” on earth arrange voluntary and conditional transactions for the (Daily 1997). Ecosystem services are the planet’s life support delivery of ecosystem services), to broader schemes in systems, those that we cannot live without. From a functional which those who benefit from the ecosystem services pay point of view, the MEA classifies these services into four (usually indirectly) those who provide the services. broad categories: provisioning, such as the production of food and water; regulating, such as the control of climate and For the GEF, the PES concept has been about arrangements disease; supporting, such as nutrient cycles and crop pollina- between buyers and sellers of environmental goods and ser- tion; and cultural, such as spiritual and recreational benefits. vices in which those that pay are fully aware of what it is that Ecosystem services can also be classified according to their they are paying for, and those that sell are proactively and geographical scale (local, regional, global), value to society deliberately engaging in resource use practices designed to (direct or indirect), or the type of natural ecosystem providing secure the provision of the services. GEF has taken this prac- the service (forest, coral reef, wetlands, etc.) (WRI 2009). tical approach to PES, because the GEF instrument was designed to serve the governments of member countries Ecosystem services are receiving increased attention in the while at the same time exploring mechanisms for the private context of human development through The Economics of and public sectors to invest in conservation and sustainable Ecosystems & Biodiversity study (TEEB). This is an interna- development. The adoption of a wide-angle view of PES by tional initiative designed to call attention to the global eco- the GEF is further justified by the fact that the different GEF nomic benefits of biodiversity, and the growing costs of Agencies have adopted different definitions of PES. GEF INVESTMENTS ON PAYMENT FOR ECOSYSTEM SERVICES SCHEMES 3 Ecosystem services and PES schemes are central to the overall architecture of the GEF and to the Biodiversity Ecosystem Services Strategy in particular. The goal of the Biodiversity Focal Area is “the conservation and sustainable use of biodiver- sity, the maintenance of the ecosystem goods and ser- and PES at GEF vices that biodiversity provides to society, and the fair and equitable sharing of the benefits arising out of the utiliza- tion of genetic resources.” To achieve this goal, the GEF-5 Biodiversity Strategy encompasses four complementary and mutually reinforcing objectives: a. Improve sustainability of protected area systems; b. Mainstream biodiversity conservation and sustain- able use into production landscapes/seascapes and sectors c. Build capacity for the implementation of the Cartagena Protocol on Biosafety. d. Build capacity on access to genetic resources and benefit sharing (ABS) The GEF’s Biodiversity Focal Area Strategy makes explicit reference to PES as a mechanism to help achieve two of its Objectives: 1) the Sustainable Financing of Protected Area Systems at the National Level and 2) Fostering Markets for Biodiversity Goods and Services. In these two strategic programs, the GEF supports the design and implementation of PES schemes as revenue mechanisms to support biodiversity conservation in protected areas and to compensate resource managers for off-site ecolog- ical benefits associated with biodiversity conservation- compatible land-use practices. The GEF Biodiversity Strategy also calls for the strengthening of the terrestrial protected area network as a way to cover gaps in areas that provide the ecosystem services that support life in terrestrial, freshwater and marine environments alike. The GEF has provided financial resources for PES projects across focal areas since the early 1990s, using a variety of thematic and geographic approaches. There has been a sig- nificant shift during GEF-5 towards projects and programs which seek to achieve multi-global environmental benefits by combining resources from more than one focal area to achieve greater impact, in a more integrated manner. A spe- cific example is the SFM/REDD+ Program which is used to coalesce and augment MFA investments in transformative initiatives in forests that deliver multiple global environmen- tal benefits, including climate change mitigation, biodiver- sity, and land degradation-related benefits in the context of sustainable forest management. The SFM/REDD+ Program include the establishment of PES as a core output. Ecosystem services and PES schemes are also very rele- vant to the Land Degradation (LD) Focal Area which iden- tifies improved provision of agro-ecosystem and forest 4 THE GLOBAL ENVIRONMENT FACILITY ecosystem goods and services as key goals. Approaches to Projects on PES Portfolio Review and Analysis The GEF portfolio of PES projects varies widely with regard to the approach used to establish and implement PES schemes. The GEF has funded a number of projects to build the human and institutional capacity required by stakeholders to develop and implement PES schemes, at global, national and local scales. In addition to building individual and institutional capacity, some projects have targeted the economic valuation of ecosystem services, or the development and implementation of pilot PES schemes financed either by governments or by arrange- ments between buyers and sellers. GLOBAL PES PROJECTS The GEF has supported PES project at a global scale, because there are a number of components on building institutional and human capacities for developing PES schemes that are a common to many in countries with the potential of delivering ecosystem services. Participating countries also benefit from these global projects, as there are economies of scale, including capacity for aggregat- ing and disseminating lessons learned. In addition to the Millennium Ecosystem Assessment, the GEF is supporting four global projects, two of which focus on building capacity: UNDP’s Institutionalizing Payments for Ecosystem Services and UNEP’s Project for Ecosystem Services—ProEcoServ. Institutionalizing Payments for Ecosystem Services is a global project with emphasis on tropical America and South and East Africa. This project seeks to make informa- tion on PES available to all stakeholders by means of the “ecosystem marketplace,” improve capacity for institu- tional and policy development, and deliver operational models to design, establish and implement schemes for payment for biodiversity conservation in agricultural land- scapes. The project also targets business models for bio- diversity offsets, PES for biodiversity in forest enterprises, and PES assessment tools for coastal and marine habitats. GEF INVESTMENTS ON PAYMENT FOR ECOSYSTEM SERVICES SCHEMES 5 The GEF has invested $5.3 million and leveraged an addi- additional financial support from the Mainstreaming tional $11.6 million in co-financing for this project. Market-based Instruments for Environmental Management project implemented by the World Bank. The Project for Ecosystem Services—ProEcoServ, a global Funding was made available for the development and project with pilots in Chile, Vietnam, Trinidad & Tobago, implementation of sustainable financing mechanisms, South Africa and Lesotho, seeks to integrate the sustain- scaling-up the Environmental Services Program, and able use of biological resources and ecosystem services removing barriers to the participation of small land-own- into national decision making and development ers in the PES program. GEF invested $10 million and lev- approaches. The project is developing tools for policy eraged $70 million in co-financing for the project. development and implementation, enhancing the policy- Detailed reviews of the achievements and limitations of science interface level