Costa Rica Payment for Environmental Services

Costa Rica Payment for Environmental Services
Name	Costa Rica Payment for Environmental Services
Native name	Pago por Servicios Ambientales
Established	1997
Location	San José, Costa Rica
Type	Environmental conservation program
Administered by	Fondo Nacional de Financiamiento Forestal

Costa Rica Payment for Environmental Services Costa Rica launched a landmark payment for environmental services initiative in 1997 that linked financial incentives to forest conservation, reforestation, and ecosystem protection. The scheme drew attention from actors such as World Bank, United Nations Environment Programme, Inter-American Development Bank, European Union, and Food and Agriculture Organization as a model for market-based conservation. Key Costa Rican institutions including MINAE, FONAFIFO, and civil society organizations like Asociación Nacional de Empleados Públicos y Privados participated alongside research bodies such as National University of Costa Rica and University of Costa Rica.

Background and origins

Origins trace to policy responses after deforestation spikes during the 1970s–1990s, negotiations linked to the Rio Earth Summit and commitments under Convention on Biological Diversity and United Nations Framework Convention on Climate Change. Costa Rican political leaders including figures from administrations of Óscar Arias Sánchez and Miguel Ángel Rodríguez supported reforms that engaged instruments like Ley Forestal 1996 and environmental finance mechanisms promoted by Global Environment Facility and World Resources Institute. Early pilots involved partnerships with Peace Corps volunteers, CARE International, and local NGOs such as Asociación Conservacionista de Monteverde.

Program design and mechanisms

The program paid landowners for defined services: carbon sequestration, watershed protection, biodiversity conservation, and landscape beauty for tourism. Contracts were structured with tenure verification via registries like Registro Nacional de Costa Rica and technical standards informed by Intergovernmental Panel on Climate Change methodologies and research at CATIE. Payment modalities included annual per-hectare stipends, incentives for conservation easements similar to models from United States Department of Agriculture programs, and reverse auctions piloted with support from World Wildlife Fund and Conservation International. Monitoring used remote sensing via Landsat, ground inventories guided by Food and Agriculture Organization protocols, and collaborative enforcement with agencies such as Servicio Nacional de Guardacostas and municipal authorities.

Funding and administration

Initial funding blended domestic and international sources: a fuel tax enacted through legislation linked to Ministerio de Hacienda revenue, transfers from national budgets overseen by FONAFIFO, and grants/loans from IDB, World Bank, KfW, European Investment Bank, and bilateral partners like GIZ. Administration rested with FONAFIFO in coordination with MINAE, provincial offices, and technical advisers from IUCN and The Nature Conservancy. Private sector engagement included carbon buyers from corporations such as Microsoft and BP in later voluntary market transactions facilitated by standards like Verified Carbon Standard and Plan Vivo.

Environmental and social impacts

Studies by University of Oxford, Stanford University, Princeton University, World Resources Institute, and Costa Rican institutes reported increased forest cover, carbon storage gains relevant to Kyoto Protocol mechanisms, and improved water regulation benefiting hydroelectric projects by Instituto Costarricense de Electricidad. Social impacts included income diversification for smallholders in regions like Guanacaste, Osa Peninsula, and Monteverde, with engagement from cooperatives such as COOPEGUANACASTE. The program influenced ecotourism growth linked to Costa Rica National Parks and organizations like SINAC (National System of Conservation Areas), contributing to livelihoods studied by Inter-American Institute for Cooperation on Agriculture.

Criticisms and controversies

Critiques by scholars from Yale University, London School of Economics, Boston University, and NGOs such as Global Witness questioned additionality, leakage, and equity, citing cases of perverse incentives similar to debates around REDD+. Land tenure conflicts involved indigenous territories recognized under rulings from the Inter-American Court of Human Rights and groups like Asociación de Desarrollo Integral de Territorios Indígenas. Allegations of irregular payments prompted audits by Contraloría General de la República de Costa Rica and debate in the Asamblea Legislativa de Costa Rica about transparency and benefit targeting. Technical critiques referenced measurement challenges described by IPCC and market design concerns noted by OECD analysts.

Implementation and case studies

Regional case studies documented outcomes in Guanacaste Conservation Area, Talamanca Range, Osa Conservation Area, and private reserves like Monteverde Cloud Forest Reserve. Pilot projects with Catholic Relief Services and CARE International tested integration of agroforestry with payments in coffee landscapes near Monteverde and pastureland transitions in Alajuela Province. Collaborative research with Durham University and University of Cambridge evaluated social safeguards and gender impacts, while adaptive management incorporated lessons from Costa Rica Institute of Technology technical extension programs.

Influence on international policy and replication

The Costa Rican model informed REDD+ debates under United Nations Framework Convention on Climate Change, influenced country programs in Mexico, Colombia, Philippines, Vietnam, and pilot schemes in Ethiopia and Tanzania. Multilateral dialogues at forums like UNFCCC COP meetings, Convention on Biological Diversity COP, and policy briefs from World Bank Group and UNDP disseminated design lessons. Academic citations in journals such as Nature Climate Change and Ecological Economics chronicled replication efforts and adaptations in payment schemes supported by Global Green Growth Institute and philanthropic funders like Fondation Bertelsmann and Gordon and Betty Moore Foundation.

Category:Environmental programs