WORKING TOGETHER TO INSPIRE SUSTAINABLE SOLUTIONS

ANALYSIS OF PES NEEDS AND FEASIBILITY IN SERBIA CONTENT

INTRODUCTION 01

Author: Goran Sekulić THE DANUBE BASIN IN SERBIA 02 Editor: Maya Todorova Editor of the English text: Vanya Rainova PES IN SERBIA – GENERAL REMARKS 03 Design concept: Boyan Petkov, Ina Kalcheva Printed at Geosoft EOOD DETAILED REVIEW OF EXISTING FINANCIAL SCHEMES RELATED TO NATURAL Cover photo: © Wild Wonders of Europe / Ruben Smit / WWF RESOURCES AND NATURE CONSERVATION 04 © Text 2012 WWF Danube-Carpathian Programme All rights reserved Fund for environmental protection 04

This study was prepared as part of THE DANUBE PES PROJECT: PROMOTING Fund for waters 08 PAYMENTS FOR ECOSYSTEM SERVICES AND RELATED SUSTAINABLE FINANCING SCHEMES IN THE DANUBE BASIN. Fund for forests 13

This project promotes and supports land managers who help us sustain the benefits that we all get Charges for use of protected areas 17 from nature. The project is implemented by the WWF Danube-Carpathian Programme with the financial support of the GEF through UNEP and the European Commission. Tourism in protected areas 21

General recommendations for PES schemes in Serbia 22 WWF-DCPO Ottakringer Straße 114-116 Potential case studies for PES schemes in Serbia 27 1160 Vienna, Austria Phone: +43 1 524 54 70 Fax: +43 1 524 54 70-70 [email protected], www.panda.org/dcpo

WWF-Bulgaria 38 Ivan Vazov Street, app. 2-4 Phone: +359 2 950 50 40, +359 2 950 50 41 Fax: +359 2 981 66 40 [email protected], wwf.bg

WWF-România Str. Ioan Caragea Voda nr. 26A, 010537, sector 1, Bucuresti Phone: +40 21 317 49 96 Fax: +40 21 317 49 97 [email protected], wwf.ro scaling the PES concept with a focus organizations are also working on INTRODUCTION on biodiversity conservation. The developing international PES (IPES).

People have largely underestimated natural resources and the relatively the benefits derived from ecosystems poor results of the existing concept in industrial society. Most often, for conservation of ecosystems have these gains were seen in the context brought economic assessment of THE DANUBE BASIN IN SERBIA of culture and spirituality and ecosystem services to the forefront of were, therefore, difficult to value in contemporary thinking about nature economic terms. conservation policies. Global policies Serbia is located in southeastern Europe and occupies an area of 88,361 sq. have started to acknowledge the km. Most of its territory (80%) is in the Balkan Peninsula; the remaining 20% However, the last decades have immense importance of ecosystem stretch into the Pannonian Plain. witnessed a shift in our thinking services and to incorporate them in about ecological services. The growing economic systems. The Danube is the largest river in Serbia. Its basin covers almost the entire concern over the rapid depletion of territory of the country, save for small areas in southern Serbia, which belong to the Adriatic and Aegean Sea basins. Coming from the northwest, the Danube flows through the Pannonian Plane. In the eastern part of the country, the river enters Djerdap gorge (Iron Gate), one of the largest gorges in Europe. The Cultural (eg. educational, largest tributaries in Serbia are Tisa, Sava, Morava, Tamiš and Timok. Provisioning (eg. food, recreational, spiritual, water, timber) religious)

Regulating (eg. climate regulation, water purification, Supporting (primary flood protection, disease production, soil formation) control)

Figure 1. Classification of ecosystem services (based on Millennium Ecosystem Assessment, UN 2005)

Payments for ecosystem services in general. Many international (PES) are incentives for the marketing programmes and initiatives promote of services that are provided by this concept. The United Nations natural systems. Nowadays, PES Environmental Programme (UNEP), are recognized as one of the most the Conventional on Biological convenient tools for supporting Diversity (CBD) and the International nature conservation and sustainable Union for the Conservation of Nature management of natural resources (IUCN) are cooperating closely on

WWF 2012 - Payments for Ecosystem Services in Serbia / page 1 WWF 2012 - Payments for Ecosystem Services in Serbia / page 2 effective and targeted financing of People who are working in sectors PES IN SERBIA – GENERAL REMARKS ecosystem conservation. Additional related to natural resources (nature economic analysis should be conservation, water management, conducted in order to properly adapt forestry) are acquainted with the The PES concept is a relatively new to mechanisms, even though certain existing mechanisms and to define general facts and principles of Serbia, and it has not been developed elements are in place. In addition, procedures for the internalization environmental economics, but and implemented. However, recent the existing financial mechanisms of environmental costs in different incentives and organized efforts for laws regulating the use of natural are focused on provisioning services sectors. promotion of this concept are lacking. resources have enabled some (timber, water, flora and fauna), basic environmental economics which leaves out other ecological However, there is little awareness mechanisms. services of great importance, such as and knowledge about PES in Serbia. natural flood protection and water The Law on Environmental Protection purification, for example. (2004) adopted the “user pays” principle and introduced fees for the Protected area managers in Serbia are use of natural resources and some allowed to collect fees for different ecological services. Other laws, such kinds of use of resources in their DETAILED REVIEW OF EXISTING FINANCIAL SCHEMES as the Law on Waters and Law on parks. This mechanism resembles a Forests, also regulate the payment for PES scheme, but then, again, we run RELATED TO NATURAL RESOURCES AND NATURE natural resource use. The 2010 Law into the problem of loosely defined on Forests goes as far as introducing a rules for investing the money collected CONSERVATION fee for forest services of public interest from such fees. In addition, the (protection of water basins, protection ecological services, for which the users Fund for environmental protection from erosion, non-timber forest are charged, are not always specified, products, recreation, etc.), which can and users are not aware that they be considered a fee for ecosystem are paying for benefits they get from The Fund for Environmental The main financial sources of the services. ecological services. Protection was established by the Law Fund for Environmental Protection on Environmental Protection1, which are charges established by the However, these laws do not regulate In recent years, there has been a passed in 2004. A separate Law on eponymous law (Articles 27, 45 & 85). the investment of collected fees. deliberate effort to develop tourism Fund for Environmental Protection2 They include: Provisions for the use of these funds in some protected areas in Serbia. was adopted in 2009. The fund aims • charge for the use and trade are defined broadly, and they do These initiatives also have some to secure funding for activities in the not explicitly ensure financing of characteristics of PES schemes, since with wild fauna and flora; area of preservation, sustainable use, The charge for the use and trade of conservation initiatives. As a result, they generate income that supports protection and advancement of the the money is not invested back into the management of the protected wild flora and fauna is defined by environment, as well as in the area of the Decree on Control of Use and the conservation of ecosystems areas. energy efficiency and use of renewable Trade of Wild Flora and Fauna3. The and the improvement of ecosystem energy sources. amount of the charge is 10% of the services. Obviously, there are solid foundations for the further development of PES Therefore, we cannot fully schemes in Serbia. Many of the 1 Official Gazette of the Republic of Serbia no. 135/2004 acknowledge existing financial existing financing mechanisms can 2 Official Gazette of the Republic of Serbia no. 72/2009 & 101/2011 mechanisms in Serbia as PES be adapted so that they enable the 3 Official Gazette of the Republic of Serbia no. 31/2004, 35/2004.

