world development report 2003 dynamic...

DRAFT 0

World Development Report 2003

Dynamic Development in a Sustainable World

Background Paper

Sustainable Development in Mountains:

Managing Resources and reducing Poverty

D. Jane Pratt and John D. Shilling

Commissioned by: Linda Likar

SUSTAINABLE DEVELOPMENT IN MOUNTAINS: DRAFT 0

W D R: BACKGROUND PAPER -- 2 -- June 26, 2002

WORLD DEVELOPMENT REPORT : BACKGROUND PAPER

SUSTAINABLE DEVELOPMENT IN MOUNTAINS: MANAGING RESOURCES AND REDUCING POVERTY

By D. Jane Pratt and John D. Shilling

CHAPTER I Mountains: A Global Resource

INTRODUCTION:

Mountains present monumental paradoxes:

v They dominate the landscape and inspire scared devotion and awe; Their people are isolated and ignored.

v They are the font of fantastic wealth; Their people live in poverty.

v They are the home of incredible variety and biodiversity; Their ecosystems are fragile and easily degraded.

v Their people have learned vital lessons about sustainability; Will anyone listen?

Mountains cover over 25% of the Earth’s land surface, and more than 50% of the world’s population depends on mountains for fresh water. Mountains provide a substantial portion of the world’s timber and minerals,1 and their environmental services are critical to the sustainability of their lowland “plains.” They shelter over half of the world’s biodiversity and nurture rich and varied cultures tha t have much to teach the rest of the world about sustainability and natural resource management. They inspire us and move our spirits. Altogether, the environmental goods, protection, and services provided by mountainous regions are critical to the survival of the human species, both upstream and downstream.

Mountain people live in remote, rugged, and hard to reach environments. Their dispersed settlement patterns make it difficult for them to form a political constituency; so they frequently lack access and voice in political systems. They are all too often ignored by governments (almost always based in lowlands), by traditional development agencies, and by most of the non-profit community. If we do not solve the challenges of conservation, poverty reduction, and sustainable development in mountains, there is little hope of solving the challenges of sustainability anywhere.

In recognition of the special challenges of conservation and sustainable development in mountain regions, the UN General Assembly declared the year 2002 the International Year of Mountains, noting that “The International Year of Mountains 2002 fosters the conservation and the sustainale development of mountain regions,, thus assuring the welfare of mountain communities and those in the lowlands.” (The Declaration of IYM 1 Their share in the production of timber and minerals is likely to increase as more readily accessible lowland sources are exhausted. [Can we cite extraction figures?]



Objectives). The International Year of Mountains is thus intended to call attention to the importance of mountain ecosystems, and the role of mountain communities as stewards of these natural systems on which all life depends.

PHYSICAL CHARACTERISTICS:

Mountainous areas are generally characterized by their altitude, steepness of slope, accentuated relief, and prominence with respect to surrounding landscapes. They exist in a wide range of latitudes, from the polar regions to the temperate, sub-tropical, and tropical zones. Mountains constitute important and distinct regions in many countries and regions throughout the world. Looking at altitude alone, Messerli and Ives have calculated that 27% of the Earth’s total terrestrial surface lies above 1000 m above sea level (Messerli and Ives, 1997). The combination of slope, altitude, temperature, insolation, and rainfall make mountains one of the most highly variable and differentiated ecosystems in the world. This and the factor of inaccessibility create two conditions that are typical, if not universal, conditions of mountains: a high degree of biodiversity, coupled with a disproportionate share of poor and marginalized human populations.

For this analysis, we have made use of recent studies by WWF and by NASA funded studies2 in Mountain Research and Development (MR&D) to obtain more information on mountain areas. From the MR&D data, we have identified mountain areas on the basis of two criteria: mean elevation above 1000m and significant ‘dissected’ or roughness of terrain. The areas examined are 30’ x 30’ and allow a relatively fine breakdown on mountain areas, from which water runoff, population, and population density are calculated. The MR&D begins with a table of 8 altitude ranges and 7 roughness ranges, and groups these into 15 relief classes.3 We have further arranged these classes into Lowlands (less than 1000m and low relief): Upland Plateaus (more than 1000m but low relief), Low Mountains (200-1000m with high relief), and High Mountains (more than 1000m and high relief). The latter three categories will be used for our analysis of mountains. These areas are overlaid on WWF’s recent study of 867 ecoregions to determine the biodiversity of different mountain regions as well.

According to the altitude criteria, for 53 countries, over half of their land area consists of mountainous terrain, while another 46 have 25-50% of their land area in mountains; (SeeBox X, source "Mountains and People: An account of Mountain Development Programmes supported by the Swiss Agency for Development and Cooperation (SDC)". Published by SDC, Berne, 2001.).

2 “A New Typology for Mountains and Other Relief Classes,” Michel Meybeck, Pamela Green, and Charles Vorosmarty, Mountain Research and Development, February, 2001 3 Not all the 56 cells contained entries. The 38 cells with significant entries were then grouped into the 15 relief classes.



Table I, Mountain Countries

1 (%mtns)

Countries and territories of the world and their mountain areas

2 (no.)

3(%)

0-25 (Countries in this category are not listed) 101 4.425-50 Bolivia, Bulgaria, Colombia, Croatia, Cyprus, Czech

Republic, Dominican Republic, Ecuador, Ethiopia, Fiji, French Polynesia, French Southern & Antarctic Lands, Greenland, Guatemala, Indonesia, Israel, Jamaica, Jan Mayen, Madagascar, Malawi, Malaysia, Mauritius, Mexico, Mongolia, Myanmar (Burma), Pakistan, Panama, Papua New Guinea, Peru, Philippines, Portugal, Puerto Rico, Romania, Russia, Sao Tome and Principe, Solomon Islands, South Africa, South Korea, Spain, St. Vincent and the Grenadines, Thailand, United States, Venezuela, Vietnam, Yemen, Zimbabwe

46 9.5

50-75 Afghanistan, Albania, Antarctica, Austria, Azerbaijan, Burundi, Cape Verde, Chile, China, Comoros, Costa Rica, Djibouti, El Salvador, Eritrea, Greece, Haiti, Honduras, Iceland, Iran, Italy, Japan, Laos, Morocco, New Caledonia, New Zealand, North Korea, Norway, Serbia, Slovakia, Slovenia, South Georgia and the South Sandwich Islands, Svalbard, Swaziland, Taiwan, Turkey, Vanuatu, West Bank, Western Samoa

38 9.6

75-100 Andorra, Armenia, Bhutan, Bosnia and Herzegovina, Georgia, Kyrgyzstan, Lebanon, Lesotho, Macedonia, Montenegro, Nepal, Reunion, Rwanda, Switzerland, Tajikistan

15 0.5

0-100 Total countries analysed 200 24Legend: 1 Percentage of mountain areas within a country (four categories) 2 Number of countries analysed per category 4 Percentage of total land area in category (total global land and ice area is 144 million, of which about 36 million km 2 are mountainous) Source: Adapted from Kapos et al., 2000

[Additional findings from these studies about mountain attributes.]

MOUNTAIN CHARACTERISTICS:

Water: Excluding the vast stores of fresh water in the polar ice caps, which could become a significant factor in sea level rise with global warming, it is estimated that more than half of the world’s fresh water comes from mountains.4 Indeed, all of the major, and many of the world’s minor rivers originate in mountains. Well over two billion people in India, Pakistan, Nepal, China and the Indochinese peninsula depend on flows of the great

4 Little of the fresh water in polar ice will be available for human use due to its location.



rivers originating in the Himalaya.5 The city of Los Angeles could not exist without water that has its source in the Rocky Mountains; the people of Australia and Japan depend on water from mountains, and the Arabian Desert Peninsula is reliant on rivers that flow from the Jeman and Oman mountain chains. The Nile, which provides 95% of Egypt’s fresh water, has multiple tributaries in mountains, from Ethiopia to the Rhuengheri range of Rwanda. Almost all of South America relies on water that has its source in the Andes. This includes not only the traditional Andean countries of the Pacific Coast, but Brazil, whose great Amazon has its source in the Andes. (Messerli and Ives, Chapter 7).

Share of forest cover and timber production by region

Share and volume of mineral production by region for major minerals like copper, silver, gold, etc.

Figures on biodiversity in mountains and importance of key species.

Data on arable land in mountains, limitations on growing season and crops.

Data on amenity values.

MOUNTAIN PEOPLE AND THEIR CONDITIONS:

Based on the definition of mountains outlined above, some 2.4 billion people live in mountain areas.6 This is 42% of the world’s total population. With the exception of the of the Upland Plateaus, which tend to be quite isolated and arid, population densities in Mountain areas tend to be higher than in lowlands. This is true even for zones classified as high and very high mountains. This concentration of people in such rugged areas has implications for their subsistence and the sustainability of mountain production systems. Agricultural potential in mountains is limited by the small size of arable plots, climatic variability, and more difficult growing conditions, typically including shorter growing seasons due to altitude. These areas are unlikely to be as productive of basic food crops as lowland areas, contributing to higher levels of poverty in mountains. See Table 2 (at end)

Numbers of poor and percentages of total mountain populations and of poor in the relevant countries, probably relatively greater in mountains

Selected human development indicators for mountains by region or country, including measures of health (infant mortality, maternal death rates, life expectancy), education (adult literacy, primary attendance rates, secondary attendance rates), and other public services (access to clean water and sewage disposal, fire and police protection, libraries) compared to relevant lowland areas.

Indicators of accessibility of mountain areas (road density, telephone lines, urban centers, other communications).

5 The Ganges, The Bhamiputra, The Yellow, and the Mekong Rivers. 6 This was estimated using 1995 country based population figures from WRI. The total world population was 5.7 billion. In these estimates the individual zones are based on mean altitude. Much of the population in high altitude zones is probably living in valleys. They are nonetheless affected by the isolation of these high relief areas and highly dependent on their immediate mountain surroundings.



Indicators of cultural factors (frequency of different languages, different ethnic groups, different religions, numbers of sacred sites)

THREATS TO MOUNTAINS AND THEIR PEOPLE:

Rates of deforestation and cumulative loss.

Rates of additional siltation downstream and negative effects.

Impacts of increased water flow variability (flooding) where it occurs.

Amounts of downstream pollution from mining and other such activities and their impacts.

Estimated rates of loss of biodiversity.

Estimated rates of deterioration of cultural sites and amenity values.

MOUNTAIN CONFLICTS:

More than half of wars and armed conflicts in recent decades have taken place in mountain regions, according to data maintained by the University of Hamburg’s Unit for the Study of Wars. Many of these have been determined to be consequences of environmental changes linked to natural resource degradation, poverty, and related social and cultural strife (Libiszewski and Balcher, in Messerli and Ives, 1997). Ecological vulnerability inherent in mountain areas plays a major role; and this is exacerbated by competition for mineral reserves, surface resources, and water. Moreover, the inaccessibility of mountains makes them particularly prone to use by guerrillas and terrorist groups, such as the Shining Path in Peru, the Maoists in Nepal, and more recently, the Al Quaida network in Afghanistan. Other factors that have been analyzed as contributory include ethnic and cultural conflicts related to niche settlement patterns in mountains; political and economic marginalization of mountain people; and hardship-driven migrations both to and from mountainous regions. Since mountain ranges often form national boundaries, this also figures in the high incidence of conflicts. (Kashmir)

[Some of the above material can be presented in boxes, tables, and graphics to the extent possible, with details in annex. The text would highlight the special features on mountains in terms of their contribution to the welfare of the rest of the world, their relative poverty and isolation, and the extent that the ill-managed exploitation of resources contributes to environmental and social problems. This can be done in terms of paradoxes featured in the introduction. ]

CHAPTER II: SUSTAINABILITY FOR MOUNTAINS AND THEIR PEOPLES

WHAT CONSTITUTES SUSTAINABILITY IN MOUNTAINS

25. Arriving at a comprehensive definition of sustainability in mountains, particularly one that is universally accepted, is itself a mountainous task and not likely to be a productive effort. More useful is to identify the characteristics and attributes that contribute to sustainable use of mountain resources for human needs, broadly defined, and for alleviation of poverty in mountains. Then policies and other means of preserving



and enhancing these characteristics can be identified and pursued in practical, results oriented efforts.

First, it is important to recognize that sustainability does not mean cessation of all change. Mountains, even in their most pristine forms, constantly undergo natural change – uplift, volcanic eruptions, erosion, shifting vegetation, species evolution and extinction. To this, a number of human induced changes have been added – forest conversion, mineral extraction, hunting, are local changes that can change water flows and siltation downstream, eliminate both animal and plant species, and affect local risks of flooding and landslides. In addition to such relatively local impacts, global influences, such as climate warming affect mountain processes – glacial retreat, rising tree lines, etc. that have local as well as transnational impacts. Many of these activities have contributed to income generation and growth overall. What is important is that change due to human activity does not undermine the ability of mountain regions to sustain the flow of vital mountain services indefinitely, while insuring that mountain people benefit appropriately from the good and services provided, which has often not been the case in the past.