to increase the relevance of ecosys- the Costa Rica PES scheme can be found in Chomitz et al. tem services in policy making, and promoting innovative (1998), Hartshorn, et al. (2005), Sierra and Russman (2006) international mechanisms for non-carbon-based ecosystem and Sanchez et al. (2007). The new UNDP GEF-5 project services. The GEF has invested $6.2 million and leveraged (4836) “Conservation, sustainable use of biodiversity, and an additional $14 million in co-financing for this project. maintenance of ecosystem services of internationally important protected wetlands” aims at adjustment of The other two global GEF projects are UNEP’s existing system of payment for environmental services Communities of Conservation: Safeguarding the World’s (PES) to include ecosystem services provided by wetlands. Most Threatened Species, in Bolivia, Colombia, Ecuador, These could generate an estimated $41-$64/ ha. Peru and Venezuela, and Expanding FSC Certification at Landscape-level Through Incorporating Additional Eco- Mexico’s National Payment for Hydrological Environmental system Services, in Chile, Indonesia, Nepal and Vietnam. Services program targets the peasant communities of the These two projects consider PES as a potential source of ejidos (peasant communal properties). This program, which financial resources to protect biodiversity, with the details was designed by the federal government to pay forest to be worked out during project implementation. owners for the benefits of watershed protection and aquifer recharge, seeks to complement the nation’s forestry and water policy by providing economic incentives to avoid NATIONAL PES SCHEMES deforestation in areas where water problems are severe. The GEF supported the Mexico program in developing sustain- The GEF has invested in the two most important national able financing mechanisms for biodiversity, water and carbon PES schemes developed and implemented so far: the users; developing and strengthening existing and new PES Environmental Services Payment Program (FONAFIFO) in programs; and supporting environmental services providers Costa Rica and the Payment for Hydrological Environmental and payments for service providers. The scheme is based on Services Program in Mexico. GEF’s involvement in these water fees, creating a direct link between those who benefit projects was not only as a source of funding for the PES from the environmental services and those who provide schemes, but also to strengthen the institutional and tech- them. It also relies on funds from the World Bank, the nical capacity to manage complex systems of payments Government of Mexico and the GEF. GEF invested $15.3 for environmental services. million and leveraged $166 million in co-financing for the project. Detailed reviews of the achievements and limitations The GEF supported Costa Rica’s national PES scheme in the Mexico PES scheme can be found in Muñoz-Piña et al. through the Ecomarkets project implemented by the World (2008) and Alix-Garcia, J et al. (2009). Bank. This project, which is considered the world’s most successful national-level application of the environmental services approach, compensates landowners for activities PUBLIC-PRIVATE SCHEMES that have been identified as contributing to a sustainable environment, including conservation of natural forests, The GEF is interested in promoting partnerships with the reforestation through sustainable plantations and agro-for- private sector to foster innovation, open new markets, and estry. Funding sources for this program are obtained from a achieve greater scales of investment. These partnerships fuel tax (80 percent of funds), revenues from a forestry tax should subsequently be operated as sustainable long- and from a World Bank loan, and grants from the term instruments to promote private sector participation Government of Germany (for forest protection), the in the conservation of biodiversity and environmental Government of Norway (for carbon sequestration) and the benefits of global importance. GEF. The GEF has invested $8.3 million and leveraged an additional $51.9 million in co-financing for this project. The Costa Rica PES scheme (or PSA in Spanish) received 6 THE GLOBAL ENVIRONMENT FACILITY Under the GEF Earth Fund, a $50-million public-private key watersheds. In these projects sellers are mostly local partnership initiative designed to enhance GEF engage- communities and farmers. Potential buyers include one or ment with the private sector, the GEF recently approved more of the following: water-users and water-utilities, the Earth Fund Platform Piloting Public-Private Funds for carbon markets, the GEF, or undetermined at project’s Watershed Protection. The objective of this platform, initial stages. While potential buyers may have expressed implemented by the Inter-American Development Bank willingness to pay, securing commitments to engage in (IDB), is to support the establishment of at least five Water these schemes has always been difficult during early Funds across Latin America and the Caribbean to pay for stages of development of the PES schemes. the conservation of watersheds that provide water and support biodiversity. Funds have been already identified In the case of Brazil (GEF 2765), the watersheds targeted in Brazil (Sao Pablo and FUNDAGUA in the state of for the project generate hydroelectricity and approxi- Espirito Santo), Colombia (Bogota and Medellin), Mexico mately 95 percent of the greater Vitória metropolitan (Monterry), Dominican Republic (Santo Domingo and area’s water supply. The project in Gabon seeks to protect Yaque), and Peru (Lima). A core element of this platform is the habitat of a significant number of endemic plant and that the five Water Funds are set in watersheds that not animal species. Agreements between buyers and sellers only produce water, but that also provide global environ- have also been reached in productive landscape in the mental benefits, including terrestrial and freshwater eco- Fynbos and grasslands of South Africa, which provide systems and species of global importance. For this important ecosystem services including water, food, platform, GEF is investing $5 million and leveraging at fiber and medicines. least $15 million in co-financing, of which approximately 50 percent will be from the private sector. In these projects, the GEF is investing in building human and institutional capacity to establish and implement PES schemes. In some instances, GEF financed the start-up STAND-ALONE AGREEMENTS BETWEEN costs of the schemes as well as the recurrent costs to the BUYERS AND SELLERS land owners, at least during the term of the project. A common challenge of these stand-alone schemes has The GEF portfolio includes a number of projects in which been convincing the buyers to enter into contractual the PES schemes are identified, structured and implemented agreements for the payment of ecosystem services that in directly between buyers and sellers. The geographic the past had been provided for free. settings for these projects include watersheds in a variety of natural ecosystems, such as the Atlantic Forests and There is a small group of projects where PES is consid- Cerrado savannahs of Brazil (GEF 2356 and 2765), and ered as a potential revenue source for protected areas or tropical rain forests in the Dominican Republic (GEF 2512), buffer zones. These include projects in the northern Gabon (GEF 3761), Mexico (GEF 3816) and Nicaragua Andes (Bolivia, Colombia, Ecuador, Peru and Venezuela), (GEF 3981). The projects in Brazil, the Dominican Africa (Lesotho and Uganda), and Southeast Asia (Papua Republic, Mexico and Nicaragua aim at maintaining forest New Guinea). cover for the protection of biodiversity and water flow in GEF INVESTMENTS ON PAYMENT FOR ECOSYSTEM SERVICES SCHEMES 7 Projects by Focal Area GEF PES projects have been