WWF 2012 - Payments for Ecosystem Services in Serbia / page 3 WWF 2012 - Payments for Ecosystem Services in Serbia / page 4 market value of used/traded natural bags) and by the type and volume of good. vehicles with internal combustion Percent of Source Amount in RSD engines (every vehicle owner pays the total amount • charge for the registration in the charge annually). the European Eco-management Charges for the use and trade with 72.421.465,45 1,51 and Audit Scheme `(EMAS) • charges for the use of fishing wild fauna and flora system; areas6 The charge for the registration into Users (management bodies) of Charges for motor vehicles 809.516.074,43 16,89 EMAS system is currently 66 000 fishing areas are charged 15% of Charges for substances which are 4.570.299,90 0,09 RSD (ca. 600 EUR), paid by the the amount collected for issuing of detriment to ozone layer company. licenses for professional fishermen Charges for SO2, NO2 emission 2.541.947.230,26 53,04 and 10% of that amount for sport • environmental pollution and industrial waste fishermen. charges; Charges for special treatment waste 1.334.484.362,31 27,85 Environmental pollution charges Part of the revenues from the Charges for use of fishing areas 29.265.264,95 0,61 are defined by the Decree on Types enforcement of provisions of the of Pollution, Criteria for Calculating TOTAL 4.792.204.697,30 100 Law on Waters (charges for water of Charges for Environmental protection) are also used by the Fund Pollution and Payers, Amount and Table 1. Revenues of the Fund for Environmental Protection in 2011. (for more details see next chapter). Way of Calculating and Collecting (source: Serbian Fund for Environmental Protection) of Charges4 and Rulebook on According to the Fund’s report, the Determining of Harmonized total revenue was nearly 4,8 billion Amounts for Environmental In addition to these charges, the Fund improvement of the quality of air, RSD (ca. 48 million EUR) in 2010, Pollution Charges5. They are can tap into the following financial water, soil and forests, mitigation and 4,2 billion RSD (ca. 42 million calculated by the produced ton sources: of climate changes and ozone layer EUR) in 2011. The table below shows of contaminating compounds (ie. protection; the revenue structure: • revenue obtained in privatization SO2, NO2, industrial waste, plastic processes; • rehabilitation of waste landfills, encouragement of reduction of international bilateral and • waste creation, recycling and waste multilateral cooperation re-use; programmes and projects; • incentives for cleaner production self-generated income from the • and early adaptations to management of liquid money assets; environmental needs; • donations, grants and other sources • technology and products that could in compliance with the Law. reduce the burden to and pollution of the environment; The environmental protection activities that can be financed by the • biodiversity and geodiversity Fund are listed in Article 93 of the protection and preservation; 4 Official Gazette of the Republic of Serbia no. 113/2005, 06/2007. Law on Environmental Protection. • incentives for sustainable use of 5 Official Gazette of the Republic of Serbia no. 7/2011. This long, wide-ranging list includes: protected natural areas; 6 Implemented by Law on Protection and Sustainable Use of Fish Fund (Official Gazette of the Republic of • protection, preservation and • improvement of existing and Serbia no. 36/2009).

