Economic aspects of a Payment for ecosystem services scheme for certain forest management practices related to water improvements in CataloniaDr. Ignasi Puig VentosaFundació ENT

October 26th, 2012

1. Scope of the analysis

2. Main stakeholders implied

3. Legal and economic tools to manage PES programmes

Outline

Scope of the analysis

• Presence of forests in general relate to increased quality and quantity of water.

• Services provided by the forests benefit certain agents. The implementation of Payment for Ecological Services (PES) schemes can benefit all parties.

• The study aims to identify the main stakeholders involved and propose ways to implement measures to compensate forest owners for ecological services generated by certain forest management practices.

Introduction Sylvamed

Three specific cases are being analysed in Catalonia for forest ecological services related to water:

•Basins where water is used for consumption:(photo: Susqueda reservoir –Girona-)

Certain forest management practices increase availability of water and water quality, and renders a profit for water companies.

Ecological services analysed Sylvamed

•Basins where bottled water is extracted:

Water bottling companies obtain a profit and a reduction in treatment costs if forest managers implement certain management practices that increase the quality (and quantity) of water.

•Water extraction areas classified as polluted in the River Basin Management Plan of Catalonia (Work in progress)

Main implied stakeholders

In general, a PES can distinguish three types of agents:

•Ecosystem service suppliers: private parties, local communities or public managers who have the capacity to decide on the management of the resource.

•Buyers or beneficiaries of environmental services: stakeholders who benefit from the existence of a positive externality that is an ecosystemservice

Private PES: buyers are individuals and private companies that directly benefit from the service and participate on a voluntary way.

Public PES: buyer is the government, acting as representative of society as a whole.

Hybrid PES: buyers are NGOs, foundations and organizations. In this case, the buyers are not the direct beneficiaries, but they remunerate ecosystem services beneficial to society and the environment in general (as in PES public programs) and do it voluntarily (as in private PES).

•Intermediaries: conduct/facilitate negotiations between suppliers and buyers and contribute to the design of the programme.

Main stakeholders implied Sylvamed

The water supply in Catalonia is carried out from:

Regular surface contributions, natural (base flow of rivers) or regulated by reservoirs

Groundwater resources

Unconventional resources (desalination, reuse)

Suppliers: forest owners and forest managers in the area of water extraction, undertaking several practices.

Buyers: wholesale water suppliers (these represent 97% of the water supplied to the area):-Aigües Ter Llobregat (ATLL)-Consorci de la Costa Brava (CCB): north, center and south-Mancomunitat de Les Garrigues

Possible Intermediaries:-Generalitat de Catalunya, through Departament de Territori i Sostenibilitat -Agència Catalana de l’Aigua-Confederación Hidrogràfica del Ebro

Basins where water is used for consumption

Sylvamed

Almost 80% of extractions are from the area of Montsenyand Guilleries (Girona).

Catalan Association of Water Bottlers (ACEA) created in 1978,integrates 22 companies, almost

100% of the Catalan market.

The bottled water industry in Catalonia in 2010 had a turnover of 280 million euros and a bottled water volume of 1,263 million liters.

Suppliers: forest owners and forest managers in the extraction area.

Buyers: bottling companies

Possible intermediaries:-Generalitat de Catalunya, through

Departament de Territori i Sostenibilitat -Agència Catalana de l’Aigua-Confederación Hidrogràfica del Ebro-Departament d’Empresa i Ocupació (organization that grants concessions)

Basins where bottled water is extracted

Sylvamed

Àmbit d’extracciódel recurs

EmpresaMunicipi de l’extracció

Extraccions 2006

(m3/any)

Tordera – Besòs

Nestlé Waters España, S.A.

Arbúcies

387.655Fontdor, S.A. 187.629Font del Regàs, S.A. 133.344Font Agudes, S.A. 27.890Vichy Catalán, S.A.