designed to support con- servation efforts within the protected area systems of several countries, including Colombia, Ecuador and Peru, and in productive landscapes, such as the Fynbos PES PROJECTS BY FOCAL AREA and grasslands of South Africa and the mountains of Venezuela. The GEF has also invested in biodiversity PES projects at the national level in Panama to strengthen the regional initiative of the Mesoamerican Corridor, as well as in individual field sites in the tropical mountains of the Dominican Republic. BIODIVERSITY-CLIMATE CHANGE (BD-CC) The GEF has supported Biodiversity-Climate Change PES projects in Argentina, Nicaragua and Thailand. The project in Argentina, Establishment of Incentives for the Conservation of Ecosystem Services of Global Significance (GEF 3623), aims at testing PES mechanisms and replicating them across the country to protect natural Of the 57 GEF projects with PES as the core, component ecosystems. The project includes demonstrations of PES or element, 32 are in the Biodiversity Focal Area, 11 are schemes in four pilot sites in forest and pampas biomes. Sustainable Forest Management, 10 are Multi-focal Area The PES schemes will be scaled-up in at least two more projects (including Biodiversity), and 4 are in land degradation. provinces. The GEF is investing $2.8 million and leverag- ing $6.9 million in co-financing for this project, which is implemented by UNDP and UNEP. BIODIVERSITY (BD) The project in Nicaragua, Integrated Management in The GEF has supported PES projects through the Lakes Apanás and Asturias Watershed (GEF 3891), seeks Biodiversity Focal Area in a variety of ecosystems, to protect 7,500 ha of forest in the Apanás watershed, including tropical lowland and montane rain forests under a PES scheme that will involve up to 100 contracts (Brazil, Uganda, Mexico, Nicaragua, Gabon), subtropical with farmers and private nature reserve owners who will rain forests (Thailand), temperate forests (Bulgaria be paid for water provision, biodiversity conservation and and Romania), tropical savannas (Kenya), and open carbon sequestration. The GEF is investing $4.0 million grasslands (South Africa). The benefits derived from and leveraging $4.9 million in co-financing for this project, these ecosystems include water provision, carbon which is implemented by the IDB. storage and biodiversity conservation. Specific biodiversity Global Environmental Benefits are included in some of The third BD-CC PES project, Integrated Community- the projects, for example the Mbe watershed in Gabon based Forest and Catchment Management through an has a very high number of endemic plant and animal Ecosystem Service Approach (GEF 3445), is in Thailand. species, while the project in Uganda encompasses the The project, which is part of the Sustainable Forest largest chimpanzee populations in the country living Management (SFM) program, aims at creating an enabling outside protected areas. policy and institutional environment for scaling-up of 8 THE GLOBAL ENVIRONMENT FACILITY integrated community-based forestry by harnessing investing $4.4 million and leveraging $25.4 million in co- innovative financing mechanisms, including PES and financing for the project, which is implemented by UNDP. bio-carbon schemes. The GEF is investing $1.7 million The project Sustainable Land Management in the Semi- and leveraging $10.7 million in co-financing for the Arid Sertao (GEF 2373) will sponsor regional workshops project, which is implemented by UNDP. that bring together representatives from other projects in Brazil and Latin America that involve incentives and pay- ment mechanisms for environmental services. The project LAND DEGRADATION (LD) is intended to support the establishment of an incentive program (FISP Ecológico) for land-use practices that gen- The GEF has four PES projects in the Land Degradation erate environmental services. This project will also train Focal Area, and six of the 10 Multi-focal Area projects representatives of 20 nongovernmental organizations include Land Degradation (see Multi-focal Area projects). (NGOs) operating in northeast Brazil to support farmers in accessing the carbon market. GEF is investing $5.9 million The objective of the project Agricultural Productivity and and leveraging $9.2 million in co-financing for the project, Sustainable Land Management (GEF 2355) in Kenya is to which is implemented by The International Fund for reduce sedimentation in the study area. This project will Agricultural Development (IFAD). support the piloting and operationalization of PES pro- grams to increase carbon sequestration and reduce sedi- mentation in a pilot area by developing the knowledge INTERNATIONAL WATERS (IW) base, identifying appropriate buyers and producers of environmental services, building capacity and promoting In the International Waters Focal Area, there are no PES dialogue. The GEF is investing $10 million and leveraging projects or projects with PES elements. In only two an additional $72 million in co-financing for this project, instances in this focal area, the GEF has invested in the which is implemented by the World Bank. valuation of environmental services, with measurements to be linked to future PES schemes. However, although PES The Ecosystem Restoration of Riparian Forests in São has not been the focus of GEF investments in Paulo project (GEF 2356) in Brazil will develop a compre- International Waters, ecosystem services have. Indeed, hensive policy and regulatory framework to support the the GEF’s portfolio of Large Marine Ecosystem (LME) proj- creation of funding mechanisms, such as PES, to facilitate ects represents a good example of how the ecosystem long-term riparian forest restoration by small farmers. concept or the ecosystem approach has been instrumen- Fifteen microwatersheds will be selected to host pilot ini- tal in the design of projects aiming to achieve the sustain- tiatives covering an area of about 45,000 hectares and able management of natural resources in general and of involving 1,500 rural families. GEF is investing $7.0 million sustainable fisheries in particular. GEF has invested in 17 and leveraging $11.8 million in the project, which is imple- LME projects so far, in areas including the Agulhas and mented by the World Bank. Somali Current along the African coast of the Indian Ocean, the Benguela Current (South Africa, Namibia and In the project Demonstrating Sustainable Land Angola), the Caribbean, the Central American Pacific from Management in the Upper Sabana Yegua Watershed Panama to Mexico, the Humboldt Current (Peru and System (GEF 2512) in the Dominican Republic, payments Chile), the Canary Current along the Atlantic north coast are made in cash and in kind for the maintenance of of Africa, the Mediterranean Sea, and the Guinea Current forested areas, to guarantee the availability of timber and in West Africa. other building materials for home improvements. GEF is GEF INVESTMENTS ON PAYMENT FOR ECOSYSTEM SERVICES SCHEMES 9 SUSTAINABLE FOREST MANAGEMENT (SFM) have specific PES elements. Commonly these projects are utilizing PES as a means to effect change in land manage- For 20 years the GEF has recognized the importance of ment and use practices in project pilot areas. In Albania forests for their role in sustaining biodiversity, their ability to (GEF 4778) PES is being used as an interim incentive for provide a range of important environmental services and farmers and community members to adopt improved sus- their potential contribution to many countries’ sustainable tainable management practices which would be unviable development plans. By the end of the fourth replenishment in the short-term. In the main these PES components are period the GEF had invested over $1.6 billion in more than focused on environmental services related to water and 330 forest projects. Within these