WWF 2012 - Payments for Ecosystem Services in Serbia / page 5 WWF 2012 - Payments for Ecosystem Services in Serbia / page 6 building of new infrastructure for • activities related to waste 2% of total revenue. regulating and supporting services environmental protection; management; are neglected, ie. ecosystems also The activity of the Fund for contribute to pollution reduction but • incentives for use of renewable • cleaner production, reduction of Environmental Protection has some that is not reflected in the allocation energy sources and increased energy emissions (pollution); of financial resources; efficiency; elements of a PES scheme because • protection and improvement of the it is partly based on “user pays” • users are not well informed • incentives for cleaner transport; quality of air, water, soil and forests; principle. However, it lacks some about what they pay for and what • incentives for sustainable • improvement of protected important aspect to be considered ecosystem services they actually use; development; area management (sustainable as a comprehensive mechanism • there are no clear regulations on the development incentives); that ensures financial support for development of the system • conservation of ecological services. way of using the income generated, of information about the • renewable energy sources and i.e. no specific conservation Those aspects are: environmental state, monitoring energy efficiency, measures (or programmes); and evaluation of the environmental • ecological services are neither • educational, research and • no clear provisions on monitoring state, as well as introduction explicitly mentioned nor defined; development incentives in the effect of conservation measures of a system of environmental environmental protection. • the Fund’s objectives do cover applied are in effect. management; some provisioning service but • preventive and intervention The annual program for 2011 defines measures in emergency 14 priority fields, of which 5 are environmental pollution including related to waste management, 1 restoration and remediation; to water, air and soil protection Fund for waters • projects and programs for geological each, 1 to nature conservation , 1 to research; renewable energy sources, 1 to cleaner production, 2 to education and 1 to Two ministries share the responsibility issues, while MTAWMF is responsible • incentives for ecological other activities defined by law. education and raising awareness of water management in Serbia: the for water use, flood prevention and Ministry of the Environment, Mining for other technical aspects of water of environmental problems and Among completed projects, the sustainable development; and Spatial Planning (MEMSP) and management. Certain responsibilities largest investments are in waste the Ministry of Trade, Agriculture, are shared at the provincial or local • co-financing the obligations of the management, emission reduction, Water Management and Forestry level. Republic in relation to subsidiary waste water treatment, and other (MTAWMF). In general, MEMSP measures. structural measures for pollution is responsible for water pollution The graph below shows how the water reduction and remediation. Nature management sector is financed. Fund assets are allocated according to conservations claims a small portion, programmes. The mid-term program amounting to 1 to 2% of the Fund’s is voted by the entire Cabinet. The total annual investment. The trend annual programme is approved by the mirrors the revenue generation Ministry of the Environment. pattern: charges for emissions and waste make a contribute to the Fund’s The mid-term program for the period budget considerably more than other 2010-2012 lists only 6 priorities for charges. Charges for the use and trade financing. They are: of flora and fauna contribute around

WWF 2012 - Payments for Ecosystem Services in Serbia / page 7 WWF 2012 - Payments for Ecosystem Services in Serbia / page 8 Charge for use of water resources Government of Serbia This charge is paid for: an object); Ministry of Ministry of trade, Autonomous environment, agriculture, water Province of • drinking water supply (per m3); • mooring and placement of floating mining and management and Local Vojvodina objects (per m2 of an object). spatial planinig forestry governments • bottling of water (per m3); (municipalities) APV Fund for 3 Directorate for environmental APV Fund for • use of thermal waters (per m ); Clearly, many of the activities Fund for waters waters mentioned above rely on ecosystem protection • irrigation (per m3 or per ha); environmental services (drinking water supply, protection Fund for 3 waters • fisheries (per m or per ha); fisheries) but no clear link between • energy production in hydro power this financial mechanism and ecosystem services has been 40 % 60 % plants (per kWh); 60 % 40 % Water and waste established in the Law. According water tariffs • other production facilities (per kW); Charges for water pollution Charges for water use/ to the Law, revenues from charges discharge • use of river sediments (per m3 of for use of water resources are used extracted sediment); to finance the management of water courses; management of and • use of “water land”8 for commercial Human purposes (per m2 or type of protection from the detrimental Industry Agriculture settlements activities); impacts of water (floods); water use and management; and building, • locating a temporary floating object maintenance and management of 2 Figure 2. System of charges in the water management sector in Serbia (based on Law on for commercial purposes (per m of hydro systems. Waters and Law on Environment).

Charge for water discharge Unlike the Fund for Environmental • charge for drainage; Protection, the Fund for Water is not • charge for use of public water This charge is paid for discharging In the context of PES, it is important an institution, but a separate budget facilities and systems; of waste waters in water courses, to note that the fee for water discharge item in the national budget. It was channels, lakes, accumulations or is higher in protected domains that established in 2010 by the Law on • charge for basin water management. in canalization systems, and it is have specific importance for water Waters7. Six types of charges go into calculated per m3 of discharged protection. These protected domains the Fund for Water. They are: The first three charges are fees for economic instruments related to water water. In addition, this charge is paid are defined by the Law on Waters and • charge for use of water resource; protection; the remaining three are for water discharged from cooling are not to be confused with protected • charge for water discharge; water management charges. systems in thermo power plants. In areas established by the Law on this case, the fee is calculated per kWh Nature Protection. • charge for pollution of water; of produced energy.

7 Official Gazette of the Republic of Serbia no. 30/2010. 8 any land that is permanently or periodically covered by water (Law on waters).

WWF 2012 - Payments for Ecosystem Services in Serbia / page 9 WWF 2012 - Payments for Ecosystem Services in Serbia / page 10 Charge for water pollution Charge for water basin management

