Cost-Benefit Distribution of Ecosystem Services and Contracting Under a PES Scheme: the Case of the Güisayote Biological Reserve, Honduras
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Cost-benefit distribution of ecosystem services and contracting under a PES scheme: the case of the Güisayote Biological Reserve, Honduras Olivia Raquel Rendón Thompson Submitted in accordance with the requirements for the degree of Doctor of Philosophy The University of Leeds Sustainability Research Institute School of Earth and Environment July, 2014 ii The candidate confirms that the work submitted is his/her own and that appropriate credit has been given where reference has been made to the work of others. This copy has been supplied on the understanding that it is copyright material and that no quotation from the thesis may be published without proper acknowledgement. The right of Olivia Raquel Rendón Thompson to be identified as Author of this work has been asserted by her in accordance with the Copyright, Designs and Patents Act 1988. © 2014 The University of Leeds and Olivia Raquel Rendón Thompson iii PhD Publications Chapters 4 and 5 are based on the following publications: Rendón Thompson, O.R. 2012. Feasibility of a Payment for Ecosystem Services scheme: cost-benefit distribution and contracting opportunities. LACEEP Working Paper Rendón Thompson, O.R. 2012. Improving drinking water quality in the Güisayote Biological Reserve, Honduras: Feasibility of a Payment for Ecosystem Services Scheme. LACEEP Summary for decision makers 46. iv Acknowledgements I received much support and guidance from many people and organisations throughout the development of this research. I would likely to acknowledge the funding provided by the University of Leeds through a Fully-funded International Research (FIRS) Scholarship which enabled me to pursue my goal of doctoral studies in the UK. Likewise, I recognise the funding provided by the Latin American and Caribbean Environmental Economics Program (LACEEP) through a research grant that allowed me to carry out fieldwork in Honduras. I am also grateful to LACEEP and CATIE for funding my participation in several training and developmental workshops in Latin America. I acknowledge additional financial support for conference attendance and article publication from the ESRC Centre for Climate Change Economics and Policy (CCCEP) and the Sustainability Research Institute (SRI) of the University of Leeds. I am extremely grateful to my main supervisor Jouni Paavola, whose guidance has been invaluable for this research and my career. He provided insightful constructive criticism, timely guidance, constant support and encouragement, proving to be an excellent supervisor for the duration of my PhD studies. My two co-supervisors, Nesha Beharry-Borg who provided guidance in the earlier stages of this research, and Martin Dallimer who was there at a crucial stage of my research, the last months, providing guidance and support beyond my expectations. I am also grateful to Francisco Alpizar and Jorge Maldonado who provided guidance as LACEEP advisors. This thesis would not have been possible without the support of these erudite academics. Thanks! I would like to particularly thank the participants of the fifteen communities in this research for their time and effort; as well as my two interviewers, Ana and Karla, for their enthusiasm to work and their patience through all the obstacles that arose during fieldwork. A huge thanks to all the staff at AESMO for their interest and v support in all aspects of my research during fieldwork, especially Victor Saravia. Other people who have in some way or other contributed to my research and my PhD experience along the way include Dale Whittington, Felipe Vasquez, Carlos Medina, Lindsay Stringer, Michelle Lesnianski, Merv, Camilo, Lizeth, Benedicta, all SRI staff and researchers, and those whose names I have forgotten to mention. Above all, I thank my Higher Power for giving me the strength, perseverance and intelligence to carry this research to completion, as well as making sure I always had exactly what I needed. vi Abstract This thesis assessed the costs and benefits distribution of improving drinking water quality through a land set-aside payment for ecosystem services (PES) scheme in a watershed of Honduras. The benefits of improving drinking water quality were determined using a contingent valuation survey for a stated willingness-to-pay (WTP) for improved drinking water quality through a PES scheme; and a revealed WTP was determined as the sum of averting expenditure and illness damage costs. Likewise, the costs of water conservation were determined through two approaches, the flow and rent opportunity costs of upstream landholders. Both WTP measures evidenced that beneficiaries could afford and were willing to pay for improved drinking water quality. The two WTP measures were not correlated, but this could be due to biased estimates or context-dependent preferences for each approach. Conversely, the cost of water conservation came to an overall flow net return of US$ 1,410 ha-1, with coffee exhibiting the highest returns. However, the median positive returns without coffee, US$ 140, are used and they are correlated to the rent opportunity costs. Identifying a reliable, accurate and cost-effective method to determine opportunity costs is challenging, but the two methods employed provided valid estimates. This study identifies and discusses several distributional issues for PES schemes; these are the upstream- downstream externality framework, peoples’ perceptions, unequal water governance, and fair targeting of payments to service providers. The WTP for improved drinking water quality is not sufficient to compensate the opportunity costs of landholders. The WTP would only cover 6% to 10% of the estimated cost of the water conservation. Thus, a user-based PES scheme at the study site is not feasible. Water conservation is more likely to be possible if substantial external support is obtained or through a sustainable land management-based scheme. vii Table of Contents PhD Publications ......................................................................................................... iii Acknowledgements ..................................................................................................... iv Abstract ....................................................................................................................... vi Table of Contents ....................................................................................................... vii List of Tables ............................................................................................................... xii List of Figures ............................................................................................................ xiv Chapter 1: Introduction.............................................................................................. 15 1.1 Research Motivation ........................................................................................ 15 1.2 Research Aim and Objectives ........................................................................... 19 1.3 Thesis Structure ................................................................................................ 19 Chapter 2: Literature Review ..................................................................................... 21 2.1 Conservation and the Ecosystem Services Approach ...................................... 21 2.1.1. What are Ecosystem Services? ................................................................ 23 2.2 Equity issues in Ecosystem Service Use ........................................................... 26 2.2.1 Distribution of Costs and Benefits ............................................................ 28 2.3 Payment for Ecosystem Services Schemes ...................................................... 31 2.3.1 Designing PES Schemes for Improved Equity ........................................... 33 2.4 Valuing Ecosystem Services ............................................................................. 37 2.5 Conclusion ........................................................................................................ 43 Chapter 3: Methodology ............................................................................................ 46 3.1 Ecosystem Service Selection: Water Provision ................................................ 46 3.2 Case Study: Honduras and the Güisayote Biological Reserve ......................... 48 3.3 Research Design ............................................................................................... 58 3.4 Data Collection ................................................................................................. 59 3.4.1 Exploratory Methods ................................................................................ 60 3.4.1.1 Focus Groups ....................................................................................... 60 3.4.1.2 Participatory Community Mapping ..................................................... 61 3.4.1.3 Water Board Interviews and Water Source GIS Mapping .................. 62 3.4.2 Valuation of the WTP for Water Provision ............................................... 63 viii 3.4.2.1 Sampling for Valuation Methods ........................................................ 65 3.4.2.2 Determining a Stated WTP: Contingent Valuation ............................. 65 3.4.2.3 Determining a Revealed WTP: Averting Behaviour plus Damage Costs ......................................................................................................................... 66 3.4.3 Defining