market based mechanisms - group d12_naveen changed

8/7/2019 Market Based Mechanisms - Group D12_naveen changed

1/33

MARKET BASED MECHANISMS

GROUP 12

CHANCHAL RAJ MEENA- 208

GAURAV PATANGE -211

MADHUSUDANAAN N M-216

NAVEEN KIRAN SEKHAR-220

PRANEETH MANDURI-226


2/33

THE CONTEXT - DEFINITIONS

Products and services provided by naturalresourcesEcosystem services

Creating/Exploiting existing Demand-Supplyrelations to promote ecological sustainability

Market basedmechanisms

Strict specifications, regulations formanaging ecology

Command andcontrol mechanisms

Absorption of CO2 by forest cover/marineflora/fauna

Carbonsequestration

Convergent point of ground water,management of dependency on environment

Watershedmanagement

Gene conservation, prevention of extinction ofspecies

BiodiversityConservation


3/33

AGENDA

Recommendations

Case studies

Tried and tested framewor s

Analysis of past mar et successes and failures

ar et based mec anisms for ecosystem services


4/33

FRA EWORKClassification in all t e cases seen so far

ar et

Product (Servicesprovided by t e

natural resource)

Buyers (T ebeneficiaries of t

e

service)Sellers (decision

a ers andsuppliers of t

eservice)


5/33

MYTHS UNVEILED

Perceived as exploiting resources excessively,depletion, extinction

Analysis reveals t at capitalism broug t wit itincreased understanding and involvement of t emasses towards environmental conservation

Capitalism as t e bane of t e environment

Perceived as t e cause of ruin of efficient mar etbased mec anisms

Analysis reveals t at local politics plays a major rolein property rig ts ac nowledgement and enforcinginstitutions

Politics as main urdle for sustainability


6/33

REAL CAUSES OF MBM SUCCESS/FAILURE

Starting from t e demand side ensured success

Does a tree falling in a forest ma e noise if no one is t ere toear it?

Direction of initiation of services

Lac of proper product definition

Excessive focus on monitoring mec anisms No clear property rig ts definition e.g. Forest land of

government, Timber in private ands

Problems wit existing Institutions

Neit er be copied from nor copied to ot er scenarios

Fit wit t e particular ecosystem


7/33

FRAMEWORKS PATTERNS IDENTIFIED

Joint Implementation (JI)

Clean Development Mec anism (CDM)

Pa ment for Environmental Services

(PSA)

Direct Finance Mec anisms (DFM)


8/33

CARBON SEQUESTRATION


9/33

BRITISH COLUMBIA CARBON

SEQUESTRATION

62 milliona of ig lydiverseforests

Em loysdirectly andindirectly

14 er centof t eorkforce

Timber isone of t e

mainsources of

income

T e forestsector asroven to be

fertile groundfor forest

carbon marketdevelo ment

Demand forCarbonCredit


10/33

STAKEHOLDERS

T e forestdepartment -

Supplier

Large powercompanies

Buyers

Privateintermediaries


11/33

KEY ISSUES

Due to w ic Buyers ave been cautious resulting in alac of funding

Uncertainty in t e role of forest carbon sin sin t e Kyoto protocol

Lea age ris s involved in carbonsequestration

Conflict between t e provincial government and forestarvesting company

Property rig ts not clearly defined

Need for efficient Carbon modeling andmeasurement mec anisms


12/33

CURRENT STATUS

Advancedmodeling andCarbon

measurementtec niques

ave beendeveloped

Currently avoluntary

mar et exists

Lac ofinstitutionscoming intot e way of

formal

mar etcreation


13/33

WATERSHED MANAGEMENT


14/33

CAYAMBECOCA

ECOLOGICAL

RESERVE

Financing Waters ed Conservation

ANTISANA

ECOLOGICAL

RESERVE


15/33

CASE FACTS

Area : 520,000 a

pramos, ig -altitude Andean grasslands,

cloud forests recognized for t eir capacity to retain umidityand regulate water-flows

Natural ecosystems are c aracterized by

Glaciers -source of important rivers in Ecuador


16/33


17/33

FLOWS OF FUNDS AND BENEFITS IN FONAG


18/33

POTENTIAL SOLUTIONS TO

ADDRESS THESE THREATS

Waters ed valuation

Land purc ase or compensation

measures

Enforcing protection

Targeted land management

Sustainable production systems


19/33

BIODIVERSITY


20/33

At least 0 per cent of t e worlds economy and 80

per cent of t e needs of t e poor are derived from

biological resources. In addition, t e ric er t e

diversity of life, t e greater t e opportunity formedical discoveries, economic development, and

adaptive responses to suc new c allenges as

climate c ange.

The Convention about Life on Earth,

Convention on Biodiversity web site.


