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ESE Unit Working Papers




This paper presents a framework to understand the relationship between efficiency and equity in compensation/ payment mechanisms for ecosystem services. We devote particular attention to the role of the institutional setting, social perceptions about economic fairness, uncertainty and interactions between agents, including power relations. We use the heuristic idea of the ‘policy trade-off curve”, which defines combinations between equity and efficiency that are theoretically possible to achieve. Different types of institutional factors not only determine which combinations may be feasible, but also influence the actual combination characterizing a particular scheme, as well as condition possible changes. By stressing the role of complex institutional relations in shaping this relationship, the paper attempts to go beyond the neoclassical vision on PES, which we argue has largely neglected the social embeddedness of market transactions

WP01_Revisiting the relationship_UNEP.pdf



This paper reviews the factors that make PES schemes work. Judging the effects of many PES schemes is challenging, partly because it is not evident what is being paid for compared with more traditional market transactions, and partly because it is not always possible to calculate the marginal net social benefit of the behaviors induced by the scheme. Given these difficulties, this paper analyzes the different schemes currently operating in order to identify the most efficient approaches in terms of both ‘process’ (how the scheme works) and ‘outcome’ (what the scheme produces). It poses and answers three questions: What are PES? What can they be expected to achieve? What lessons can be learned from experience to date on the efficient design of future PES schemes?

WP02_Making Payment_UNEP.pdf




The valuation of ecosystem services is becoming an increasingly important contribution to policy and decision making at scales from the local to the global. There are several issues that need to be carefully considered before linking ecological-economic models via valuation approaches. Here we focus on three fundamental dichotomies where the distinctions are critical for delivering meaningful and robust valuation estimates. These three dichotomies are 1) ecosystem services versus benefits; 2) prices versus values; and 3) here and now versus there and then. The latter indicating the importance of spatial and temporal considerations for valuation exercises.

 WP03_Valuing Ecosystem Services_UNEP.pdf


In any assessment framework for the ecosystems and ecosystem services, trade-off between provisioning and regulating services are very common. If the trade-offs are not acknowledged and identified in the analysis, it would impair the effectiveness of any response policy for its management. The paper presents an ecological perspective on regulating services. It demonstrates the role of economics in developing methodologies to manage trade-offs between provisioning and regulating services. Building on the analysis, the paper proposes a general framework for managing these trade-offs using a landscape-based approach.

WP04_Managing tradeoffs_UNEP.pdf



The paper provides a critical angle to the whole debate. The author questions both the justification for adopting an “ecosystem service framework” and the extent to which some prominent examples of valuation of regulating services can withstand detailed scrutiny. The views expressed in the chapter may be seen as controversial by many readers, but they highlight some of the fundamental theoretical and methodological considerations that underpin this field of ecological economics.

 WP05_Ecosystem Service Framework_UNEP.pdf                  


Food security is an increasingly growing concern throughout sub-Saharan Africa. While agricultural output has expanded considerably during the past decade, it has not kept pace with population growth. One strategy to boost agricultural output in the absence of irrigation is water harvesting, various forms of which are commonly employed in Burkina Faso. Water harvesting typically consists of small scale agricultural production techniques that combine labor with indigenous environmental assets (e.g., mulch and soil) to aid in moisture retention. This paper estimates a quadratic production technology for millet and white sorghum mono-crops, and a directional output distance function for joint production of white sorghum and cowpea, with water harvesting use as an input. Results indicate that in millet monocropping and white sorghum monocropping, water harvesting typically increases yields by at least forty percent. Water harvesting also has a positive effect on sorghum and cowpea multi-cropping. These results provide useful insight on the economic benefits of water harvesting, and on the potential of water harvesting as a poverty reduction strategy throughout sub-Saharan Africa.

  WP06_Evaluating Economic Impacts_UNEP.pdf



The paper describes methodologies that can be used to estimate the accounting prices for regulating services. Their methodological analysis demonstrates the importance of defining the purpose behind valuation prior to selecting and applying a valuation methodology as well as the requirement for adequate interdisciplinary understanding of the ecosystem services to be valued.

 WP07_Accounting for Regulating Services_UNEP.pdf





The paper analyses the application of stated preference methods for valuing coastal ecosystem services in two case studies. The contingent valuation method (CVM) is used to estimate the total economic value (TEV) of wetland conservation in Mutharajawela Marsh and Negombo Lagoon (MMNL) in Sri Lanka. In the second case study, choice experiments (CE), which are often regarded as both an evolution of an alternative to CVM, are used to demonstrate the process of Marine Protected Area (MPA) decision-making in the context of deep-water Lophelia reefs of the Republic of Ireland. Both approaches are shown to be effective at capturing the non-use values of ecosystems.

WP08_Valuation of Coastal ES_UNEP.pdf


The paper presents an economic valuation of the impact of climate change on forest regulating services in Europe. It demonstrates the interdisciplinary nature of work to estimate the economic value of regulating services. Using Global Circulation Models (GCMs) and Integrated Assessment Models (IAMs), an economic assessment of the carbon sequestration in European forests is presented and future projections are made based on the four climate change scenarios that have been presented by the Intergovernmental Panel on Climate Change (IPCC).

WP09_European Forests_UNEP.pdf    





The threat to the health of the world’s biodiversity and ecosystems has been a major concern of ecologists for decades. But economists, for a variety of reasons, have been slow to recognize the importance of the ecosystem functions to human well-being. This attitude of neglect has changed rapidly in recent years not only because of the increasing severity of the problems of biodiversity loss and climate change, but also from a re-examination of some basic economic assumptions about utility and well-being. Likewise, ecologists increasingly recognize that “natural systems” cannot be understood without considering the human impacts upon them. This paper discusses various ways to “value” ecosystem functions in terms of hierarchies of services provided and the complex relationships between economic and ecological systems. A key issue discussed in this paper is the dependence of the world’s poor on the direct services of nature. A complicating factor is that the issue of protecting ecosystem integrity cannot be addressed without considering the effects of climate change. The interrelated problems of ecosystem integrity, human institutions, and climate change are explored using information collected from the village of Keti Bunder in the Indus delta in southeastern Pakistan.

