Payment for Environmental Services. Why is it important to have a national policy?
30/01/24 - Erika de Paula Pedro Pinto
low carbon | Environment | Politics | food safety | Land Use
Wenderson Araujo/Trilux - CNA/Senar System
Instrument has the potential to promote reconciliation between agricultural production and environmental conservation.
The relationship between climate balance, environmental quality maintenance and food production capacity is increasingly evident. Extreme weather events have led to crop losses that pose risks to food security. FAO estimates indicate losses in the global agricultural sector of US$ 123 billion per year between 1991 and 2021 caused by various disasters.1. On the other hand, for every dollar invested in preventive measures, rural families could obtain up to seven dollars in return in benefits and avoided agricultural losses [1].
Promoting the restoration of degraded areas, curbing deforestation, combating fires, conserving biodiversity, springs and soil quality, and adopting low-impact management practices are examples of actions capable of generating numerous environmental benefits and increasing the resilience of production systems. At the same time, the benefits generated are those that contribute to the balance of the climate and hydrological cycles, to the control of pests and diseases, and to reducing the risk of erosion and silting of rivers, among others.
Our ecosystems not exploited by human action, these benefits are generated naturally and are known as ecosystem services. Food, water, energy and income security depend on the maintenance of ecosystem services [2]. Therefore, considering that despite their intrinsic value, “ecosystem services"are being exploited in a predatory manner, the economic incentive that stimulates their recovery or maintenance is a fundamental strategy. Thus, when there is a human activity that promotes such benefits, we have the generation of "environmental services". In other words, when an individual or group invests efforts in the recovery and/or maintenance of the quality of the environment, they contribute to the generation of these services.
Economic incentives such as Payment for Environmental Services (PES) They therefore aim to change behavior to maintain or recover ecosystem services that were previously treated as free goods [3]. Through PSA, it is possible to reward, for example, a farmer for protecting his native vegetation or for recovering degraded areas [4].
In this context, the establishment of a public policy to guide such efforts, create clear guidelines, ensure fair sharing of benefits aimed at including vulnerable populations, and provide a secure legal environment to attract investment is essential. There is a large volume of resources available that could be channeled into initiatives that economically incentivize the provision of environmental services. The Paris Agreement, for example, has the support of large global investors who demand immediate action to curb global climate change and whose assets are in the tens of trillions of dollars [5].
In Brazil, it is estimated that around 80% of the carbon credits that could be generated by 2030 would be linked to forest restoration projects in degraded pasture areas. Such projects are capable of removing carbon from the atmosphere in addition to generating other benefits related to socio-biodiversity, water security, etc. [6]. Going further, based on Brazil's forest restoration target of 12 million hectares, it is estimated that 1 to 2,5 million direct jobs will be created [7]. All this potential makes a legal framework for PSA in the country even more strategic.
The first bill aimed at establishing a National PSA Policy was created in 2007. At that time, social movements in the Amazon demanded public policies to improve living conditions in rural areas, as well as incentives for the proper use and management of natural resources with better economic use and low risk of environmental degradation [8]. It was in this context that the Rural Family Production Socio-Environmental Development Program (ProAmbiente) initially emerged, which became a federal policy in 2004. ProAmbiente foresaw PSA as one of the strategies capable of boosting sustainable socio-environmental development in the region. The need to create a legal framework led to the creation of the first bill (PL nº792/2007) aimed at establishing a National Policy for Payment for Environmental Services (PNPSA).
The PNPSA was only established in 2021 by Law No. 14.119 contemplating fundamental aspects to stimulate sustainability-oriented agriculture, such as:
- Safe legal environment
- Recognition of the role of the private agent in executing and financing projects, inducing voluntary markets and accounting for ecosystem services in the production chains linked to their businesses;
- Prioritization and recognition of indigenous peoples, traditional communities and family farmers in promoting sustainable development in their territories and in environmental conservation;
Creation of a Federal PSA Program that aims to promote, among other actions, the sustainable management of agricultural systems, agroforestry e agrosilvopastoral, as well as the recovery of degraded areas, contributing to the capture and retention of carbon, the conservation of soil, water and biodiversity;- Establishment of a National PSA Registry for the registration of public and private initiatives, ensuring transparency of information and with provision for data integration at different levels (federal, state and municipal);
- Recognition of Private Natural Heritage Reserves (RPPNs) as areas eligible for the provision of environmental services;
- Alignment with the Native Vegetation Protection Law (nº 12.651/12) regarding the opportunity to use public resources to compensate efforts to provide environmental services in Permanent Preservation Areas and Legal Reserves.
It is worth noting that the PSA agenda has advanced in recent decades at the subnational level, independently of federal law. However, after the approval of the PNPSA, regulations on the subject were drafted or instituted in the states of Maranhão, Minas Gerais, Pará, Rio Grande do Sul, Roraima, São Paulo and Tocantins. In addition, there are municipal initiatives that have not yet been mapped out.