Second, it is important to recognize that sustainability concerns cover very different time frames. Mountain ecosystems are fragile, and can degrade rapidly in certain circumstances. Natural risks and hazards are unusually prevalent in mountain regions: in Yunquay, Peru, 17,000 people were buried within a few minutes by a massive landslide triggered by an off-shore earthquake hundreds of kilometers distant; Soyuz Lake in Tajikistan was formed by an earthen dam created by mass wasting, creating a hazard that threatens downstream communities and contributes substantially to the drying of the Aral Sea; Mount St. Helen’s in the U.S. Pacific Northwest erupted destroying thousands of acres of high quality forest cover; and volcanic eruptions from Mounts Etna in Italy, Pinatubo in the Philippeans, La Soufriere in Guadaloup and Martinique, among others, have forced evacuations and economic disruption, and in many cases tragic loss of life. [CHECK DATES AND INSERT SPECIFIC DATA FOR ABOVE EVENTS]

In addition to natural risks, human activities in mountains can have significant impacts on these fragile ecosystems. Large areas of European mountain forests were cut, and have not grown back due to changes in land use and soil loss. Mountain areas in Africa have been stripped of vegetation by overgrazing and are no longer capable of supporting sustainable livelihoods at current population levels and intensity of use. In many parts of the world, deforestation in mountain areas has contributed to lasting changes in land productivity. [do we have more cases, more validation?]

In other cases, change and the impacts of change can spread over a relatively long time frame from a human point of view. For example, glacial retreat due to global warming is likely to occur over a period of 50-100 years until nearly all mountain glaciers are melted. During this transition period, downstream flows are likely to increase, encouraging increased dependence on those flows, which will diminish rapidly once the glaciers are gone.7 Land conversion (deforestation) and species depletion and extinction can easily be spread over time spans longer than a normal human life, so impacts may not be perceptible. Other mountain attributes only change over a much longer period of time,

7 Without normal glacial functions of storing winter snows, there will be greater variability in water flows as well. – more runoff in winter and spring, less in summer and fall.



through gradual erosion or uplifting due to tectonic processes. Furthermore, like many other environmental changes, some of the changes in mountains may be irreversible in any human relevant time span, such as restoring glaciers or reforestation in higher altitudes where trees grow slowly. For this paper, we will consider impacts over short (3-5 year), medium (10-25 year), and long (30-50+ year) time horizons.

Third, it is important to recognize that sustainability means finding ways to manage mountain resources and systems so that they can provide their critical goods and services indefinitely into the future. While we cannot predict exactly what the future will look like or what goods and services will be in demand, it is clear that mountains provide many essential goods that will be valued for a long time (water, timber, hydropower, minerals, etc.), and others that may increase in value. The opportunity cost of foreclosing the longer term availability of renewable resources must also be taken into account. Since such future values cannot be known, conventional discounted present value calculations are not always feasible. Nor can such calculations account for irreversible losses of resources critical for human use. The objective in all of this is not to stop change in mountains, but to manage mountain resources in ways that provide sustainable livelihoods for mountain dwellers and the goods and services valued in lowland areas in ways that protect the long-term capacity of mountains to continue to provide such goods and services.

WHAT ARE THE VALUES OF MOUNTAIN GOODS AND SERVICES

Mountain goods and services bring value on local (within mountain communities), national (between mountains and related lowlands),8 and global (between mountain environments and the rest of the earth) levels. Some of these goods have market prices when they can be converted into commodities or services that can be traded. Others provide benefits that are valued, but not priced in markets because they are not readily converted into tradable goods and services. When these goods and services were plentiful, they could be had for the taking and no prices were needed. As they became scarce, various systems were developed to manage their use and assure their continued availability. Market based price systems are often the most effective ways to manage these resources, but not always, as we shall see below. For other mountain goods and services, appropriate mechanisms have yet to be developed to ensured their sustainable use and continued availability. Many of these goods and services are not readily converted into discrete items that can be priced in markets, but they have value for individuals, for communities, and for the functioning of economies.

Fresh water is perhaps the most important product of mountains for economic well-being. Mountains provide fresh water for over half the world’s population directly. Not only is water provided, but it is usually clean and safe for human consumption in its natural state.9 In addition in normal circumstances, mountain environments even out the rate of flow of water between wet and dry seasons and reduce siltation downstream.

8 Recognizing that often such natural ecological relations do span natural borders, which does complicate a number of issues. E.g. Nepal and Bangladesh. 9 Unfortunately all too often, other human activities contaminate normally fresh mountain water before it reaches downstream users – mine tailings, fertilizer runoff, etc.



Where upstream activities, such as forest conversion, disrupt normal flow and siltation patterns, this can cause significant costs to downstream users.10

Clean and regular water flows is being increasingly recognized as a valuable service worth paying for. There are growing numbers of cases where the downstream users are finding ways to compensate upstream users to take actions that mitigate the negative downstream impacts. Examples of such approaches will be described in the case studies presented below, such as those for Costa Rica and Ecuador, which are similar to approaches that have been undertaken in New York City and California in the U.S. Some of these actions can have effects in the relatively short term, which suits the conditions for market based economic transactions. Others cover a longer term or broader areas, and therefore usually involve public assistance through government interventions or the action of public interest groups (NGOs). Protecting water resources can be important for local use and for national consumption.

Forests are probably the second most important good provided by mountains, with varying distributions across mountain regions. About XX% of the world’s timber comes from mountain regions, and the share is likely to increase as lowland forests are depleted. Timber is a mountain resource that is readily converted to a marketable commodity through logging, and it is at least notionally priced for it log value. Since most logging is done in natural forests, little is anything is paid for the tree production costs, which should determine the minimum price, together with the costs of cutting, extraction, and processing. 11 However, standing timber also provides valuable services – stabilizing water flow, protecting biodiversity, providing amenities, generating other products.12 Studies in a number of areas have placed economic values on these services and they often exceed the value of the timber extracted. Because many of these services are not traded, they lack market prices, and the timber extractors are not charged for their destruction of other valuable services.13

Timbering often disrupts local cultures and production patterns. It may provide short-term income at low wages for loggers, but as an area become logged out, the timber companies move on and leave the local people deprived of their logging wages and stripped of their traditional sources of livelihood in the now depleted forests. This often leads to more destructive cutting of remaining wood, and conversion to other uses, which are often not sustainable. Unless the forest dwellers control their own resources and gain the revenue from their exploitation, timber generally does not raise mountain incomes and often contributes to impoverishment of mountain people over the medium term. (citation) It is the downstream exploiters who benefit, usually over the medium term

10 Flow regulation per se is more important in local watersheds, where deforestation can increase the chances of severe flooding and landslides. Over larger watersheds, these effects are less pronounced as the effects of the increased runoff are spread over a larger area. (citation) 11 In some cases, governments charge stumpage or royalty fees for cutting timber on public land (wh ich constitutes a large part of mountain forests), but these are rarely based on the opportunity costs of the trees and rarely transferred back to forest dwellers. Few public or private owners practice sustainable forestry when natural forest is available (cite Indonesia experience). 12 In some cases, it is the extraction process – roads, slides, compacted loading areas – that contribute to the erosion, etc associated with logging. But that is part of the process and must be counted. Both process and extraction rates can be managed far more sustainably than is typically the case. 13 Cite PG&E and Indonesia examples.



until wood is depleted in a given area. Restoring forests in mountain areas can be a long term proposition, if it is even possible.

Minerals are another major good provided by mountains. Like timber, minerals are distributed unevenly among mountain areas and usually extracted by enterprises from outside mountain areas who gain access to the resource for little or no payment to the mountain people. Their payments to governments are based on taxes and royalties and rarely returned to mountain areas. Ores enter markets once they are processed, converted to commodity metals, priced, and sold. The impacts of mining on local mountain areas are more localized than logging, but usually more intense. Tailings and run-off from mines can cause severe damage to nearby land and toxic pollution to water sources.14 The value of the lost clean water and health damage are rarely included in the costs of the mining company. 15

Mining can offer employment to local people in mountains, but it is often highly dangerous and risky work. The introduction of the mining economy severely disrupts traditional societies over relatively long periods and leaves only wasted lands when a mine is closed. An operator has no market incentive for remediation once the minerals are exhausted, unless regulatory systems are effectively enforced, with penalties for non-compliance. Local communities have often revolted against the exploitation of mining, and such cases are becoming more common. 16 In some cases, protecting employment of miners is used as an argument for subsidies to mining activities, but the miners are rarely the real beneficiaries of such subsidies. In a few cases, as we shall describe below, enlightened mining companies and their partners have developed innovative approaches to deal with the environmental and social impacts of their activities.

Biodiversity and amenity benefits are among the most widespread of mountain values, and among the most difficult to assign market prices. Although there are specific species (charismatic megafauna) that attract attention on an individual level, and other exotic species that have high value for collectors, despite CITES, most biodiversity and amenity benefits stem from the integral functioning of mountain environmental systems. These integral systems also provide important and sustainable sources of livelihood for mountain dwellers. Revenue may be earned from sustainable use of forests and other mountain products, sometimes from revenues from tourism and recreational uses (within limits that protect the objectives of tourists and recreation), sometimes from the more healthy and satisfying environment of the mountains themselves, and sometimes from sacred and inspirational value to local people or visitors.

It is increasingly recognized that integral mountain systems have benefits of global value. Protecting biodiversity is important for preserving genomes for food crops, for developing new medicines, and aesthetic values world-wide. Preserving mountain forests

14 Arsenic and xxxxx are commonly used in processing metals and are highly toxic when they run off downstream. E.g. Ock Teddi Mine in Papua New Guinea. 15 Technology has permitted the extraction of smaller and smaller ore concentrations (e.g. copper ore is now mined at 0.5% concentrations compared to 2-3% 50 years ago [check data]). This means more areas can be mined and more processing with dangerous chemicals is carried out. 16 One of the most striking cases is that of Bougainville in Papua New Guimea, where local opposition to the operation of a very large copper mine has forced its closing for many years, at considerable loss of income to the mining company, the islanders, and the government of PNG.



and related vegetation systems intact reduce risks of landslides. (citation) Mountain forest areas can also be important for sequestration of CO2. It is very difficult to translate these benefits and values into market prices and transactions, but there have been some interesting initiatives with some success.17 While there are often short and medium term aspects to these actions, they typically run over the longest terms, and public interventions are more likely as markets rarely function well with such horizons.

Mountain goods and services are Public Goods: It should be clear from the above analysis that mountain goods and services have many special characteristics. Many of the most important mountain contributions take the form of public goods. By ‘public goods,’ we mean those goods and services that do not satisfy the criteria of private goods in that it is virtually impossible to exclude others from the benefits of a public good and use of the public good does not reduce its availability for use by others.18 Most of the beneficial environmental services provided by mountains – water management, biodiversity, weather contributions, cultural, recreational, and amenity values have important public good aspects. These are often mixed with private good aspects, which makes it more difficult to determine how to assign ownership, prices, and manage them, but progress is being made. When population pressures and economic pressures are low, the degree of use of public goods does not often pose a sustainability problem. As pressures have increased, overuse and abuse of public goods becomes more of a problem. Depending on the circumstances, threats can result from degradation due to open access exploitation, 19 from insufficient protection of valuable mountain assets, and from improper pricing of the goods provided. Here, attempts to appropriate many mountain resources for private use can diminish their benefits to others (e.g., diversion or pollution of upstream water, or disruption of scenic views).

A second point is that many mountain goods and services are part of, or the result of interactive systemic relations. They cannot be separated from the fabric of the mountain ecological systems. Water management depends on the kinds of forest and ground cover, the extent of roads, the kinds of construction on waterways, etc. Similarly, protection of biodiversity depends on changes in land use, demands for rare species, competition for food sources. As a result, activities which extract resources have systemic effects beyond the creation of commodities that enter private markets and direct impacts on the mountain environment. Logging can have major impacts on water flows and siltation. Mining can have an impact on downstream pollution. Roads built to take out those products can have a major impact on mountains, opening up areas to further settlement, increasing erosion, disrupting ecosystems. As a result, management of mountain environment requires more elaborate consideration of secondary effects and the ir systematic impacts than is often the case in lowland areas.

17 Cite Bolivia, Costa Rica sequestration programs 18 Technically the terms are ‘excludability’ and ‘[individual consumption]’ A lighthouse is a classic example of a pure public good – once in place, no-one can be prevented from benefiting from it, and anyone’s benefiting from it does not prevent another from benefiting. In mountains, scenic views have similar characteristics. In practice, many goods have some public and some private good characteris tics, and the challenge is to manage the balance. Cite reference on public goods. 19 Note that open access is not the only alternative to private property. There are a variety of viable common property control and management systems, both traditional and modern that can be effectively used, as will be discussed below (citation).



WHAT ARE THE REASONS FOR POVERTY IN MOUNTAINS:

At various times in the past, the characteristics of mountains have lead to their political power and dominance. Their resources (gold and silver), the security provided by their geography, the strength of their warriors, their situation astride important trading routes, and the lack of a number of diseases contributed to their domination of lowland areas (Incas, Berbers, Tibetans, Mongolians). With the advent of the industrial revolution and modern economic structures, the relative advantages of mountains as centers of power have been eclipsed, and they have been marginalized. Extensive sedentary agriculture in lowlands, manufacturing based on economies of scale, easier transportation and trade, and the broader reach of common language and culture in lowland areas enabled them to grow much more rapidly than mountain areas in modern times and become predominant. In nearly all parts of the world, mountain areas came to be regarded as backward, their people and cultures inferior, and their resources fair game to support lowland economies.

Population densities in mountainous areas can be relatively high, despite the difficult terrain. This may be due to population, economic, or political pressures from nearby lowland areas. Mountain land is usually less productive, and the mountain people rarely receive full benefits from resources extracted from mountains. Their relative isolation reduces their voice in political decisions. As a result, lowland governments often applied lowland based institutions of governance and resource management on mountain people, usually to their disadvantage. Control of most of the value of natural resources tended to be appropriated by governments or lowlanders, and mountain people became dependent on wages from the exploitation of the natural resources for their livelihoods, while the asset values and rents tended to be allocated elsewhere. (citation)

Difficult terrain in most mountain areas mean that constructing physical infrastructure is relatively expensive and yields low social returns (especially in the eyes of lowland decision makers and taxpayers), except where the infrastructure serves the exploitation of natural resources. Mountain areas are isolated in physical terms and until recently in terms of communications.20 Similarly mountain areas tend to be poorly served with social and human development infrastructure (health care and education). Mountain groups often have different ethnic and cultural backgrounds from the lowland groups who control political power, further reducing the voice of the mountains and contributing to the lack of interest and resources from the lowlands. This marginalization is common in both developed and developing countries, accentuating difficulties that result from lack of access to centers of population and markets.

