Re-post:
One of the things we learn in natural resource
economics is to look at problems in terms of their costs and benefits. By
asking questions about who gains and who loses (and when, and how) we can
gain an important perspective on the causes of natural resource problems.
When given access to private benefits from
natural resources, people tend to take actions that promote their own
well-being. This access comes in the form of our daily contact with open-access
and common property resources as well as extraction and habitat conversion on
private lands. We all pollute in numerous ways to
promote our own benefits (comfort, convenience, standard of living), because it’s
cheap and easy to do so. As individuals, the costs we pay for access to the
world’s resources are low because they are shared by everyone.
How do we change the calculus? Let’s try everything and see what works. Education,
an appeal to “do the right thing”, and legal mandates on acceptable use, all
serve important roles. Monetary
incentives that affect individual costs and benefits also can be an
effective tool in many situations. These incentives come in several forms, most of
which we discuss in this course.
One incentive-based method that seems to be
gaining favor in developing nations is PES. PES stands for Payments for Environmental
Services. The basic idea of PES is to create incentives for conservation of
natural resources by transferring dollars from those that benefit from
conservation to those who bear the (opportunity) costs of conservation.
In some PES arrangements government and/or NGOs
pay landowners to engage in activities to conserve or restore biodiversity.
This can be as simple as letting a cow pasture revert back to its natural state
or setting aside lands that would otherwise be used for another purpose.
Costa Rica is a leader in PES and a great example
of the power of this approach. From the 1940s through the 1980s, Costa Rica had
one of the highest rates of deforestation in the world. As recently as 1987, forest cover in Costa
Rica was as low as 21 percent of national territory, down from over 85 percent
in the early 1900s. The principle causes of deforestation were incentives for
the conversion of land to agricultural uses, such as preferable tax treatment
for lands used to cultivate crops and support cattle, and heavier tax burdens
for “unproductive” lands (i.e. lands not used to produce market benefits). People
responded to the incentives they faced. Given the costs and benefits of land
use it made sense to convert lands to other uses.
In 1996, leaders in Costa Rica decided to try to
reverse this path of biodiversity loss. The main idea was simple: reward
landowners for conservation rather than rewarding them for land conversion. A
series of forest laws were enacted, which gave favorable tax treatment to conservation
and reforestation, banned the export of primary forest products, mandated that
banks provide low-interest loans for reforestation, created a system of
national parks and forest reserves and, in 1997, enacted a PES system.
Costa Rica’s PES system involves direct payments
to landowners in exchange for the adoption of land uses and management
techniques that provide one or more of four services: Greenhouse gas mitigation, provision of water
or other hydrological services, conservation of biodiversity or provision of
scenic beauty for recreation and tourism. Payments are provided by government. Revenues
from a fuel tax (ala Pigou) are a primary source of funding. Other sources of
funds include sale
of carbon credits to other nations and international loans. Between 1997
and 2005, a half-million hectares of forest lands were enrolled in the program.
Forest cover is now over 60 percent and rising.
While this progress is exemplary, the Costa Rican
Minister of the Environment recently stated that it is getting increasingly
difficult to conserve. Without a
system of international carbon markets, such as that which might take place
through large scale adoption of REDD and
REDD+ schemes, he suggested that the Costa Rican path of conservation will
soon be unsustainable.
Read more about Costa Rica’s
PES experience here at PaxNatura.
Read more about PES here at UNEP
and at Ecology and Society.
