Paying farmers to save the planet

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Rewarding farmers for good environmental stewardship is one way to shift to a sustainable green economy. Photo: N. Palmer (CIAT)

by Vanessa Meadu

A central question at the current Rio+20 negotiations is how to shift to a sustainable, green economy.

One way is to place an economic value on environmental goods and services and encourage a shift towards more sustainable activities by paying or rewarding those who practice good stewardship. In the agricultural sector, this means paying or rewarding farmers who adopt good practices. Payment for Ecosystem Services, or PES, is an innovative market-based approach currently being used around the world to encourage such shifts.

An example PES scheme has beneficiaries of environmental goods and services, such as a company that uses freshwater, paying the custodians of those environmental services (such as upland farmers who operate in the watershed) to adopt or continue agricultural practices (such as integrated soil fertility management or conservation agriculture) that keep that environmental service healthy. The benefits to the users are clear: water is cleaner from the source, and therefore less costly to filter and treat. The overall quantity of water flow may also increase. There can also be multiple benefits to farmers: not only do they get compensated for their efforts (in terms of cash or investments in infrastructure, health, education) but can they also ultimately benefit from the use of more sustainable agricultural practices, which can increase crop yields, be more resilient to drought or heat, and therefore diversify and improve income opportunities and help farmers adapt to a changing climate.

It's a great theory, but can it work?

Dosteus Lopa of CARE International, shared experiences from the Uluguru Mountains in Tanzania. In this region, the project on Equitable Payments for Watershed Services (EPWS) has been working with the local water authority in Dar es Salaam, Tanzania’s capital city, to help reward and compensate the upland farmers to adopt agricultural practises that reduce sedimentation and improve water quality to the downstream users. A similar scheme has also been implemented by the Regional Environmental Center for Central Asia in Kyrgyzstan. Both projects report a range of common challenges including dealing with property rights, building knowledge and capacity of farmers to use the new practises, designing transparent and fair payment schemes, and properly identifying and involving all the stakeholders along the value chain.  There must also be proper institutional structures, laws and policies that allow these schemes to be set up.

Rewards come in various shapes and sizes. In Kyrgyzstan, implementers had to deal with downstream water users who were not willing to make cash payments – because they didn’t have any money. In that case, residents preferred to pay via their labour, working for several days in exchange for receiving the environmental service.

While the transaction costs of setting up these schemes can be high at the outset, including need for detailed environmental and socioeconomic assessments and monitoring, the Tanzanian and Kyrgyzstani experiences show that PES can indeed be successful with the right efforts and investments, particularly as more companies adopt corporate social responsibility (CSR) policies. Better knowledge sharing is needed to reduce the costs and make projects easier to set up and more profitable.

Sara Namirembe of the World Agroforestry Centre shared experiences from their initiative on Pro-poor Rewards for Environmental Services in Africa (PRESA) which brings together people working in several PES projects to share lessons and exchange strategies for successful implementation. Balancing fairness and efficiency is the main challenge she has seen across different programs. As well, buyers want proof that they will actually receive what they are paying for; that is, that the land use practices will deliver the anticipated environmental services. This is a necessary condition for buy-in. Programs such as PRESA are helping to build a solid base of knowledge and enhance the capacity of local groups that want to implement, and perhaps benefit from, PES.

PES shows that environmental and economic goals don’t need to be at odds. PES systems can be equitable and pro-poor, supporting economic development as well as protecting ecosystems. Decisions made at Rio+20 must help support more projects that exemplify what a green economy can achieve.

The CGIAR Research Program on Climate Change, Agriculture and Food Security (CCAFS) is covering the Rio+20 Conference live between 12 - 22 June. Read the latest stories related to agriculture and food security from the conference. To get the latest updates follow both CCAFS on Facebook and Twitter and Agriculture Day Facebook and Twitter. Join the conversation about agriculture and food security during at Rio+20 using #Rio4ag on Twitter.

Vanessa Meadu is the communications manager for CCAFS.