there have been six proj- carbon. In a small number of cases (GEF 4472, 4778 and ects which have included specific PES elements. For the 4779) the projects will specifically develop REDD+ carbon most part, these projects include a PES element as a poten- credits for the voluntary carbon market. Within Peru (GEF tial mechanism for sustainable financing. These projects are 4750) the project is seeking to increase available funding targeting the tropical rainforests of Southeast Asia (GEF for government-financed PES mechanisms and in Mexico 2751, 3443, 3445 and 3627) as well as some dry and mon- (GEF 4792) GEF resources are channeled through a tane forests in South America (GEF 3933). One project (GEF national trust fund to finance the provision of water, 3951) is global in nature being implemented in south east carbon and biodiversity benefits Asia, south Asia and south America. In its fifth replenishment cycle, the GEF has strengthened MULTI-FOCAL AREA its SFM efforts to deliver multiple global environmental benefits from forests, including the protection of forest In the multi-focal area projects included in this analysis, habitats, forest ecosystem services, mitigation of climate PES is identified as one potential financial mechanism, change and protection of international waters, reflecting along with other schemes like carbon sequestration, eco- the transversal nature of forests globally. tourism and trust funds. Given the novelty of PES as a potential mechanism for sustainable financing, most proj- GEF-5 includes a separate $250 million funding envelope ects start by identifying the environmental services, the for forests through support for a wide range of landscape potential buyers and sellers, and institutional arrange- level SFM tools. This operates as an incentive mechanism ments and conditions for payment. for developing countries to invest up to $750 million of their STAR allocations from biodiversity, climate change The multi-focal area project that has received the most and land degradation in forests. Altogether, up to $1 bil- attention is the World Bank project Integrated Silvo- lion will be made available for SFM/REDD+ throughout Pastoral Approaches to Ecosystem Management, in GEF-5 with a goal to achieve multiple environmental ben- Colombia, Costa Rica and Nicaragua (GEF 3574). Several efits from improved management of all types of forests. studies have analyzed how this project has successfully The portfolio of projects and programs implemented delivered local and global environmental benefits, under the SFM strategy is resulting in effective provision- including carbon sequestration, biodiversity conservation ing of forest ecosystem services and strengthen the liveli- and reduced land degradation. In the World Bank proj- hoods of people dependent on the use of forest resources. ect Mainstreaming Biodiversity in Sustainable Cattle Ranching in Colombia, the PES element specifically tar- Within this mechanism $401 million in GEF grants has gets watershed management through increased tree been invested in 31 projects and 3 programs, utilizing $90 cover. This project is building on the experiences of the million from the SFM/REDD+ incentive. Within the SFM/ silvo-pastoral project. REDD+ portfolio there are 10 projects and 1 program that 10 THE GLOBAL ENVIRONMENT FACILITY PES is also mentioned related to the provision of water- Projects by Region shed services (and carbon) in other multi-focal area proj- ects, including IFAD’s Promotion of Sustainable Forest The GEF portfolio of PES projects is concentrated in and Land Management in the Vietnam Uplands, UNDP’s Latin America and the Caribbean (32 projects), followed Strengthening Community-Based Forest and Watershed by Africa (10 projects) and Asia (8 projects). There are Management in Indonesia, IFAD’s Rehabilitation and also four global projects and three in Europe; one Sustainable Use of Peatland Forests in South-East Asia, regional (Bulgaria and Romania) and two country based the World Bank’s Mainstreaming Biodiversity Protection (Albania and Croatia). While the concentration of GEF within the Production Landscapes and Protected Areas PES projects in Latin America reflects differences in the of the Lake Aibi Basin in China, and the IFAD/UNIDO institutional capacity to develop and implement PES project Participatory Control of Desertification and schemes, there are some new projects that include PES Poverty Reduction in the Arid and Semi-Arid High schemes: the “Sahel and West Africa Program in Support Plateau Ecosystems of Eastern Morocco. of the Great Green Wall Initiative -GGWI” (ID 4511) and “Watershed Approach to Sustainable Coffee Production In Peru (GEF 4773) is developing two PES mechanisms in Burundi” (ID 4631). In the GGWI programmatic focusing on water resources via specially created trust approach Burkina Faso, Ethiopia, and Nigeria have proj- funds. The trust funds are to be used to support prepara- ects that include PES schemes. For instance, Burkina tory activities and start up costs to operationalize the Faso will pilot payment for environmental and ecosystem PES, with downstream water users such as hydro-electric, services provided by local communities, to reduce pres- mining and agriculture ultimately transferring paying for sure on forest resources. Other projects in Africa include improved water provision. “Developing an Experimental Methodology for Testing the Effectiveness of Payments for Ecosystem Services to Enhance Conservation in Productive Landscapes” in Uganda” and “Sustainable Management of the Mbe River Forested Watershed through the Development of a Payments for Ecosystem Services (PES) Mechanism” in PES PROJECTS BY REGION Gabon. Changes in policy and improvements in human and institutional capacity should result in more globally balanced portfolio overtime. GEF INVESTMENTS ON PAYMENT FOR ECOSYSTEM SERVICES SCHEMES 11 Projects by Agency Program in South Africa) and selected watersheds in the Mbe River in Gabon and the Upper Sabana Yegua Most of the PES projects supported by the GEF have Watershed System in the Dominican Republic. UNDP has been implemented by the World Bank, UNEP and UNDP. one project with UNEP in Argentina to test PES mecha- IFAD, IDB and the United Nations Industrial nisms and replicate them across the country to protect Development Organization (UNIDO) maintain a small natural ecosystems. New PES projects in GEF-5 include portfolio of GEF PES-related projects. investments in Latin America, Asia and Central Europe. UNEP has 9 GEF PES projects, including one with UNDP. In relation to PES, UNEP has concentrated its efforts on PES PROJECTS BY AGENCY building capacity at various levels to facilitate the appli- cation of ecosystem services concepts and the develop- ment and testing of PES in a few well-selected sites, as well as on developing and testing PES schemes. Specifically, UNEP has focused on the economic valua- tion of environmental services, the development and application of management and decision-making tools for the consideration of environmental services in deci- sion making, and the application of PES schemes under a wide range of environmental and socio-economic con- texts. Additionally, UNEP has been engaged in the development and implementation of pilot PES schemes in Uganda and the Danube Basin, and in the valuation of “bundled” ecosystem services in the Global ProEcoServ project. In GEF-5, UNEP has a project in Indonesia, Kenya, Mexico, Philippines, and Tanzania entitled “Multiplying Environmental and Carbon Benefits in High Andean Ecosystems. The World Bank has the largest portfolio of PES projects, with 23 GEF PES projects, including one with UNDP. IFAD has 7 projects with a PES component, including World Bank projects range at various scales: from global one with UNIDO. These projects include the Sustainable (i.e. “Science and