Environ Manage (2006) 38:562–571 DOI 10.1007/s00267-003-3032-4
Costa Rican Environmental Service Payments: The Use of a Financial Instrument in Participatory Forest Management Miriam Miranda Æ Carel Dieperink Æ Pieter Glasbergen
Received: 18 November 2002 / Accepted: 27 February 2004 Ó Springer Science+Business Media, Inc. 2006
Abstract The core element of the Costa Rican forestry policy is a financial instrument called the environmental service payment. This instrument rewards forest owners for the environmental services (the mitigation of greenhouse gases, the protection of watersheds and scenic beauty, and the development of biodiversity) their forests provide. In this article, the experiences with this new instrument are analyzed by focusing on the way interests are represented and access is granted, the openness of information exchange, whether social learning occurred, and whether decision-making authority is shared. The analysis is based on a survey conducted in the Huetar Norte Region and on in-depth interviews with the major stakeholders. The Costa Rican case indicates that financial instruments can be used to share responsibilities and that stakeholders can successfully cooperate on forest issues. It also shows that such a participatory approach is only promising if certain cultural, economic, organizational, and political conditions are met. Keywords Forestry management Æ Participatory management Æ Natural resources management Æ Financial instruments Æ Incentives Æ Costa Rica Æ Environmental Service Payments
M. Miranda (&) Universidad Nacional, Centro Internacional en Politica Economica para el Desarrollo Sostenible (CINPE) P.O. Box 555-3000, Heredia, Costa Rica E-mail:
[email protected] C. Dieperink Æ P. Glasbergen Copernicus Institute for Sustainable Development and Innovation, Chair of Environmental Studies and Policy, Utrecht University, P.O. Box 80115, 3508 TC Utrecht, The Netherlands
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Introduction Traditionally, the mainstream approach to natural resource management was inclined to take a narrow view and has tended to be centralized, bureaucratic, and exclusionary (Kapoor 2001). Forestry management proceeding with a narrow set of perceptions and interests followed this general pattern. States annexed forests that were privatized later on with the aim to convert them into private agricultural and pasturelands and to attract investments of the multinational agro-industrial companies. Under the traditional paradigm, forests were barriers for growing agricultural interests because export of cash crops and meat should improve positions on international markets. Thus, the prime objective of forest managers was to log the forest as quickly as possible, and woods were marketed without including their ecological values in the market prices. A tremendous loss of forest ecosystems occurred, especially in the developing world (Redclift 1984, 1987). This process could continue, for scientific knowledge on the value of ecosystems was hardly developed. The importance of genetic biodiversity and the role of forests in watershed protection and carbon sequestration were not recognized. More cautious indigenous knowledge on nature was neglected. Government organization and civil society reflected this general pattern also. Forestry organizations were suboffices of agricultural agencies and operated rather isolated from NGOs working on the same issues. Recently, a new, more horizontal and participatory approach emerged in natural resources and forestry management (Venter and Breen 1998; Imperial 1999; McDuff 2001). Local communities, environmental NGOs, business organizations, and researchers do play a role now, in addition to the traditional loggers, transporters, and wood
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processors. Key words characterizing this new approach are representation and access, information exchange and social learning, and shared decision-making authority (Moote and others 1997; Wells 1998, p. 825). Costa Rica is one of the countries in which participatory initiatives have been intensified since the 1992 Rio Conference. The core element of the Costa Rican forestry policy is the environmental service payment (ESP). This financial instrument rewards forest owners for the environmental services (mitigation of greenhouse gases, watershed protection, protection and development of biodiversity, and the protection of scenic beauty) their forests provide. The introduction of the ESP is part of a participatory approach as nongovermental organizations (NGOs) play an important role in the formulation and application of the instrument. In this article, we analyze the application and perceived social–economic effects of the ESP in order to come to conclusions concerning the conditions that enhance the effectiveness of such financial instruments in participatory forestry management. To collect empirical evidence for this article, a survey was done among local farmers in San Carlos and Sarapiqui in the Huetar Norte region in northern Costa Rica, the area that is the most important receptor of the ESP. A random sample of 72 farmers (with 95% confidence) was taken from the official list of beneficiaries of the ESP. The questionnaire used was improved after some pilot tests in the Central Valley and contained questions on socioeconomic characteristics of the beneficiaries, knowledge of environmental services, possibilities of accessing the ESP program, the role of the state and NGOs, technical assistance, investments done, and perceived benefits and constraints. Additional in-depth interviews about the history and application of the ESP were held with representatives of governmental organizations (MINAE, the Ministry of Environment and Energy; the central and regional offices of SINAC, the department of MINAE responsible for the management of the 11 National Conservation Areas and OCIC, the Costa Rican Office for Joint Implementation), NGOs (FONAFIFO, FUNDECOR, CODEFORSA), and business (the National Forestry Office, the Costa Rican Forestry Chamber, the hydropower company Electrica Matamores) being the key stakeholders of the ESP. Files of MINAE offered socioeconomic and physical data of farmers and farms. The Costa Rican ESP is an innovative landmark in a longer process of change in the country’s forestry management, which is sketched in the next section. A detailed characterization of the ESP, its application, and its effects follow. We conclude the article with a reflection on the broader meaning of the Costa Rican experiences.
