PES (Payment for Ecosystem Services)
An ethical programme that supports landowners by replacing income from unsustainable activities (e.g.logging or palm oil), with income from forest protection and reforestation.
Program Area 9: PES: The Nakau Programme
Over the past 4 years Live & Learn have worked with project partners Ekos (http://www.ekos.org.nz/) to create a regional Payment for Ecosystem Services (PES) programme, which includes REDD+ activities. The Nakau Programme is performance based. Landowners implement project activities such as conserving the forest. Project performance is independently verified, and participants are only paid for achieving the results. Hence it is a low risk investment for donors or businesses who want to cause rainforest protection to happen. The Programme:
- Provides surety to investors and supporters by producing independently verified environmental outcomes - quantified as PES units that can be sold on voluntary markets to generate income
- Ensures that land owners receive a fair share of income, and that income is managed in a way that creates positive community development outcomes
- Supports the capacity and sustainability of project partners, including service providers and project owners, to make sure environmental and community benefits are enduring
- Assists project partners to market and sell PES units at a fair price
How does the Nakau Programme Operate?
Project Coordinators (e.g. an NGO) work with Project Owners (the land owners) to develop a project under the umbrella of a shared methodology. All projects within the Nakau Programme are therefore linked and benefit from reduced setup costs and opportunities to share IP.
Each project in the Nakau Programme is required to apply two methodological components:
A. The Nakau Methodology Framework covering all general and obligatory methodology elements (validated to the Plan Vivo Standard).
B. A ‘Technical Specifications Module’ for each activity that generates PES units; i.e. ecosystem accounting elements. (Validated to a recognised standard such as Plan Vivo, ISO or VCS).
The Nakau Methodology Framework sets benchmarks for landowner participation, including free prior and informed consent and fair distribution of benefits. It prescribes benefit-sharing arrangements for all project participants, including innovative governance and business models for managing PES benefits at the community level.
The Technical Specification module guides measurement and reporting of the environmental services (e.g. greenhouse gas abatement) from the project. Verification of monitoring reports allows the ex-post issuance of PES units (e.g. carbon credits).
PES units and unit sales
Individual project participants may market and sell their own PES Units (e.g. carbon credits). However the Nakau Programme can assist with marketing and sales, including aggregation of PES units and facilitating sales through online retail markets (e.g. crowd funding). The Programme has capabilities for targeted marketing efforts towards institutional investors (e.g. retirement funds), individual companies or retail markets.
In the interests of fairness and transparency the Nakau Programme introduces an open-book pricing model for project participants. The floor price of PES units is calculated by adding up the following:
- Project implementation costs (including service provider fees, license fees, regulatory costs etc)
- Opportunity costs (i.e. the Programme will at the very least replace the income that would otherwise have been earned through ‘business as usual’ activities)
- A ‘fair trade adjustment’ to ensure landowners receive fair compensation for the value of their resources
Nakau Programme structure
The ‘Nakau Programme Operator,’ is being setup as a wholly owned subsidiary of two not for profit NGOs (Live & Learn and Ekos), which foundered the Nakau Programme. The Programme Operator will own the shared IP for projects within the Programme, ensure Programme integrity and provide services such as capacity building, sales and marketing support and offer the potential for PES unit aggregation for large buyers.
The Nakau Methodology Framework prescribes the legal structure at the project level, including requirements for the Project Coordinator (service provider) and Project Owner (a legal entity through which the land owners participate).
Four projects are well progressed and expected to produce saleable PES units in 2015/16
- Drawa Community REDD+ Project: 6,000 Ha in Vanua Levu, Fiji. Main activities: (REDD+) Changing land use from logging to forest protection, and enhancing greenhouse gas removals through secondary forest recovery
- Loru Community Conservation Area Project: 350 Ha in Santo, Vanuatu. Main activities: (REDD+) Avoiding deforestation for copra production, regeneration of degraded forest and establishing agro-forestry plots to provide income and address drivers of native forest degradation
- Sirebe Community REDD+ Project: 2,000 Ha in Choiseul, Solomon Islands. Main activities: (REDD+) Changing land use from logging to forest protection.
- Boeboe Community REDD+ Project: 800 Ha in Choiseul, Solomon Islands. Main activities: (REDD+) Changing land use from logging to forest protection.
Replication and scalability
The Programme design priority was to create opportunities for project replication at least cost. New projects may to be added to the Programme without the need for new methodology development, so long as project proponents and the activity type meet eligibility requirements. Hence in the above examples, the Choiseul Projects have been fast-tracked by linking them to the Fiji (Drawa) project. Other organisations (e.g. NGOs) may become Project Coordinators in the Nakau Programme to establish new projects, subject to meeting entry requirements designed to maintain Programme integrity, and upon signing a binding license agreement that commits the participant to the Programme rules. The first ‘new’ Project Coordinator is the Natural Resources Development Foundation (NRDF) in the Solomon Islands, whom are developing the Choiseul projects.
Programme design also allows for scalability, for example as an instrument for moving from a project level approach to a ‘jurisdictional’ approach, which could include a whole Island or province. For example, a province could implement changes to land use policies such as further regulating or excluding industrial logging in conjunction with participation in the Nakau Programme. In this scenario the Nakau Programme would provide an instrument to facilitate performance based payments and ensure fair distribution of benefits to individual communities or landowners.