Innovation Networks for Coral Reef Management of Protected Areas and Forests of the Resilience ScINet CR2” -ID 4333) to regional (“Sahel and Northern Highlands of Peru, the Agro-Biodiversity West Africa Program in Support of the Great Green Wall Conservation in the Souss Massa Draa Region of Initiative” ID 4511 and the “Integrated Silvo-Pastoral Morocco, the Promotion of Sustainable Forest and Land Approaches to Ecosystem Management (Colombia, Management in the Vietnam Uplands, the Rehabilitation Costa Rica and Nicaragua) ID 947) to national (i.e. the and Sustainable Use of Peatland Forests in South-East government-financed PES schemes in Costa Rica and Asia, and the Sustainable Land Management in the Mexico) to watershed pilots like the Espirito Santo Semi-Arid Sertao in Brazil. In addition, IFAD has one Biodiversity and Watershed Conservation and project with UNIDO entitled Participatory Control of Restoration Project in Brazil. Desertification and Poverty Reduction in the Arid and Semi-Arid High Plateau Ecosystems of Eastern Morocco. UNDP has 15 PES projects, including one with UNEP and another with the World Bank. These projects range from IDB has five PES projects: the Integrated Management in global efforts to increase the visibility and use of PES Lakes Apanás and Asturias Watershed (Peru), schemes as mechanisms to protect biodiversity and Mainstreaming Biodiversity in Palm Cropping in other global environmental benefits to interventions at Colombia with an Ecosystem Approach, and the Water the landscape level (the National Grasslands Biodiversity Fund, which is under the Earth Fund. 12 THE GLOBAL ENVIRONMENT FACILITY GEF has supported the development and implementation Summary of of a significant number of PES schemes around the world. These schemes aim at channeling funding to land users in exchange for Global Environmental Benefits. The screening Portfolio Analysis of 500 projects in the GEF Project Management Information System (PMIS) showed that there are 42 projects which either have PES as the main objective of the project (14 projects), or which have a PES component built into the architecture of the project (43 projects) GEF is also investing in other financial mechanisms such as trust funds, ecotourism and certification schemes of terrestrial, freshwater and marine biological resources. The REDD+ agenda is supported with a growing portfolio under the SFM multi-focal area program. Project Design GEF has supported projects where the level of effort and geographical scope vary widely. The GEF has financed projects where PES schemes are at the center of the proj- ect, or PES is a component of a larger project. For the projects where PES is the main objective, the aim has been to build human and institutional capacity to deliver PES schemes or to develop and implement national PES schemes, such as in Costa Rica and Mexico. When PES is not the main objective of the project, but is considered in the design, there are two types of projects: those in which there is an explicit set of activities in pursuit of a PES scheme and those in which PES is mentioned as an optional financial mechanism for conservation. For the first group, there is a specific plan that includes activi- ties such as modifying the policy and regulatory frameworks to make PES schemes viable, building human and institu- tional capacity, or setting up and implementing pilot PES schemes, many in watersheds. In many cases these projects are utilizing PES as a tool for effecting change in manage- ment practices of land managers and local users. Within these the projects may be setting up the PES mechanism and also acting as the initial buyer of the environmental ser- vices in order to jump start the PES in the absence of a ready market or easily identifiable service buyer. GEF INVESTMENTS ON PAYMENT FOR ECOSYSTEM SERVICES SCHEMES 13 For the second group, PES is mentioned as one of several could also provide a format for the longer term operation financial strategies (i.e. trust funds, ecotourism) without of the PES. It appears that projects with a strong PES com- providing specific plans for development and implemen- ponent, not only in terms of financial resources but also in tation of a PES scheme. Projects are also utilizing specifi- terms of the level of engagement of relevant stakeholders cally created trust funds as the financial mechanism for the (particularly secured and potential buyers), have a better PES. While this is generally in order to initiate the PES it chance of rendering tangible and lasting PES schemes. Recently, experimental designs and pilots have been tar- PES IMPORTANCE IN PROJECT DESIGN geted for the same geographical areas, as is the case in Uganda. Projects like this need to determine if there is enough information to set up and run the PES pilot, while at the same time assessing if the time and financial resources available to the project are sufficient to put in place an experimental design that renders valuable and relevant answers to project design and implementation. In the past GEF has provided financial support for the evalu- ation of ecosystem services as part of some projects, with or without an explicit commitment to develop and imple- ment a PES scheme. It is not clear if the evaluation of the ecosystem services alone will be used to design and develop pilots or larger projects. While there may be justi- fication for evaluation efforts in new locations and novel ecosystem service packages, there is a clear need for proj- ects considering PES to include robust investigation and analysis of the potential market conditions which will be necessary for long term sustainability of the initiative. 14 THE GLOBAL ENVIRONMENT FACILITY Institutional Arrangements Co-financing and Financial The implementation of GEF PES projects has been carried Sustainability out through different institutional arrangements. For the The GEF has supported efforts to set up PES schemes, national PES schemes and large-scale projects that pay for the starting costs and pay for the Global include the protected areas system as well as productive Environmental Services targeted by the projects. The GEF landscapes, the projects have been executed by minis- is likely to continue paying for the environmental services tries, government research and extension agencies and in the near future, as third-party buyers have been difficult the protected area authorities. In projects with a narrow to find for most PES stand-alone schemes. Financial sus- geographic and thematic scope, local governments and tainability has been easier to secure in national PES international and national NGOs have contributed to the schemes, which have taxes and fees as the main source of design and implementation. GEF agencies and NGOs funding for paying land owners. Public-private partner- have played a key capacity-building role for all projects, ships are also likely to result in self-sustaining schemes, both large and small. The engagement of buyers of envi- because water and associated biodiversity will be paid for ronmental services has proven to be one of the most chal- directly or indirectly by users. While there are many lenging activities in the design and implementation of instances in which land owners are willing to participate in PES schemes. This has been particularly true for the pri- PES schemes, the engagement of buyers continues to be vate sector. Land owners, especially local communities a main barrier. Although potential buyers have been iden- and indigenous peoples, are key elements of the schemes tified and have expressed willingness to pay in many and need to be successfully engaged during early stages places, the number of projects where actual agreements of project design. have been reached remains small. PES are conceptualized as voluntary transactions where Building Capacity defined environmental