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Innovation in Costa Rica’s Forestry Management Originally, the Costa Rican economy was mainly based on agriculture in the central valley of the country. Traditional forestry management resulted in a colonization of peripheral forests, which were turned into pasture and croplands. Population growth, the ambition to integrate Costa Rica in the international agricultural and meat markets, and active government policies triggered this process. Between 1950 and 1994, Costa Rica deforested 37% of its territory. Growing awareness of the detrimental effects of logging on natural resources gradually changed government policies and forest management since the 1960s. Four forestry laws followed the creation of a first national park. Though the aim of the first 1969 forestry law was to stop deforestation by the introduction of an incentive system, it still allowed land use change. Moreover, because of lack of capacity, it took 10 years before the incentive system was operationalized in an Income Tax Deduction Programme (1979) and a Soft Credits Programme (1983). Table 1 gives an overview and characterization of these financial instruments. The 1986 second forestry law officially introduced forest reserves and restricted land use change because it forbids logging in areas 20 m alongside a water channel. Incentives like the Forest Payments Title (1986), the Fund for Municipalities and Organisation (1986), and the Forest Advance Payment Titles (1988) were based on this law. The third law of 1990 and the 1996 addendum to this law were the legal bases for the Forest Management Payment Titles (1994) and the Forest Conservation Certificates (1996). Ongoing deforestation motivated the introduction of these new incentives. Existing instruments could not mitigate the too-high opportunity costs for forestry activities (if compared to crops and pasture). Some instruments also had perverse effects. The Forest Management Payment Titles not only stimulated reforestation, but was also an incentive for deforestation of existing forests. Landowners could make money twice, first by cutting and selling primary forest, and second by reforesting the open areas. Apart from this, democracy and equitability reasons also necessitated additional instruments, because especially large landowners benefited from the Income Tax Reduction and the Forest Payment Titles. The 1996 Forestry Law radically changed the situation by prohibiting and sanctioning all land use changes. It replaces former incentive systems by the introduction of the Environmental Service Payments. After approval of the third forestry law in 1990, the Partido Unidad Social Cristiana (PUSC) government immediately reopened the negotiations. The Ministry of Environment and Energy (MINAE) represented the Costa Rican State during the process. The negotiations were open involving environmental NGOs, scientists, and business.