This charge is similar to the one for protected domains as well, and if Similarly to charge for drainage, Since the Fund for Waters is just a water discharge, but focuses more polluters implement measures for this charge is used for water course budget item in the national budget, on the level and type of pollution purification, the fee is decreased. management and for flood protection. detailed reports on the amount than on volume of discharged water. Every owner of floating objects pays However, the water basin charge collected from water charges are It is calculated based on the type, this charge as well. is restricted to parts of catchment not available. However, revenues quantity and characteristic of emitted areas without drainage systems. The can be estimated by looking at the pollution. In the case of dispersed Charges for water pollution two charges are mutually exclusive: financial plans for water management polluters (fertilizers, pesticides) are directed to the Fund for users who pay one are exempt from activities. Revenues from the water and detergents with phosphates, it Environmental Protection and their paying the other. In the context of management charges (the last three is calculated per kg of a polluting allocation is under the jurisdiction of PES schemes, it is noteworthy that on the list) are used according to substance. This charge is higher in the Ministry of Environment. managers of protected areas don’t annual programs developed by have to pay this charge (Law on the Ministry responsible for water Waters, Article 181). management9 and adopted by the Charge for drainage Government with a decree. According Revenues are used for water to the Decree on the Establishment of Every owner or user of land, by the Law on Waters. Revenues are management in particular the Program for Water Management infrastructure, road infrastructure used for construction, maintenance catchment areas and for drainage in 201110, the planned spending for or public land has to pay this and management of drainage systems. Many such areas are water management activities was charge, unless a drainage system systems. Because drainage activities natural floodplains and these 6,01 billion RSD (ca. 60.1 million for atmospheric waters is in place. can cause great damage to natural revenues could be used for their EUR). A significant portion Charge is calculated per area of ecosystems, it is very important restoration and management. of this budget, however, is agricultural land, construction land, to stimulate biodiversity-friendly Floods rank among the top disaster used for funding projects that living facilities and/or structural drainage systems and to develop risks in Serbia. In past decades, floods are counterproductive to the facilities, etc. Users who create their adaptation measures to natural have caused the greatest economic maintenance of ecosystem own drainage system, the charge can water regimes. damage and resulted in the largest services (eg. dams, drainage go down by up to 50%, as specified number of victims of all natural systems). The table below shows disasters. At the same time, the the allocation of the Fund for Waters natural disaster insurance system is budget. Charge for use of public water facilities and systems not well developed, and few individual households choose to benefit from it. All users of public water facilities in those systems. Mostly it applies for water supply, for discharge of to industrial facilities, fisheries and waste waters and for transport irrigation systems. Revenues are used pay this charge. Unlike the charge for construction, maintenance and for water use, this charge focuses management of drainage systems and entirely on the use of public water regional and multi-purpose water facilities and the discharge of waters reservoirs. 9 currently Ministry of Trade, Agriculture, Water Management and Forestry. 10 Official Gazette of the Republic of Serbia no. 20/2011.

WWF 2012 - Payments for Ecosystem Services in Serbia / page 11 WWF 2012 - Payments for Ecosystem Services in Serbia / page 12 Fee for forest and forestland use Planned amount % of the total Activity / in RSD amount Every owner or user of forests pay from the territory of the Autonomous this fee. The fee is a percentage of the Province of Vojvodina are directed Construction and maintenance of 1.130.000.000 18,53 multifunctional dams and accumulations total income from forest management. to the Provincial Fund for Forests. Forest users (public enterprises that In addition, 30% of all collected fees 1.300.000.000 21,32 Use and management of waters manage public forests) pay 3% of are directed to local governments Protection of waters from pollution 650.000.000 10,66 their total annual income, while forest (municipalities). Management of water courses 2.008.287.732 32,93 owners pay 5%. Revenues collected and flood protection Studies, plans, projects 830.000.000 13,61 Fee for protection, use and improvement of forest International cooperation 180.000.000 2,95 functions of public interest TOTAL 6.098.287.732 100 Any legal entity in Serbia, except for of forest functions of public interest. Table 2. Financial plan for water management activities for 2011. public enterprises established for Currently, it is not known how many forest and national park management, public entities actually pay this fee. has to pay this fee equal to 0,025% of the entity’s gross annual income. Two programs govern the distribution FUND FOR FORESTS of the fund’s asset: the Program on Again, because the Fund for Forests is Forestry Development and an annual an item within the national budget, no programme for use of the fund’s The Fund for Forests is a separate • production of reproductive material data about the fund’s annual revenues assets. The 2012 annual programme budget item in the national budget, (seed and seedlings). are available. There is no efficient projects spending 1,5 billion RSD just like the Fund for Waters. It payment enforcement system in place, (ca. 15 million EUR) of the Funds was established in 2010 by the Law The Fund’s assets come from the especially when it comes to the fee resources. The table below shows the on Forests11. The Fund’s primary following sources: for protection, use and improvement allocation of these resources. objective, as stated by the Law, is to • fee for forest and forestland use; finance the following activities: • fee for protection, use and • growth of forest coverage by improvement of forest services of reforestation; public interest; • improvement the state of coniferous • other sources (national budget, rural plantations; development funds, donations, etc.). • conversion of coppice forests to high forests;

11 Official Gazette of the Republic of Serbia no. 30/2011.

WWF 2012 - Payments for Ecosystem Services in Serbia / page 13 WWF 2012 - Payments for Ecosystem Services in Serbia / page 14 The Law on Forests (article 77) Almost half (48,6%) of the forests in Percent of Source Amount in RSD mandates funding for forest renewal Serbia are privately owned. Generally, the total amount and reproduction. The law requires that is a good opportunity for the forest users and owners to invest at development of PES schemes. These Protection of forests 42.200.000 2,81 least 15 % of their annual income is a dearth of knowledge about the Reforestation 379.500.000 25,30 from forest products into forest exact state of privately owned forests, Forest management 95.000.000 6,33 management. Management activities but an educated guess would qualify are defined in the Forest Management it as unfavorable. For a variety of Construction of forest roads 277.900.000 18,53 Plan developed every 10 years. reasons, including small holds, Production of seed 5.652.000 0,38 insufficient knowledge and technical Production of seedlings 50.000.000 3,33 Article 90 of the same law requires capacities, and lack of finances, Scientific research in forestry 30.000.000 2,00 forest users and owners to assess private owners have used the forests the forest value in their forest in an unsustainable way, focusing on National inventory of private forests 367.818.744 24,52 management plans. The law defines exploitation and neglecting to invest Development of forest management 3.544.306 0,24 forest value as the value of timber, enough resources in management and plans for private forests land, non-timber forest products and regeneration. The improvement of Education 15.000.000 1,00 forest functions of public interest. This the state of private forests in Serbia Development plans for forest regions 30.000.000 2,00 article actually provides basic steps is one of the objectives defined in the for the development of PES schemes Strategy for Forestry Development Other plans and projects in line with 12.000.000 0,80 in forestry, and it is very important in the Republic of Serbia. The first Strategy on forestry development that it also recognize forest functions strategic step would be to collect Dues from 2011 191.384.950 12,76 (services) of public interest. However, current and accurate data about TOTAL 1.500.000.000 100 there are no by-law regarding this private status and to analyze their issue and the lack of experience and current state. Expert and financial Table 3. Financial plan for activities funded by the Fund for Forests in 2012. capacities for integrated valuing of support is to follow. The strategic forests has stalled progress on this plan also proposed to support the front. associations of private owners and At first glance, the financial plan mostly management of young foster the aggregation of small holds. allocates a significant sum to forests (clearing of undergrowth) for conservation measures, such improvement of timber production. as protection, reforestation, management. However, the detailed Although significant funds are description of these activities shows allocated for reforestation, that they are primarily technical but that is not necessarily a measures for improvement of forest biodiversity-friendly activity. production. For example, the sum Sometimes, valuable and allocated for forest protection is to biodiversity rich non-forest be spent on fire prevention facilities areas are being forested for and disease protection. Similarly, economic reasons (extension of forest management activities mean forest areas used for intensive timber use).

