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MDG-7: Ensure Environmental SustainabilityMDG target 7.A: Integrate principles of sustainable development intocountry programs & policies; reverse environmental resource lossConstraint:Lack of incentives to conserve environmental resourcesLack of financial incentives to conserve environmental resources that provide a public benefiton privately owned landCosta Rica’s Forestry Law 7575 recognizes that environmental services provided by private landare public goods and provides the legal and regulatory basis to contract with landowners for theenvironmental services provided by their land. The law also establishes a financing mechanism for thispurpose.Components:• Explicitly recognizes four environmental services provided by forest ecosystems: a) mitigation ofGHG emissions; b) hydrological services, including the provision of water for human consumption,irrigation and energy production; c) biodiversity conservation; and d) provision of scenic beautyfor recreation and ecotourism• Delegates responsibilities and duties inter alia to licensed foresters, the Ministry of Environmentand Energy, the National Forestry Financing Fund, the National System of Conservation Areasand the Costa Rican Office for Joint Implementation• Provides the legal and regulatory basis to contract with landowners for environmental servicesprovided by their lands, and establishes a financing mechanism for this purpose• Empowers the National Forestry Financing Fund to issue such contracts for the environmentalservices provided by privately-owned forest ecosystemsResults:• The forest area enrolled in the PSA programme at the end of 2005 represented about 10 percentof the country’s forest area and studies have found that PSA recipients have higher forest coverthan non-recipients.• It is estimated that the PSA program prevented the loss of 720 sq km of forests in biodiversitypriority areas in 1999-2005.• The 210 sq km of forest plantation contracted in 1998-20005 stored about a million tonnes ofcarbon, and the whole PSA programme is estimated the have avoided the emission of 11 milliontonnes of carbon from 1999-2005.• In 2005, about 65 percent of PSA conservation contracts were in biodiversity priority areas.Key Elements of Success:• Regulations within Forestry Law No. 7575 establish the conditions for and levels ofenvironmental service payments (PSAs) through the National Forestry Financing Fund to smalland medium-sized landowners.Lessons Learned:• Environmental service payment programmes are very popular with landowners and can providean effective incentive to conserve biodiversity and forest resources. In Costa Rica, requests toparticipate in the programme far surpassed available financing.• The rising number of contracts with water users indicates that many share the commonperception of the benefits of forests. Most of these contracts are in catchments that providesatisfactory levels of water services and where forest cover is still substantially intact.Background Information:More than half of Costa Rica was covered by forest in 1950. Forest cover declined rapidly over thefollowing decades, falling to 24 percent by 1985. Agriculture, particularly pasture, replaced the forest.Conversion was driven by rapid expansion of the road system, cheap credit for cattle, and land titlinglaws that encouraged deforestation.MDG Good Practices 29