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Subsidy of 50 US$/hectare/year for an initial period of 5 years
Subsidy in the form of tradable certificate for tax reduction Subsidy in the form of tradable certificate for tax reduction
Tax on logging (20%) subsidizes forestry activities
Forestry law 1990
Forestry law 1986
Forest Advance Payment Titles (1988) Forest Management Payment Titles (1994)
Forest Conservation Certificates (1996)
Forestry law 1986 Fund for Municipalities and Organisation (1986)
Forestry law 1990
Forestry law 1986 Promote reforestation Forest Payments Title (1986)
Owners of non-forest lands Plant commercial trees, finance total costs of plantation Promote forestry activities Municipalities and local Plant trees, start watershed organizations management, start tree nurseries, construct infrastructure Promote reforestation Organized small owners of Plant commercial trees, finance non-forest lands total costs of plantation Promote management of Owners of natural forests Prepare forest management plants, natural forests improve road networks and harvesting and silvicultural practices Protection of natural forests Owners of natural forests Stop logging for at least 20 years, start 2 years before application
Low (8%) long lasting (up to 30 years) interest loans with a 10 years grace period Subsidy in the form of tradable certificate for tax reduction
Income Tax Reduction (1979) Forestry law 1969 Stop deforestation for Owners of primary forests Stop land use changes agriculture and pasture activities Soft credits (1983) Forestry law 1969 Reforestation Owners of non-forest lands Plant commercial trees
Required activities Target groups Aims Legal base Name
Table 1 Financial instruments in Costa Rican’s forestry (based on Segura, 2000, p. 207)
Lands under the regime were excluded from taxes
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Characteristic of the incentive
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The Foundation for the Central Volcanic Range (FUNDECOR), a moderate initially US-funded anti-Sandinist environmental NGO, but also radicals like the Costa Rican Ecological Association (Aeco) and the Costa Rican Environmental Federation (FECON), participated intensively. Highly influenced by socialist philosophies, the latter refused to accept any more land use changes. During the 1990s, all Costa Rican universities introduced special curricula in environmental studies and forestry, and Costa Rican researchers participated actively in international research programs like COSEFORMA (with Germany), the Forestry Research Program (with the UK), SUDESCA (with Denmark), COSUDE and PROSIBONA (with Switzerland), and OLAFO (with Norway, Switzerland, and Denmark). The international Costa Rican–based Centro Agrono´mico Tropical de Investigacio´n y Ensen˜anza (CATIE) concentrated research efforts on the implementation of the FSC principles and INBio, the well-equipped and respected National Institute of Biodiversity on forest ecosystems. Scientists from this epistemic community introduced policy proposals and commented draft versions of the forestry law also. The business sector was represented by the Costa Rican Forestry Chamber (CCF), a chamber of commerce of 140 forestry firms, and by JUNAFORCA, the Board of Smaller Forestry landholders. The business sector joined forces in the National Forestry Office (ONF) with the legal assistance of CEDARENA, the Centro Derecho Ambiental y De Recursos Naturales. In 1996, the Partido Liberacio´n Nacional (PLN) government finished the negotiations. The process resulted in a broad consensus in the Costa Rican society on the new forestry law and the ESP.
Characterization of the Environmental Service Payments The basic principle of the ESP is that forestry is no longer valued as such, but that it should be valuated as an ecosystem with the implication that the services forestry provides are rewarded as a precious commodity. The Forestry law (but also the Biodiversity and Environmental law) recognizes four key forest commodity services: mitigation of greenhouse gases (fixation, reduction, sequestration, and storage), watershed protection, protection and development of biodiversity, and the protection of scenic beauty. Watershed protection is necessary to conserve the water resources for consumption and for the production of hydropower. Costa Rican society recognizes the environmental services in economic terms. Protection of existing primary forest, reforestation, and sustainable management of both