WP10_Institutions Ecosystem functions_UNEP.pdf




Environmental protection and poverty alleviation in the developing world are usually heralded as joint objectives. However, these two goals are often associated with different sectoral policy instruments. While so-called PES are increasingly being promoted for environmental protection, poverty alleviation is increasingly addressed by CCT programmes. These instruments although aimed to achieve distinct objectives have a number of similarities and challenges in their design and implementation phases. This paper elaborates on these similarities and develops a unifying framework that is used to discus the extent to which both approaches could be unified.

WP11_Towards a Unified Scheme_UNEP.pdf       


PES schemes are attracting the attention of donors due to their positive environmental impacts and potential pro-poor effects of the payments. However, there is no information to reflect if the amount of payments transferred to beneficiaries is enough to have a significant impact on poverty reduction efforts or if it represents only a token contribution. This paper provides evidence of the potential of PES to contribute to poverty alleviation by comparing per household annual payments received from PES with the monetary amounts required to have an impact on poverty reduction in selected countries of Latin America, Africa and Asia.


 This paper provides a critique of the CBA tool for ecosystem services policy evaluation. We argue that when applied to public ecosystem services, the theoretical assumptions that underlie economic valuation and CBA fail to fully acknowledge the multiple dimensions of human well-being, the plural forms of value articulation, the complex nature of ecosystems, the distributional biases of markets and the fairness implications of spatio-temporal framing. The current monistic utilitarian approach to ecosystem services policy evaluation should therefore be replaced by a pluralist framework composed of a heterogeneous set of value-articulating instruments that are appropriate to the specific context within which decision-making takes place. It is argued that within this pluralist framework, CBA may remain an appropriate tool to examine the contingent trade-offs of local policies that have limited impacts on ecosystems and their services.

WP13_Cost-Benefit Analysis_UNEP.pdf  





This paper discusses the application of PES-like programs in the context of in-situ conservation of plant and animal genetic resources. PACS seeks to tackle market failures associated with the public good characteristics of agrobiodiversity by increasing the private benefits from utilising threatened but valuable crop varieties or livestock breeds on-farm through individual-based or community-based reward mechanisms. Theoretical and applied insights about PACS are discussed and attention drawn to some generic constraints to be overcome in implementing PACS programs by practitioners on the ground, partly dependent on: (i) the complex institutional setting in which PACS schemes operate; (ii) a meaningful conservation goal based on a safe minimum standard approach; and (iii) inter-linkages between ecological effectiveness, economic efficiency and social equity, as well as potential trade-offs.

WP14_Exploring the Potential of Payments_UNEP.pdf


The precautionary principle is a mandate to tread cautiously when managing novel threats to the environment or human health. A major obstacle when applying the principle at the international level is disagreement about how precautionary efforts should be restricted to ensure that policy costs are proportional to the attained level of protection. Proportionality is an unresolved question when preliminary evidence precludes decision makers from assigning probabilities over future outcomes. The paper suggests practical analytical tools that governments can use to evaluate and communicate feasible options for balancing ex ante trade-offs when probabilities are unavailable. The suggested tools are applied to climate-change policy using the integrated-assessment model DICE (Nordhaus 2008). In addition, the paper situates the task of precautionary decision making within the broader context of implementing a precautionary response at the international level.

WP15_precautionary principle_UNEP.pdf          




The Policy Brief reports the implications of the current state of the art on the science of strategic behavior for the national treatment of different kinds of international environmental public good. While many environmental public goods are managed through multilateral environmental agreements aimed at building consensus over time (social norms), others are not. Many of the regulating services identified by the MA, for example, are not subject to agreement. Their provision depends on the independent actions of many countries. For such public goods it is important to have answers to these questions: Is it necessary to cooperate or coordinate with other countries in their provision? Will unilateral action provide a good-enough outcome? When can individual countries or small coalitions of countries enhance provision of public goods? To answer such questions it is necessary to understand the nature of the environmental public goods, the socio-economic conditions in which they are provided, and the nature of the strategic interactions involved. With such an understanding, it is possible to estimate the likelihood that independent voluntary action may produce a ‘good enough’ outcome.

WP16_Provision international env_UNEP.pdf




This working paper identifies the issues associated with paying for international environmental public goods that are currently undersupplied. It identifies the conditions that need to be satisfied for supply of these public goods to be socially efficient, the reasons that they are currently undersupplied, and the policy options for addressing the problem. We conclude that diagnosis of the public goods failure associated with particular ecosystem services is critical to the development of the appropriate international response. There are two categories of international environmental public good that are most likely to be undersupplied. One has an additive supply technology, a high opportunity cost of supply and transmission to a large number of other countries through the general circulation system (e.g.mitigation of climate change). The other has a weakest link supply technology, and transmission to a large number of other countries through global trade, transport and travel (e.g. control of infectious zoonotic diseases). The degree to which the collective response should be targeted depends on the importance of supply from any one country. If particular countries are more important for the provision of some services than others support should be targeted at those countries. Targeted support may take the form of direct investment in supply (the Global Environment Facility model) or of payments for the benefits of supply (the Payments for Ecosystem Services model). The fact that GEF is under-resourced, and is only weakly targeted, suggests that the second option may become the dominant mechanism for assuring local provision of international environmental public goods. The conditions for PES to be effective are discussed.

WP17_Paying for International Environmental_UNEP.pdf