Creating Pro-Poor Markets for Ecosystem Services
A High-Level Brainstorming Workshop 

10 – 12 October 2005, London, United Kingdom 

Organized by the Division of Environmental Conventions, UNEP in conjunction with the London School of Economics 


Highlights for Monday, 10 October 2005

The High-Level Brainstorming Workshop “Creating Pro-Poor Markets for Ecosystem Services” began on Monday, 10 October 2005. Following an opening ceremony, the first segment of the workshop involved keynote presentations and discussions of the desirability of markets for ecosystem services from the environmental and development perspectives, as well as the salient features of such markets to ensure that the Millennium Development Goals (MDGs) are not achieved to the detriment of environmental sustainability and vice-versa.  

Above photo L-R: Charles Perrings, President of the International Society for Ecological Economics; Jeffery Sachs, Director of the Earth Institute at Columbia University and Special Advisor to the UN Secretary-General; Partha Dasgupta, Professor of Economics, University of Cambridge; and Miles Parker, Deputy Chief Scientific Adviser/Director for Science Department for Environment Food and   Rural Areas (DEFRA).


Lewis Pinault, Managing Director, The Box (EDS Innovation at LSE), welcomed participants to the LSE facilities and wished them fruitful discussions.

Bakary Kante, Director of UNEP Division of Environmental Conventions (DEC), welcomed participants, and highlighted the need to create markets for ecosystem services that can benefit the poor. He indicated that Multilateral Environmental Agreements (MEAs), as international legally binding instruments, can be a useful tool in ensuring this, and recommended to focus on four areas: carbon sequestration, landscape beauty, biodiversity and water.

Klaus Töpfer, UNEP Executive Director, stressed the importance of the Milennium Ecosystem Assessment (MA) in indicating the status of ecosystems services. He expressed UNEP’s commitment to creating pro-poor markets for ecosystem services, and asked participants for advice on how UNEP can take this initiative further.

Pro-Poor Markets for Ecosystem Services – Critical Issues, Opportunities and Constraints for MEAs:

Charles Perrings, (left) President of the International Society for Ecological Economics, chaired the first segment of the workshop, focusing on the critical issues, opportunities and constraints for MEAs in creating pro-poor markets for ecosystem services. Chair Perrings indicated that the MA provided a means to quantify changes to the physical availability of services and the value of ecosystems.


MDGs and Ecosystem Services: 

Jeffery Sachs, (left) Director of the Earth Institute at Columbia University and Special Advisor to the UN Secretary-General, made a keynote presentation on the MDGs and ecosystem services. He highlighted the scientific, ecological, economic and institutional complexity and uncertainty characterizing ecosystem services, and the failure of market systems that do not adequately address ecological challenges. Stressing that market failures are not necessarily solved through market solutions, he defined market mechanisms as decentralized transactions, distinguishing them from other economic instruments, such as regulatory or corrective compensation and incentive mechanisms. He noted that environmental goods can be addressed through redefinition of property rights, corrective taxation, subsidies, individual transferable quotas, zoning and other regulatory frameworks, and their success depends on the accuracy of the underlying ecological modeling and its susceptibility to correction.

In the ensuing discussion, Gabriel Labbate, UNEP, highlighted the difficulty in combining donors’ short-term timeframes and the intergenerational dimension of environmental issues. Simon Rietbergen, the World Conservation Union (IUCN), emphasized country-level dialogue, particularly with the Ministries of Environment and Finance. Amanda Hawn, The Ecosystem Marketplace, raised the issue of social rate of return and win-win solutions.

Above photos L-R:
Simon Rietbergen, IUCN; Gabriel Labbate, UNEP and Amanda Hawn, The Ecosystem Marketplace

Discounting ecosystem losses: 

Partha Dasgupta, (right)  Professor of Economics, University of Cambridge, suggested taking into account four classes of capital: manufacturing; human capital/skills formation; knowledge; and natural capital. He defined ecosystems as capital assets, noting that damages are frequently irreversible and ecological processes are overwhelmingly nonlinear, so that an ecosystem can collapse abruptly, without much prior warning. He highlighted how higher growth rates  would not include natural capital, which may increase the productive base of countries.

In the ensuing discussion, Robert Hepworth, Executive Secretary of the Convention on the Conservation of Migratory Species of Wild Animals (CMS), enquired about nonlinear ecological processes. Referring to the examples of fisheries and freshwater lakes, Dasgupta suggested the use of sensitivity analysis looking at ranges of key commodities that may provide unambiguous responses, to guide decision making in situations of uncertainty. Charles Arden-Clarke, UNEP, asked about best practices at the national level and possible scaling up at the international level. Dasgupta noted the absence of studies at the national level, and the relevant work of the World Bank in this area. Anantha Duraiappah, International Institute on Sustainable Development (IISD), raised the issue of valuing and pricing multiple services.