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primary and secondary forests are seen as investments for the future. In return, the Costa Rican society rewards these investments in financial terms according to the following scheme: US$201.6 per ha/year for protection, US$516 per ha/year for reforestation (to prepare the land and buy and maintain trees), and finally US$314 per ha/year for sustainable forest management as defined in an FSC-principles–based manual (Manual 1997). To place these figures more in perspective, we would like to add that the monthly minimum salaries in Costa Rica are about US$300. To implement the ESPs, several functions need to be fulfilled. The main functions are funding, making land available through farmers’ participation, generating awareness and knowledge about land conversion, and compliance control. This as a whole must be organized and sustained by a communication structure. The 1996 Forestry Law has created FONAFIFO, a subsidiary organization of MINAE, as a national environmental service fund for forestry development. The main object of FONAFIFO is ‘‘to get funds for the environmental service payment program and other necessary activities to develop the natural resources sector’’ (Forestry Law no. 7575). FONAFIFO gets funding from several sources. So far, the fossil fuels tax raised by the Costa Rican state is the main source of funding. According to Law no. 8114, 2001 (Ley de Simplificacio´n y Eficiencia Tributaria), the fund annually receives 3.5% of the fossil fuel tax raised by the Costa Rican government (approximately US$8.6 million a year). FONAFIFO also receives funds from the sale of carbon bonds by the Costa Rican Office for Joint Implementation OCIC, another subsidiary body of MINAE on the international market (for instance to Norway, see Miranda and others 2002). Moreover, FONAFIFO has gotten funding from the GEF to protect territories included in the Mesoamerican Biological Corridor and from private hydropower companies and a beverage company (Florida Ice & Farm), which want to prevent erosion in the catchments in which they are located. These contributions are transferred through the ESP to landowners in the watersheds. FONAFIFO is looking for additional funding from industries and from the national drinking water institute A&A, because not all demands—in particular for protection activities—can be met. After approval by MINAE and in case of reforestation by the Ministry of Agriculture, FONAFIFO concludes legally binding contracts with the individual landowning farmers and pays them once a year. Landowners willing to participate in the program should submit several documents to one of the regional MINAE offices and a proof of identity or statutes of an organization, a legal authentication of representatives, proof of an official legal title on the land, of payment of local taxes, and of non-indebtedness to the National Health System CCSS, an official cadastral map,
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and a copy of a cartographic map to indicate the location of the area. Moreover, a professional topographer should determine the size of the lands. Applications for sustainable forestry management were accepted only if based on a professional Forest Management Plan approved by SINAC. In principle, all landowners can apply for the ESP with the exception of those who have gotten their lands through the Agrarian Development Institute (IDA). The fact that their land was transferred to them for free with the special duty to turn it into agricultural land motivates this exclusion. As to one of the other crucial functions—technical assistance and compliance control—FONAFIFO and SINAC are officially responsible for the monitoring of the accomplishment of the contracted goals. Technical assistance and verification is done by SINAC, often in cooperation with FUNDECOR and other independent NGOs. FUNDECOR is the first Central American organization certified by the Forest Stewardship Council. The organization is empowered to evaluate forestry projects and to include or exclude them from the national list of certified forests and plantations.
Factors Motivating the Application of the Environmental Service Payments Table 2 shows that since 1997, more than 280,000 ha came under the ESP regime but that annual figures show a decline due to a lack of funding. As radical NGOs pushed the government towards a preference for protection and reforestation over sustainable forest management in 2000, no payments have been made for sustainable forest management (or ‘‘hidden deforestation’’). A strong lobby by the Forest Chamber resulted in a reintroduction of Sustainable Forestry in the 2001 program, but after the 2002 elections MINAE definitively eliminated this category from of the program with the argument that it did not stop deforestation (Ascher 2001, p. 742). The ESP is a national program and several areas in the country benefit. However, a concentration of payments can be found in the northern Huetar Norte Region (RHN). The flat and low-populated RHN of approximately 960,000 ha has San Carlos as its main population and commercial center. In 2001, about 208,382 people lived in the area (INEC 2001). Deforestation of the flat lands started in the second half of the last century, quickly changing the landscape into agriculture and pasturelands. Deforestation was intensified during the 1980s when the IDA started a process of resettlement and new peasants from the cities founded about 50 new settlements. Additionally, international and national banana companies cleared forests completely to start banana plantations, especially in the northeastern part of the region.
