Right investment in environmental services can lead to poverty reduction

Scientists recommend realistic, conditional, voluntary and pro-poor rewards for environmental services and find that in-kind payments may be more beneficial than cash

Rewarding Upland Poor for Environmental Services (RUPES) is a long-term research program dedicated to developing practical environmental services schemes that can be adapted to work in different countries with different circumstances. The goal of this program is to reward poor people for their work in protecting environmental services and, at the same time, come up with development programs that alleviate rural poverty and protect the natural environment. This is done in a balanced way that ensures effectiveness, efficiency, fairness and support to the poor people. A study recently carried out in Indonesia, the Philippines and Nepal outlines the key issues associated with the design and implementation of Rewards for Environmental services (RES).

Scientists from the World Agroforestry Centre (Beria Leimona, Laxman Joshi and Meine van Noordwijk) developed and explored two propositions that would meet the conditions necessary for alleviating poverty and enhancing environmental sustainability. The propositions stipulated were: to provide individuals who protect environmental services with cash incentives, and to provide them with non-financial incentives such as social, human and physical forms of capital. The project was therefore to determine which of the two propositions would lead to a significant reduction in poverty, and to examine the expected non-financial benefits received from participating in the scheme. In addition to that, the study also aimed to encourage scientists and policy makers to focus on balancing trade-offs between poverty and conservation so as to receive maximum environmental benefits.

Cash payments are viewed as being flexible as they can be converted into local goods and services prioritized by the receiver. However, money given to individuals’ usually ends up being used for the wrong reasons, leaving no long-term benefits for their own livelihoods. “The first proposition would only work if the scheme involves upstream (rural) providers of lower population density relative to downstream (urban) beneficiaries. The downstream beneficiaries should also have higher income, the ability and willingness to pay compared to the upstream providers,” said Beria Leimona. “In addition to that, the environmental services are to be non-substitutable, sustainable, worth buying and efficient with low transaction costs.”

Therefore, using this method would prove difficult to achieve the desired results given the population and income structures of the downstream and upstream communities in Asian cases. For instance, the ratio between the income levels of the upstream and the downstream is quite low and in some cases the upstream communities may have slightly higher income than the downstream communities. This can be attributed to the fact that the upstream communities reside in the highlands thus get their income from their agricultural produce. “This method would best be used in the early stages of implementation, enabling practitioners to avoid useless investments and over expectations of alleviating poverty and retaining environmental services,” pointed out Leimona.

According to the scientists, the second proposition on non-financial benefit, proved to be the best method to use as it matches the people’s needs and expectations and also extends to the community as a whole, not just the poor. This is because the scheme provides investments in schools, health centre’s, water pipes, and even strengthens and instills new skills that in the end benefit all. Factors that contribute to poverty were also considered, for example, with human capital, lack of knowledge and access to higher education are contributing factors. In the case of physical and financial capital, poorly maintained roads and insufficient land contribute to poverty. ”Obtaining information about all the factors which encompassing livelihood capital - not just financial - - will help practitioners to design better pro-poor reward schemes,” says Leimona.

The study recommended reward for environmental services schemes be given four attributes, i.e. realistic, conditional, voluntary and pro-poor. Realistic means that the benefits gained by both the buyer and the seller need to be tangible and sustainable thus reducing and avoiding threats to the environmental services that are likely to occur in the absence of further intervention. When it comes to pro-poor, the program should include fairness aspects, such as equitable access, decision making and impacts on all actors, as well as ensuring the rewards for environmental services are positively biased towards poor stakeholders. “Overall, the criteria ‘voluntary’ and ‘pro-poor’ for establishing rewards for environmental services are the most important issues for local communities. This is because individuals get involved by choice and are involved in internal and external decision-making processes,” noted Leimona. Furthermore, he ‘conditional’ aspect of the scheme is a way of ensuring transparency in the rewarding processes such as when they should be granted on not. Conditionality helps in solving local problems about voluntary participation thus making the process more effective. “Intermediaries and buyers also play a crucial role in the scheme as they ensure it is realistic and of importance to the poor,” declared Leimona.

One of the constraints faced by practitioners in the developmental stages is that the poor may be excluded from such schemes as they may not qualify as providers. This is as a result of lack of or ownership of small pieces of land, hence they receive smaller portions of benefits or none at all compared to people who are well-off. The laborers may also lose their jobs as the scheme may provide land-use systems that require limited labor. In addition to that, since the scheme is area based, distribution of resources may be local thereby enhancing the differences in wealth status.

There have been numerous efforts to increase environmental services and alleviate poverty, and rewards for environmental services have the potential to be one of the best ways to achieve this. This study’s results can contribute to ensuring fairness and efficiency in providing rewards for environmental services, across the world.