These factors help explain why mountain areas have a much greater incidence on poverty and lower levels of development almost everywhere. There are a few exceptions where countries have recognized the importance of mountain areas for their environmental, economic, and amenity values. This tends to come at higher levels of development. Switzerland, a highly mountainous country that created most of its wealth in lowland activities (financial services, jewelry, certain food and chemical industries) does value its mountain areas for their environmental and amenity values and as representative of the image of the country. As a result, it has worked hard to maintain and enhance its mountain areas through a variety of programs that recompense mountain people for the

20 Wireless telecommunications can be much more easily brought to mountain areas, but at some cost.



services the mountains provide and to maintain the tourism value of the mountains.21 In parts of the Rockies and other mountains in the US and Canada, the amenity and tourism value of mountains has led to renewed interest and investment in mountains and preserving mountain environments in those regions where the amenity value of tourism and recreation exceeds tha t of disruptive extractive industries such as mining and timber. Elsewhere, mining and logging tend to prevail in the absence of direct market competition from tourism. The overall result is not the lack of intrusion, but different types of intrusion and different impacts on the mountain environment.

People in mountain areas tend to be fragmented by geography, and often by language and culture. Social and political institutions are usually quite localized, and often quite strong within the local area. Although mountain people are independent, the rigors of life in those areas requires strong local social systems to assure survival. The relative isolation tends to make such local groups distrustful of outsiders, and particularly of non-mountain people.22 Fragmentation and lack of communication with lowland power structures contributes to the isolation of mountain areas and their poverty.

The key to improving standards of living in mountains is improving local institutions to give local people more control over mountain assets and the means of negotiating more equitable allocations of their benefits. In part this will involve improving the provision of education and health services so that mountain people will be able to mange their assets better in the modern world.23 This will in turn depend on building more equitable relations with the political institutions of the lowlands and assuring a more equitable distribution of public services. Such a rebalancing of power should be based on greater recognition of the importance of services mountains provide and the expanded role that mountain dwellers can play in assuring the provision of these services. A certain degree of enlightened self interest on the part of lowland institutions as well as well coordinated actions on the part of mountain people will be required progress in this area.

It is particularly important to obtain recognition for community property rights in mountain areas and vest control in local institutions through the application of principles of subsidiarity. 24 Means of identifying and quantifying the value of economically and socially beneficial services provided by mountains will permit creation of appropriate institutional structures, and proper remuneration of mountain people for services, thus improving the quality of life in both mountain and lowland areas. As will be discussed below, market mechanisms can be used in many instances, once the proper institutional framework is in place. Means of improving communications and trust between upland and lowland groups will be essential to make progress in these areas.

It is clear that there is no one-size-fits-all approach. Different methods will have to be used in different areas and adapted to local circumstances. However, it is possible to

21 It is estimated that 80% of the income of mountain dwellers in Switzerland is from transfers from the government. These may represent compensation for stewardship activities or subsidies depending on the circumstances. 22 This xenophobia is often reinforced by the exploitative treatment of lowlander powers of mountain areas. 23 In improving education, it is important not to lose critical local knowledge and skills possessed by mountain people. 24 Other rural areas could also benefit from greater recognition of community property as well, but it is particularly important in mountains.



identify a well defined range of possible situations and appropriate solutions as a starting point for local adaptation. This will be addressed in the next section



CHAPTER III: ADDRESSING SUSTAINABLE DEVELOPMENT AND POVERTY ALLEVIATION IN MOUNTAINS

A FRAMEWORK FOR MOUNTAIN RESOURCES :

The well-being of mountain populations varies depending on their natural and community resources, their knowledge of resource use, their access to lowland markets, and the lowland valuation of mountain goods and services. The latter two factors in particular are often related to the degree of political access and voice available to mountain people as a recognized political constituency. The illustration below makes the case dramatically. In the first photo, a well- fed Swiss farmer and his well- fed cows are thriving. In the second, a gaunt Ethiopian farmer and his cattle are barely surviving. The difference between their life circumstances reflects differences between a high natural resource endowment, knowledge on how to develop it, and high access to markets, in the Swiss case; and a low natural resource value, poor technology, and low access to markets in the Ethiopian case. Natural resource endowment, sometimes called “natural capital”, provides rural populations with the most critical wherewithal with which to nurture themselves and their families. Complex regimes support the maintenance of such systems, involving an intricate web of legal, economic, social, cultural, and often religious incentives and sanctions to ensure that the resource base is maintained for present and future generations. Where highland producers have access to markets for high value added products, or where they receive transfer payments or premium prices from lowland markets in return for environmental services, such connections can help mountain communities to achieve a good quality of life. It is the absence of one or another of these factors that creates special problems for conservation, poverty reduction, and sustainable development in mountains. As we shall see in the examples below, appropriate approaches depend on the presence or absence of these critical factors.

[XXXX Photo of Swiss and Ethiopian Farmers]

Approaches to sustainable development must be locally adapted. Nowhere is this more true than in mountains, where variations of altitude, rainfall, insolation, temperature, soil, vegetation and other factors create myriad micro-climates. Replication of “best practices” must take account of the exceptionally high variability of mountain ecosystems and cultures. Nevertheless, it is possible to construct a framework for assessing different mountain areas and circumstances in order to help design the best approaches to contribute to sustainable development and poverty alleviation.

The first factor to consider is the type of potentially or actually valuable resource that a mountain area possesses. From the above discussion, these can be roughly divided into two broad categories. 1) Resources whose economic value depends on their being extracted and exported as commodities to the lowlands; and 2) Resources whose economic value results from the environmental services rendered by intact mountain ecosystems to local and downstream beneficiaries. For analytic simplicity, we will consider the exportable and in-place resources as separate attributes characterizing a given region.



Extractive Exports25 consist of commercially traded resources that have economic value when they are removed from the mountains and sold in lowlands. The vast majority of the demand and value of these products derives from usage outside of the mountain areas. 26 Hydropower, timber, mining (including minerals, gems, and building materials), and rare species are the best-known examples of such resources. Almost all commercially developed hydropower originates in mountain regions, and a disproportionate share of mineral and timber resources also come from mountains. For timber, this was not always the case; but easy access and higher land values for agriculture and other uses led to deforestation of many lowland forests over the several centuries, so that much commercial forest land is now in mountainous regions. Many minerals are common in mountains because the geological up-thrusts and folding bring veins of metals and minerals close to the surface in mountains, making them more accessible.27

In-situ (or in-place) resources refer to the value of a region’s natural resource endowment that result from their existence and functioning in situ. Such natural resource va lues cover a vast range of possibilities: biodiversity; maintenance of watersheds, traditional knowledge and production systems, environmental amenities such as recreation, aesthetic and inspirational value, and the powerful appeal of untrammeled nature. The service and amenity values of these resources depend on the recognized benefits conferred on downstream dwellers.28 The higher the appreciation of these services and the higher the income levels of downstream inhabitants, the greater economic value likely to be assigned to these services, and the greater the potential for viable economic transactions to help preserve these environmental services. For convenience, we can group in-situ resources into three categories:

v Environmental Services. The range of environmental services provided by mountains is exceptional. Over half of the Earth’s biodiversity ‘hot spots’ are in mountains. Mountains are the source of fresh water for over half of the world’s population. Undisturbed, mountain streams provide clean water, reducing the need for expensive water treatment. Mountain ecosystems also provide carbon sequestration from intact and regenerating vegetative cover, risk abatement through mitigation of landslides and other hazards, and generation of weather regimes on which current patterns of development are based.29

v Local Production Systems and Traditional Knowledge. Mountain cultures have co-evolved over long periods with the ecosystems in which they exist, leading to development of detailed indigenous knowledge systems, local

25 Export is used in the sense of exporting from mountain areas, even if the goods remain within the country, as is often the case. 26 Mountain communities may use small quantities of these resources, but large-scale extraction with attendant impacts on the environment depend on export markets. 27 In the extreme, modern coal mining technology in West Virginia mountains has begun stripping off the entire tops of mountains to expose coal veins underneath. The waste is dumped into nearby valleys, creating severe environmental problems and increase chances of flash flooding. 28 Some, such as local flood control and the beauty of mountains also accrue to those living in mountains, and they are keen to protect these values. However, it is not often they have the resources to protect them without assistance from downstream beneficiaries as well. 29 Cite Cardozo study on environmental services with appropriate caveats.



stewardship of timber and non-timber forest products, high altitude production systems, and specialized food and craft products. Maintenance of such systems is critical to the sustainability of local mountain communities, who are the stewards of upland resources; and it is also critical to continued availability of specialized products that are highly valued by lowland populations.30 In addition, these traditional knowledge systems have valuable lessons to share with the internationa l community that will be lost if attention is not paid to these communities.

v Amenity Values. Next to coastal areas, mountains are the second highest vacation destination for tourism. This tourism generates income for mountain dwellers and provides incentives to preserve the features of mountains that attract many visitors. Such mass-producedtourism, however, often increases environmental degradation more than it benefits local economies. (citation) Extensive visitation can reduce the amenity values that attract tourists in the first place. Recreational and aesthetic values, sacred and inspirational values, and the desire to experience nature in a pristine state are strong factors in the exceptionally high amenity value of mountain regions.

Unfortunately, the real world is not so simple. There are often competitive demands on mountain resources – increased resource extraction reduces the extent and value of in-place services, or preserving in-place services may reduce what can be exported. Furthermore, the relative value placed on these resources depends on the tastes and technology of the rest of the world’s economy. The values of export commodities are determined by world markets, and often by the tastes and income levels of the developed countries. The values of the in-place services are usually determined by the tastes and income levels of the local downstream areas.31 In developing countries, this creates a bias for export uses that may or may not be justified depending on the use of the proceeds of the exports and calculation of the in-place values.32

To facilitate the analysis, we have constructed a simple matrix to illustrate different situations with respect to resource endowment of a given locale. Richness in economically valued resources for export (such as mining and timber) are measured on the vertical axis, and in-place natural resource values (environmental services such as protection of watersheds, biodiversity, and recreational value) are measured along the horizontal axis. This results in four quadrants: See Figure 1.

30 For example, it has been discovered recently that dairy products produced by cows grazing in high altitude pastures is significantly lower in cholesterol and higher in omega-3 fatty acids than dairy products from herds grazing at lower altitudes. Such products may be significant for the health and life of certain at-risk consumers. 31 For some services, such as high end ecotourism, values in developing countries may be determined by adventurers in wealthy societies – e.g. trekking in Nepal and climbing Mt. Everest. 32 To be correct, local values should be calculated on a purchasing power parity basis to begin to be comparable with export values. However, local markets would be based on actual price comparisons at current exchange rates, which would put a premium on exports, and which raises equity issues.



Figure 1: Mountain Resources

IB, High Export, Low in Situ value

IA, High Exports, High In Situ values

Expo

rt R

esou

rces

à

IC. Low Export, Low In Situ value

ID. High In Situ Value, Low Export Value

In Situ Resources à

ACCESS TO MOUNTAIN RESOURCES :

The fundamental differences in the economic or social value of export commodities and in-place services and natural resource value are further affected by differences in access to markets. Easy access to markets makes export uses easier, but may also place a higher value on in-place values. On the other hand, lack of access to markets may help preserve in-place services without having to create an economic transaction, but it makes it more difficult to alleviate poverty. 33

Access to markets represents the major factor in how much economic value can be realized from both export and in-situ resources and in determining the sustainability of their use. It is also an important factor in alleviating poverty in mountain areas. For this analysis, access to markets consists of three complementary elements: 1) Investment in transportation infrastructure to improve physical market access; 2) Application of appropriate technology to mountains to provide communications linkages (wireless telecom), to provide utilities (solar power, mini-hydro), to improve knowledge, (distant learning, internet access), and to enhance the value of mountain products; and 3) Development of institutions to improve the sustainable management of mountain resources, including more participatory governance, application of market mechanisms to a broader range of mountain goods and services,34 and appropriate regulatory interventions.

Physical access to mountain areas is a function of proximity to lowland areas and the extent of transportation infrastructure in place. The more populated and the higher the income of the nearby lowland areas, the greater will be the access to markets and the potential for greater interactions. These can either increase the demand to exports of

33 This could also be constructed in three dimensions where access to markets is measured on a third axis. However for ease of presentation, we will consider access as a separate mediating variable. 34 For example, organized schemes of transfer payments for environmental services can represent a special kind of ‘access to market’ in serving to connect highland communities responsible for resource stewardship with downstream beneficiaries.



mountain goods or the demand for in-place services, or most likely some combination of both. Cultural and linguistic commonality will also increase the likelihood of high access. On the other hand, greater distance, more rugged terrain, and cultural differences are likely to reduce physical access and access to markets. Many of these factors can change over time and are affected by technology, policies, and institutional innovations. Lowland tastes and technology may change, which can increase or reduce the demand for mountain resources. Higher incomes are likely to increase the demands for and relative valuation put upon in-place services. Migration in and out of mountains is likely to increase access.35 Conflicts and illicit activity is likely to reduce access, such as the Shining Path in Peru, or the Maoists in Nepal, or the drug dealers in the Golden Triangle.