21/33

Sun GrownCoffee

S ade GrownCoffee

Mesoamericaregion


22/33

SHADE-GROWN COFFEE AND

CONSERVATION IN MESOAMERICA

To find ways to preserve biodiversity outsideprotected areas, in agricultural landscapes

S ade Grown Coffee is very Bio-diversityfriendly

Many coffee areas are close to protected areas

And t ey connect protected areas to eac ot er

Context

Farmers s ifting trend from S ade-grown Coffeeto ot er crops, including ig yield Sun-Grown-Coffee because of low coffee prices

Problem Statement


23/33

KEY STAKEHOLDERS

Environmentally Conscious coffee consumers

Buyers

Coffee farmers in t e region nearby t e protected area

Sellers

World BanGlobal Environment Facility (GEF)

Smit sonian Migratory Bird Center (SMBC)

Rainforest Alliance

SalvaNATURA (NGO) Coffeeplants-certifying agency

Intermediaries


24/33

SOLUTION SELLING BIODIVERSITYFOR

PRICE PREMIUM

Certification

Shade-growncoffee farmerscertification

Tec nological benefits provide t rougNGOs

Credit preferences

Productcertification

Bird-friendly label sponsored by SMBCEco-OK label sponsored by Rainforest

Alliance


25/33


26/33

REASONS FOR SUCCESS

Externalities

Supply Side Success

Availability of Credit and external elps

from NGOs for certificationAvailability of tec nology and funds due

to large participations from variousorganizations

Lower production cost, specially forsmall sized farms

Income derived from ot er products timber, fuel wood, fruit, eco-tourism, etc.

Demand Side Success

Pre-identified mar et mec anisms, from

organic coffeeHelp of ot er organizations aving

sta es in t e project by givingrecognition to t e S ade-grown Coffeeas bird friendly or eco o


27/33

CENTRAL THEME


28/33

PHILOSOPHICAL APPROACH TO MARKET

BASED MECHANISM

Accept t e fact t at

Todays world is driven by incentives

Need for s ift of ideology from political economy to political ecology

Ac nowledge t e sta e of all sta e olders

Command and control mec anism s ould wor only asouter body wit eart at Mar et based mec anism


29/33

RECOMMENDATION


30/33

IMPLEMENTATION OF RECOMMENDATIONSRules / Guidelines Carbon Sequestering Watershed Management Biodiversity Services

Problem Definition Deforestation Deforestation Deforestation

Focus onrootcause Need for industry to rely onforest

Lac

of clean water supplydue to erosion of natural

source

Lac

of competitiveness oft e bio-diverse farm products

Solution directlytargeted

atrootcause

Afforestation and industrial

forest zone

Preserve clean sources Monetize forest farming

creating externalities

Market Mechanism atthe

heart

Carbon credit mar

et Water mar

et Bio-diverse farm products

mar

et

Command and Control

mechanism asregulating

framework

Redefinition of property

rig ts over forest, Tripartite

committee of industry lobby,

forest depart,

environmentalists

Re abilitation policy (one

time compensation + lifetime

exemption from water tax),

clear property rig ts, water

s aring model

Property rig ts (farming and

forest land), guidelines for

setting price and subsidy,

legal framewor

, mar

eting

guidelines

Incentiveto Government Sustainable economic growt Water conservation tax or

fund to save t e forest

Minimal efforts on

government side

Incentiveto Suppliers Funding, regular income Price premium Boost to t eir industry

Incentiveto Buyers Regulatory compliance, cost

effective solution

Affordable clean and regular

water supply

Eco friendly and ealt y

branded products

Incentiveto Society Clean air, control on global

temperature

Efficient utilization of water

resources

Bio-diverse ecosystem

Externalities No externalities No externalities Farming, forest, tourism,

branding

Learnings Importance of institution Creation of demand driven

mar

et

Mar

et sustainability

t roug externalities


31/33

CRITICAL SUCCESS FACTORS

Demandas majorforcedrivingmar ets

Incentivesfor eac andevery

sta e older

Commandandcontrolmechanismcontaininginstitutions,framewor s

Externalitiesto attainmar etsustainability

Bundlingeffectby

avingmultiplesolutions tosame problembased ondifferentunderlinemar etableproducts

suitable tot at context

Extent of Implementation


32/33

REFERENCES

Selling Forest Environmental Services - Mar et basedmec anisms for Conservation and development byStefano Pagiola, Jos u Bis op, Natas a Landell-Mills

Analysis of relations ip between processes ofglobalization and environmental governance by

Kamal, Gueye Economic incentives for Environmental Protection:

Integrating T eory and Practice by Robert W. Ha nand Robert N. Stavins

Innovative Financing Mec anisms for SustainableEcosystem Management by Gerdien Meijerin et all(2008)

Environmentalism: A global History by Ramc andraGu a

Varieties of Environmentalism by Ramc andra Gu a& Juan Martinez-Alier


33/33

GO GREEN

THANK YOU!

market based mechanisms - group d12_naveen changed

Documents