Payments for Ecosystem Services

Aug 03, 2007


It is clearly time for a new social contract with the farmer and the tribal, if not as a moral imperative certainly as a strategic one.

Two symbols come to mind immediately when we look at India as it is instead of through the aspirational prism of an India shining or poised.

One: the disenfranchised forest-dwelling tribal. The other: the suicide-prone marginal farmer.

What could be the most harmonious and sustainable way in which we can address the problems of these two deeply disadvantaged groups? In the context of a national quest for an inclusive, high growth economy with a low carbon footprint, we obviously need to find creative answers very quickly.

Recently, I was fortunate enough to be at the Tallberg Forum in Sweden, where I listened carefully to other experiences, which led me to a few stories and from them some questions. Jose Campos, Deputy Director-General, CATIE …. from Costa Rica, for example, revealed to us that his country developed a fairly just working model for payment for ecosystem services (PES) which helped take the forest cover in the country from about 30 to about 50 per cent in just three decades, has helped reduce poverty and has given Costa Rica a new identity as the Switzerland of Latin America.

What are ecosystem services? Human beings have just begun to understand the real cost of our development model for the earth. We know that nature provides most of the ‘services’ — that keep all of us alive and healthy such as clean air, enough water and fertile soil. Together, economists and environmentalists have agreed to call them ecosystem services.

The reason they have come to the fore is that these ‘services’ have been taken so much for granted that we have not allowed for them in our economic models. Now we know they are not ‘free’ and in fact they extract a heavy price for their neglect. A price all of us can count in our polluted water sources, our air pollution and our fallow lands, and much worse to come with global warming and climate change.

But what can we do about it, especially in the context of a receding state and a hesitant market?

We have something to learn from both the successes and limitations of the Costa Rica model, so that we can fashion our own. Because it is clearly time for a new social contract with both the farmer and the tribal, if not as only a moral imperative certainly as a strategic one. The premise is fairly simple: We need to maintain the service delivery of the ecosystem. Yet in the current state of human development, some people use far more of the ecosystem resources than others. Can they, therefore, compensate those who protect the ecosystem resource base?

Of course, at one level, this is an absurd premise. Why should, say, urban elites get away with their profligate lifestyles just by paying off others to not follow suit?

To answer this, obviously this is not a perfect exercise, but it might be a good beginning. We can either do nothing, as we do now, or look at the state or the market to incentivise the protection of ecosystems. We could, as India has done before, also create a unique hybrid encompassing both.

And if we have envisaged an NREG (National Rural Employment Guarantee), why not imagine a PES?

It will take patience and the evolution of relevant governance mechanisms. What we now have is an isolated bureaucracy that governs, in relative secrecy, many of the transactions around ecosystem services. One example is that of the decisions on private participation in timber production as a means to increase forest cover. Another good example is in eco-tourism. Shockingly, we have no standards of what constitutes an eco-tourist facility and even weaker links when it comes to land use policy. To add to that, as usual, there is too much fragmentation of authority and very little public discourse.

So what can we do? Back to Costa Rica.

In Costa Rica, the government pays $60 per hectare a year for ecosystem costs to landowners (most forest land is in private hands there), at an exchequer cost of approximately $20 million annually. There are four defined services — biodiversity, water, carbon sequestration and scenic beauty. Performance indicators are in place, as are elaborate monitoring and assessment systems at a very local level. And today, where beef and timber used to be the biggest export items, ecotourism is Costa Rica’s number one industry.

When we asked what made it happen in Costa Rica, Mr. Jose suggested that it was a combination of political will and desire for change, positive externalities including a fall in the price of export items such as beef or bananas, the impact of carbon trading mechanisms, decentralisation, a commitment to financial incentives, and a command and control state that was not inimical to positive market forces. He also cited universalisation of education.

Arguably, many of the above are already in place in India. Now is the time to capture the political tremor to make a new social contract with the tribal and the farmer. Imagine a farmer with a small landholding getting support for water conservation and farming practices that encourage biodiversity across agricultural landscapes. Imagine him directly benefiting from carbon trade. Imagine our 80 million-plus vanvasi citizens earning their livelihoods by preserving the forest and indeed adding to it.

There have been many extraordinary people thinking along these lines. The ecologist Madhav Gadgil, for one. The ecological economist, Sharad Lele, for another. And the social worker Right Livelihood Award winner, Sudarshan, for another. They are all people with years of experience in working in tribal and forest areas. We should share their wisdom and daring. But so far, the government has been in a continuous state of analysis paralysis on PES. It is time for a rigorous public debate.

Nobody suggests that it will be easy. Especially in our country where land rights are so contested and where the understanding of the commonality between public and private good is at the moment weak. Yet if you do not take a stab at it right now, will it be too late later? Going by official figures, our forest cover today stands at about 22 per cent, although much of this area is actually bereft of tree cover. How can we begin to think of restoring our lost forests and renewing the ecosystem services they provide? Can we do it without the wisdom of those who have lived in and with the forest for hundreds of years? The recently passed Forest Bill gives land rights to forest-dwelling tribals. Wildlife conservationists fear that this could be a wedge that opens the door to large-scale destruction of our flora and fauna. On the other hand, it could be an opportunity to refashion a relationship with those who know how to conserve and preserve. It really is up to us. Can we do it?



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