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Table 2 Hectares and investments (in US$) under the Environmental Service Payment regime Year
1997
1998
1999
2000
2001
Hectares (97–01)
Investments (97–01)
Protection Reforestation Sustainable forest management Annual hectares Annual investments
94,621 5035 8532 108,188 24,654,420
44,452 4283 9170 58,131 16,808,102
56,539 4284 5989 67,943 16,637,761
16,721 2500 0 18,321 7,177,324
20,626 3281 3997 27,904 963,217
232,959 19,383 27,688 280,487
10,496,472 9,097,554 46,646,798
Currently, RHN is one of the most developed forestry regions in Costa Rica. Land ownership is mainly equally divided over the population with only a few large landowners (having more than 100 ha). Small landowners with less than 30 ha dominate the landscape. RHN has 66,500 ha of primary and intervened forest and 20,000 ha of secondary forest, which in principle could be commercially logged. The area also has 42,000 ha of primary forest on areas that are too steep for commercial logging and can only be protected. Moreover, an area of 31,000 ha is covered with plantations of commercial trees such as melina, terminalia, eucalyptus, teca, pine, and some fast-growing indigenous species. Together with tourism, the production of hydropower, and the production of pineapple, sugar cane, citrus fruits, ornamental plants, cassava, palm heart, and meat, forestry is one of the major sources of income in the region. Although the region has only a size of 18% of the total Costa Rican area, it produces 43% of the national wood consumption (COSEFORMA 1996). The implementation of the ESP in the RHN followed the national trends as shown in Table 2. Between 1998 and 2001, 4710 ha were reforested, 20,248 ha got a protection status, and the management of 8371 ha of natural forest became more sustainable (FONAFIFO 2002). The fact that the region took the lead in the implementation of the ESP program is due to the availability of knowledge and experience, a good social organization, available funding, and the existing regional infrastructure. Landowners in the region already had some experiences with governmental financial instruments as government has tried to stimulate reforestation in the 1980s and forestry management in the early 1990s. In addition to the existing knowledge on forestry issues, new knowledge was generated and communicated during the 1990s. Bi- and multilateral research projects of Costa Rican and foreign universities (PROCAFOR, PROSIBONA, TRANSFORMA, OLAFO Y COSEFORMA, PMIBN, PFRMBN) introduced new approaches such as ecosystems valuation. Feasibility studies on new forestry options with the aim to give technical assistance to small- and middle-sized farmers were conducted involving, apart from MINAE and SINAC, regional landowners and NGOs such as the Forestry Development Commission of San Carlos CODEFORSA.
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66,240,824
Professional NGOs organize the implementation of the ESPs in the RHN. CODEFORSA is active in San Carlos, initially accompanied by APAIFO, the Asociacio´n Pequen˜os Produtores Agropecuarios y Forestales, a small San Carlos–based local NGO. However, because of lack of transparency, the organization lost credibility and involvement. FUNDECOR, the Foundation for the Central Volcanic Range and CACSA, the Centro Agrı´cola Cantonal de Sarapiquı´, an NGO especially involved with smaller farmers owning lands transferred to them by the IDA, concentrate their activities around Sarapiquı´. FUNDECOR subsidizes CACSA to hire a forestry engineer in order to provide the local farmers with technical assistance. NGO representatives personally visited all farms in the region and advertisements were placed in shops, cantinas, and bars to promote the ESP. Mass media such as television and newspapers were also used to educate the local communities. Moreover, the NGOs took over all the paperwork MINAE asks of the applying farmers in return for 12% to 18% of the ESP they would receive. In order to organize smaller landowners to joint access to the ESP program, FUNDECOR started its Parasol project. Under this project, 110 ha of forests will be managed in a sustainable way. FUNDECOR, CODEFORSA, and CACSA also organized seminars and training and offered technical assistance on location. Awareness-raising of environmental risks was also done by ABAS, the Asociacion Bienestar Ambiental de Sarapiquı´, a radical NGO known for its successful organization of a referendum to protest against the building of new hydropower plants. The availability of additional funding had a positive influence on the implementation of the ESP in the region also. Third parties showed a willingness to finance measures to be taken by landowners in special areas even if those landowners could not show a legally valid title on the lands. Electrica Matamores, a local hydropower company, invests in forest management to protect the watershed against erosion and to improve the quality and the free flow of water. Recently, the Global Environment Facility (GEF) has provided money to protect the area because it is a part of the Central American Biological Corridor. The German bank KFW invests US$4 million in a CDM project in the
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area. The bank funds 70% of each hectare submitted to the ESP program and FONAFIFO adds the additional 30%. A final motivating factor we would like to stress is the relatively well-developed infrastructure of the region. Road and communication networks were already available, as were several wood mills. These mills started to process primary forest woods, but were easily adapted to process plantation woods. The combination of above-mentioned factors motivated local landowners to take the risk to change the use of their lands. Forestry became an important phenomenon in the region. It not only changed the landscape but also replaced agriculture as the dominant item in local culture.
