Untitled - Peat Portal

DEVELOPMENT OF FINANCING AND INCENTIVES OPTIONSFOR SUSTAINABLE MANAGEMENT OF PEATLAND FORESTS IN SOUTHEAST ASIA46CRITERIATRUSTEconomic incentives tend to work best where trust has built up between all thekey stakeholders. This may have involved education and outreach, collaborationon previous projects, and shared objectives and perspectives.SCALESome economic incentives have limited in terms of their scale. Eco-tourismschemes for example, tend to be very site specific, focusing on a particularProtected Area. REDD+ payments, on the other hand can be applied nationallyas carbon is a homogenous product of peatland conservation where performanceis only governed by management and growth rate rather than other microfactorssuch as landscape and access to markets and resources.DRIVERSEconomic instruments will be cost-effective if it is targeted at the drivers ofpeatland degradation and destruction and the appropriate financial penalties orrewards. REDD+ payments to conserve carbon stocks may not be effective if othernon-economic (political, social, cultural) forces are behind the damage. Thiscould also mean that action should focus on the removal of perverse incentivessuch as direct or hidden government subsidies for plantation agriculture andpalm oil that may be driving peatland degradation.RATING1 - Low2 - Moderate3 - High1 - Small scale2 - Moderate scale3 - Large scale1 - Low fit2 - Moderate fit3 - Good fitTable 6: Comparison of Incentive Options by CriteriaOthERCOMMENTSINCENTIVES ATLOCAL LEVELCRITERIA HAZE FUND REDD+ USER PAYSCountrieswith strongerregulatoryframeworks andenvironmentalgovernance willperform best.1 - LOWSome benefits difficult torevoke and temptation totransgress conditions maybe strong.2 - MODERATEOften charges do notreflect environmentalperformance.3 - HIGHREDD+ schemes based onprinciple of performance butprotocols being developed.Conditionality 3 - HIGHPayments only paid iffires have not occurred.3 - LOWCarefully designedincentives at site levelshould avoid negativeoutcomes.2 - MODERATETaxes can be avoidedand perpetrator isoften one step aheadof the regulator.2 - MODERATEStill problems with carbonbased funds damaging peatlandsaround the world.3 - LOWPayments should beclear incentive toprevent fires.PerverseIncentivesWill dependto an extenton institutionalset-up – numberof agencies,departmentsetc.3 - ShORTOften locally based,direct payments tocommunities from localagency.2 - MODERATENational or regionalmechanism.1 - LONGInternational mechanismwith funds filtered througha number of governmentagencies.Value Chain 2 - MODERATECould be quite complexinvolving internationaltransfers and brokers.Transactioncosts declineover time ifgovernancemechanisms arealigned with thescheme.2 - MODERATEDue to their local naturerequires considerableinvestment at each sitebut relatively few partnersare involved.3 - LOWTaxation and chargesrequire considerableeffort, but can operatevery efficiently forlarge areas regionallyand nationally.1 - hIGhREDD+ projects are complexinvolving a long value chainfrom national governmentto local communities, withcomplex verification andmonitoring. Likely to decreasein long term.2 - MODERATEAs it is a new schemethese may be highinitially, unless able towork with existing pilotprojects.TransactionCosts2 - MODERATERisk of communitiesseeking payment and notcontributing positively toconservation outcomes.0 - NANot really an issue fortax/charging systems.1 - hIGhLarge sums of moneypotentially involved and verylong value chain suggest highpotential.Rent-Seeking 3 - LOWAs currently plannedfunds can only be usedfor very specific actionsconnected to fireprevention and fighting.DEVELOPMENT OF FINANCING AND INCENTIVES OPTIONSFOR SUSTAINABLE MANAGEMENT OF PEATLAND FORESTS IN SOUTHEAST ASIA47