Roads and other modes of transportation are the main physical form of access, and impact directly on the capacity of mountain services by their existence (roads are a major contributor to erosion, for example) as well as the opportunities for linking to markets. In recent years and in some locations, air travel and telecommunications have opened up a wider range of access to mountain areas. In some cses these are less disruptive than roads, and may offer opportunities for income gains from in-place activities. Given the threatened and fragile nature of many mountain areas, the type and rate of expansion of access is important. In some areas, it should be limited, in others expanded. Enhancing some in-place environmental services may depend on increased access to market transactions to monitor and remunerate stewardship activities, but controlled physical access. The discussion of the various cases below will highlight how different approaches are needed in different areas.

CLASSIFICATION OF MOUNTAIN RESOURCES:

With the framework described above, we can identify specific cases and examples that illustrate the issues to be addressed in each quadrant. It is a relatively simple to see that the most intractable problems of sustainability are likely to arise in the “High-High” (high economic and high environmental value) and the “Low-Low” (low economic and low environmental value) cases. The Low-Low case represents the typical form of mountain marginalization. There is little for market interests to go to that area, and the people are most likely to be poor due to lack of resources and contact with the rest of the world. The High-High case represents the typical case of conflict and competition for mountain resources. Without careful management of both types of resources and reasonable compromise, sustainability is truly at risk. The cases of High export resources and Low in-situ resources (High –Low) and Low export resources and High in-situ resources (Low-High) are likely to be more manageable due to less conflict over sustainability objectives. Nevertheless, they require careful management to assure both sustainability and assuring adequate incomes to the mountain dwellers in those areas. We will present case studies of good and bad examples of management of mountain resources for both sustainability and poverty alleviation for each of the quadrants in the typology.

35 However, too much migration of lowlanders into mountains (for recreation, resort, and retirement activities may displace indigenous mountain dwellers. E.g. Aspen, Colorado.



The ‘low-low’ case: Low value economic resources and Low value environmental resources leads to poverty.

These areas present the greatest challenge for poverty alleviation. They are poor in resources that can sustain local populations or that can be marketed. And they are of low concern for environmental conservation issues in the short to medium term. The Upland Plateau areas, such as the puna region of the southern Andes and the ?? of the Himalayas, are characteristic of these Low-Low cases. Such areas are of high concern for social and economic development as they represent the extreme of marginalization. Poverty is pervasive in these areas, which have limited capacity to provide incomes from local resources or from export of mountain products. Populations are likely to be ethnically or culturally isolated from nearby lowlands (possibly nomadic), further adding to isolation and have only relatively weak institutions beyond local clans. Environmental risks are likely to be due to neglect of potentially important issues.

People in these areas are particularly vulnerable to the fact that caloric requirements of living at higher altitudes are greater than in lowlands, given metabolic difficulties of thinner air and colder temperatures, while agricultural production is decreased due to altitudinal conditions. These mountain areas are frequently characterized by environmental degradation. This may have been due to excessive population pressure and migration from nearby lowland areas that depleted or exhausted fragile resources, perhaps resulting from past mismanagement. Population centers may also be along isolated trade routes, where the population would support and depend upon supporting the passing commerce.

The primary cha llenge in these areas is survival and basic poverty alleviation. The cost of providing public services and other poverty alleviation is high in relation to any immediate economic return. There is little immediate benefit from improving living standards in these areas beyond helping the local people. Lack of resources increases competition for the sparse resources that are available and may make developing a coherent program difficult, particularly if there are ethnic or cultural differences between the people in the isolated mountain areas and the centers of wealth and power. Policies would have to center around welfare programs to supplement incomes and improve social and educational services; migration; and improved technical packages.

Some areas in this quadrant are characterized by high altitude urban agglomerations, such as Mexico City and La Paz, which are highly or entirely dependent on their lowland hinterlands. They may have been located there for historical reasons, and their growth due to their position as national capitals. They impose a heavy burden on their local environment, such as water depletion and air pollution and draw on resources of the rest of the country. In these areas, there is little left to preserve of the original environment, and decisions will be made primarily on the needs of the local populations. However, improving general environmental conditions are important for improving the welfare of the inhabitants. The primary challenges are managing the environmental conditions that result front the intensive use of these areas. This involves control of pollution, ensuring adequate and safe water supply, and managing population expansion. Providing clean air and water will depend on applying known technology wherever possible, imposing



pollution control regulations, and undoubtedly passing on the costs to the bulk of the population through higher prices, taxes, or user fees. Care should be taken not to adversely impact the poor in these programs. In addition, national- level policies would be needed to limit population growth and in-migration while encouraging out-migration. [Good case: Denver? Alice Springs, Australia? : bad case, Mexico City?]

In areas where there is less population density and where access to markets can be enhanced, it may be possible to develop environmentally benign income generating activities in manufacturing and services. These programs would have to be carefully designed to protect the valuable resources and reduce degradation. At the same time, they would need to develop better opportunities for the local poor. There may be some possibilities for improving management of environmental services, such as water. This might make it attractive to develop some market based programs to pay local people for stewardship to prevent downstream damages, if they have access and control over the causes of the problems. However, payments based on stewardship services are not likely to be significant. If the main source of environmental degradation is exploitation of the meager remaining environmental resources, it will require stronger interventions from the government or external agents to establish guidelines for better behavior.

Where market transactions can be arranged that directly benefit the poor, they should be used. Beyond that, increased social services should be funded by the government. The potential for developing income generating activities and environmental services would depend on developing strong institutions and appropriate relations with downstream markets and beneficiaries. The Zuni native Americans live in a Low-Low region, but can make a reasonable living by selling their beautify jewelry and other crafts in nearby affluent markets. Tibetans make equally impressive jewelry and crafts, but do not have an affluent market nearby. Establishing such relations to generate incomes may encounter political problems, depending on the circumstances. These factors would also affect any potential for migration. This is likely to involve substantial institutional development to increase the participation and voice of the poor and give them more control over their environment. [Good case, tourism, communications in schools and ARC in eastern West Virginia?: bad case, Rwanda agriculture]36

In some cases, it may be possible for an area to move from low to high natural resource value. The extreme harshness of the Tibet Autonomous Region of China, for example, makes its biodiversity value relatively low, and its isolation reduces the value of other environmental resources. However, the critical role of this Himalayan as the source of many of the world’s great rivers, its mineral potential, and its cache as the cultural home of Tibetan Buddhism are increasing recognized by key agents in these markets and shifting it from low to high natural resource value for both exports and in-situ benefits. The valuation of these resources is based on market perceptions of scarcity, impacts on other (downstream) activities, and commercial benefit. These change over time. Demand for these resources may contribute to increased access for TAR, with the attendant benefits – and risks. A question then, is whether certain other areas, such as Mongolia or the Puna region of the Andes could create new opportunities for improving local incomes by promoting changes in market perceptions for such things as high-end 36 A special case in this category is the historical importance of control of trade routes, especially in mountain passes. Illustrates how economic value can change over time.



eco-tourism. In addition, as downstream areas from certain isolated areas become more affluent, they may place a higher value on the resources from nearby mountains. Or such areas may become valued due to their location in relation to other activities, such as the potential value of the Pamirs or Caucuses as a means of transport for oil.

In areas with both low value environmental resources and low economic potential, offering credit to help boost local economies is one promising mechanism to alleviate poverty . In the case study in Ecuador described below, low natural resource values are the result of serious ecological degradation that has already taken place. The project aims to rehabilitate damaged ecosystems, and link future economic development to conservation in the area surrounding a national park. Another example of a Low-Low case is The Foundation for International Community Assistance (FINCA),a NGO which supports village banking programs in marginalized mountainous countries. Village banks are established to improve access to financial services for the poor, to accumulate savings, and to strengthen community groups. Loans, starting at $50, are given to local inhabitants with the hope that after three-years, members will have accumulated $300 in savings. All but one project have experienced high repayment rates, between 92 and 100 percent. Members who are late in repaying their loan must pay a penalty, but payment is flexible. Loans are not made greater than $300 to attempt to prevent elites from dominating the program.

Project Condor represents a significant effort to deal with a case where there is high environmental value and low economic conversion value. It is a “bad” case in that years of neglect have led to impoverishment of local communities and serious degradation of environmental resources. Current efforts to repair environmental damage and to improve livelihoods for local communities are promising, but are both more costly and less effective than it would have been if mechanisms had been introduced much earlier to provide benefits to local communities for environmental stewardship.



The ‘High-Low’ case: High economic export values, Low environmental services value requires careful management of the exploitation.

These areas feature relatively high value commodities, with relatively low values for in-place environmental services. Many of these areas are found in the Low Mountainous areas, and to a lesser extent in the middle levels of the High Mountainous areas . In these cases, the potential for conflict among uses is less severe, but not without challenges to protect the environment from pollution and degradation and to assure that local people realize a fair income and long terms opportunities from the exploitation of the mountain resources. Where these resources are accessible to markets with appropriate infrastructure, there is good potential for sustainable use of the resource and reduction of poverty. This involves assuring effective management of the of rate and means of extraction of resources, minimizing the use of processes that degrade the environment for

ECUADOR: PROJECT CONDOR AND THE MT CHIMBORAZO NATIONAL PARK

In the high Andes of Ecuador, the Canadian International Development Agency and Scarboro Missions is working to support the development efforts of the indigenous communities of Pulingui San Pablo and Chorrera Mirador Alto. These two communities sit at over 4000 meters at the skirts of Mt Chimborazo, at 6300 meters the highest point from the center of the world as well as the location of a national park. Despite their proximity to a national park, fuelwood access is difficult and environmental degradation is extremely severe, especially in the form of soil erosion and landslides. The closest market is an hour drive away and the majority of community members walk to market. Malnutrition is still the leading cause of death among the children of these communities.

One of the first steps taken was to secure property rights for the local communities. In 1996, an agreement was signed by the Ministry of Environment and the Federation of 14 Puruhae communities (FOCIFCH) of the Chimborazo area. Under this agreement, the State committed to respect native properties and to plan the Park's development with the participation of the local organizations. The Ministry was also recognized as the entity responsible for managing the environmental impacts of local communities operating within Mt. Chimborazo's National Park.

Since the signing of this agreement, a practical model of community management in the park area is beginning to emerge. Under this model, the local people are the lead managers and the role of the Ministry is one of supporter and monitor. Project Condor is supporting this management model by strengthening the capacity of two of the communities to manage their own development. Project Condor consists of four interrelated initiatives: capacity training, community projects, conservation, and the empowerment of women. Specifically, workshops and follow-ups are being conducted in leadership, ecotourism, and conservation. 20 young people are being trained and licensed as professional native guides through a local university sponsored program. Experience gained within the two participating communities is being shared with the remaining twelve communities of the FOCIFCH.

HTTP://INTERCONNECTION.ORG/CONDOR: PROYECTO EL CONDOR.

The Mountain Institute. 1997. Investing in Mountains: Innovative Mechanisms and Promising Examples for Financing Conservation and Sustainable Development. Synthesis of a Mountain Forum Electronic Conference in Support of the Mountain Agenda.



either production of transport, and protecting the integrity of indigenous cultures. Successful cases are located in areas close to population centers or close to cheap transportation. In areas were ownership rights can be secured by mountain people, often living standards can be improved. Good case studies include forest management in Costa Rica, described in detail below, small-scale tea plantation in Kenya, and selectmining operations in Peru.

In most developing countries, the bulk of the mountain products is exported into international markets. In many cases, the right to exploit the resource is determined by national governments, who normally claim ownership of such resources. The benefits of exploitation rights are typically given to large, well funded firms – both foreign and domestic -- who exert influence over government regulations to their own benefit. Revenues are usually appropriated by intermediaries and lowland elites who gain ownership of the resources. Local mountain people are rarely compensated for the resource, or for the loss of other resources that results from the extraction activity. They may be employed in menial jobs in the mines or cutting timber, but rarely is their standard of living improved. Extractive firms have an incentive to minimize costs of the mine operation and the transport system, and may try to get the government to contribute the infrastructure, which would divert public resources from other uses that may improving living standards in mountains. In the case of the Antamina Mining Company, a collaborative local effort involving the help an international NGO resulted in an alternative transport system that avoided an important National Park as well saving investors money in ther long-term. This case study is described in the text box below.

Because of the public good aspects of many of these goals, a combination of market and regulatory regimes would be necessary to protect the environment and the access of local people to the resources of their mountain areas needed for their livelihood. However, once an overall framework is agreed upon, with adequate participation from the local people, it is likely that many market-based mechanism can be used to implement the policies. For example, the investment of funds from the downstream purchase of hydro-power into upstream stewardship programs in Costa Rica in one way to provide stewardship incentives. Where reasonable institutions and social capital exist or can be developed, a range of effective policies can be supported.

Where mountain areas possess high value products, but have low access to markets, it becomes important to manage the construction of the necessary infrastructure to enable the evacuation of the product with minimal disruption to the environment. Mining is the most common example, as the resource is often discovered in remote mountain regions, and requires appropriate infrastructure to transport the product at commercially viable costs. Logging for timber and pulp and paper may fall into this category as well. In these areas, it is important to prevent the extraction of resources from damaging other environmental services and sources of income of local populations. This requires government regulation and appropriate enforcement for pollution avoidance and mitigation of degrading effects. EIAs are appropriate instruments for this, if done properly and enforced. This may be more difficult because of the remoteness of the site. In some cases, such as forest areas, local populations can be more involved in the management of the resources, using traditional social and environmental approaches. Depending on the situation, it maybe desirable to limit the physical access to the site to



the extraction of the resource and discourage expanding access. This would be true where the area has a fragile environment and where allowing expanded settlement would have adverse social or environmental impacts. A special case in this category is trade in illegal goods, such as drugs37 and CITES smuggling. Appropriate approaches are interdiction, provision of alternative livelihoods, and managing access.