Caldes de Malavella152.803

Malavella, S.A. 52.231Nestlé Waters España, S.A. 23.244

Fontselva, S.A.Sta Coloma de Farners

79.093

Agua del Montseny, S.A.St Esteve de Palautordera

67.298

Alimentos Bebidas y Condimentos, S.A. La Garriga 7.491

Girona

Font Vella y Lanjarón, S.A. St Hilari Sacalm 720.704

Fontaga, S.A. Ribes de Freser 83.423

Font Vella y Lanjarón, S.A. –Manantial Fonter– Amer 45.392

Hijos de José Bassols, S.A. –Aigua de Sant Aniol–

St Aniol de Finestres

26.883

Comercialización y Elaboración de Aguas Minerales, S.L.

Osor 24.635

Agua del Montseny, S.A. –ManantialAiguaneu–

Espinelves 21.002

Aigua Les Creus, S.A.Maçanet de Cabrenys

9.276

Aigües Minerals de Vilajuïga, S.A. Vilajuïga 1.322

Lleida

Aguas Minerales de Caldas de Bohí, S.A. La Vall de Boi 30.979

Naturquell, S.A. Estamariu 3.600Aigües Minerals i Begudes RefrescantsRocafort, S.L.

St Martí de Riucorb 27

Terres de l’EbreAguas Minerales Pascual, S.L. Benifallet 39.616Aguas de Fontdalt, S.A. Tivissa 24.442

TarragonaExplotadora de Manantiales, S.A. –Aigua FontNova–

Aiguamúrcia 27.765

Llobregat – Foix

Font d'Abaix, S.L. Orpí 22.500

Font Aiguaviva, SCPSta Margarida i els Monjos

791

TOTAL 2.201.035

IPV8

Diapositiva 9

IPV8 aquests de l'ebro, toquen aquí?si la majoria d'extracciosn són de montserny i guilleries, potser no cal posar-losIGNASI; 24/10/2012

Legal and economic tools to manage a PES programs

Currently there is no a legislative framework that explicitly regulates the creation of PES programmes, but there is justification for them in:

Llei estatal 42/2007, de 13 de desembre, de patrimoni natural i de la biodiversitat

This law mentions the need to encourage positive externalities in the field of protected areas and land stewardship agreements,establishing that the regions regulate the mechanisms andconditions for doing so. A specific fund is regulated.

Llei estatal 45/2007, de 13 de desembre, per al desenvolupament sostenible del medi rural

The concept of "territorial contracts in rural areas“ could be used. They are tools that establish agreements between government and farm owners to encourage them to develop sustainable activities.

Llei catalana 8/2005, de 8 de juny, de protecció, gestió i ordenació del paisatge (from European agreement on landscape)

Fund for protection, management and planning of landscape could be used to develop PES programmes to pay forest activities in landscape matters.

Legal tools in Catalonia Sylvamed

Typical legal tools that could be used to articulate PES programmes in Catalonia are:

•Subsidies

Government can use subsides to pay for the ecosystem services produced by forests. There is a discussions between:

Existence: the supplier should be paid for the existence of a ecosystem benefit, even if he or she does not do anything.Additionality: only additional management practices in forests that improve the quality or quantity should be paid.

•Agreements

Voluntary agreements could be formalised between suppliers and buyers. They could be with or without the participation of an intermediary. Government can encourage them. In Catalonia there are a number of land stewardships agreements with similarities with PES programmes.

Legal tools Sylvamed

Revenue for the implementation of a PES for the management of forests in improving the quality and quantity of water could be obtained from the following economic instruments:

•General budgetConsidering that an environmental improvement benefits the whole society, and it is ultimately this who buys the service, a PES programme could be paid through the general budget.

•Environmental taxes:This option consists on using the revenue of an environmental tax (not necessarily related to the service) to pay for the PES programme, e.g. on fertilisers or on reservoirs.

•Specific taxes to users: Cànon de l’aigua (tax on water final use): this is an existing environmental tax that

could be partially used to pay suppliers, if the final consumers are considered buyers of the ecosystem services.

Taxes to water suppliers: either a new specific tax, or a surcharge on an existing tax, if water supplier companies are considered as buyers of the ES.

•Tax deductions:In PES schemes one could conceive the payment not as a transfer of money, but as a deduction on certain taxes. E.g. in Catalonia there are options in the personal income tax (IRPF) or in others.

Economic tools Sylvamed

Thank you for your attentionDr. Ignasi Puig Ventosaipuig@ent.catwww.fundacioent.cat