Paying for the environmental services of silvopastoral practices in Nicaragua

Abstract

Agricultural landscapes can provide many valuable ecosystem services, but many are externalities from the perspective of farmers and so tend to be under-produced. This paper examines an effort to make direct payments for ecosystem services (PES) in an agricultural landscape. The Regional Integrated Silvopastoral Ecosystem Management Project is piloting the use of PES to induce adoption of silvopastoral practices in the Matiguás–Río Blanco area in Nicaragua. Silvopastoral practices could substantially improve service provision while retaining agricultural production, but they have found only limited acceptance among farmers. The Silvopastoral Project seeks to increase their adoption by paying farmers for the expected increase in biodiversity conservation and carbon sequestration services that these practices would provide. The Project developed an ‘environmental services index’ (ESI) and pays participants for net increases in ESI points. Although the Silvopastoral Project is still underway, it already appears to have succeeded in inducing farmers to increase substantially the use of practices that generate higher levels of ecosystem services. In the project's first two years, over 24% of the total area experienced some form of land use change. The area of degraded pasture fell by two thirds, while pastures with high tree density increased substantially, as did fodder banks and live fences. On-going monitoring indicates that these land use changes are in fact generating the desired services. Questions remain about the long-term sustainability of the approach, however. To ensure sustainability, long-term payments are likely to be needed, raising the question of how they will be financed. Payments by water users and by carbon buyers provide a partial answer to this challenge, but still leave many gaps.

Introduction

Agricultural landscapes can provide many valuable ecosystem services. They can contain high levels of biodiversity, sequester substantial amounts of carbon, and affect downstream water supplies. Many of these services are externalities from the farmers' perspective, however, and so tend to be under-produced. Recent years have seen numerous efforts to devise innovative mechanisms to induce farmers to adopt practices that generate higher levels of services (Landell-Mills and Porras, 2002, Pagiola et al., 2002). An approach that has received increasing attention is to pay farmers directly to provide ecosystem services (Ferraro, 2001, Pagiola and Platais, 2007).

This paper examines one effort to make direct payments for ecosystem services (PES) in an agricultural landscape. The Regional Integrated Silvopastoral Ecosystem Management Project, financed by the Global Environment Facility (GEF), is piloting the use of PES to induce adoption of silvopastoral practices at sites in Nicaragua, Colombia, and Costa Rica (Pagiola et al., 2004). The extensive pastures that replaced the original forests in this area provide particularly low levels of services — with little biodiversity, low carbon sequestration, and adverse impacts on hydrological flows. Silvopastoral practices could substantially improve service provision while retaining agricultural production, but have found only limited acceptance among farmers. The Silvopastoral Project seeks to increase their adoption by paying farmers for the expected increase in biodiversity conservation and carbon sequestration services that these practices would provide.

This paper describes the Silvopastoral Project and its initial results at its Nicaragua site. We begin by describing the benefits of silvopastoral practices and the reasons for their limited adoption. We then discuss the PES approach, and how it is applied in this case. The first two years of the project have already resulted in substantial increases in service provision. Although this project is still underway, it is already generating important lessons for similar efforts.