The ‘Low-High’ Case: Low Economic Export Value and High In-Situ Environmental Services Value means that conservation and protection is important:

These areas are likely to provide important environmental services to their adjacent downstream areas. They tend to be found in the High Mountainous areas, where extraction of resources would be difficult, if they were found. Watershed protection (water purification, siltation reduction, flow management) that would protect dams and maintain the quantity and quality of urban water supplies for downstream populations is among the most important.38 Classic watershed protection cases include Ecuador, NYC, and PG&E. Mountains also provide recreational opportunities, such as ski resorts, hiking, and hunting. These areas include the picture postcard images that reflect romantic, idealized mountain settings: Alpine and Rocky Mountain resorts, Himalayan hill stations, and pristine spas in Japan. It is only recently that these services have been recognized as having marketable economic value. Heretofore, such services were simply assumed because they were provided ‘naturally’ with no apparent effort by the recipients or the upstream people. With increased pressure on the mountain areas and resulting degradation, the value of many of these services is understood in terms of the costs of replacing them, for example when degradation reduced the natural service (water control and purification) or when encroachment constricts areas available for recreation. This is directly related to the public good aspects of most of these services.39

The challenge in these areas is to clearly identify the services that provide value and find ways for the providers (stewards) to be recompensed. These regions tend to offer the greatest opportunities to develop market based mechanisms to both preserve the environment and where upland populations are disadvantaged, to reduce poverty as well. It is important to have in place a regulatory and legal framework that allows the determination of the services provided and the creation of mechanisms to effect payments. Where both upstream and downstream populations recognize their individual and mutual benefit in paying mountain dwellers for the stewardship services they provide, market based arrangements can be designed that provide incentives to maintain environmental services through appropriate market instrument, or taxes and fees to obtain favorable environmental services. When downstream benefits are clearly identifiable and quantifiable, beneficiaries may be willing to pay directly for improved environmental outcomes and markets can function directly (XXXX example). When the benefits are more diffuse, or the beneficiaries constitute much of the population, tax systems may be 37 Colombia, Afghanistan, the Golden Triangle in Southeast Asia are the prime cases. 38 The alternative would be for downstream populations to pay for water purification and treatment plants, build more flood control, and experience lower lives for dams. 39 The identification of these services also highlights the interconnectedness of mountain systems and raises the question of the responsibilities of owners of mountain property rights to leave intact certain of these interconnected services.



used. (XXXX example) For recreational values, protection and regulation of access through restricting and/or pricing access through user fees helps to maintain mountain ecosystems primarily by mechanisms that limit access and generate revenues to maintain mountain system integrity.

In most of these cases, issues of property rights and responsibilities must be clarified so that environmental services produced upstream are recognized, quantified, and monitored, enabling those downstream to pay upstream communities for continued stewardship of specific natural resources or environmental services. Alternatively, upstream dwellers can be taxed in ways that penalize activities that degrade the

BOLIVIA: THE NOEL KEMPFF CLIMATE ACTION PROJECT The Noel Kempff Mercado National Park, Bolivia, covers over 1.5 million hectares in one of the most biologically diverse areas in the world. Since 1997, almost half of this area is managed through the Noel Kempff Mercado Climate Action Project, the largest forest-based carbon project in the world. Project participants include the Government of Bolivia, Fundación Amigos de la Naturaleza (FAN), the Nature Conservancy, and three U.S.-based energy companies. The project has been given $9.6 million (U.S.) for first 10 of 30, including a permanent endowment of $1.5 million Project activities have contributed to biodiversity protection through park expansion, and improved soil, water, and air quality through the cessation of logging on two million acres of land. The most recent mid-term estimates indicated a potential net carbon benefit of 6-8 million metric tons of carbon over 30 years. Carbon offsets generated from this project are shared among the Government of Bolivia and the three energy company investors. In the case of the government offsets, proceeds would be allocated to various specified biodiversity priorities in Bolivia. Local participation is emphasized in this project. FAN has hired approximately half of the park guards from the local communities and established revolving funds for microenterprises such as heart-of-palm plantings, to help take pressure off of the forest lands. In addition, the project is assisting the local communities in their efforts to attain legal status as indigenous peoples and to secure land tenure. Carbon benefits from the project are expected to last in perpetuity, considering both that the site lies within the National Park and a permanent endowment has been established to fund protection activities beyond the 30-year life of the Project. Project developers have shown that logging concessionaires would have continued harvesting timber on the property and much of the land in the project site would have been cleared without the guidelines of the project.



environment. Which approach is used will depend on the terms of property rights and governing regulations.40

Areas with high environmental in-situ value and high market accessibility are also likely to be facing special problems of over use and environmental degradation due to the value of their resources and access to markets. Unregulated eco-tourism, for example, is recognized for its perverse effects: people come to the mountains to enjoy unspoiled nature; but their presence in large numbers can destroy the very qualities that attracted them in the first place. Thus regulating and controlling access will be an important element in the management and preservation of the environmental service capacity of mountain areas. (XXXX examples)Areas that have much more limited access may contain high local, regional, or global biodiversity va lue, which is generally known through scientific research. Others may be the source of important rivers (Tibet), or they may be of particular cultural or amenity value that depends on remaining relatively undisturbed. In these cases, conservation of their environmental service values should be the primary objective. This has been partly achieved by isolation from markets, but such isolation is no longer always an effective defense if there are products or services which have market value, such as eco-tourism, that bring their own access. Furthermore, people living in these areas are often poor and in need of means to improve their standards of living, which requires greater access.

The challenge is to conserve these areas in an affordable manner and to keep physical access limited41. Parks and Protected Areas are the most appropriate institutional approach. These can be created and maintained through transfer payments, high-end ecotourism, and “niche” economies that rely on production of highly specialized, high value-added products. Maintenance of both the conservation value of the natural resources and specialized niche economies depends on ensuring that access to market is managed to prevent overexploitation of the services. This avoids degradation of the environment while maintaining the cache of limited accessibility. To a large extent, benefits from improved environmental outcomes that result from such conservation efforts should be directed to the poor in those areas, who should be increasingly involved in enhanced stewardship. This should be a key part of any program – both through direct payments for stewardship activities and though programs to improve social services to poor and/or isolated populations.42

For example, in the Annapurna Conserva tion area in Nepal, visitors pay an entance fee of $12 which is channeled back to local people through the Kind Mahendra Trust for Nature Conservation, a local NGO. As of 1997, over $400,000 had been collected, enough to cover operation costs for the park as well as regional development programs.

40 Throughout, we have been using ‘upstream-downstream’ in a figurative sense. Those ‘upstream’ provide the environmental stewardship service, those ‘downstream’ consume it. They may not actually live in this relation along a specific waterway. 41 Probably in both directions 42 Such payments should not be considered subsidies, however. Rather, they are fair compensation for maintaining environmental services.



For tourists interested in viewing the mountain gorilla in its natural habitat, a user fee of $200 per day in charged by the National Park office in Kigali, Rwanda. These funds were then used to cover park expenses and salaries for the staff.Of utmost importance when considering user or entrance fees for protectedareas is the assurance that the funds are channeled back to local communities themselves. The reinvestment of these funds directly into local communities creates strong incentives for increased local stewardship activities. Such programs must be carefully designed to satisfy many competing interests and to permit a sustainable use of the valuable environmental resources in the area. This in turn requires well-developed institutions to manage the property rights issues and establish the necessary markets and transactions. One further caveat. Since such systems create new dependencies on external niche markets (tourism, special products43) it is essential to ensure that the integrity and sustainability of indigenous systems is maintained. Local communities must be able to survive on their own, with external revenues being used for ‘lumpy’ investments, public services, and to buffer market fluctuations if they are to be sustainable. [Good case, Rwanda gorillas: good case, Bhutan, Nepal; similar cases in many other well-managed national parks. Bad case:? Oil drilling in Ecuador, ANWAR]

The ‘High-High’ Case: High Economic Export Value and High In-Situ Environmental Services Value requires careful balancing of trade-offs:

These cases present the most difficult challenges. Their richness in both exportable and in-situ environmental resources create conflict over the best use of the resources. These tend to occur in the Low and middle level mountainous areas. All too often, the use of one impedes the realization of value from the other. In the typical case, economic profits from the exportation of marketable commodities runs head on into the desire to preserve the value of in-place services and the integrity of the ecosystem. Frequently, the drive for economic profits prevails; in part because the exploiters can gain use rights with the promise of economic return to governments or other authorities with control over the resources, and in part because of the difficulties of placing a market value on the environmental services and actually realizing a monetary return through transactions for the use of the service.

Clearly, the public good aspects of the environmental services make it more difficult to estimate and collect the value provided. While markets provide ready cash for the exportable commodities, their producers are rarely charged for the environmental damages done or costs imposed on others by the side effects of extraction. These two elements of market failures – difficulty in pricing the environmental services and the lack of pricing of environmental costs -- create a bias in favor of exporting environmental commodities. This bias is exacerbated in developing countries by the fact that export commodities are valued in global markets dominated by high income countries with large ability to pay. The competing environmental services would be priced – to the extent

43 In some cases, such as carbon sequestration of maintaining water quality, effective markets can only be maintained through some form of public intervention – either through governments of broad-based interest groups.



they are – in local markets with lower income levels and ability to pay. 44 Not surprisingly, efforts to balance demands for environmental services and exports have made more progress in developed countries, but it is by no means all or nothing, and some of the most impressive examples come from developing countries where those seeking to protect mountain environments and the welfare of those living in mountains have achieved a great deal.

Where these areas have good access to markets, the competition is likely to clear and out in the open. And there are likely to strong advocates for both sides. This may increase the chance that a solution can be found. Whether or not a satisfactory solution is found will depend a great deal on the institutional structure. Where vested business interests wield the power and local interests cannot gain representation, economic exploitation is likely to prevail, whether it be in West Virginia or Iryan Jayan. However, if mountain dwellers are able to make their voices heard and can gain allies from among those who benefit from the environmental services downstream, arrangements can be made to manage the use of environmental resources and obtain payment to stewards upstream for protecting those services. (XXXX example) Depending on the circumstances, market instruments can play a large role, so long as there is an appropriate legal and regulatory framework that allows agreements to provide environmental services to be made and enforced among the interested parties. This may require some government interventions to establish the basis of a market, such as required water quality levels or landscape preservation that allow proper quantification of the environmental service provided. Various combinations of regulations and market instruments are possible.

Where these areas do not have good access (especially to institutions), the challenges may be greater. Those promoting exploitation may be able to make a stronger case to access for exploitation, the potential damage to environmental services may be less obvious, and local mountain dwellers may have less voice. As the case of Antimina demonstrates, it is still possible to work out solutions that allow export of the resources while protecting the in-situ resources. even when local people have limited volice and access to authorities.45 But it takes a lot of effort.

In the end, the real challenge in the High-High case is how to take advantage of the exportable mountain resources without undue damage to the in-situ mountain resources. This requires careful management and cooperation between public and private interests and a full understanding the all the costs and benefits of both classes of resources. It also require appreciation of the values and needs of the mountain people. Satisfactory solutions require balancing the need to generate income from both exportable and in-situ resources and assure that local people participate in the income and in receiving appropriate social services. This means that the full range of institutional interventions discussed in more detail below will have to be exercised.

In many cases heretofore, the approaches of the High-Low cases have been applied to the High-High. Environmental impact assessments have been completed and basic

44 The ‘intrinsic’ value of clean water would be the same to a rich New Yorker and a poor Javanese, but the former has the resources to pay upstream users not to pollute the water, whereas the the latter does not. 45 In this case, international interests in the environment and long term sustainability of the mine prevailed over the narrow interests of the government and the initial mining consortium.



mitigation measures undertaken to reduce the direct negative impacts of the export of resources. Little attention has been paid to the larger values of the in-situ services and the impacts the export activities would have on their long-term sustainability. There are tools available for assessing that and for reaching reasonable compromises. It is critical to extend the range of solutions to cover both types of resources adequately.

In the case studies that follow, we will see examples of both successful and unsuccessful approaches to management in all four types of cases: Low/Low, with low economic and environmental values; Low/High, with Low economic and high environmental potential; High/Low, with high economic potential and high natural resource value for in-situ environmental services; and High/High, where conflicts arise and trade-offs are needed in situations where economic conversion and environmental services values exist together in the same place.



Case Study for High Economic Conversion Value and Low Natural Resource Value

Case Study for High Natural Resource Value and Low Economic Conversion Value Case study for high natural resources and low market access

“The Project is proving that a well-designed forest conservation and management project can produce significant ne t carbon benefits that are scientifically valid and long- lasting; protect biodiversity and ecosystems; improve local environmental quality; and meet the goals of sustainable development by creating economic opportunities for local people.”—XXXX SOURCE/?? Another mechanism that can be used in areas of high in situ value, and low economic conversion value, is charging entrance or user fees to be invested in conservation.



GOOD CASE; NORTH CAROLINA, USA: HANDMADE IN APPALACHIA

“Our Mission is to celebrate the hand and the hand made, to nurture the creation of traditional and contemporary craft, to revere and protect our resources, and to preserve and enrich the spiritual, cultural, and community life of our region.” References: McGill, K.Y. 1999. “Valuing cultural heritage in a tourist economy.” Published in

Mountains of the World: Tourism and Sustainable Mountain Development. Mountain Agenda, Switzerland.