567 Valuation of natural capital 10 Source of employment
8
Source of income
6 4 2 Inversion Capacity
0
Social organization
Improvement of life condition
Institutional Innovation
Knowledge/access to information Sarapiqui San Carlos
Fig. 1 Perceived socioeconomic effects of the Environmental Service Payment in Sarapiquı´ and San Carlos
Perceived Socioeconomic Effects of the Environmental Service Payment A more detailed insight in the socioeconomic effects of the ESP is available for Sarapiquı´ and San Carlos, two areas with a different agricultural structure in the RHN region. Figure 1 gathers and represents the perceptions of both direct and indirect beneficiaries of the ESP in a spider diagram. The perceptions concern eight aspects of the ESP: the meaning of the ESP as a source of income, the required inversion capacity, the impact of the ESP on institutional innovation, on knowledge and access to information, on the conditions of life, on social organization, on employment, and finally on the valuation of natural resources. The interviewees in both areas have valued the effects on a 10-point scale. As Figure 1 indicates, overall perceptions are positive. The recognition of the ESP as an important source of income differs between Sarapiquı´ and San Carlos. Recognition depends on the type of forestry activity farmers are implementing and on the actual use and size of their lands. The very small producers in Sarapiquı´ are not able to participate in protection because they generally do not have forests. Therefore, they can only take a piece of their agriculture land to grow trees. Reforestation activities not only result in less revenue than protection activities, but farmers’ perception of the profitability of reforestation is also negatively influenced by the fact that reforestation is a middle-term return activity (at least 8 years) with hidden profits during the first years. For the milk- and cheeseproducing farmers in San Carlos (in particular those with lands in the upper Platanar watershed), the ESP is an extra source of income because they now get money to protect economically marginal forest areas in steep and inaccessible upper parts of the watersheds, while their main economic activities generate a cash flow every 2 weeks. The perceptions of the farmers in Sarapiquı´ on the ESP as a source of income will probably be more positive the moment they harvest the wood.
Perceived inversion capacity also differs between the two areas. Sarapiquı´ landholders invest approximately 70% of the ESP received to prepare the land and to farm and maintain the trees, while in the San Carlos area, milk producers claim that they invest 90% of the ESP in implementing conservation actions. They state that apart from fulfilling all formal requirements, a lot of time is required for training and various actions to protect the forest against hazards. In both areas, the ESP has promoted an ongoing institutional innovation in a very short period of time. A growing green awareness and a reliable legal and organizational framework has emerged. Credibility and trust have been institutionalized. Stakeholders—public, private, individuals, and NGOs—enthusiastically and positively invest financial and human resources in forestry activities. Consequently, voluntary environmental agreements between the Costa Rican State, NGOs, landholders, and private firms have been introduced to protect and recover upper watersheds in addition to well-structured programs in environmental education and solid waste management. Having said this, some administrative and bureaucratic issues need to be worked out to improve the efficiency of the program. Some of the informants showed their discouragement about the ESP and criticize MINAE/SINAC and FONAFIFO for their time-consuming bureaucratic procedures and the required paperwork. As a result of the program, the communities in Sarapiquı´ and San Carlos have developed their knowledge on forests and forest management. They have learned to diversify the classical farm economy by the introduction of new ESP-related activities. Organizations involved in the program could increase their research on foreign species’ adaptability to local conditions as well as on the behavior of native species. This new knowledge has been socialized between landholders.
