Environmental Services

Environmental services originate in natural assets (soil, water, plants, other living organisms and the atmosphere) providing mankind with economic, financial, ecological and cultural benefits. More often than not these benefits are taken for granted. The hydrological services provided by forests, such as clean and regulated water flow, and reduced sedimentation, for example, are only noted when natural disasters, flooding, siltation of reservoirs and scarcity of water occur as a result of the removal of forest cover.

That such services should be lost despite their value is easy to understand: land users typically receive no compensation for the services their land generates for others, and consequently do not take them into account in making land-use decisions. Recognition of this problem has led to efforts of developing systems in which land users are compensated for the environmental services they generate. This typically would create additional income streams for land users who are often poor and would make benefits of environmental and natural resources explicit. The World Bank is assisting various countries in this endeavor. Thus far this work is mostly focused in Latin America although initiatives in other regions are currently being explored.

Capacity Building
 
The Bank is also aware of the need for capacity building and training and has developed a two week training course for senior level technical staff of government agencies on environmental services. Non-governmental and private sector organizations are encouraged to participate. The training course is very much a hands-on and case study centric exercise. The where, how and why specific tools work or do not work is presented in an intensive participatory workshop environment. The benefits envisioned are increased generation of valuable services to the country and their protection. With an eye towards financial sustainability payments for environmental services should be made privately viable where possible.

For more information, e-mail Gunars Platais at gplatais@worldbank.org or Stefano Pagiola at spagiola@worldbank.org.

Examples of Environmental Services

Brazil

In Brazil, the Prototype Carbon Fund is supporting an innovative mechanism through which biodiversity conservation benefits are expected. The Plantar greenhouse gas emission reduction project is expected to enhance biodiversity conservation in inexpensive, quantifiable ways, providing an additional benefit to project investors. The Plantar properties that will produce charcoal for pig iron smelting with new plantations of high-productivity, clonal Eucalyptus stands, also support cerrado savannas in various stages of recovery. The global importance of cerrado ecosystems is high. Plantar's most important contribution to biodiversity conservation is its existing system of fire surveillance and control, which is allowing cerrado remnants on its properties—and perhaps on neighboring properties—to partially recover their original plant and animal composition.

Costa Rica

Costa Rica has the most advanced system of payments for environmental services. Land users who protect natural forest or reforest their land receive payments of about US$50 per hectare per year. These payments are financed from energy taxes, the sale of carbon offsets, and the international donations for biodiversity conservation.

Ecuador

In Ecuador, municipal authorities in Quito, Cuenca and Pimampiro, recognizing the environmental services provided by surrounding ecosystems are allocating part of their revenues to financing protection activities in the watersheds from which they receive drinking water. The World Bank is assisting the government in the preparation of a project on payments for environmental services from private lands. The project is designed to work on varied ecosystems and expected to provide input to the further development of other such initiatives in the region.

El Salvador

El Salvador, who has gone through the disastrous effects of Hurricane Mitch and several earthquakes, demonstrated the importance of integrating natural resources management into the decision making process. The World Bank is assisting the country in the design of a project whose objectives are to enhance and protect the environmental services generated by El Salvador's natural ecosystems and conserve the globally significant biodiversity they contain, through the development of a system of payments for environmental services and the consolidation, expansion, and restoration of natural protected areas