Check on how to cite this: http://www.wnccrafts.org/ HandMade in America http://www.ncarts.org/blueridge/ Blue Ridge Heritage Initiative

In the Blue Ridge and Great Smoky Mountains mountains of North Carolina, HandMade in America is working to further its mission to renew communities around their most undervalued asset: their rich craft heritage. Over 360 citizens participated in a regional planning process to determine how to promote the hand made objects of the area to the nation at large. Although Appalachia is relatively isolated from the rest of the East Coast, the Blue Ridge Parkway provides access to nearly 22 million tourists who come into the area each year, and tourism is a major component of the regional economy. HandMade’s economic impact study found that the craft industry directly contributed US $122 million a year to the region’s economy, and over 50% of those sales were made to tourists. One of the non-profit’s twenty year goals is to implement environmentally sustainable economic strategies for Western North Carolina that emphasize the hand made industry. Working with local citizens, HandMade developed a self-guided driving trail system to direct tourists to areas off of the Blue Ridge parkway where locals wished to have visitors. In 1996, HandMade published the Craft Heritage Trails of Western North Carolina. Over 21,000 copies of the first edition were sold, leading to a second edition in 1998. Currently, HandMade is a partner with the Blue Ridge Heritage Initiative in creating three additional trails: the Blue Ridge Music Trail, Cherokee Heritage Trail and Gardens and Countryside Trails of the Blue Ridge. Local craftspeople have reported an increase in sales averaging 30 percent since the publication of the first edition. HandMade in America has received America's national award for environmental sustainability for job creation/enrichment as well as the American Planning Association "Current Topic Award" for planning for economic development. HandMade’s work in North Carolina is a good example of a positive attempt to maximize economic benefit to rural communities without compromising cultural integrity. In addition, HandMade’s work to create self-guided tail systems helped to convert Western North Carolina from a area with low natural resources and low access to market, to an area with higher access to market for locally made HandMade goods.



Case Study for Low Economic Value and High In Situ Natural Resource Potential

GOOD: COSTA RICA: HYDROELECTRIC UTILITIES FINANCE UPSTREAM WATERSHED

The following case study illustrates an example of market-based mechanisms to provide incentives to landowners to conserve resources on their properties. The use of direct payments by downstream beneficiaries of environmental services to upstream natural resource managers is one example of a mechanism that can be used in an area with high natural resource values, and low potential for economic exports. In this case study, private forestland owners are compensated by both the Government of Costa Rica and Energia Global, a private hydroelectric company, to increase forest cover on private lands to contribute to regularity of water flow. To pay for these services, the Government of Costa Rica established a fund, consisting largely of a 5% tax on fossil fuel, and enlisted the help of a local NGO to provide administrative expenses. The fund was primarily established to protect biodiversity, not watershed issues. In this case study, the public is involved through its payment of the 5% fuel tax that finances the government fund for payments to landowners. The national government, a private hydroelectric company, and a local NGO work together to coordinate, fund, and distribute funds to upstream landowners. The National Forest Office and National Fund for Forest Financing (FONAFIFO) was established by the Government of Costa Rica to provide incentives for reforestation by compensating private forest land owners for their efforts to reforest land or to keep it from development. FUNDECOR (Fundacion para el Desarrollo de la Cordillera Volcanica Central) is a local NGO that has volunteered its administrative services to the project. Energia Global is a private hydroelectric company that provides electricity for about 40,000 people. The company’s water supply comes from two watersheds, with a total acreage of 5,800 hectares. Revenues are maximized when the plant is running at full

In Costa Rica, private landowners are compensated by the National Government and a private hydroelectric company when forest cover is maintained or increased in watershed areas. To pay for these services, the Government of Costa Rica established a fund, consisting largely of a 5% tax on fossil fuel, and enlisted the help of a local NGO to provide administrative expenses. The hydroelectric company involved hopes both to increase the regularity of stream flow and to reduce reservoir sedimentation by paying for landowner services. The company believes that increased forest cover will help to achieve both of these objectives. Payments of $48 per acre are made directly to individual landowners through a local NGO. On the national level, the Ministry of Environment is attempting to expand this project to the national electricity and water utility companies throughout Costa Rica.



capacity. However, due to small reservoirs that can only provide water for five hours, the company is largely dependent on hourly flow from its watershed. Energia Global hopes both to increase the regularity of stream flow, and to reduce reservoir sedimentation. No in-depth hydrological study has been conducted in the area of this project, and studies investigating the relationship between forest cover and stream flow in other parts of the country found conflicting results. The company, however, believes that increased forest cover will help to achieve both of these objectives. Energia Global estimates that, given the value of electricity foregone by having to spill excess water, its investment in watershed activities will pay off if it can capture an extra 360,000 cubic meters of water. Energia Global pays $18 per hectare to FONAFIFO. FONAFIFO then adds an additional $30 per hectare, and then makes cash payments to owners of upstream private lands who either agree to reforest, engage in sustainable forestry, and/or conserve their forestland. FUNDECOR oversees the implementation of the conservation activities and also manages the legal and administrative operations. Funds are distributed by FUNDECOR to individual land owners. The $48 per hectare is not based on the value of the hydroelectrical services, but is the approximate equivalent of the opportunity cost of foregone land development. Cattle ranching is the primary form of land use foregone to promote forest cover in the Sarapiqui watershed where this project is located. Two studies have been conducted to estimate the ecological benefits of water resources. The first study, conducted by the Tropical Science Center, concluded that water prices should be increased up to 120% to reflect the economic and ecological value of the water. The second study recommended a new tariff structure differentiated by both economic sector and geographic location. On the national level, the Ministry of Environment is attempting to expand this project to the national electricity and water utility companies. In this case study, FONAFIFO had already been established, and FUNDECOR was also already set up as an NGO and willing to contribute its services voluntarily. Expanding this concept to the national utility companies will require much more complex changes in institutional and regulatory arrangements. A proposal has been made that all utilities be legally required to pay landowners for their services, but as of May 2001, the proposal had not been acted upon by the Costa Rican Congress. Two additional private hydroelectric companies have established similar initiatives following the example of Energia Global, and one company has extended the concept to include drinking water. The FONAFIFO scheme has been criticized for mainly benefiting large private forest landowners and often ignoring small landowners. Reasons given for this inequity include: large landowners are better informed, and can better afford to conserve part of their lands. Another incentive for program designers to concentrate on large landowners



is to lower transaction costs by working with a fewer number of people for a greater amount of land. References: Chomitz, K., Brenes, and L. Constantino. 1998. Financing Environmental Services: The Costa Rica Experience and its Implications. Paper prepared for Environmentally and Socially Sustainable Development, Latin America and Caribbean Region, World Bank. Washington: World Bank. Davis, P., and D. Perrot-Maitre. 2001. “Case 2- Costa Rica: Hydroelectric Utilities’ Financing of Upstream Reforestation.” Case Studies of Markets and Innovative Financial Mechanisms for Water Services from Forests.



Case Study for High In Situ Value and High Economic Export Value

GOOD CASE --NEW YORK CITY, USA: WATERSHED AGRICULTURAL PROGRAM A recent partnership between New York city and the upstate farmers of the Catskill mountains, who inhabit the watershed feeding the city’s reservoirs, is drawing the attention of US federal officials as well policy makers across the country. Some 1,900 square miles of watershed have been protected from further degradation while at the same time allowing for the growth of upstate communities, with an emphasis on dairy farmers. In the early 1990s, New York City and the Environmental Protection Agency (EPA) were concerned about the potential decrease in water quality due to runoff from barnyards and faulty sewage treatment systems upstream. New York was facing the possibility of having to build a water filtration system at the cost of $6 billion. New York City saw watershed protection as essential to ensuring its water supplies; and farmers New worried that their profits would be threatened by expensive anti-pollution requirements.

What started out as a potentially expensive and exhausting battle has turned into a model project, bringing together the rural and urban inhabitants of New York with the hope of benefiting the mountain inhabitants, city dwellers, and the environment. In January 1997, Governor Pataki, New York City Mayor Giuliani, representatives from the EPA, numerous environmental organizations, and officials from state, county, and town governments, signed the historic NYC Watershed Memorandum of Agreement. New York city agreed to fund $35.2 million for farmers in the Catskills to purchase or build pollution abatement devices. Participating farmers must convince at least 85 percent of the 400 farmers in the watershed to join them. On average, a farm will receive $75,000 for improvements such as cement manure pipes, fencing to improve cattle feeding, and riverside tree planting. The Watershed Agricultural Council, consisting of 21 members, meets to disburse the city funds to participating farmers. The program is voluntary and completely run by the farmers themselves.

Numerous benefits are already materializing through this partnership. The primary social benefit is renewed trust between upstate farmers and city residents. Income for farmers is not only increased due to city funding, but their productivity is expected to improve in nine out of ten cases due to expected improvements made on their properties. Downstream water consumers benefit by avoiding the cost of a water filtration system, and the incentives for conservation have been created by direct payments to participating farmers. In the case of the New York Watershed Agreement, the price of water use was not changed, but rather the revenue was reinvested in protecting the watershed. This case study illustrates the benefits possible across the board when downstream users must pay for the maintenance of the watersheds as well as the cost of the water.



Making the connections between upstream and downstream communities explicit has paid political dividends as well, "We have put aside the suspicions that have existed far too long between the downstate communities and their upstate neighbors. This agreement does what many thought impossible: it protects the 1,900 square mile watershed from degradation while allowing upstate communities the ability to grow and develop in and environmentally responsible manner" according to New York State Governor Pataki. As in the example in Costa Rica, where Energia Global paid forest landowners on a per hectare basis for forest conservation and regeneration, revenue from water sales can be channeled to local communities to support stewardship practices. Both are cases of high in-situ environmental values. In New York, the profitable dairy farming industry in close proximity to a major urban market makes it a case of high economic export value as well, whereas in Costa Rica, the potential for economic export of cattle is much lower due to the much smaller market base. The cost differences in the two schemes are remarkable, reflecting the extremely high income levels of New York compared to rural Costa Rica: $75,000 per farm in New York versus $48 per hectare in Costa Rica. Another major difference with the Costa Rica case is that the New York agreement requires that 85% of the farmers participate, creating a strong incentive for farmers to organize among themselves; and in the New York case, all participation is voluntary. Whereas in Costa Rica, a local NGO is used to administer funds, in New York, the farmers themselves organize and disburse revenue for watershed protection. The development of highly participatory local organizations in the New York case may create a more enduring institutional base for sustainability over the long term. References: http://www.epa.gov/OWOW/watershed/wpnyc.html- EPA: New York Watershed Agreement

http://www.nysefc.org/tas/NYCwatershed.htm New York State Environmental Facilities Corporation: New York City (NYC) Watershed Programs

The Mountain Institute. 1997. Investing in Mountains: Innovative Mechanisms and Promising Examples for Financing Conservation and Sustainable Development. Synthesis of a Mountain Forum Electronic Conference in Support of the Mountain Agenda.



Bad Case Study for High In Situ Environmental and High Economic Conversion Value

INDONESIA: PT-FREEPORT AND THE GRASBERG GOLD MINE The Grasberg mine, located in the eastern Indonesia, is the world’s largest open-cut gold and copper mine. The mine is owned and operated by PT-Freeport Indonesia, with approximately 80% of the shares owned by Freeport McMoRan and 10% by the Indonesian government. The area where the Grasberg mine is located has been the site of a major military build-up since 1995, and now is the most militarized area of all Indonesia, including East Timor. PT-Freeport is helping construct new bases for both naval and land forces to operate in Irian Jaya. Criticisms of PT-Freeport’s operations in Indonesia are numerous and well documented. The company has been accused of grievous human rights violations, the involvement of PT Freeport staff in the death of local people, the destruction of local water quality, and serious long term environmental threats posed by the mining activity. The local inhabitants, represented by LEMASA, the Amungme tribal Council, have been vocal and insistent in protesting their treatment by PT-Freeport. In 1988, 1,000 people from the lower-Waa village were moved to the coastal lowlands to make room for the facilities. In one month alone, 38 people died of malaria. Corpses have been moved from the local cemetery to make room for Freeport employees[ XXXX FOR HOUSING? BURIAL SITES? OFFICES?]. The company terminated its contract with the Multilateral Investment Guarantee Agency when MIGA planned to initiate investigations. In addition to human rights abuses, PT-Freeport has a long list of environmental offenses. The company dumps 3 billion tons of waste rock on local alpine valleys [XXXX annually?]; and 285,000 tons of tailings are dumped daily into local rivers, constituting the biggest source of heavy metal pollution from gold mining. This dumping is illegal in the United States and all developed countries, as well as in most developing countries, and was the primary reason for the cancellation of Freeport’s political risk insurance. The top of the mountain, which the company intends to remove, is sacred to the Amungme and regarded as the head of their mother. In response to concerns about the removal, PT-Freeport’s spokesperson stated, “In a country of mountains why shouldn’t one be sacrificed in the name of progress?” The change of power in Indonesia, however, in combination with pressure from communities and both local and international activists, has brought attention to the actions of PT-Freeport in Irian Jaya. In addition, the Amungme have brought their case for redress against the abuses of PT Freeport to New Orleans, Louisiana, the home of the parent company. In response, PT-Freeport has made some changes in policy, although Amungme tribal leaders accuse Freeport of merely making policy without implementing it. After Papuans rioted against a military crackdown in 1996, Freeport increased its support for local communities to 1% of annual net revenues, approximately $16 million. Freeport also set aside an equity stake in its local subsidiary, Freeport Indonesia. The dividends from those shares are supposed to go into a trust fund for Amungme elders. As of mid-2000, the



dividends had not been invested. CODE Indonesia additionally deemed the 1% Trust Fund a failure. In response to accusations of torture and murder of civilians, Freeport requires employees to report abuses and state in writing that they have not seen or participated in abuses. In addition, it named a tribal chief to the board of its Indonesia subsidiary. In response to the destruction of 230-square-kilometers of forest, Freeport built levees to prevent spills and pledged to replant 75 hectares a year through 2015, when the mine will be depleted. Environmentalists assert that the company isn't doing enough and that vast areas will remain contaminated. But Freeport says that remaining land can be used for farming. The program director at Human Rights Watch sees the actions of PT-Freeport as a first step, and not evidence that the company has turned over a new leaf. Questions:

• What might have happened differently if environmental management procedures had been agreed upon, such as in the case study at Antamina, at the outset of the mining?

