World Agroforestry Centre - Transforming Lives and Landscapes

One thing which surprised us was how little guidance there is about how to establish carbon projects for the voluntary market.

Over the past decade, schemes that involve payments or rewards for environmental services have become increasingly popular. The idea is simple enough: in return for providing a range of environmental services, such as conserving landscapes, protecting watersheds or sequestering carbon, farmers and other land uses are rewarded through payments in cash or in kind. But how much do we know about the way these projects work, and what needs to be done to make them a success?

Not as much as we should is the short answer. In 2010, World Agroforestry Centre scientist Henry Neufeldt and Caitlin Patterson conducted an internet survey to explore the experiences of Rewards for Environmental Services (RES) schemes across the globe. They analysed responses to 17 questions relating to 55 different projects, covering a wide range of environmental services (carbon, biodiversity, water) in Africa, Asia, Latin America, North America, Europe and Australia. They ranged from small projects with less than 1000 participants to large ones with over 10 000 participants. At the time of the project survey, 21 of the 55 projects were fully functional.

The survey found that project developers favoured partners with clear rights of tenure. The rewards offered by the projects varied from cash payments to better access to markets and the distribution of agroforestry materials such as seedlings. The majority of respondents believed their projects were helping to alleviate poverty. However, the requirement for clear tenure may exclude the poorest members of society from participating in these sorts of projects.

The survey revealed that there is very little structured sharing of information about what makes projects successful, or otherwise. "One thing which surprised us was how little guidance there is about how to establish carbon projects for the voluntary market," says Neufeldt.

"There is clearly a need for a step-by-step manual which takes project developers and potential sellers through the whole process from setting up schemes to accessing the market." The issue is not so much about a lack of information, he says, but how to find the right information.

The survey revealed that existing uncertainty about the carbon market has had a negative impact on the ability of projects to secure funds. If this uncertainty continues then investors will become increasingly wary of participating in carbon markets. However, if there is a global agreement on promoting projects that reduce emissions from deforestation and degradation (REDD), tradable bio-carbon would experience a significant increase in demand.

Neufeldt and Patterson also analysed their results using the three paradigms developed by World Agroforestry chief scientist Meine van Noordwijk and a research colleague to describe and distinguish between different sorts of reward schemes (See box). Neufeldt and Patterson found that the majority of projects in their internet survey defied classification under one specific paradigm, reflecting the variability in many project traits.

A new classification system?

The most commonly used definition of payments for environmental services was devised by Sven Wunder of the Center for International Forestry Research (CIFOR): the payments are voluntary transactions where a well-defined environmental service is bought by a minimum of one buyer from a minimum of one provider. For example, a utility company might pay land users to plant trees and sequester carbon, thus helping it to offset its emissions.

World Agroforestry Centre scientist Meine van Noordwijk and Beria Leimona of Wageningen University believe this definition is too narrowly focused on market-based mechanisms for enhancing environmental services. In a paper published in Ecology and Society, they argue that reward systems should be analysed on the basis of how they meet four conditions: they should be realistic, conditional, voluntary and pro-poor.

Based on research conducted in Asia, the authors defined three ways of analysing compensation and reward schemes: commoditized environmental services (CES); compensating for opportunities skipped (COS); and coinvestment in stewardship (CIS). The first focuses on the direct interaction between the community that provides the environmental services and the beneficiaries. The second rewards land users for accepting restrictions on the way they use their land. The last relates to activities on collectively owned or state-owned land.

According to van Noordwijk and Leimona, the CIS approaches have the greatest opportunity to be pro-poor, as the other two presuppose property rights that the rural poor often do not have. "CIS requires and reinforces trust building after initial conflicts over

Van Noordwijk M and Leimona B. 2010. Principles of fairness and efficiency in enhancing environmental services in Asia: payments, compensation, or coinvestment? Ecology and Society 15 (4).