services are procured by buyers from an environmental service providers. The most readily ‘marketable’ environmental services are those dealing Building human and institutional capacity for the devel- with carbon and water. Although the carbon market is opment and implementation of PES schemes has been immature there are a number of well established stan- the main focus of GEF investments. Modalities for build- dards and systems for developing a marketable carbon ing capacity include stand-alone projects aimed at inter- service, and there are already many examples of carbon ested audiences with the capacity to participate in PES transactions from which to draw experience. While water- projects, projects that use pilot sites where actual (or related services are less developed globally they do pro- potential) buyers and sellers have been identified and vide insight of the imperative of the economic incentive are willing to participate, and projects with a specific necessary to make the PES function. The example of high- experimental design to test hypotheses on actual PES volume water users illustrates that the conditions to create projects. Capacity-building efforts have been funded at a ’market’ between buyers and providers will only occur if various geographical scales, ranging from global to site- the PES presents to the buyer a solution equal or less specific projects. costly than the cost of water storage infrastructure. GEF has also invested significant resources in building institutional capacity and administrative systems to deliver payments. Sellers of environmental services have been the target of these investments, particularly when the schemes are being developed at the local level (i.e. watersheds). GEF INVESTMENTS ON PAYMENT FOR ECOSYSTEM SERVICES SCHEMES 15 Analysis of the GEF’s portfolio of PES projects reveals some trends and opportunities for establishing such Future Directions schemes to protect Global Environmental Benefits. These are: i. Capacity building: There is a continuous need to build capacity at the local and national level to prop- erly design and implement PES schemes. Demand for building institutional and human capacity will continue, particularly among local communities and indigenous peoples. Determining how to deliver the necessary training for these stakeholders to engage in meaningful and equitable agreements with buyers will continue to be a challenge. While internet-based tools for training and education will continue to grow, access to service providers in remote areas will require different mechanisms, including south-south exchanges and secondment of local or regional experts during project development. Pilot projects are likely to continue forming part of the architecture of projects. It is expected that some of the pilots being developed in these projects can provide enough information to scale-up and replicate suc- cessful experiences. ii. Water demand: PES schemes are likely to be devel- oped and implemented in areas where water is in high demand. These projects have the potential to deliver other important Global Environmental Benefits, such as biodiversity conservation, if the pilot sites are selected to maximize the number of services provided. Stakeholders in the private sector (agribusiness) and public utilities in the central and regional governments are most likely to continue engaging in the development and implementation of PES schemes. Climate change risk assessment is likely to become an integral part of project design, and increased spatial and temporal resolution of climate models will serve this purpose iii. National PES systems: Government-financed PES systems operate at large scales, are more efficient due to economies of scale and can provide benefits across the landscape. These national schemes allow for the internalization of ecosystem services into 16 THE GLOBAL ENVIRONMENT FACILITY national economies, which will continue to be the consuming, it is essential to engage them early in largest source of funds in many biodiversity-rich project scoping. Showcasing of successful projects, developing countries. The Costa Rica and Mexico and explicit accounting of the savings obtained in schemes will continue to generate lessons for other PES schemes, have proven to be key tools to ensure interested governments. full participation in project design and implementation. iv. Links with carbon sequestration: While the carbon Guidance from STAP: The GEF Scientific and vi. market is immature it is nonetheless more potential to Technical Advisory Panel (STAP) recently published a be readily accessed than markets for water or biodi- paper with guidance to GEF on how to use PES to versity. It is also clear that with a growing understand- effectively deliver Global Environmental Benefits ing of forest carbon projects that are designed for (STAP 2010). STAP adopts a user-financed definition carbon sequestration but also target biodiversity rich of PES, in which payments are made only if the areas have the potential to strengthen biodiversity agreed-upon environmental service is provided. conservation or improve water function in critical Following on this definition, STAP suggests that GEF water catchments through REDD+ approaches. Well should support PES projects in three different ways: designed projects are seeking to derive a number of environmental services contemporaneously. While all i) by funding direct payments of environmental ser- of the SFM/REDD+ projects are developing carbon vices, especially when these short-term payments are benefits a smaller number include the development likely to shift land use or persuade interested long- of marketable REDD+ carbon credits for the voluntary term buyers of environmental services, or when pay- market. However this adds an additional layer of com- ments through associated trust funds look more plexity and cost to project implementation. The asso- promising to secure biodiversity conservation; ciated transaction costs would mean that these may well be limited to larger scale projects however ii) by supporting government-financed multiple service smaller scale initiatives may well provide valuable payments for ecosystem services schemes. Leveraging learning opportunities. The GEF global Carbon biodiversity considerations in REDD design would be Benefits Project (CBP): Modeling, Measurement and particularly important in such cases; and Monitoring is closely linked to this emerging trend. The aim of this project is to produce a standardized by paying for the start-up costs of PES projects, but iii) system for GEF and other natural resource manage- carefully considering if such investment is the only ment (NRM) projects to measure, monitor and model binding constraint in the project implementation. carbon stock changes and greenhouse gas (GHG) emissions. The CBP will produce a modular system While STAP recommends that GEF invest in PES, it also that allows the user to collate, store, analyze, project recognizes potential threats to the effectiveness of PES and report on carbon stock changes and GHG emis- schemes, including noncompliance with the contractual sions for baseline and project scenarios in NRM inter- conditions, poor selection of areas or individuals who not ventions in a standardized way. in a position to supply the environmental services, “leak- age” (whereby protecting a certain place pushes pressure v. Public-private partnerships: Projects that allow for elsewhere), and paying for services that would have been the development of public-private partnerships provided even in the absence of payment. The complete set would allow for the inclusion of market forces into of recommendations can be found on the STAP website. the development of PES schemes. The Earth Fund platform will continue providing opportunities for these joint ventures. Because the