ISSN: 1659-2751

«

»

Payment of Environmental Services in Costa Rica: Evaluating Impact and Possibilities

Introduction

Since the Earth Summit gathered in Rio Janeiro in 1992, more than 180 countries of the world have been negotiating the United Nations Framework Convention on Climate Change including a strategy to reduce the emissions of greenhouse gases that are thought to contribute to global warming. The Kyoto Protocol (1997) – recently ratified in 2005 – includes provisions to allow countries where emissions reductions are very costly to meet their reduction targets by buying credits from countries where emissions reductions are cheaper. This strategy is still in the process of being debated; moreover, the tenth conference of the parties carried out in Buenos Aires (COP 10) reached only partial agreements.

Costa Ricahas developed a system of payment for environmental services. However, to truly mitigate the effects of greenhouse gases and to preserve its forests in favor of all humanity, the commitment of all countries is necessary to create an international market for the sale of these environmental services.Costa Ricahas been a leader among Latin American countries in the design of and development of a system of payment for environmental services. Since 1997, a program locally called Pagos de Servicios Ambientales (known as PSA in Spanish, or Payments for Environmental Services, PES in English), has been providing payments to more than 4,400 farmers and forest owners for reforestation, forest conservation, and sustainable forest management activities.

In this process of developing and trying to sell emission reduction credits, a considerable amount of experience has been achieved. From this it has been detected that in the particular situation of this country, carbon credits come primarily from two sources: first, converting degraded agricultural and abandoned pasture lands into forests and second, from reducing deforestation (Castro, 1999). In 1996, in an unprecedented transaction,Costa Ricasold its first 200,000 tons of carbon emission reduction credits toNorwayfor $ 10 per ton of carbon.Costa Ricareceived no bids when it tried to auction an additional 1,000,000 tons of carbon credits with a floor price of $ 20 per ton. During the year 2001, another eight Latin American countries offered credits to the World Bank’s Prototype Carbon Fund at prices between $ 2.90 and $ 20 per ton (Castro and Cordero, 2001). Carbon trade final results will depend on the ultimate rules and regulations, as well as on carbon prices.

Considering that the European Union (EU) established a scheme for greenhouse gas emission allowance trading within the Community by Directive 2003/87/EC (EU, 2003) which apply in 2005, new opportunities emerge for many developing countries, including Costa Rica in helping to reduce carbon dioxide through their carbon sinks, which are systems such as forests and forest plantations, which absorb CO2 from the atmosphere (CE, 2000; Redondo-Brenes, 2005). By offering corrective and offsetting arrangements to industrial countries, developing countries can obtain financial or development benefits (Castro and Cordero, 2003).

Document in English (pdf) (1684)