However, Brazilian federal legislation on PSA still lacks regulation, which is the responsibility of the Secretariat of Bioeconomy of the Ministry of Environment and Climate Change (MMA). Considering the large funding gap in the country, especially for the PNPSA priority audience, and the vulnerability of production systems to the effects of climate change, it is essential that the federal PSA program be effectively established and that strategies to leverage public and private resources be made viable.
1 The estimates consider the following categories of disasters: storm, flood, drought, extreme temperature, insect infestation, forest fires, earthquake, landslide and volcanic activity.
References and Recommended Reading
[1] FAO. The impact of disasters on agriculture and food security: avoiding and reducing losses through investment in resilience. Food and Agriculture Organization of the United Nations - Rome, 2023.
[2] Joly, CA; Scarano, F.; Seixas, CS; Metzger, JP; Ometto, JP; Bustamante, MMC ... and Toledo, P. 1st Brazilian Diagnosis of Biodiversity and Ecosystem Services. São Carlos: Editora Cubo, 2019, 351p.
[3] Sant'anna, AC; Nogueira, JM Economic Valuation of Environmental Services: Increasing the Effectiveness of PES Schemes in Developing Countries? Journal of Agricultural Science and Technology, vol. 2, p. 1048–1057, 2012.
[4] Eloy, L.; Coudel, E. & Toni, F. Implementing Payment for Environmental Services in Brazil: paths for critical reflection. Sustainability in Debate, Brasília, vol. 4, n.1, Jul/Dec 2013, 21-42pp.
[5] Gramkow, CO Big Environmental Push in Brazil. São Paulo, FES, 2019, 31p.
[6] McKinsey & Company. Voluntary carbon market has huge potential in Brazil. McKinsey, September 14, 2022.[8] Brancalion, PH, de Siqueira, LP, Amazonas, NT, Rizek, MB, Mendes, AF, Santiami, EL, ... & Chaves, RB (2022). Ecosystem restoration job creation potential in Brazil. People and Nature, 4(6), 1426-1434.
[7] Brancalion, PH, de Siqueira, LP, Amazonas, NT, Rizek, MB, Mendes, AF, Santiami, EL, ... & Chaves, RB (2022). Ecosystem restoration job creation potential in Brazil. People and Nature, 4(6), 1426-1434.
[8] FVPP – Living, Producing and Preserving Foundation. 2006. The history of the movement for the development of the Trans-Amazonian and Xingu highways. Brasília, DF; MMA (Ministry of the Environment).
ECLAC. Environmental Performance Assessments: Brazil 2015. OECD, 2016
OECD (2019), Biodiversity: Finance and the Economic and Business Case for Action. Report prepared for the G7 Environment Ministers' Meeting, 5-6 May 2019.
Pinto, EPP, Stella O., Moutinho, P. Green Finance: Brazilian Scenario. CEBRI, 2014.
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GLOSSARY
Protected area, covered or not by native vegetation, located along rivers or any watercourse. Their purpose is to preserve water resources, biodiversity and landscape, in addition to protecting the soil and ensuring human well-being.
Dynamic complex of plant, animal and microorganism communities and their inorganic environment that interact as a functional unit.
A voluntary transaction, through which a payer of environmental services transfers financial resources or another form of remuneration to a provider of such services, under agreed conditions, in compliance with the relevant legal and regulatory provisions.
Public authority, civil society organization or private agent, natural or legal person, national or international, that provides payment for environmental services.
Natural or legal person, under public or private law, or family or community group that, having met the eligibility criteria, maintains, recovers or improves the environmental conditions of ecosystems.
According to Decree 1.922, of June 5, 1996, it is a private domain area specially protected, on the initiative of its owner, through recognition by the Public Authority, for being considered of relevant importance due to its biodiversity, or its landscape aspect, or even for its environmental characteristics that justify recovery actions.
These are the direct and indirect contributions of ecosystems to the economy and human well-being, that is, benefits of nature for the population. They are classified into four categories:
1) Provision services (supply of goods for human consumption);
2) Cultural services (tourism, recreation, education, aesthetic appreciation of the landscape, etc.);
3) Support services (soil formation, nutrient cycling, primary production, etc.);
4) Regulatory services (regulation of ecosystem processes, such as water, climate, disease regulation, etc.).
Individual or collective activities that favor the maintenance, recovery or improvement of ecosystem services.
Composed of agricultural, forestry and livestock activities, carried out by planting trees in pastures during or after agricultural cultivation.
Forms of land use and management in which trees or shrubs are combined, in an intentional and planned manner, with agricultural crops and/or animals in the same area, at the same time (simultaneous association) or in a sequence of time (temporal association), to diversify production, employ the workforce, generate income, protect the soil and water, in addition to promoting the involvement of the local population.
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