Presentation at the RISE/CEPS event in Brussels by Patrick ten Brink of IEEP - Public goods from private land - 1 feb 2010

1. Public Goods from private land
Ecosystem services and PES
Patrick ten Brink
TEEB for Policy Makers Co-ordinator
Head of Brussels Office
Institute for European Environmental Policy (IEEP)
Workshop: Public Goods from Private Land
RISE and CEPS
1 Place du Congres, Brussels
1 February 2010
1

2. Presentation overview
1. Introduction to TEEB ambitions and
process and approach
2. Ecosystem services, decision making,
public goods & trade-offs
3. Ecosystem services & PES
4. Key issues
5. Comment on the Presentation of the
RISE Report

3. TEEB’s Genesis and progress
“Potsdam Initiative – Biological Diversity 2010”
1) The economic significance of the global loss of
biological diversity
TEEB Interim Report
CBD COP-9, Bonn, May 2008
TEEB Climate Issues Update
Strömstadt September 2009.
TEEB for Policy Makers
Brussels 13 Nov. 2009
Oct. 2010

4. TEEB for Policy Makers report
- launched 13 November 2009 -
The Global Biodiversity Crisis
• Coral reef emergency
• Deforestation
• Loss of public goods…
Measuring what we manage
• BD & ecosystem service indicators
• Natural capital accounts
• Beyond GDP indicators et al
Available Solutions
• PES water, PES – REDD+
• Markets, GPP
• Subsidy reform
• Legislation, liability, taxes & charges
• Protected Areas
• Investment in natural capital et al
http://www.teebweb.org/
Responding to the value of nature

5. Critical issues
The values of biodiversity and ecosystems are missing
• Many not known (but this is changing); widespread lack of awareness
• Values are not taken systematically into account in assessments and decision
making
• They are generally not integrated into the economic signals, into markets – the
economy is therefore often not part of the solution (some exceptions: PES)
Inappropriate incentives; misinterpretation of right solutions, insufficient
evidence base at policy makers’ finger tips and weaker public support for action
There is not enough political will or conviction or awareness of benefits/cost to
launch due policies (market based or otherwise)
Biodiversity loss continues – eroding natural capital base without realising its
value
… Sub-optimal provision of public goods from private land

6. Ecosystem Services
Public Goods and Private Goods
Provisioning services
• Food, fibre and fuel Market values
• Water provision
Potential Market values
• Genetic resources
– eg water supply PES; -eg ABS
Regulating Services Potential Market values
• Climate /climate change regulation – eg REDD & water purification PES
• Water and waste purification - Avoided cost of purification
• Air purification
• Erosion control Social value – health, wellbeing
• Pollination
• Biological control Opportunity cost: Lost output or
cost of alternative service provider
Cultural Services
• Aesthetics, Landscape value, recreation and Market values : eco-tourism
tourism
• Cultural values and inspirational services
Social value – identity et al
Supporting Services
• Soil formation
+ Resilience - eg to climate change

7. Ecosystem Services
Public Goods and Private Goods
Some ecosystem services are Private goods - eg food and wood provisioning
Others are pure public goods - eg climate regulation / climate change mitigation,
genetic diversity, health and wellbeing, cultural identity, spiritual value
Others public goods with private aspects - eg water purification, landscape
value and eco-tourism, recreation, genetic knowledge,
• Vittel PES case: payments by Vittel to farmers to change land-use practice to secure quality for bottled water
• PES for forest / watershed management for (clean) water provision – USA, Mexico, New Zealand
• Ecotourism – fast growing market
• Genetic knowledge – bioprospecting and medicines; links to traditional knowledge and access and benefits
sharing (ABS)
• Contribution to maintaining public good of current climate – REDD+ PES
Need to understand different opportunities for land use and implications for public
and private goods / gains.
Need to take value into account in decision making
Need for public policy for public goods.

8. Taking account of public goods
…can change what is the “right” decision on land/resource use
US$ Based only on private gain, the “trade- Shrimp Farm
/ha/yr off” choice favours conversion….. Mangroves
$12,392/ha
10000
$9632/ha
After
Adding Storm
Public protection
5000 Benefits
From
mangroves
$1220/ha Fishery
$584/ha nursery
$584/ha
private profits private private
0 profits profits Net of public
less costs of
subsidies restoration
needed
after 5 years
If public wealth is included, the “trade-off”
choice changes completely…..
-ve $11,172/ha
Source: Barbier et al, 2007

9. Land-uses and trade offs for
ecosystem services
1natural Climate
regulation 2 extensive Climate
regulation
Food Energy Food
Energy
Soil
Soil protection
protection Freshwater Freshwater
Climate
regulation
Food
Energy
Upon closer analysis -
Net value may be less Energy
Soil
protection
Freshwater
3 intensive
Source: Ben ten Brink (MNP) presentation at the Workshop: The Economics of the Global Loss of Biological Diversity 5-6 March 2008, Brussels, Belgium.