engagement with the Private Sector has been traditionally time GEF INVESTMENTS ON PAYMENT FOR ECOSYSTEM SERVICES SCHEMES 17 Annexes 18 GEF PES PROJECTS (TABLE) PROJECT GEF APPROVAL GEF COFINANCE FOCAL ID AGENCY COUNTRY PROJECT NAME REGIONAL COUNTRY LIST REGION DATE AMOUNT AMOUNT AREA LIST 671 World Bank Costa Rica Ecomarkets LAC 12/1/99 8,000,000 51,900,000 B 762 World Bank Regional Maloti-Drakensberg Conservation and Development Project Lesotho, South Africa AFR 2/1/00 $15,200,000 $17,700,000 B 945 World Bank Ecuador National Protected Areas System LAC 5/11/01 $8,000,000 $6,400,000 B 947 World Bank Regional Integrated Silvo-Pastoral Approaches to Ecosystem Management Colombia, Costa Rica, Nicaragua LAC 5/11/01 4,500,000 3,900,000 M;B THE GLOBAL ENVIRONMENT FACILITY 1516 World Bank/UNDP South Africa C.A.P.E. Biodiversity Conservation and Sustainable Development Project AFR 5/16/03 $11,000,000 $44,450,000 B;B; 1794 World Bank Bolivia Removing Obstacles to Direct Private-Sector Participation in In-situ Biodiversity Conservation LAC 9/18/02 $680,000 $427,800 B 2102 World Bank Panama Second Rural Poverty, Natural Resources Management and Consolidation of the Mesoameri- LAC 6/8/05 $6,000,000 $44,000,000 B can Biological Corridor Project 2120 UNDP Venezuela Biodiversity Conservation in the Productive Landscape of the Venezuelan Andes LAC 9/13/05 $7,351,900 $29,545,061 B 2355 World Bank Kenya Agricultural Productivity and Sustainable Land Management AFR 11/10/05 10,000,000 72,800,000 L 2356 World Bank Brazil Ecosystem Restoration of Riparian Forests in Sao Paulo LAC 9/27/04 7,047,000 11,871,600 L 2373 IFAD Brazil Sustainable Land Management in the Semi-Arid Sertao LAC 11/19/04 $5,943,000 $9,201,000 L 2443 World Bank Mexico Environmental Services Project LAC 11/10/05 $15,000,000 $166,792,000 B 2512 UNDP Dominican Demonstrating Sustainable Land Management in the Upper Sabana Yegua Watershed System LAC 4/6/05 4,434,695 25,462,688 L Republic 2551 World Bank Colombia Colombian National Protected Areas Conservation Trust Fund LAC 11/10/05 $15,000,000 $27,500,000 B 2589 UNDP Global Institutionalizing Payments for Ecosystem Services CEX 8/28/06 $5,690,939 $12,027,000 B 2615 UNDP South Africa National Grasslands Biodiversity Program AFR 6/14/07 $8,300,000 $37,261,764 B 2632 IFAD/UNIDO Morocco MENARID Participatory Control of Desertification and Poverty Reduction in the Arid and Semi AFR 4/24/08 6,000,000 19,035,165 M;I;L; Arid High Plateau Ecosystems of Eastern Morocco 2693 World Bank Peru Strengthening Biodiversity Conservation through the National Protected Areas Program LAC 11/16/07 $8,891,000 $22,900,000 B 2751 IFAD Regional SFM Rehabilitation and Sustainable Use of Peatland Forests in South-East Asia Indonesia, Malaysia, Philippines, Viet- Asia 11/16/07 $4,299,164 $10,799,210 L;B;CC nam plus Brunei* and Singapore* 2765 World Bank Brazil Espirito Santo Biodiversity and Watershed Conservation and Restoration Project LAC 11/16/07 $4,000,000 $8,000,000 B 2806 UNEP Regional Promoting Payments for Environmental Services (PES) and Related Sustainable Financing Bulgaria, Romania ECA 8/25/09 964676 1374373 B;B; Schemes in the Danube Basin 2868 UNEP DR Payment for Ecosystem Services in Las Neblinas Scientific Reserve as a Pilot Approach to Ecosys- LAC $1,156,955 $1,185,431 B tem Management that Promotes the Sustainability of Protected Areas 2884 World Bank Costa Rica Mainstreaming Market-based Instruments for Environmental Management Project LAC 3/31/06 $10,000,000 $80,303,500 B 3443 UNDP Indonesia SFM Strengthening Community Based Forest and Watershed Management (SCBFWM) Asia 11/16/07 7,000,000 41,000,000 M;B;L; 3445 UNDP Thailand SFM: Integrated Community-based Forest and Catchment Management through an Ecosys- Asia 3/17/10 $1,758,182 $10,760,000 M;B;C; tem Service Approach (CBFCM) 3574 World Bank Colombia Mainstreaming Biodiversity in Sustainable Cattle Ranching LAC 4/24/08 7,000,000 33,000,000 M;B;L; 3611 World Bank China PRC-GEF Partnership: Mainstreaming Biodiversity Protection within the Production Land- Asia 9/23/08 2,976,000 8,935,000 M;B;L; scapes and Protected Areas of the Lake Aibi Basin 3623 UNDP/UNEP Argentina Establishment of Incentives for the Conservation of Ecosystem Services of Global Significance LAC 11/13/08 $2,905,000 $6,900,000 M;B;C; 3627 IFAD Vietnam SFM Promotion of Sustainable Forest and Land Management in the Vietnam Uplands Asia 9/15/09 654,545 9,000,000 M;B;L; PROJECT GEF APPROVAL GEF COFINANCE FOCAL ID AGENCY COUNTRY PROJECT NAME REGIONAL COUNTRY LIST REGION DATE AMOUNT AMOUNT AREA LIST 3682 UNEP Uganda Developing an Experimental Methodology for Testing the Effectiveness of Payments for AFR 2/1/10 $870,000 $900,000 B Ecosystem Services to Enhance Conservation in Productive Landscapes in Uganda 3761 UNDP Gabon CBSP: Sustainable Management of the Mbe River Forested Watershed through the Develop- AFR 859091 2950000 B;B; ment of a Payments for Ecosystem Services (PES) Mechanism 3790 UNEP Global Communities of Conservation: Safeguarding the World's Most Threatened Species Bolivia, Colombia, Ecuador, Peru, LAC 1/27/09 $1,775,000 $1,775,000 B;B; Venezuela 3807 UNEP Global Project for Ecosystem Services (ProEcoServ) Chile, Lesotho, Trinidad and Tobago, CEX 1/27/09 6296637 14045000 B;B; Vietnam, South Africa 3816 UNEP Mexico Mainstreaming the Conservation of Ecosystem Services and Biodiversity at the Micro-water- LAC 4/21/09 $1,485,000 $4,850,000 B shed Scale in Chiapas 3929 World Bank Indonesia Promoting Sustainable Production Forest Management to Secure Globally Important Biodiversity Asia 6/24/09 $3,300,000 $8,000,000 B 3933 IFAD Peru SFM Sustainable Management of Protected Areas and Forests of the Northern Highlands of Peru LAC 11/12/09 $1,720,000 $13,481,000 B 3951 UNEP Global Expanding FSC Certification at Landscape-level through Incorporating Additional Eco-system Chile, Indonesia, Nepal, Vietnam CEX 3/17/10 $2,880,000 $2,880,000 B;B; Services. 3954 UNDP PNG PAS Community-Based Forest and Coastal Conservation and Resource Management in PNG Asia 6/24/09 $6,900,000 $12,000,000 B 3981 IADB Nicaragua Integrated Mangement in Lakes Apanas and Asturias Watershed LAC 3/17/10 $4,040,900 $4,900,000 M;B;C; 3989 IFAD Morocco MENARID - A Circular Economy Approach to Agro-Biodiversity Conservation in the Souss AFR 6/24/09 $2,647,272 $5,500,000 B Massa Draa Region of Morocco 4113 IADB Colombia Mainstreaming Biodiversity in Palm Cropping in Colombia with an Ecosystem Approach LAC 3/17/10 $4,250,000 $14,130,000 B 4260 IADB Regional Public-Private Funding Mechanisms for Watershed Protection LAC $5,000,000 $15,000,000 B 4333 World Bank Global Science and Innovation Networks for Coral Reef Resilience ScINet CR2 Indonesia, Kenya, Mexico, Philip- CEX 10,700,000 11,500,000 M;B;I; pines, Tanzania 4454 IADB Jamaica Integrated Management of the Yallahs River and Hope River Watersheds LAC 26-May-11 3,768,667 8,809,256 M;B;L;M; 4479 UNDP Guatemala Sustainable Forest Management and Multiple Global Environmental Benefits LAC 9-Nov-11 4,400,000 13,160,000 M;B;C;L;M; 4511 World Bank Regional Sahel and West Africa Program in Support of the Great Green Wall Initiative Burkina Faso, Ethiopia, Nigeria (with AFR 26-May-11 73,750,000 1,810,000,000 M;B;C;L;M; PES projects) 4605 World Bank Belize Management and Protection of Key Biodiversity Areas LAC 9-Nov-11 6,085,600 16,000,000 M;B;C;M; 4631 World Bank Burundi Watershed Approach to Sustainable Coffee Production in Burundi AFR 9-Nov-11 4,200,000 21,500,000 M;B;L;M; 4732 UNDP Malaysia Improving Connectivity in the Central Forest Spine (CFS) Landscape - IC-CFS Asia 7-Jun-12 10,860,000 36,500,000 M;B;L;M; 4750 UNEP Regional Multiplying Environmental and Carbon Benefits in High Andean Ecosystems Indonesia, Kenya, Mexico, Philip- LAC 7-Jun-12 4,796,364 18,150,000 M;B;C;L;M; pines, Tanzania 4772 UNDP Colombia Conservation and Sustainable Use of