WWF 2012 - Payments for Ecosystem Services in Serbia / page 15 WWF 2012 - Payments for Ecosystem Services in Serbia / page 16 CHARGES FOR USE OF PROTECTED AREAS Service RSD per year

Article 70 of the Law on Nature • degree of damages made to the Tourism agency (incl. hunting, extreme sports etc) 10.000 Protection, allows protected area protected area; Hotels 1.200 per bed managers are to collect fee for • degree of increased Manager’s Hostels 770 per bed different types of use of the protected obligations in maintenance of Mountain houses 430 per bed areas they manage. They can set and tidiness and cleanliness, guarding collect fees for the following activities: and other activities related to Camps 10 per m2 • activities in the area of tourism, conservation, improvement, Restaurants, buffets 1.000 per m2 catering, trade, services, presentation and development of the Shops 750 per m2 craftsmanship, industry, mining, protected area; Mills 100.000 energy, water management, • advantages and uses provided by the Mining 200 per m3 civil engineering, transport, protected area for performance of telecommunication, use of wild flora allowed business and activities. Exploitation of river sediments 100 per m3 and fauna; Bottled water production 1 per l of bottled water All legal or private entities using a • holiday houses and other non- trout - 40 per m2 commercial facilities for rest in protected area in any of the above- Fishponds carp - 1000 m2 nature; mentioned ways have to pay these charges. The protected area manager Accumulations for hydro power 3.600 per ha motor vehicles in use in the • may reduce or waive the fee for protected area; Wind power 150.000 per object persons who permanently live in the Transport of energy/ power lines 30 per m2 of area under power line • tourist, recreational, sports and area, disabled persons and persons other manifestations and activities, with special needs, retired persons, Road transport 50 per m of a road advertisements, commercial film, users whose activities increase the Recreation houses 120 per m2 photo and audio recordings; value of protected area, as well as for Table 4. Charges collected for the use of Kopaonik National Park. • use of services, regulated fields, persons who have suffered damage or facilities and other property of the loss from natural disasters. A fee collection mechanism is not level. The managers of other protected manager and of the name and logo in place in all protected areas. The areas have less influence and therefore of the protected area; The charges are set by the Decree of Closer Criteria, Manner of Calculation management of large national and find it difficult to develop and • visit to the protected area, parts and and Collection of Fees12 as well as by nature parks takes advantage of this implement a system of charges that facilities thereof. protected area management decisions. revenue-collection opportunity, but would be accepted and supported by The table below show an example the managers of smaller areas often other stakeholders in the region. Criteria for price setting are as follows: of the set tariffs, in this case for the lack the capacity to implement and • degree of use of the protected area; Kopaonik national Park. enforce charges. Political influence is All in all, charges for the use of also a factor: the management bodies protected areas make a significant of national parks are government- contribution to the annual budgets sanctioned public enterprises and as of Serbia’s national parks, often such carry a lot of clout on the local higher than funding received from the 12 Official Gazette of the Republic of Serbia no.43/10 national budget (see table below).

WWF 2012 - Payments for Ecosystem Services in Serbia / page 17 WWF 2012 - Payments for Ecosystem Services in Serbia / page 18 Subsidies Total annual Collected National park from the national Planned amount % to total annual budget (RSD) charges Activity budget in RSD budget NP Tara (2011) 305.000.000 14.700.000 (4.8%) 15.500.000 (5,1%) Protection and maintenance (incl. 121.606.000 62,7 ranger service, staff, developing of NP Kopaonik (2010) 113.000.000 6.886.000 (6,1%) 19.249.000 (17%) documents, cooperation with NP Djerdap 197.591.000 60.000.000 (30,4%) 54.000.000 (27,3%) stakeholders, education, (planned for 2012) international cooperation) Visitor management 30.774.000 15,9 Table 5. Funding of national park management (Source: financial plans of the national parks). Subsidies for landowners 800.000 0,5 (damage made by wild animals)

Timber sales are the main source budget. Monitoring and improvement of the 16.174.000 8,3 of financing for all national parks conservation status in Serbia. That is especially true in Protected area managers are legally Land use and infrastructure 22.318.000 11,5 National Park Tara where forestry mandated to keep separate account (forest management plans, roads, generates more than 60% of the for funds generated by these charges, forest certification) annual budget. Therefore, charges and to use them for protection, Other (information system) 2.200.000 1,1 development and improvement of the collected for the use of protected areas Total 193.872.000 100 in this park are a smaller portion protected areas. However, a review of of the park’s budget. Djerdap and the management plans and financial Table 6. Allocation of funds for management activities in National Park Djerdap Kopaonik are less forestry-oriented reports of four national parks lent (Source: 2012 Management Plan of National Park Djerdap). and generate more income from little information about how the charges. National Park Kopaonik is a money collected from charges for the prominent tourist destination owes use of protected areas were spent. All activities listed in Djerdap’s look reveals that lack of planned its higher income from charges to management Plan can be regarded as activities aimed at improving the fee-paying tourist industry entities. A The table below shows the allocation part of protection, development and conservation status, such as habitat hydro-power plant located in National of financial resources as specified improvement of the protected area, management, restoration, mowing, Park Djerdap contributes a significant in the 2012 Management Plan of but obviously the largest portion of etc. Most of the planned activities are amount of charges to that park’s National Park Djerdap. the annual budget is allocated to staff in the realm forest management and salaries and maintenance. A closer tourism infrastructure development.

