Payment for the Libungan Watershed Services: A Pilot Study Prepared for Mindanao Development Authority by Carmelita P. Martinez Edgardo Cruz Marie AntonettePaña PAYMENT FOR THE LIBUNGAN WATERSHED SERVICES: A PILOT STUDY Prepared for Mindanao Development Authority by Carmelita P. Martinez Edgardo Cruz Marie AntonettePaña Order of Presentation • Introduction – Ecosystem and Ecosystem Services – PES – PES Process • Case Study – PES Framework of Libungan Watershed • Policy Challenges Ecosystem and Ecosystem Services • Ecosystems are the result of the interaction between: – Biological/living (plant, animal, etc) components of environment and – Physical/non-living components (air, water, energy) Examples: - Coral reefs - Forests - Deserts - Mangroves Air quality Pest & disease control Wild species & habitat protection Carbon sequestration & storage Soil formation & fertility Plant pollination Watershed protection & regulation Ecosystem Services & the Economy 1. Environmental Goods Product Inputs food, freshwater, fuel, fiber Production Process Inputs 2. Regulating Services climate regulation, flood regulation, Stable Business Operating water filtration Context 3. Supporting Services Healthy worker fundamentals (e.g., clean nutrient cycling, soil formation air, adequate amounts of 4. Cultural Services water, food, etc.) aesthetic, spiritual, educational, Contributors to ‘license to recreational operate’ 6 Concept of PES Source: Wunder, Sven, 2005 Payment of Ecosystem Services • A voluntary transaction where: • A well-defined ES (ecosystem service) or a land use likely to secure the service • Is being bought by a (minimum one) ES buyer • From a (minimum one) ES provider or seller • If and only if the ES provider (seller) secures ES provision (conditionality) Wunder, Sven, 2005 PES Process Identify ES Prospects and Potential Buyers Define, measure and Consider whether to sell Determine market value Identify buyers assess the ES in the Area to individuals or groups Assess Institutional Capacity Assess legal, policy and land Examine existing rules for PES Survey available PES support ownership market and deals services and org Structure agreements Design mgt and Reduce transaction Review options for Establish equity & fairness for evaluating Select contract type business plans cost payment type PES options Implement PES Agreements Verify PES service delivery and Finalize PES mgt plan benefits Monitor and evaluate deal • Degradation of the watershed in various part of Mindanao is very apparent – Deforestation – Unregulated tourism development – Development of agricultural plantations in the upland • Effects – Reduction in the water flow and supply – Degradation of water quality – Flooding • MinDA – Promote establishment of PES – MindaNOW Nurturing our Waters – institutionalization of PES Case Study – Libungan Watershed Objectives of the Study • General : Explore the potential of PES in Libungan Watershed to address upstream conservation and protection for continuous flow of services downstream • Specific: – Assess the current status of the watershed – Determine the cause-effect relationship between ecosystem and human activities – Conduct WTP/WTA – Quantify the values of Libungan Watershed – Recommend PES institutional arrangement Methodology • Assessment of the Current Status of the Libungan Watershed – Consultation Workshop • September 3 – 4, 2014 in Koronadal South Cotabato (together with AVLDA) • October 8, 2014 in the Municipality of Alamada, North Cotabato – Geographic Information System (GIS) • Quantification of Watershed Services – WTP/WTA – PES Institutional Arrangement Methodology • DPSIR – in assessing the cause-effect relationship between LW and human activities by Sggobi 2011 Driving Force Response Agricultural Laws & Policies Development Other CSR activties Eco-tourism Illegal Logging Population encroachment Poverty Impact - Water Pollution - Change in Land use - Soil erosion - Siltation of Libungan River Pressure - Lowering of the Forest degradation State water level in Use of pesticides & - Libungan River Libungan River fertilizers quality - Flooding Waste generation - Landscape quality Water requirement - Water availability Findings • Driving Forces in Libungan Watershed Findings • Pressures Caused by the Driving Forces • State • Changed the State of Libungan River quality • Response • Landscape quality • BUGNAW • Water Availability • Impact • NGP • Siltation of LR • CSR of industrial • Water pollution plantations • Flooding downstream • Change in land use • Increased in solid waste Findings – Losses incurred due to Flooding • Sellers (upland farmers) - PhP 7,072.94 (mean) PhP 150,000.00 (maximum) • Buyers - PhP 7,345.79 (mean) PhP 80,000.00 (maximum) – Losses due to water shortage • Sellers (upland farmers) - PhP 2,474.51 (mean) PhP 100,000.00 (maximum) • Buyers - PhP 9,822.08 (mean) PhP 80,000.00 (maximum Findings • Water regulation services of Libungan watershed is to be subjected to PES • 92% of the respondents are willing to pay for the protection of Libungan watershed/willing to accept payment. • Those who can not pay are willing to volunteer their time in any protection and conservation project • Perceived Value of LW – Seller = PhP 5.656 billion per year – Buyer = PhP 123.034 million per year • Land Ownership/rights – Majority refused to answer – >30% owned the land – >10% rented the land and 2% are tenants LW PES Framework Domestic Water Watershed Services Users Upland Clean Water Farmers/irrigators Farmers Water Availability Lowland industries and commercial establishments Fund for Watershed Payment for Protection watershed PALMA+PB protection Intermediary M&E Broker BLGUs MLGUs Conclusion • The respondents of the study (buyers and sellers) valued the Libungan watershed highly and they are willing to be involved in the protection of the watershed. • Their willingness can be a basis in the establishment of PES in the area. There is a need , however, to enhance their KAP on PES-related activities • Since there are no local enactments relative to PES, national policies like NIPAS Act and DAO 2000-51 can be used to support the PES • PALMA + PB is seen as the most appropriate intermediary or the broker of the PES Recommendations • Conduct extensive information, education and communication campaign about PES • Institutionalize the PES thru local enactments • Develop a policy for PES market and deals. This implies creating awareness among the different stakeholders in the area (upland and the lowland dwellers) in order to stimulate demand and supply for the PES • Build capacity of the service providers, buyers and the intermediaries. The role of PALMA+PB alliance is very critical in bringing the and different LGUs in implementing the PES schemes • A Policy Framework must be developed to create right enabling environment before the PES is implemented Policy Challenges for PES in LW • Application of existing laws and regulations to PES is very difficult because NIPAS Act and other National policies are not explicit on PES. • Local policies do not consider PES • Ownership and use rights over: – Land Tenure (who, what, how long and under what conditions) – Natural resources – Credits for ecosystem services • Clarity on who has authority and how legal or policy conflicts will be handled • Available mechanisms for contract enforcement and appeal Thank you!! .