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In Sarapiquı´, the beneficiaries more clearly recognized that the ESP has been an instrument to improve their quality of life (an average ranking of 7) than in San Carlos (an average ranking of 4). The small agricultural proprietors in Sarapiquı´ recognized that with the income of the ESP, they have been able to acquire goods that were not available before. San Carlos beneficiaries, in particular the owners of a cattle ranch, do not recognize this because their cattle ranch already provides income to them in the short term. Although consultants stress the importance of the ESP as an additional source of income for rural families, the ESP does not eradicate rural poverty because this is beyond its scope. Figure 1 shows a high effect of the ESPs on social organization because the interviewees have characterized the ESP as an instrument motivating farmers and communities to organize themselves. The key role of FUNDECOR, CODEFORSA, ABAS, and CACSA is recognized. A growing community organization resulted in spinoff improvements in the field of education, health, infrastructure, and local participation in natural resource management. Coordination between different public and private organizations has been improved as well. The Ministries of Education, Health, and Environment and municipalities work together in different activities and programs concerning environmental education and solid waste management. Recently, Electrica Platanar, a private hydrofirm, also joined in. The ESP is not identified as an important source of employment at the local level. It mainly creates employment possibilities for professionals such as forestry engineers, geographers, biologists, ecologists, sociologists, and administrators who are hired by the organizations involved in the program. With the implementation of the ESP, a radical change in the valuation of landscape and territory is experienced. Presently, forests mean much more than only wood. They are understood as providers of essential services and as opportunities to participate in the emerging new markets for ecotourism, carbon, and biodiversity. The fact that informants recognize that because of the program, the amount of solid waste on riverbanks decreases also indicates its effects on the valuation of the landscape. Summarizing, the socioeconomic effects of the ESP should be understood to be much wider than the mere financial indicators show. The program benefits landowners, hydropower companies, downstream-located communities, and more indirectly the development of ecotourism in the region.
Reflection on the Costa Rican Approach Costa Rica is a good example of the shift in forestry management approaches. The dominant traditional approach
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with an emphasis on high deforestation in order to create agriculture and pasturelands, together with a lack of environmental awareness and participation, changed in a relatively short time into a more participatory approach. Both the negotiations on the latest Forestry Law and the ESPs as well as the actual implementation of this program can be characterized as participatory if we take a closer look at the role of representation and access, information exchange and learning, and the sharing of decision-making authority.
Representation and Access All relevant stakeholders and interests were represented during the negotiation processes on the Forestry Law. The Costa Rican state and political parties had open contacts with business organizations, environmental NGOs, the scientific community, and big and small landowners through round-table meetings. Participation in the implementation of the ESP is also high, but limited to the key stakeholders with a strikingly high NGO involvement. NGOs such as FUNDECOR and CODEFORSA in the north, AGUADEFOR in the NorthPacific area, and Fundacion Neotropica in the south play a key role, assisting not only with all the paperwork required by the regional offices of MINAE and FONAFIFO, but also in organizing communications in and with the communities. The success of the ESP, neatly depends on the NGOs, also because Costa Rican municipalities so far have had no responsibility for land-use planning. Access to the program is not open to all landowners, because both formal regulations and policy priorities exclude some of them. Small pieces of land cannot be put under the ESP regime because a minimum size of 2 ha is required by the Forestry Law. The Forestry Law also stresses that reforestation should be commercially viable, which implies that fast-growing trees are planted that can be logged easily. As a result, owners of land in steeper parts of a watershed cannot participate in the reforestation part of the program. An official IDA letter excludes IDA beneficiaries from land use changes with the argument that they had gotten former forest lands for free with the explicit purpose of turning them into agricultural lands (IDA 2001). Policy practice also results in access limitations. Funding parties are willing to contribute to FONAFIFO only if the fund cofinances their locally specific investment preferences, for instance, the improvement of specific watersheds for hydropower or drinking water production or the Corredor Biolo´gico Mezoamericano. As a result, access to the ESP is concentrated in the northern part of the country. Other parts of the country with fewer water market interests, especially the urban areas in the central valley, hardly benefit. In the central valley, only one ESP project has been