WWF 2012 - Payments for Ecosystem Services in Serbia / page 19 WWF 2012 - Payments for Ecosystem Services in Serbia / page 20 TOURISM IN PROTECTED AREAS There is no specific data on the with conservational objectives. As revenue generated from tourism a consequence, tourism in those in these protected areas. However, areas can easily cross the line of The management of some protected enjoy walking and bike tours, sport it is safe to assume that tourism sustainable, eco-tourism and turn into areas in Serbia has recently developed fishing, canoeing and other activities. is a significant source of income, conventional, intensive tourism. In tourism programmes that generate The management has fostered especially for the protected areas addition, the use of money generated additional income. The value of cooperation with tourist organizations that have invested in their tourism by tourism is not specifically defined, tourism is widely recognized, yet in the region as well as with agencies capacities. Unfortunately, there is but most likely is poured back into only a few protected areas can boast working in nearby tourist centres. no reliable system to monitor tourist the development and maintenance of functional tourism programmes. They have also improved the reserve’s activities and their compliance tourism facilities. Among the leaders are the special tourism infrastructure (visitor center, nature reserves Zasavica and Uvac, trails, boats) with the support of both Mokra Gora nature park and well national and international funds. as the natural monument Resacska GENERAL RECOMMENDATIONS FOR PES SCHEMES IN SERBIA pećina (cave). Nature park Mokra Gora (http:// www.parkprirodemokragora.org) is Tourism activities are best developed an attractive tourist destination in There are few financial schemes absent in existing financial in Zasavica. The reserve includes western Serbia, close to the border related to natural resources in Serbia. mechanisms in Serbia are: Zasavica river with its flood plains. with Bosnia and Herzegovina. Its Currently, none of them fully complies • explicit internalization of It is famous for the farming of main attraction is Drvengrad (literally, with the concept of PES schemes, environmental costs; traditional cattle breeds (Podolsko wooden city), which mainly consists but most of them have the potential cow, Mangulica pig and Balkan of traditional wooden houses. Nature to be adapted into a functional PES • transparent pricing system; donkey) and local products, such as and biodiversity are not the top selling scheme. Most of these schemes have • clear indications of purpose of sausage, cheese and milk. In addition points for the existing tourist industry been in place for many years and tare charges; to the traditional local products, the in the region. It relies on more traditional financial mechanisms for control of use of generated income reserve’s management has promoted conventional tourism, such as ski and the use of natural resources. They • (it should be mainly used for other exclusive products, such as conference tourism. There are plans were instituted long before modern improvement of the state of the donkey’s milk (ca. 40 euro per litre) for further development of the ski developments in environmental ecosystems); and donkey milk cosmetics, sold also center and other facilities, such as port economy and before the rise of through the reserve’s online store fields and pools. global initiatives on marketing of • monitoring the efficiency of financed (http://www.zasavica.org.rs/en/ ecosystem services with the goal of conservational measures. proizvodi/). Zasavica’s managers also Resavska Pecina (http://www. more efficient ecosystem protection. organize visitor tours, boat rides and resavskapecina.rs) is a cave system These mechanisms don’t internalize The development and adoption of other outdoor activities. in eastern Serbia. The cave is 4,5 environmental costs and they are completely new and specific legal km long with 800m is accessible to usually based on provisioning and instruments for PES schemes in The special nature reserve Uvac tourists. Around 50 000 people visit administrative costs of using of Serbia is unlikely in the near future. (http://www.uvac.org.rs), in south- the cave every year. The entrance fee natural resources. Therefore, it would be more efficient, western Serbia, has been established is currently 300 RSD (ca. 2,6 EUR) at least at first, to focus on the for the conservation of the colony for adults and 250 RSD (2,2 EUR) for Some of the important characteristics adaptation of existing instruments. of griffon vultures. Visitors can children. of a PES schemes that are generally Promoting the value of ecosystems