• What impact would increased attention to indigenous land rights have on the

conflict? Would this be a better place to start then simply channeling funds into token projects?

REFERENCES: Kennedy, D, P Chatterjee and R. Moody. 1998. Risky Business: The Grasberg Gold

Mine. Project Underground, Berkley, CA Shari, M and, and S. Prass. 2000. Freeport-McMoRan: A Pit of Trouble (int'l edition).

http://www.businessweek.com/2000/00_31/b3692148.htm. West Papua, Indonesia.



CHAPTER IV : INTERVENTIONS TO PROMOTE SUSTAINABLE DEVELOPMENT AND POVERTY ALLEVIATION IN MOUNTAINS

The discussion above illustrates the range of different problems facing mountain areas and many of the approaches that can be used to address them. Not all solutions are appropriate for every area. And it is likely that some combination will be needed in each area. The choices will depend on the environmental and demographic circumstances, on the institutional capacities on the mountain groups and their downstream interlocutors, and on the market structures and location of demand relative to the mountain services. Based on the examples above, we can identify some of the most important factors for enhancing the sustainability of mountain areas and alleviating poverty. Indeed, in many cases, these can be complementary activities, often using market-oriented instrument.

In the Low-Low instances, the primary concern will be on improving the welfare of the mountain people living in those areas. This will primarily involve government sponsored programs for subsidies and payments, but other instruments may be used as well. The emphasis should be on poverty alleviation. In the High export resource, Low in-situ resource instances, the primary concerns will be to mitigate potential damage to environmental sustainability while assures that the local people receive adequate compensation for their resources and their exploitation. This will involve management of social and environmental impacts using market mechanisms and traditional EIA methods – a combination of government and market interventions within the appropriate institutional environment. The emphasis would be on managing market based mechanisms.

In the Low export resources High in-situ resource instances, the primary goal would be protecting the environmental services and assuring incomes for the related stewardship services. This would involve government interventions establishing protected areas (parks), setting fees for resource use making or arranging payments for local people protecting valuable services, and managing access to prevent overuse of the resources. The emphasis should be on developing market based approaches to complement regulatory interventions that protect in place services. Finally, the High-High instances are intrinsically complex and involve difficult trade-offs. Some combination of the policies for the High-Low and Low-High cases would be required to protect the long term viability of both the export and in-situ resources while assuring livelihoods for the local people. Cooperation of public and private institutions will be necessary, using market instruments to the extent possible, but recognizing the role of the public sector in assuring the public goods are adequately valued and managed. Here the emphasis should be on balancing competing demands and assuring adequate remuneration of mountain people for their resources.

GOVERNMENT INTERVENTIONS:

Security and enforcement are basic government activities and are essential for sustainable development in any area and particularly so in mountains. Without basic security, protection of mountain resources cannot be assured, indeed conflict is likely to contribute to degradation and inhibit any efforts at poverty alleviation, as illustrated by the situation



in places like Colombia and Afghanistan. 46 Security is critical in all quadrants, and enforcement vital the establishing protected areas and to introducing market mechanisms.

Land rights are the basic, if not always the definitive, factor in the use of mountain land. Traditionally in most mountain areas, use was open access until various pressures on the land created the need for more control. Usually some form of community ownership evolved, where the primary group using a mountain area allocated use of various aspects of mountain resources to people in the community. This approach preserved the integrity of mountain resources, helped mitigate risks and variability of output, and managed the resources to meet community needs, while excluding outsiders. Combinations of more intense pressure on the resources and the introduction of national government authority led in many areas to the states preempting land rights. (citation)

Different states have then allocated use rights in different manners. Some land has been put under conservation rules, some has been converted to private property under a variety of systems, and has been licensed for specific uses – all with varying degrees of enforcement. In most cases, these changes have not led to more sustainable use of the environment resources, nor to poverty alleviation in the mountains. Conservation uses have often displaced indigenous people, who were managing resources sustainably. Conversion to private property has often been associated with conversion of land to specified commercial or agricultural uses with mixed results for both the environment and poverty. 47 Licensing use regimes have led to exploitation of exportable resources, often in unsustainable ways and rarely with due consideration of the rights and livelihood needs of mountain people.48 Clear and proper definitions of land (or resource use) rights are most important in the High export value cases. That is where the terms of access to the exportable resources has to be defined and the controls on their over-exploitation imposed. And that is the source of most contention. With low-export values, there is more flexibility in the treatment of rights, and in the low-low case, this is much less important a factor than providing adequate standards of living and human services.

Command and control regulations of land use represent the typical image of government interventions. They involve direct regulation on uses of land held by others, prohibition of certain activities on the land, and limitations on things like pollution. While such policies have been criticized for being overly cumbersome and inefficient (especially when the regulations specify process and not outcomes), there are cases where they are the only option. 49 Such interventions may be the only way to prevent degradation and protect mountain people’s livelihoods. This may include prohibitions on release of toxic chemicals from mining, controls on road building activities in delicate areas, etc.

46 An interesting exception to this is the demilitarized zone separating North and South Korea, where a pristine environment has emerged because absolutely no activity is allowed in that area. 47 For example, in Central America, land titling schemes required potential land owners to convert mountain forest lands to commercial pasture or other agricultural use in order to secure title. 48 Government often grant rights to extract minerals and timber for very low fees to large firms. Adequate environmental protection is rarely required, and the bulk of the benefits accrue to the exploiting firm and the government (above or below the table). Little if the income finds it way back to the mountain people affected. This is as true in developed (West Virginia) as developing countries. 49 These policies can be easily abused as well, which is why they should be used as sparingly as possible and carefully monitored. Involvement of mountain people in their formulation and implementation is important in this regard.



Obviously, it is important to design such regulations carefully and be sure they are enforced. These policies will usually have the greatest impact on high in-situ value cases to control and manage the public goods aspects until adequate proxy markets can be established. In cases of high export value, it would be better to establish effective property rights systems and let market forces work, but in the absence of that, command and control policies may well be advisable if there is adequate enforcement, particularly on pollution and rates of extraction.

Creating markets for environmental services are more effective in many areas than command and control regulations. In these cases, governments foster the establishment of markets for environmental services or for limiting degradation. The basic principle is simple, the public good nature of many environmental services can be converted into a marketable good by setting a cap on the amount of a pollutant emitted or by rewarding stewards for assuring the quality of a service. Initial examples were the creation of sulfur dioxide emissions trading. This has since been expanded to other emissions, carbon sequestration, and water quality, which are more directly relevant to mountains. Depending on the circumstances, the degree of government intervention will vary. In some cases, such as the carbon sequestration project in Bolivia (citation), little direct involvement is needed beyond a general supporting framework permitting agreements that pay landowners for stewardship services. In other cases, such as the NYC water basin, government agencies were involved in the demand for services and the payments mechanisms. These policies are important in high in-situ value areas to bring the efficiencies of the market to what are largely public goods. Where there is high export values, these markets will offer a better way to balance usage. In low export value areas, they will be an important mechanism for assisting in providing sustainable livelihoods for mountain people performing stewardship services.

Taxes and fees are traditional government mechanisms to raise money and influence behavior. These can be used to pay for stewardship services where the public good nature of the benefits do not permit more market oriented approaches. Taxes can be imposed on pollution emissions, to mitigate degradation, or imposed on downstream users to pay for control and mitigation activities. Fees are often used where there is a specific service used, such as entry into national parks. The may also be imposed for the extraction of a natural resource, such as timber and mining. What is important here, as with creating markets, is that the taxes and fees collected by used to support stewardship and better management of the resource – staffing and managing national parks, controlling extraction and appropriate intermediation, such as reforestation. All to often such revenues are put into general revenues and do not contribute to payment for critical stewardship services provided by mountain people, both diminishing the extent of stewardship and of poverty alleviation. The presumption should be that the application and use of such fees should be the responsibility of local groups (citation).

Public payments for stewardship of public goods should reflect general agreement on the value of such stewardship which justifies the payments, either national or internationally. These payments should be market value based to the extent possible, but they may include some additional transfers to combat poverty or increase social services (if transferred to groups rather than individuals). Taxes and fees are best imposed on items of value where there is a willingness to pay. They also have to be designed in ways that



minimize distortions. In high in-situ resource situations, they can sometimes be used to substitute for market pricing of a public good, e.g. taxes on the emission of a pollutant or for entry into sensitive area. In this way, they can influence usage. In high export resources areas, they can substitute for pricing of the natural resource. What is critical is that the revenues so generated are returned to the mountain areas in the form of improved public services or transfer payments.

Provision of infrastructure is a critical function of governments in mountain areas, either directly or by means of supporting private investment. Transport infrastructure is very important for improving access of mountains people to markets and other benefits of lowland areas. At the same time, the location and management of infrastructure can have critical impacts on the development of mountain resources. Road can open up resources for export, and they are a major source of erosion and degradation. 50 Roads can also open up areas for settlement and exploitation. The pattern of infrastructure development is a major tool governments have for managing mountain area development and should be planned carefully.

Private interests that want to exploit mountain resources may build their own roads, or try to get governments to do so for them. In some cases this can be quite damaging to the environment. And as in the case of Antimina in Peru, it turned out that alternative methods (a slurry pipeline in that case) was more economic in the long run, but only adapted after pressure from national and international sources. These activities are important in all areas of limited physical and communications access. Since the design and construction of the infrastructure can have either positive or negative impacts on the environment and the well-being on mountain people, it is important that the infrastructure be sensitive to these issues. In particular, governments should consult locally on infrastructure needs and refrain from building roads simply to facilitate the export of mountain resources as a subsidy to the exporters.

Provision of social services are another essential role of governments that play a critical role in the alleviation of mountain poverty. Better education and health increases the capacity of mountain people to improve their standards of living and undertake new income generating activities. In many cases, the combination of formal education with local traditional knowledge can greatly enhance the ability of mountain people to participate in stewardship transactions. Some of these are sophisticated and require higher levels of understanding than may be found in traditional areas. Education can also enable mountain people to practice better environmental protection in their normal activities and identify and develop high-value niche markets (e.g. Switzerland). And it can equip them to gain livelihoods from migration where mountain areas are too poor or densely populated to support their populations at adequate levels. This is most important in the low-low areas, which need better social services and are usually the most deprived. Providing these services is justified on a equity basis and as a means of improving the prospects of people in these areas to increase their standards of living or to migrate. These services are of course important in all areas and essential for building the capacity among local populations to better manage their affairs and engage in more productive market transactions as the opportunities arise.

50 Cite source.



Transfer and welfare payments are also part of a government’s toolbox. They are often abused, but are an essential last resort for areas where income opportunities are meager and migration not feasible. These payments could be associated with basic stewardship activities as well. Programs to improve sustainable economic activities may be used to create more viable jobs and income earning opportunities. These may also contain a subsidy element to offset some of the inherent disadvantages of working in mountain areas. Such transfers could also reduce the incentives to migration or resource exploitation, which would have identifiable public benefits, even if not quantifiable. Unfortunately, most developing countries do not have resources for substantial transfers, and usually the mountain people lack the voice to obtain even a fair share. This deprivation may lead to conflict and participation in illicit activities. This are primarily for the low-low areas who are most in need. They may be of value for certain deprived groups in other areas as well.

INSTITUTIONAL INTERVENTIONS

: The institutional framework includes the structure of processes and procedures under which a society operates and the organizations that exist and function. This encompasses what is often called social capital. Some institutional interventions have already been addressed in the previous section, since the government is a major institution in most countries. This would include property rights issues, fiscal structures, and regulatory structures. This section will address institutions in mountains covering local participation in community decision making, formalizing relations between upstream and downstream groups, specific agencies dealing with environmental issues, and methods for monitoring environmental impacts of mountain activities and stewardship.

Local participation is a very important means of involving local mountain people in issues of importance to preserving mountain environments and improving their well-being. It enables them to express their voice and to strengthen community management of their resources. In some areas, local communities have come together on their own to institute better community management (Thai highlands case) with the acquiescence of the national government. In some cases such activities are actively encouraged (Indonesian decentralization sort of), and unfortunately in other cases, government discourage such local initiatives. Where local participation is strong, there are generally positive impacts on both environmental sustainability and standards of living, as people take responsibility collectively for their own long term interests. The capacity to engage in varieties of local participation is very important for organizing market based stewardship activities and for assuring equitable distribution of returns. These institutional developments are most important in areas of high in-situ values and provide a means of organizing local groups to recognize the value of the environmental services and to better realize their value through market or other interventions (Nepal trekking association). Participation is important in all areas as a way of getting people to work together to express and eventually achieve their goals. Local knowledge and local commitment have proven very important in motivating local success.