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implemented—a Norwegian-funded restoration project on the Virilla watershed (Miranda and others 2002). Information Exchange and Social Learning Information exchange during the negotiations on the Forestry Law was open and stakeholders could participate in formal or informal round-table meetings. Mass media involved the general public about deforestation rates and the failure of the forestry incentives programs. Learning processes resulted during which a consensus on the high ecological value of forest was internalized. The lack of success of previous incentive systems paved the way for a debate on their perverse effects and on the role of the state, resulting in the broadly shared conviction that new financial instruments should be implemented only if they have adequate backing and support from the civil society. Consensus on a new institutional position of forestry also emerged. Forestry should become a sector on its own, independent from agriculture, and as such should be represented in the governmental organization. While implementing the ESP program, Costa Rican society’s ecological knowledge, know-how on the administration of conservation areas, and insights into the (sometimes too high) opportunity costs of land use changes, into reforestation and protection activities, and into the practice of sustainable forestry management grew. As a result, sustainable forestry management was excluded from the ESP program. Additionally, the separate stakeholders learned more specific lessons. State actors such as MINAE/SINAC and FONAFIFO transferred their positive experiences with the participatory approach and know-how on dealing with stakeholders in an open way to other negotiations, for instance, on the Biodiversity, Environmental, and Water Laws. The fact that organizations such as FUNDECOR, JUNAFORCA, and CODEFORSA learned how they could have a key position and become intermediaries between the state and the landholders had a spinoff to other NGOs. Individual landholders not only became aware of the ecological values of a forest but also replaced former negative experiences with the state and the NGOs by a growing trust. In sum, these learning processes resulted in a growing consensus on the importance of the Environmental Service Payments. Shared Decision-Making Authority The Forestry Law was approved in parliament with a large majority of votes, and all stakeholders accepted responsibility for its contents and implementation. However, this does not imply that formal decision-making authority is delegated from the state to the stakeholder level. Finally,
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SINAC approves applications and FONAFIFO prioritizes the areas to be funded. However, as already mentioned NGOs such as FUNDECOR and funding agencies have a great influence on these decisions. FUNDECOR’s influence should not be underestimated, because the organization has an important network. For instance, its chairman participates in the CDM board. Despite this, decisionmaking authority is shared because stakeholders are highly dependent on each other. As a result of the participatory approach, the information and representation base as well as the legitimacy and the efficacy of the Environmental Service Programme are broader than ever. More landowners participate in the ESP program than in earlier incentive-based programs, communication channels were structured, responsibilities were clearly defined, and procedures became clear and transparent. Because of the participatory approach, forestry management became more flexible and adaptive as well. Landowners and funding agencies are free to participate and flexibility is growing, because initiatives are taken to integrate smaller landowners into the program also. Team building and joint problem-solving created improved management capacities while keeping decision-making at pace. As a result, environmental services are rewarded now and there are no indications that this process will be stopped in the near future.
Conclusions The Costa Rican case illustrates that stakeholders can successfully cooperate on forest issues. Financial instruments can be used to enhance the sharing of responsibilities. In Costa Rica, main participants in the ESP program are NGOs and landowners, but the mechanism also offers business (hydropower, ecotourism, and beverage companies) a clear opportunity to participate in forestry management and environmental improvements. The general public participates indirectly through their tax payments. All relevant stakeholders are actively involved and willing to spend time and money in the process. During the process, mutual relations became clear. Doubts about specific roles, mutual expectations, and decision-making mechanisms did not occur. No party questioned the final decision-making power of MINAE. During the entine process, communications were interactive, horizontal, and permanent. This high level of participation is not only due to the active role of key actors, but is also a result of the high literacy rate of the participants. The fact that the first tangible results—approved applications, related money transfers, and visible land use changes—already became manifest 1 year after the approval of the Forestry Law also stimulated the continuation of the process. The ongoing
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process resulted in benefits for all stakeholders. Finally, the success of the participatory approach is also rooted in a broad consensus in Costa Rican society on the value and importance of environmental services. Currently, actual reforestation rates in Costa Rica are higher than logging figures, although the latter still include unique natural species. The ESP program has high public support, but ongoing marketing activities for softwood are required, as well as more additional funding. Efficacy could be improved if upper watershed management in urban areas is included in the program. Research institutes and a growing number of countries and international funding agencies have recognized the benefits of the Costa Rican approach (Forest Trend & Katoomba Group 2002). Its successful program on forestry protection and development has made Costa Rica a favorite host country for CDM projects and its Central American neighbors look for opportunities to implement similar approaches (Munoz 2002, p. 8). The Costa Rican case shows that financial incentives can play an important role in participatory forest management. However, the success of the approach depends on a society’s consensus on the value of nature, the availability of relevant knowledge, on an adequate implementation structure with well-qualified NGOs, and last but not least on enough funding possibilities. Thus, the approach should be exported only to countries in which these cultural, organizational, and economic conditions are present. Acknowledgments The authors thank three anonymous reviewers for their valuable comments.
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