WWF 2012 - Payments for Ecosystem Services in Serbia / page 21 WWF 2012 - Payments for Ecosystem Services in Serbia / page 22 through existing mechanism would measures should be a priority, of ecosystem services for water by revenues generated by the charge enable more opportunities for further though initially monitoring and purification. Still, the analysis would for water-basin management. development of PES schemes. research are a must, since current show the importance of these services knowledge of the population status and would justify the allocation of at The following actions would help the The coffers of the Fund for of many used species is poor; least some of the revenues for these development of a PES scheme for Environmental Protection are • a system of control and effectiveness purposes. natural flood areas: filled mainly by charging polluters. monitoring has to be established. • assessment and evaluation of However, there are some components Any activity financed from Identifying specific areas that are of natural flood areas’ contribution to that are directly based on payments these funds has to be proven as importance to natural purification, flood prevention (comparison to the for ecosystem services are in place, efficient in the sense of improving or at least criteria for their selection, known costs of technical measures); namely taxes for use of flora and conservational status (increased is a must. Those areas should be the fauna species (provisioning services). number of individuals, enlarged primary targets for conservation • identification of the most important Funds generated from these charges distribution, enlarged or improved measures financed by the fund. sites for flood prevention; make 1 to 2% of the Fund’s annual habitat, suppressed pressures, etc.). Criteria for the effectiveness of • conducting an economic analysis assets (ca. 500.0000 to 1.000.000 implemented projects and measures in order to set the percentage of euro). Although that’s a comparatively Currently, most of the Fund’s assets should be in place as well. Targeting revenues generated by charges for small share, these funds could be are invested in technical measures areas that are important for water water basin management to be used a significant source of funding for for pollution reduction and especially protection and are already defined for conservation of these areas; for water purification systems. The targeted conservation projects. Here by Law on Water is a good starting • using allocated financial resources are some steps necessary in order to importance of natural ecosystems for point. So are existing protected areas to fund projects that aim to conserve establish a PES scheme using these water purification is not recognized, that include water habitats, especially wetland habitats and to improve or funds: and there are no financial mechanisms those that provide drinking water. restore their natural water regime. for funding the conservation of • revenues from charges for the use such ecosystems. Investing at least The Fund for Water also generates of flora and fauna have to be, at Charges for water use are direct significant revenues that could be used least partly, allocated to financing part of the revenues from charges payments for an ecosystem service. projects/measures whose explicit for water pollution and water for conservation. One opportunity It is worth exploring whether PES objective is improving conservation discharge in conservational measures for a PES scheme is the fee for water schemes could be established in state of used species and their and improvement of ecosystem basin management, which includes cooperation with bottled water habitats; purification capacities would make a flood protection. The fund’s main producers, which are obliged to pay lot of sense. objective is to finance flood protection these charges for every liter of water • additional economic analysis facilities, such as dykes, retentions, they bottle. On the national level, is needed in order to set the Determining what portion of these dams, etc. Yet some natural flood percentage of the total revenues there are no specific mechanisms for revenues should go to conservation areas also play an important role in which are to be allocated annually to supporting producers in financing systems requires additional analyses: reducing flood risks due to their ability PES schemes; conservational measures. However, an assessment and evaluation of the to accumulate and store large amounts some producers have self-initiated • responsible institutions (Ministry purification capacities of different of water. Some flood areas are conservation activities as part of their of the Environment) have to define ecosystems as well as an economic designated protected areas by the Law corporate responsibility programmes. criteria for project/measures assessment of the contribution of on Nature Protection, however, the For example, the Coca-Cola Company eligibility with a focus on improving ecosystems to water purification. current policy does not acknowledge funded the restoration of natural the status of used species. Habitat Admittedly, it is unlikely that the their contribution to flood prevention wetlands in SRP Gornje Podunavlje. management and conservation fund would cover the total cost and their conservation is not funded

WWF 2012 - Payments for Ecosystem Services in Serbia / page 23 WWF 2012 - Payments for Ecosystem Services in Serbia / page 24 One possibility would be to establish forests. Of course, specific criteria and • establish and promote charges for • measure the effectiveness of all a subsidy mechanism for water users a control system for the establishment the use of protected area on the financed activities (with defined who finance conservational measures of PES schemes should be in place, jus national level, so that all protected indicators); managers can benefit form these (i.e. low intensive forestry use in water like for the other funds discussed so • present regularly activity results to opportunities; catchments, restoration of wetland far. users (payers). habitats, subsidies for farmers to • establish a transparent pricing reduce use of fertilizers and pesticides Serbia is a non-annex I country under system (in agreement with users) Tourism is the most important source in catchment areas). Such measures the Kyoto Protocol, and therefore, it with reference to estimated of financing for conservational efforts are likely to decrease production costs cannot use the mechanism for joint environmental costs; in protected areas. Unfortunately, it and/or improve water quality, and, implementation, which has import • account for these charges separately is underdeveloped in most protected therefore, they should be of interest on forest conservation. In 2012, from the rest of the budget and use areas in Serbia. Furthermore, in for bottled water producers. However, Serbia established a Designated the revenues for conservational the handful of areas where tourism whether it is feasible to use money National Authority (DNA) for Clean measures only, as mandated by law; flourishes, environmental costs are from the Fund for Waters to develop Development Mechanism (CDM). not always internalized. In some public-private partnerships must be There are four CDM projects in the • avoid using the revenues from areas tourism activities tend to these charges to finance general subject to additional analysis. works so far: three wind farms and become intense and incompatible management costs; one for the reduction of methane with conservational objectives. Often The Fund for Forests has some leakages in the gas distribution • focus on the conservation of habitats income generated form tourism is 13 potential for developing PES schemes networks operated by JP Serbiagas . and species, including proactive reinvested in tourism. There must be as well. For example, payments for Still, it is important to assess the measures, such as restoration, national standards for sustainable less intensive use or non-use of their value of forest services and explore reintroduction, repopulation, etc. tourism in protected areas, and forests are likely to be a very attractive possibilities for using the Kyoto • include project/measures slated these standards should explicitly option for some forest owners. Since flexible mechanisms for PES purposes. for financing should in the area’s link revenues generated by tourism forest owners are lacking the capacity management plan; to funding conservational efforts in for efficient forest management, it Charges for the use of protected areas protected areas. could be more profitable for them seem very suitable for developing PES to set-aside or to implement certain schemes. Unfortunately, like in the conservation measures (e.g. extensive rest of the mechanisms described so timber extraction, reforestation, far, there are neither clear rules for leaving of old/dead trees, conversion the allocation of revenue generated of coppice forests). Since this is from these charges nor a reliable compatible with objectives set in the way to monitor the effectiveness Strategy of Forest Development, it of implemented measures. Lack seems relatively feasible to allocate of transparency marks the entire financial resources to these purposes process of charge collection and re- from the Fund for Forests. Currently, distribution. Here are some general a quarter of the Fund’s annual budget recommendations for improving this is spent for inventory of private financial mechanisms:

13 Source: http://cdm.unfccc.int

WWF 2012 - Payments for Ecosystem Services in Serbia / page 25 WWF 2012 - Payments for Ecosystem Services in Serbia / page 26 The fishpond is a breeding place for its development. The Municipality of POTENTIAL CASE STUDIES FOR PES SCHEMES IN SERBIA wetland birds, such as the pigmy Kladovo is interested in reestablishing cormorant, the little egret, the squacco fish production, but there are no heron, the garganey, the ferruginous potential investors so far. Fishpond Mala Vrbica (city of Kladovo, eastern Serbia) duck and others, and became an Important Bird Area (IBA) in 1999. In any case, Mala Vrbica is suitable for the implementation of a PES The Mala Vrbica fishpond is located captive reproduction of sturgeons The area is also interesting because of scheme. Eco tourism could be a main next to the Danube river, a couple prior to their reintroduction to the sandy habitats and rare plant species. source of funding. The fishpond is of kilometers downstream from the Danube. Sturgeon reproduction in the Mala Vrbica was listed as a easily accessible from the nearby city Iron Gate gorge. It was built in the pond ceased in the early 2000s, and preliminary special protected area of Kladovo, which is one of the stops 1970s to compensate for the fallout shortly after, the pond was abandoned (SPA) site, and an initiative for its for Danube cruise ships. Birdwatching from building a dam on the Danube completely. Currently, the fishpond is designation as a protected area was opportunities could be the foundation and cutting the migration routes of state-owned and unmanaged. There launched in 2012. Illegal hunting and of developing tourism in the fishpond sturgeons. The pond was a site for isn’t even control of access. fishing present the greatest thread to area. Necessary investments include the ecosystem, as do eutrophication the construction of watching tower and natural succession. and hides (2-3), production of printed materials, installation of information The Electric Power Industry of Serbia, signs on sire, purchasing of optical which created the fishpond in the first equipment (binoculars & scopes), and place, shows no interest in investing in training of guides.

Figure 2. Location of the fishpond “Mala Vrbica”. © Goran Sekulić

Mala Vrbica fishpond

WWF 2012 - Payments for Ecosystem Services in Serbia / page 27 WWF 2012 - Payments for Ecosystem Services in Serbia / page 28 Revenues from tourism should production site once again, then cover basic site management needs, the investor should be obliged by such as guarding, monitoring and contract to implement conservation communication with stakeholders, measures, such as bird-friendly possibly with additional support from management, especially when it the municipality. comes to vegetation). In addition, fish production should be restricted The fishpond is valuable not only to species that are native to the because of its biodiversity, but also Danube. In this case, a portion of the because it could aid flood protection revenues from tourism and, possibly, with retention. It’s worth exploring from charges for water management whether a portion of charges collected should go to investor subsidies. from water basin management could be allocated to the fishpond’s habitat Establishing permanent monitoring of management (for example, for the birds in the fishpond is a must. Such removal of mud and vegetation). monitoring would enable measuring the effectiveness of conservation If the pond becomes a fish activities. © Goran Sekulić

The Danube floodplains by Belgrade Restoration of natural habitats in/around commercial forest plantations in Danube flood plains Many forest managers have already at the restoration of natural forest implemented such measures in ecosystems. In addition, since these The Danube floodplains are very and rich biological communities. compliance with the rules set in areas are important water reservoirs, suitable for plantations of commercial forest certification contracts (FSC). water supplying companies, forest species. Large natural areas There are some activities that could However, these efforts must be agriculture companies and have been cultivated and used for mitigate the negative impact of supported by other funds as well, in farmers can potentially be these purposes. Commercial forest commercial forest plantations, such order to increase their positive impact involved in financing schemes plantations are a very profitable as the creation or restoration of on conservation. Possible sources through public-private business, and the forest sector natural habitants along the edges of of financing include the Fund for partnerships. Last but not largely depends on them. At the the plantations and the restoration Forests, the Fund for Environmental least, comes the development same time, they are characterized of wetland habitat patches inside the Protection and the Fund for Water (to of eco-tourism sites within the by a homogenous habitat pattern, plantations. Restoration efforts should be used for water-basin management floodplains. low biodiversity and short life cycle focus on willow and white poplar since these forests are usually in the (clear-cut every 20 to 30 years), which riparian forests, natural eutrophic flooding areas). The Danube floodplain by Belgrade prevents the establishment of stable lakes, wet meadows and reed beds. is one area well-suited for the There are some other activities worth implementation of these measures. considering. One example is the Spreading over approximately 2000 development of CDM projects aimed ha, the area has great potential for

WWF 2012 - Payments for Ecosystem Services in Serbia / page 29 WWF 2012 - Payments for Ecosystem Services in Serbia / page 30 timber production. It is an IBA, candidate for the development of eco- and protected area designation is tourism as well. underway since 2011. It is important for many bird species, including the Revenues must be used to finance white-tailed eagle and the pigmy habitat restoration and the monitoring cormorant. The area’s proximity of the effectiveness of implemented to Serbia’s capital make it a good measures.

Feeding places for birds of prey/ removal of animal waste

Many scavenging animals, especially places are also great sites for wildlife vultures, have lost their feeding base watching, and are therefore suitable due to the steady decline of traditional for the development of eco-tourism. open-space cattle breeding. Their population in Serbia decreased Right now, the largest feeding

significantly in the last decades of 20th stations, where hundreds of tons © Goran Sekulić century. of waste are disposed, are not close Feeding station for birds of prey in SRP Gornje Podunavlje to the Danube. They are located in Establishing feeding places (sites mountainous regions in south-western for disposal of meat industry waste) and western Serbia. Nevertheless, Up to now, meat producers are not due to limited capacities for waste is one possible way to counteract smaller feeding stations do exist along charged for waste disposal at these disposal. At least some costs of waste this trend. Large carnivores also use the Danube, namely in Special Nature stations. Due to the fact that the transport and maintenance of the these feeding places (in addition Reserve Gornje Podunavlje and control in food industry is improved feeding places could be covered. to vultures and other birds of pray, Deliblatska pescara and National Park and also the control of waste disposal, Nevertheless, this is very explicit mainly eagles), which reduces the Djerdap. it can be assumed that producers can scheme for payments for ecosystem conflict with cattle breeders. Feeding have interest to pay for waste disposal services and as such it can be used for at lower prices than for conventional promotion of the concept on national ways of disposal. Large incomes are level. not to be expected from this scheme,

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