The social impacts of payments for environmental services in Costa Rica A quantitative field survey and analysis of the Virilla watershed Miriam Miranda Ina T Porras Mary Luz Moreno ENVIRONMENTAL ECONOMICS PROGRAMME October 2003 International Institute for Environment and Development (IIED) IIED is an independent, non-profit research institute working in the field of sustainable development. IIED aims to provide expertise and leadership in researching and achieving sustainable development at local, national, regional, and global levels. In alliance with others we seek to help shape a future that ends global poverty and delivers and sustains efficient and equitable management of the world’s natural resources. Environmental Economics Programme The Environmental Economics Programme (EEP) seeks to develop and promote the application of economics to environmental issues in developing countries. This is achieved through research and policy analysis on the role of the environment and natural resources in economic development and poverty alleviation. Forestry and Land Use Programme IIED’s Forestry and Land Use (FLU) programme has the goal of improving people’s livelihoods from forest and land use on the basis of equity, efficiency and sustainability, focusing on key arenas where the decision-making that matters for better forestry and land use actually takes place. The Authors Miriam Miranda and Mary Luz Moreno are researchers at the Centro Internacional de Política Económica para el Desarrollo Sustenible (CINPE) of the National University of Costa Rica. Ina Porras is a research associate in the Environmental Economics Programme at the International Institute for Environment and Development (IIED). They may be contacted at: Miriam Miranda Mary Luz Moreno Ina T. Porras CINPE CINPE IIED Apartado Postal 555-3000 Apartado Postal 555-3000 4 Hanover Street Heredia Heredia Edinburgh Costa Rica Costa Rica EH2 2EN Tel: 506 260 16 00 Tel: 506 263 45 50 Tel: (0)131 226 6875 Fax: 506 261 8733 Fax: 506 260 12 70 Fax: (0)131 624 7050 e-mail: e-mail: e-mail: [email protected]; [email protected] [email protected] [email protected] Acknowledgements The authors are indebted to the many people who provided information for this report. Special thanks are due to the National Power and Light Company (CNFL) and representatives of the Plama-Virilla project, the Heredia Public Services Company (ESPH), Florida Ice & Farm, the Foundation for the Development of the Central Volcanic Range (FUNDECOR), the National Forestry Fund (FONAFIFO) and the Ministry of Environment and Energy (MINAE). We are grateful to all the households who took part in the survey, providing the key reference material for the study, and who offered us a warm welcome on rainy days. Finally, we would like to thank James Mayers and Natasha Landell-Mills for their valuable input to the study and for their comments on earlier drafts, and Josh Bishop and Maryanne Grieg-Gran for their contribution to this project. Financial support for this research was provided by the UK Department for International Development (DFID) as part of a larger project: "Markets for watershed protection services and improved livelihoods", coordinated by IIED and involving work in Ecuador, Brazil, the Caribbean, Indonesia, India, and South Africa. Funding for the production and publication of this report was provided by the Royal Danish Ministry of Foreign Affairs (Danida), the Swiss Agency for Development and Cooperation (SDC), and the Shell Foundation’s Sustainable Energy Programme. The opinions expressed in this report are the opinions of the authors and not necessarily those of IIED. Citation: Miranda, M., I.T. Porras and M. L. Moreno. 2003. The social impacts of payments for environmental services in Costa Rica. A quantitative field survey and analysis of the Virilla watershed. International Institute for Environment and Development, London. Permissions: The material in this report may be reproduced for non-commercial purposes provided full credit is given to the authors and to IIED. Copies of this report are available from: Earthprint Limited, Orders Department, P.O. Box 119, Stevenage, Hertfordshire SG1 4TP, UK; Email: [email protected]. Enquiries: tel +44 (0)1438 748111; fax +44 (0)1438 748844; Email [email protected]. This report and its appendixes are available in pdf format at www.iied.org/eep or from [email protected]. Contents Executive Summary i Acronyms and abbreviations vi 1 Introduction...................................................................................................................................1 2 Social, spatial, environmental and economic characteristics ....................................................3 2.1 The national context................................................................................................................3 2.2 Characteristics of the study area ............................................................................................4 2.2.1 Physical and environmental description.........................................................................6 2.2.2 Socio-economic characteristics ......................................................................................8 2.2.3 Main environmental problems ........................................................................................9 2.3 Markets for environmental services within the site...............................................................10 2.3.1 Costa Rica-Norway Reforestation and Forest Conservation AIJ Pilot Project (carbon sequestration) and CNFL Project (watershed conservation) .......................................................11 2.3.2 Florida Ice & Farm Brewery Project (watershed protection)......................................11 2.3.3 Empresa de Servicios Públicos de Heredia and water use charges (watershed protection).....................................................................................................................................12 3 Methodology of analysis .............................................................................................................13 3.1 Main objective and purpose of the study...............................................................................13 3.2 The Sustainable Livelihoods Approach as a framework.......................................................13 3.3 Identification of stakeholders................................................................................................15 3.4 Sources of information and sample selection........................................................................16 3.5 Data collection techniques....................................................................................................17 4 Socio-Economic Effects of the PES in the ACCVC..................................................................20 4.1 Introduction...........................................................................................................................20 4.1.1 The population and sample of landowners in the Virilla watershed.............................20 4.1.2 Land use activities within the sample............................................................................22 4.2 Impact on household assets...................................................................................................24 4.2.1 Impact on financial assets.............................................................................................24 4.2.2 Impacts on social assets................................................................................................31 4.2.3 Impact on human assets ................................................................................................33 4.2.4 Impacts on natural assets..............................................................................................38 4.2.5 Impact on physical assets..............................................................................................42 5 Conclusions and recommendations ...........................................................................................43 5.1 Summary of impacts on household assets .............................................................................43 5.2 Limitations of and improvements to the PES programme ....................................................45 5.2.1 Financial aspects ..........................................................................................................45 5.2.2 Education and capacity building ..................................................................................46 5.2.3 Institutional and legal coordination..............................................................................46 5.2.4 Inclusion of riparian areas ...........................................................................................47 5.2.5 Improving access for poorer households ......................................................................47 5.2.6 Other pressing issues ....................................................................................................48 6 References....................................................................................................................................49 Annexe 1 - List of participants in the area Annexe 2 - The Survey List of Tables Table 2.1 Land use in the Upper Part of the Virilla Watershed..............................................................7 Table 2.2. Socio-Economic characteristics of selected