Convention on biological diversity
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ANNEX VCase Study - Developing markets for environmental services to support forest conservationThe Costa Rica Ecomarkets Project Introduction The objective of the Costa Rica Ecomarkets Project is to increase the production of environmental services in Costa Rica by supporting the development of markets and private sector providers for services supplied by privately owned forests. It directly supports the implementation of Costa Rica’s Forestry Law No. 7575: providing market-based incentives to forest owners in buffer zones and interconnecting biological corridors contiguous to national parks and biological reserves for the provision of environmental services relating to carbon sequestration, biodiversity conservation, scenic beauty, and hydrological services. ObjectivesThe project aims to contribute to environmentally sustainable development in Costa Rica through: (a) supporting the supply of and demand for environmental services provided by forest ecosystems; (b) strengthening management capacity and assuring financing of public sector forestry programmes administered by the Ministry of Environment and Energy (MINAE), including the National Forestry Financing Fund (FONAFIFO) and the National System of Conservation Areas (SINAC); (c) increasing inflows of private capital into the forestry sector, sustaining natural forests which are critical for biodiversity conservation and which form the basis for existing (e.g., ecotourism) and emerging industries. The global environmental objective of the project is to foster biodiversity conservation and preserve important forest ecosystems through conservation easements on privately owned lands outside protected areas in the Mesoamerican Biological Corridor (MBC) in Costa Rica.
Key performance indicatorsKey performance indicators related to development include: (a) 30% increase in number of providers of environmental services by end-of-project (b) 25% increase in land area covered by Environmental Service Payments (ESP) programme contract; (c) 30% increase in the participation of women land owners in the ESP; (d) 30% increase in the participation of women’s organizations in the ESP.
(a) 50,000 ha of privately owned lands within the MBC incorporated into Costa Rica’s ESP programme through conservation easements. (b) Establishment of a financial instrument to support conservation easements in Costa Rica. (c) Increased landowner participation in, and benefits from, forest conservation-related activities within the MBC in Costa Rica. BackgroundCosta Rica is a leading proponent of environmentally sustainable development, pursuing social and economic growth in conjunction with a strong and healthy environment. The environmental policy of the government has been progressive, including use of economic instruments such as electricity surcharges and reforestation credits which are targeted at protecting forest ecosystems throughout the country. Nonetheless, Costa Rica was beset with one of the highest rates of deforestation worldwide during the 1970s and 1980s. In 1950, forests covered more than one-half of Costa Rica; by 1995, forest cover declined to 25% of the national territory. Approximately 60% of forest cover, totalling 1.2 million ha, exists on privately owned lands outside protected areas. World Bank estimates indicate that 80% of deforested areas, nearly all on privately owned lands, were converted to pastures and agriculture. Deforestation was principally driven by inappropriate government policies including cheap credit for cattle, land-titling laws that rewarded deforestation and rapid expansion of the road system. These policy incentives have since been removed. Costa Rica’s efforts to internalise environmental values provided by forest ecosystems dates back to 1979, with the passage of the first Forestry Law and the establishment of economic incentives for reforestation. Subsequent laws strengthened incentives for reforestation, broadening opportunities for landowners to participate in reforestation programmes and making the programmes accessible to small landowners within rural areas. In 1996, Costa Rica adopted Forestry Law No. 7575, which explicitly recognizes four environmental services provided by forest ecosystems: (a) mitigation of greenhouse gas emissions, such as CO2; (b) hydrological services, including provision of water for human consumption, irrigation and energy production; (c) biodiversity conservation; and (d) provision of scenic beauty for recreation and ecotourism. The law: (a) delegates responsibilities and duties inter alia to licensed forestry regents and municipalities, the National Forestry Financing Fund (FONAFIFO), the National System of Conservation Areas (SINAC) and the Costa Rican Office for Joint Implementation (OCIC); (b) provides the legal and regulatory basis to contract with landowners for environmental services provided by their lands and establishes a financing mechanism for this purpose; (c) empowers FONAFIFO to issue such contracts, subject to provisions such as the availability of a forest management plan certified by a licensed forest regent, for the environmental services provided by privately owned forest ecosystems. With the passage of Forestry Law No. 7575, the forestry sector has an established modern legal framework, which recognizes environmental services provided by forest ecosystems. It defines the role of the State in protecting forests as well as in promoting and facilitating private sector activities, decentralizes duties and responsibilities to local actors, including licensed forestry regents, municipalities and regional councils, and establishes that forests may only be harvested if there exists a forestry management plan that complies with the criteria for sustainable forestry as approved by the State.
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