Biodiversity in Dry Ecosystems to Guarantee the Flow of LAC 29-Feb-12 8,787,819 39,460,200 M;B;L;M; Ecosystem Services and to Mitigate the Processes of Deforestation and Desertification 4773 IFAD Peru Conservation and Sustainable Use of High-Andean Ecosystems through Compensation of LAC 29-Feb-12 5,354,545 29,000,000 B Environmental Services for Rural Poverty Alleviation and Social Inclusion in Peru 4778 World Bank Albania Environmental Services Project ECA 7-Jun-12 2,884,848 22,574,815 M;C;L;M; 4779 World Bank Sustainable Forest and Landscape Management ECA 6/7/2012 $5,575,757 $18,400,000 CC;LD;M; 4792 World Bank Mexico Conservation of Coastal Watersheds to Achieve Multiple Global Environmental Benefits in LAC 7-Jun-12 39,518,181 239,886,000 M;B;C;L;M; the Context of Changing Environments GEF INVESTMENTS ON PAYMENT FOR ECOSYSTEM SERVICES SCHEMES 4834 IADB Brazil Recovery and Protection of Climate and Biodiversity Services in the Paraiba do Sul Basin of LAC 7-Jun-12 26,670,000 168,794,000 M;B;C;M; 19 the Atlantic Forest of Brazil 4836 UNDP Costa Rica Conservation, Sustainable Use of Biodiversity, and Maintenance of Ecosystem Services of LAC 7-Jun-12 3,705,873 17,188,318 B Internationally Important Protected Wetlands 4842 UNDP Croatia Strengthening the Institutional and Financial Sustainability of the National Protected Area ECA 7-Jun-12 4,953,000 17,300,000 B System GEF IMPLEMENTING AGENCIES PES Hartshorn, G., P. Ferrarom B. Spergel and E. Sills. 2005. WEB RESOURCES Evaluation of the World Bank-GEF Ecomarkets Project in Costa Rica. Report of “Blue Ribbon Evaluation Panel. North GEF www.thegef.org Carolina State University. FAO www.fao.org/es/esa/pesal/index.html UNDP www.undp.org/drylands/ Millennium Ecosystem Assessment (MEA), 2005. pay-environment-services.html Ecosystems and Human Well-being: Synthesis. Island Press, UNEP www.unep.ch/etb/areas/ipes.php Washington, DC. STAP stapgef.unep.org/ World Bank go.worldbank.org/51KUO12O50 Muñoz-Piña, C., A. Guevara, J. M. Torres, and J. Braña. 2008. Paying for the hydrological services of Mexico’s for- ests: analysis, negotiations and results. Ecological OTHER RESOURCES ON ES AND PES Economics 65:725–736. CBD www.cbd.int/financial/payment.shtml Sanchez, G., A. Pfaff, J. Robalino and J. Boomhower., 2007. CIFOR www.cifor.cgiar.org/pes/_ref/home/index.htm Costa Rica’s Payment for Forest Trends www.forest-trends.org Environmental Services Program: Intention, Implementation TEEB www.teebweb.org and Impact. Conservation Biology World Resources Institute www.wri.org 21 (5) 1165-1173 The Scientific and Technical Advisory Panel, 2010. Payment for Ecosystem Services and the Global Environment Facility. REFERENCES A STAP advisory document. 16 pp. Alix-Garcia, J., de Janvry, A., Sadoulet, E., and J.M. Torres. Sierra, R and E. Russman. 2006. On the efficiency of the 2009. Lessons learned from Mexico’s Payment for environmental services payments: A forest conservation Ecosystem services program. Pp. 163-188. In: Lipper, L., assessment in the Osa Peninsula, Costa Rica. Ecological Sakuyama, T, Stringer R., and D. Zilberman. Payment for Economics 59: 131-141. Environmental Services in Agricultural Landscapes: eco- nomic policies and poverty reduction in developing coun- The World Bank. 2008. Implementation completion and tries. FAO and Springer. results report (TF-50612) on a grant of SDR 3.7 million equivalent (US$4.5 million) to Centro Agronómico Tropical Chomitz, K., E. Brenes, and L. Constantino. 1998. Financing de Investigación y Enseñanza (CATIE) for the Integrated Environmental Services: The Costa Rican Experience and Its Silvopastoral approaches to ecosystem management proj- Implications. Development Research Group. World Bank. ect in Colombia. Costa Rica and Nicaragua. The World Bank, Environmentally and Socially Sustainable Daily, G. 1997. Nature’s Services: Societal Dependence on Development Central American Department, Latin America Natural Ecosystems. Island Press, Washington, DC. and Caribbean Region. FAO (2007). The Global Environment Facility and Payment World Resources Institute (WRI). 2009. Banking on Nature’s for Ecosystem Services. A review of current initiatives and Assets. How multilateral development banks can recommendation for future PES support by GEF and FAO strengthen development by using ecosystem services. programs. Gutman, P. & S. Davidson, WWF Macroeconomic for Sustainable Development Program Office, Report com- missioned by FAO for Payment for Ecosystem Services from PHOTO CREDITS Agricultural Landscapes –PESAL project, PESAL Paper Series No.1 Rome. Cover: Curt Carnemark; Inside cover: Curt Carnemark; Page 2, Francisco Nieto; GEF, 2009. Assessing Innovative Financing Mechanisms in Page 3, Curt Carnemark; Page 4, Anatoliy Rakhimbayev; the Land Degradation Portfolio of the GEF during the 4th Page 5, Curt Carnemark; Page 7, Shehzad Noorani; Replenishment. Report prepared by Reed, E., supervised Page 13, Alex Baluyut; Page 14, Edwin Huffman; by A. Kutter. 56 p. Page 16, Jaime Cavelier 20 THE GLOBAL ENVIRONMENT FACILITY ACRONYMS TEXT Jaime Cavelier Co-author: Ian Munro Gray CBD Convention on Biological Diversity CIFOR Center for International Forestry Research CONTRIBUTORS ES Ecosystem Services Gustavo A. B. da Fonseca FAO Food and Agriculture Organization of the Ulrich Apel United Nations Mohamed Bakarr Alfred M. Duda FSC Forest Stewardship Council Dirk Gaul GEF Global Environment Facility Nicole Glineur IDB Inter-American Development Bank Shakil A. Kayani Nhu Q. Phan IFAD International Fund for Agricultural Christian Severin Development Jean-Marc Sinnassamy IFC International Finance Corporation Yoko Watanabe IPBES Intergovernmental Platform on Edoardo Zandri Biodiversity and Ecosystem Services Ivan Zavadsky Mark Zimsky IPCC Intergovernmental Panel on Climate Change MEA Millennium Ecosystem Assessment PES Payment for Ecosystem Services REDD Reducing Emissions from Deforestation and Forest Degradation ABOUT THE GEF SFM Sustainable Forest Management SIP Strategic Investment Program The Global Environment Facility is a partnership for international cooperation where 183 countries work together with international SLM Sustainable Land Management institutions, civil society organizations and the private sector, STAP Scientific and Technical Advisory Panel of to address global environmental issues. the GEF Since 1991, the GEF has provided $12.5 billion in grants and TEEB The Economics of Ecosystems & leveraged $58 billion in co-financing for 3,690 projects in 165 Biodiversity study developing countries. For 23 years, developed and developing UNDP United Nations Development Programme countries alike have provided these funds to support activities related to biodiversity, climate change, international waters, land UNEP United Nations Environment Programme degradation, and chemicals and waste in the context of UNIDO United Nations Industrial Development development projects and programs. Organization WB World Bank Through its Small Grants Programme (SGP) the GEF has made more than 20,000 grants to civil society and community based organizations for a total of $1 billion. Among the major results of these investments, the GEF has set up protected areas around the world equal roughly to the area of Brazil; reduced carbon emissions by 2.3 billion tonnes; eliminated the use of ozone depleting substances in Central and Eastern Europe and Central Asia; transformed the management of 33 major river basins Production Update: September 2014 and one-third of the world’s large marine ecosystems; slowed the Design: Patricia Hord.Graphik Design advance of desertification in Africa by improving agricultural Copy-Editor: Amy Sweeting practices—and all this while contributing to better the livelihood Printer: Professional Graphics Printing and food security of millions of people. www.theGEF.org Printed on Environmentally Friendly Paper