10. Increasing rewards for ecosystem services provision through PES
Intensive land use Biodiversity ‘friendly’ land use
Eg Private optimum Eg social optimum
Cultural
Potential new
Services income from
(eg tourism) different
To date ‘unpaid’ CS
Regulating payments for
RS
ecosystem services (eg ecosystem
PS
services water quality)
BENEFITS
services
Additional PS
(other products,
pollination)
Income
(Paid) Benefit to from
provisioning Income from
land user - Services (PS) Opportunity cost -
provision original
Income foregone
to landowner products in
services (eg farm
or forest products) (in absence of PES) existing
markets
Cost to population
COSTS
of pollution
Social Benefit = Private benefit + public good (ESS) – pollution costs

11. PES: payment levels and opportunity costs
Payment levels vary widely in practice
• Costa Rica, PSA: for forest conservation US$ 64 per ha/yr in 2006. Portela &
Rodriguez 2008; Pagiola 2008 in Wunder & Wertz-Kanounnikoff 2009;
• Mexico’s PSA-H: for preservation of cloud forest US$ 40 per ha/year;
for other tree-covered land US$ 30 per hectare/year Muñoz-Piña et al. 2007.
• Vittel mineral water, France Perrot-Maître 2006; Wunder and Wertz-Kanounnikoff 2009
– Ave. payments are EUR 200 ha/year over a five year transition period and
– up to 150,000 EUR per farm to cover costs of new equipment.
– Contracts are long-term (18-30 years),
– with payments adjusted to opportunity costs on a farm-by-farm basis.
PES will be able to address the opportunity costs in some cases – but often
not in the ones where opportunity costs are very high
Trade implications important where relate to traded goods (eg Ag)
PES link to income foregone not full opportunity costs

12. Ecosystem services – at what level are the benefits felt ?
Action locally leads to local, to national & to global benefits.
Mainly local benefit Mainly global benefit
Biochemicals &
pharmaceuticals
5
Climate / climate change
Pollination / seed dispersal
4 regulation
Water and air purification & 3
Genetic / species diversity
waste management maintenance
2
Natural hazards control (fire, 1
Biodiversity
flood) 0
Erosion control Ecotourism & recreation
Food/Fibre/Fuel Education, art & research
Water (quantity) Cultural & amenity values
Additional national benefit
What are the policy implications > Funding? PES?

14. PES and the Polluter Pays Principle
(PPP)
Reducing emissions/impacts
example farming & PES
No emissions
No impact (i.e. within
assimilative capacity of ecosystem) Costs born by society
PES ? (eg pollution impacts)
Environmental target
(practical /politically feasible PES to farmers to help pay for
environmental optimum at the time) PES ? measures to meet objectives /
targets beyond legislative requirements
Private solution with
legal requirements
PPP Costs of measures borne by
(‘reference level’)
farmer – eg Polluter Pays Principle (partly
implemented)
Private Optimum (in
absence of legal requirements) Self-damaging (Damage) Costs to farmers
practice and society
No control

15. Issues
Q of principle/instrument name:
Reducing
emissions/impacts “PES” if Public goods; “Subsidy”
is avoiding public bad (eg pollution
impacts) ?
No emissions
Only PES for public goods ?
No impact
Q of practicality: Are there
PES ? enough funds available for
widespread use of PES ?
Environmental
target To what extent would savings / value
PES ? of greater public goods pay for it?
Private solution with Q of principle : Would raising the
legal requirements reference level not allow for greater
(‘reference level’) PPP
provision of goods, (& avoidance of
Private Optimum bads) and hence make less
Self-damaging requirement for PES? - use of
practice standards, liability, enforcement etc
No control
Q of social custom or responsibility : public
goods often created without payment (eg
traditional practice, social custom); risks of
moving to money based system?

16. Public goods on private land
Key Issues
• Without payments for public goods – many public goods will be lost
• Some public goods can be addressed via PES – important tool, good potential,
but not the only tool and many complicating factors (eg international dimension)
• Not all public goods will be able to be the focus of payments for service;
• & potential for payments has its limits - budgets
• Complementary effort needed to avoid loss of public goods - regulation, property
rights, subsidy reform, charges/taxes, liability, voluntary codes, social norms etc
• Balance between PES and PPP, principle and pragmatism
• Removing harmful subsidies reduces need for PES
• Thin (& moving) line between PES and subsidies – important for budgets & governance
• Decision making needs to factor in private and public goods and bads – look at
the whole chessboard.
• Major effort needed for reform of support/pricing to ensure optimal use of
natural capital
• Cannot do without public policy for public goods – fundamental rationale for
role of government. Focus on private optimum will not lead to social optimum.

17. Thank you
For full TEEB for Policy Makers report – see TEEB website
http://www.teebweb.org/
Patrick ten Brink, ptenbrink@ieep.eu
IEEP is an independent, not-for-profit institute dedicated to the
analysis, understanding and promotion of policies for a
sustainable environment in Europe
3/18/2010 17

18. TEEB for Policy-Makers
What issues are covered /chapters on the web
Part I: The Global Biodiversity Crisis and Framework for Policy Response
Ch1 The global biodiversity crisis and related policy challenge
Ch2 Framework and guiding principles for the policy response
Part II: Measuring what we Manage: Information & Tools for Decision-Making
Ch3 Measuring to Manage our Natural Capital
Ch4 Recognised the Value of Biodiversity
Part III: Solutions: Instruments and measures
Ch5 Rewarding benefits of Ecosystems and Biodiversity
Ch6 Reforming Subsidies
Ch7 Incorporating the costs of ecosystem and biodiversity loss
Ch8 The Value of Protected Areas
Ch9 Direct Investments in natural capital and ecosystem restoration
Part IV: Synthesis
Ch10 Conclusions and recommendations
Available on http://www.teebweb.org/