Above photos L-R:
Charles Arden-Clarke, UNEP; Anantha Duraiappah, IISD and Robert Hepworth, Executive Secretary, CMS

MA, MEAs and ecosystem services: 

Hal Mooney, (left) Co-Chair of the Millennium Ecosystem Assessment (MA), made a presentation on the link between the MA, MEAs and ecosystem services. He recalled that the MA focused on ecosystem goods and services, their sustainability and human wellbeing, emphasizing that the consequences of ecosystem changes for human wellbeing provide a link with the MDGs. He praised the MA for explicitly engaging MEAs in the assessment process, bringing together the environmental and the business community, and forming new coalitions among scientists and the development community. He explained that the term “ecosystem services” is actually linked to valuing services, rather than pricing them, as feared by some countries that objected to this concept. 

In the ensuing discussion, Marceil Yeater, Secretariat of the Convention on International Trade in Endangered Species (CITES), enquired about the need to invest in research and to build capacity. Bakary Kante, Director, UNEP/DEC, called for concrete suggestions on possible pilot projects in the four sectors of biodiversity, carbon, landscape and water. Stressing that the South African and Costa Rican projects were government-funded, Mooney raised the question of finding financial resources for other projects. Ahmed Khan, South Africa, reported on how the government-funded Working for Water Programme on alien plant species gradually integrated other activities on wetlands and fire management.

Above photos L-R:
Ahmed Khan, South Africa; Marceil Yeater, CITES and
Bakary Kante, Director, UNEP/DEC in discussion with Partha Dasgupta, Professor of Economics, University of Cambridge

Panel discussion on experiences from the field:

John Forgάch, (left photo right) Chairman of ForestRe, highlighted the interest of corporations in environmentally sound production, emphasizing the necessity to cooperate with the private sector and utilize private funding for the environment. He presented the case of the Panama Canal, in which financial markets were used to arrange for companies dependent on the canal, to pay for reforestation through an insurance deal. 

Alain Lambert, (left photo left) Founder and Chairman of the Conservation Finance Alliance and Conservation Finance Expert of UNEP Division of the Global Environment Facility (GEF), recommended clarifying the definition of beneficiaries and direct and indirect users of ecosystem services. He highlighted the negative impact of bad governance on providing ecosystem services. 

In the following discussion, Steve Polasky, University of Minnesota, enquired about the need for private goods in attracting private financing. Forgách
replied that the private sector is willing to fund projects on public goods, reporting that in the case of the Panama Canal the intervention of the government followed the initiative of the private sector. He highlighted the importance of the government's willingness to use a conservation trust or other compensation mechanisms. Ivan Bond, International Institute for Environment and Development (IIED), enquired whether public and private finance models can converge and require the same scientific input. Erwin Bulte, UN Food and Agricultural Organization (FAO), reported on FAO research project on agro-ecosystems services, highlighting water and health components and a system of incentives including capacity building. Jeff Sayer, World Wildlife Fund (WWF), stressed the difficulty in achieving payments for ecosystem services in the poorest countries.

Above photos L-R:
Jeff Sayer, WWF; Ivan Bond, IIED; Steve Polasky, University of Minnesota and Erwin Bulte, FAO

Kaveh Zahedi,(above left) UNEP/World Conservation Monitoring Centre (WCMC), enquired about drivers for action and change, and Forgách replied that it is a question of leadership, emphasizing the need to find a common ground for the private and public sectors. He recommended that the public sector concentrate on governance and the private sector on banking. Leonard Hirsch, (above right) Smithsonian Institution, wondered whether individuals or the community as a whole should pay for each ecosystem service, underscoring the need to ensure that all countries have access and can tap into the ecosystem services market. Lambert specified that services should be charged if the good is being over-used.

ENB SNAPSHOTS: Cocktails hosted by Klaus Töpfer, Executive Director, UNEP

ENB SNAPSHOTS: UNEP Press conference held at LSE

Above photos L-R: Bakary Kante, Director, UNEP/DEC, Klaus T�pfer, UNEP Executive Director, Charles Perrings, President of the International Society for Ecological Economics and Partha Dasgupta, Professor of Economics, University of Cambridge; Klaus T�pfer, UNEP Executive Director, during the High-Level Brainstorming Workshop “Creating Pro-Poor Markets for Ecosystem Services” press conference.

In the accompanying UNEP Press release T�pfer said, “By continually depleting and damaging it [the environment] and without investment in the running, maintenance and management costs, the Earth’s life support can suddenly and abruptly fade or switch to become less productive and unpredictable. I believe we are slowly winning this political and economic argument but not fast enough. So we must hurry up, otherwise all 6 billion of us will eventually be scratching around trying to survive.” 


This service was prepared in cooperation with the UNEP-LSE Secretariat


UNEP Division of Environmental Conventions
Meeting Portal and Documents
Background Document: 2005 World Summit Outcome
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