A framework for formalizing upstream-downstream relations is very important in this context. This involves institutions for overcoming the mutual distrust that arises between people in those two areas, for enabling the design and implementation of agreements, and for monitoring results and enforcing agreements. Some of these institutional



arrangements can be informal and spontaneous. Others rely on a government structure, particularly for enforcing contracts. As the case studies above demonstrate, a wide variety of arrangements have been created depending on the characteristics of the situation and the people involved. What is important is that both parties can have adequate confidence that the other side will perform as agreed and that the results can be monitored. These arrangements are obviously easier to create where there is common culture and language. The role of the government in providing security and fair treatment of all parties is also a major factor. This is also an important factor for high in-situ value areas, which needs these capabilities to negotiate deals for their environmental services.

Agencies dealing with the environment play an essential role in promoting environmental sustainability. They represent the environmental concerns of the population at large and provide specialized programs and knowledge about environmental sustainability. These agencies can help design and implement stewardship programs, pay those who provide stewardship services, and monitor results. These agencies can also provide essential research about ways to improve sustainability and improve income opportunities in mountain areas. Such agencies are often underfunded in developing countries, and some of the environmental fees and taxes collected for mountain environmental services should help fund their mountain activities. This capacity is important in any area with high value resources. It is important to establish the actual value of the resources and the costs of using them. Such an independent agency is important for establishing markets for many environmental services and for assuring the appropriate EIS processes for export resources.

Monitoring environmental impacts and results is critical to the success of any of the stewardship and most of the regulatory programs examined above. Often, it is the environmental agency what would be responsible for monitoring, especially if the government had established a governing regulatory structure. However, for many of the other agreements reached, the monitoring was done by local agencies of the parties themselves. In some cases the impacts are sufficiently obvious that formal monitoring is not needed, but in most cases, the sources of damage and the benefits are diffused across a large number of locations and actors, necessitating formal monitoring. This has similar importance to the previous intervention.

MARKET INTERVENTIONS:

One of the most important recent innovations in environmental management has been the explicit introduction of market mechanisms to promote sustainable environmental activities. In addition, many of the causes of degradation have resulted from market failures and imperfections. Improving access to markets under the right circumstances is the most important engine for improving incomes and reducing poverty. In this section we will look at several key market institutions that are important for enhancing environmental sustainability and reducing poverty in mountain areas. Much of this follows directly from the previous analysis, particularly governments creating the conditions of security, property rights, and rules of behavior and contracts tha t allow markets to function. In the section we will focus on identifying and quantifying environmental goods and services, valuing environmental services including full costing of both costs and benefits, and establishing markets for such goods. These are all critical for improving the efficiency of protection and use of high in-situ resources, and for



assuring that resource extractions pay the full value of the costs they impose. In addition, improving market interventions will greatly enhance to possibilities for increasing the incomes of the poor living in mountains as they are offered more opportunities to be compensated for their stewardship services.

Identifying and quantifying environmental goods that do not have the usual private good nature of normally traded commodities is a crucial first step. A tree is readily identified as a commodity – timber. It is not nearly so readily identified as an economic good when it is part of a system which regulates water flow, manages siltation, or provides recreational services. Because of the public good aspects of these services and the fact that they cannot be segmented into individual chunks that can be traded in a conventional marketplace, it is much more difficult to conceive of them as goods which can be treated as marketable. Recent advances in the understanding of the role and functioning of ecosystems in providing valuable services and identifying clear benefits from environmental systems have found ways of quantifying these services in ways which allow use of market based systems. Since these environmental goods are not separable, various virtual systems have been developed to measure the benefits, roughly assign amounts to various beneficiaries and attribute ‘production’ to stewards.

For example, in the case of the NYC watershed, a group of upstream farmers (stewards) could be identified as contributing to clean water flow by virtue of certain agricultural practices.51 And the downstream users of the water could be identified as those who did not have to build an expensive water treatment plant to get clean water to their taps. As in most such cases, careful monitoring of a range of steward activities and of the quality of the water flow is necessary for such a market to function properly. In this case, the beneficiaries had to act collectively and deal with the stewards, who acted individually, but in the context of an organization. In other cases, environmental goods are ‘created’ by assigning limits to pollution and encouraging trading of permits. In this case the good is the absence of a bad, which results in clean air.52 And there are other examples of creating environmental goods and services based on the benefits of maintaining normal ecosystem functions.53

Valuing environmental services follows from identifying and quantifying them and is necessary to negotiate transactions. Since many of these good do not trade in a normal market, regular supply and demand forces are not available to establish a price. A variety of other mechanisms have been developed, such as establishing the costs of remediation without the service (building a water treatment plant in the case of the NYC water supply), costs of supplying the stewardship (the Bolivia sequestration case?), imputed value from surveys, and other forms of estimation. In the end, the pricing is usually negotiated by the supplier and user groups, often with the intermediation of the government or environmental agencies. In some cases, full costs are directly borne by the beneficiaries. In some cases where the benefits are much broader, intermediary groups intervene and provide some payments in the name of the public good, either

51 These include both positive actions such as care of stream margins and negative actions such as not using certain fertilizers and pesticides. 52 A deeper question is whether the consumer has a right to clean air in the first place, in which case, the polluter should pay. 53 Reference study on environmental services.



governments of non-governmental agencies such as TNC. The valuation depends on a number of factors, including the income of the beneficiaries and relative political and economic power. Where beneficiaries are poor, their direct ability to pay would be limited, and government additions may be necessary. This is not really a case of welfare, but of providing necessary public services, such as clean water or air. Where the stewards are poor, the payments need to be adjusted to assure adequate livelihoods, real incentives to perform the stewardship services, and to discourage cheating.

Establishing markets for environmental services depends on the circumstances. Where reasonably well functioning market structures exist and the services can be formulated as an economic good, such as trading pollution rights. These systems are also constructed to reduce the overall level of pollution over time as efficiently as possible. Establishing market systems for many of the environmental stewardship systems prevalent in mountains is more difficult. Most to the services are the result of maintaining the integrity of mountain ecosystems, preventing degradation, and restoring degraded areas. In these cases, it is usually necessary to work with communities in mountains to gain their support for the stewardship activities needed. That may involve assuring community control, providing adequate incentives in a combination of market and traditional forms, and managing access to resources.

Where there are competing demand for export of commodity goods, it is usually necessary to develop joint arrangements that allow a reasonable amount of exports which maintaining the integrity of the mountain ecosystems to provide the needed resources. One important factor would be to charge the extractors for the negative impacts they cause to the provision of other services, through various usage fees, etc. Some of this has been attempted in forest areas, but with mixed success.

In the end, it is clear that the whole range of interventions described above will be needed to improve mountain environment sustainability and to reduce poverty by restraining the depredation of mountain resources that reduce the long term income potential of mountain dwellers and by increasing their income potential from providing services. The mix needed will depend on the circumstances, levels of wealth, and the institut ional capacity of people involved – both upland and lowland.



CHAPTER V: PROGRAM OF ACTION

ACTION PROGRAM:

Priorities for action to conserve mountain ecosystems, and to address the challenges of sustainable development in mountain regions have been developed over a period of years through highly participatory processes. The World Commission on Environment and Development in its 1987 Report: Our Common Future, identified the importance of sustainable development and outlined an action program. That program was picked up in the 1992 UNCED conference, where Chapter 13 of the Earth Summit’s Agenda 21 focused on mountains. The theme was picked up by many others. The first NGO Consultation in 1996 on the Mountain Agenda, organized by The Mountain Institute and hosted by CIP brought together some 120 mountain NGO leaders from nearly 40 countries with two specific objectives: (1) Develop consensus on a prioritized action plan for conservation and sustainable development in mountain regions; and (2) create an ongoing forum of mountain NGOs, research organizations, governments, private sector, and individuals and institutions concerned with mountains to share information and best practice. Since the first consultation, the UN Food and Agriculture Organization (FAO), as focal point for the Earth Summit’s Agenda 21 Chapter 13, “Managing Fragile Ecosystems: Sustainable Mountain Development” has convened a series of meetings, including NGOs and other UN agencies, to continue to address and report on progress during regular meetings of the UN Commission on Sustainable Development. As momentum has grown through these various for a, consensus has emerged regarding these priorities, which were reaffirmed recently at meetings such as the Global Mountain Forum in Chembery, France in 2000, the World Mountain Symposium in Interlaken, Switzerland in 2001, and the launch of the International Year of Mountains at the UN in late 2001. These priorities can be summarized as follows:

s Programs that alleviate poverty and address social inequities facing mountain communities should be supported and implemented.

s Globally significant biological diversity and watersheds should be conserved.

s Mountain communities, especially women, should be involved in decision affecting their lives and the resource base on which their livelihoods depend.

s Mountain-specific policies and laws representing the needs and interests of mountain communities should be developed and implemented with full participation of stakeholders.

s Innovative financing mechanisms should be implemented to ensure that an equitable share of benefits from resource outflows is allocated to mountain communities in ways that provide incentives for conservation.

s Partnerships and collaboration should be promoted between government and local people, public and private sectors, upstream and downstream communities, and across boundaries.

s Traditional mountain economies, sustainable livelihoods and small-scale production systems must be supported through improved access to markets.

s Increased levels of ecotourism demand that governments, local communities, and NGOs collaborate on strategies that minimize cultural and environmental impacts.



s Indigenous knowledge systems and cultural heritage should be recognized and promoted as essential resources in achieving sustainable mountain development.

s The sacred and spiritual values of mountain landscapes should be recognized as a valid basis for conservation of mountain environments.

s Integrated and applied mountain research should receive more financial support and continue to expand in scope and impact.

These conclusions accord well with the lessons that emerge from our analysis and case studies.

In the Low-Low case, we saw the need for interventions that center on appropriate technical packages to improve subsistence livelihoods and minimize environmental degradation, the need for restoration of degraded areas, and in worst case areas, for welfare payments and/or subsidies.

In all cases where the economic value of resources justifies conversion for export to markets, there is a need to apply conventional approaches to mitigation of social and environmental impacts as a minimum standard, through environmental impact assessment, and careful attention to implementation of recommendations.

Where in-situ environmental services are valued, there is a wide range of policies and approaches that can be drawn upon to ensure that ecosystems are preserved, and their environmental services can be continued on a sustainable basis: parks and protected areas can become sustainable through fees, debt- for-nature swaps, or any of a series of transfer payment mechanisms.

Most important, our analysis has shown that the greatest conflicts arise in cases where both environmental services and economic conversion values are high, and where there is a need for trade-offs. Even where the private sector has complied with regulations and has carried out required environmental assessments, compliance with this minimum standard is sufficient only for cases where in-situ environmental services and intact ecosystems are relatively low in value. Where in-situ environmental service values are high, such conventional approaches are still necessary; but they are not sufficient to deal with cases where trade-offs must be made. In these instances, additional mechanisms must be brought to bear. These may take the form of additional legislative, regulatory, enforcement frameworks; or they may involve special transfer payments or compensation for restoration, or for lost services. Increasingly, market based approaches are being conceived to help achieve such trade-offs efficiently. Supervision is still needed to assure that equity needs are also respected.

For the development community and the environmental community, the cases of high economic potential with low environmental values, and of high environmental values with low economic potential require continuing vigilance to ensure that best practices are applied. In the case of environmental values, financial support for NGOs and local communities can go a long way to ensure that such vigilance is maintained. For economic potential, corporations need the assurance of a level playing field, and the ability to pass on higher costs to consumers. This is not a serious burden, as such costs typically add no more than 2-5% to the costs of production. Thus, while these cases



require serious attention, it is clear that there is a great deal of best practice to draw upon in choosing how to manage them.

That is not the case for situations where low environmental and economic values exist together. These areas have tended to be neglected by development agencies, governments, and the NGO community as well, and are in greatest need of special assistance for poverty alleviation and welfare efforts.

Finally, the case of high economic and environmental values invariably requires trade-offs. To make such trade-offs in an informed manner requires difficult and complex calculations. This must begin with appropriate valuation, considerations of political and economic equity (especially regarding property rights), bringing multiple stakeholders to the table (and keeping them there), and application of multiple management regimes. In the best cases, such trade-offs have worked because good-will and trust has been built up over time, and because representatives of government, the private sector, and civil society have come to understand and respect each others interests and obligations as legitimate.

CONCLUSIONS:

TBD



Table 2: Mountain Relief Classes

Revised Relief Classes Total Area

(Mkm2)

Runoff (km3/y)

Runoff depth

(mm/y)

Population (Mil)

Population density (p/km2)

A. Lowlands (1-7) 82.40 20329 246.71 3301.8 40.07 B. Upland Plateaus (8-10) 5.76 645 111.98 159.0 27.60 C. Low Mountainous (11-12) 25.51 10626 416.54 1368.1 53.63 D. High Mountainous (13-15) 19.33 6545 338.59 870.7 45.04 EEE. Mountain Areas (8-15) 50.60 17816 352.09 2397.8 47.39 Total 133.00 38145 286.80 5699.6 42.85

Revised Relief Classes (percent)

Total Area

(Share)

Runoff (Share)

Runoff depth

(relative to mean)

Population (Share)

Population density (Relative to mean)

A. Lowlands (1-7) 0.62 0.53 0.86 0.58 0.94 B. Upland Plateaus (8-10) 0.04 0.02 0.39 0.03 0.64 C. Low Mountainous (11-12) 0.19 0.28 1.45 0.24 1.25 D. High Mountainous (13-15) 0.15 0.17 1.18 0.15 1.05 EEE. Mountain Areas (8-15) 0.38 0.47 1.23 0.42 1.11 Total 1.00 1.00 1.00 1.00 1.00

world development report 2003 dynamic...

Documents