Streamlining Monitoring for Smallholder and Community PES (SMS-PES)

Transaction costs are one of the main challenges for smallholders and communities in accessing international carbon and other, nascent, ecosystem services (ES) markets. A large proportion of these costs are associated with the development of credible methodologies for monitoring to offer reassurance along the value chain that land use practices result in the delivery of ecosystem services. This is especially true for smallholders and community projects with multiple, scattered small properties, for whom meeting environmental thresholds and economies of scale remains difficult, yet the social and environmental cost of leaving them out is not a viable option in many developing countries. At the core of our proposal is the testing of scientifically robust methodologies for cost-effective monitoring of small farmers and community ES projects, which will contribute to poverty alleviation by 1) improving access to these emerging markets, and 2) allowing a higher proportion of the money to go to farmers rather than project management.

Monitoring of emerging markets for ES presents a varied picture across the world, and it is strongly linked to how indicators for ES are initially defined. Many watershed and/or biodiversity protection projects combine type of activity (e.g. forest protection) with some level of targeting (e.g. riparian areas, biological corridors) as indicators of provision. Monitoring is then focused on monitoring land cover or land use, rather than outcomes (e.g. number of species). International carbon markets have been stricter in approaches to carbon stocks and monitoring to ensure that offsets are real and verifiable. International standards provide credibility and can lead to price premiums, however they often are expensive and cumbersome (Corbera and Brown, 2010a; Skutsch et al., 2009) and the transaction costs associated become active barriers that often lead to the exclusion of smallholder and community projects (De Pinto et al., 2010) .

With a budget under 500k, this sleek proposal integrates cutting-edge scientific analysis, with a novel application of choice experiments, to address the question of what is an optimal level of monitoring in carbon forestry projects. By 'optimal', we mean a monitoring strategy that satisfies the needs of buyers of ecosystem services credits and minimises effort and resources required such that these resources can reach smallholders. We focus directly on monitoring carbon and other ecosystem services (biodiversity and to a smaller degree watershed services) and their implications along the overall value chain for these ES: 1) at the Offset Creation level (eligible smallholder and community-based practices and measurable indicators for carbon, BD, and social co-benefits); 2) at the Verification of Value of offset stage (third party Standards); and 3) at the Articulation of Demand for Offsets stage (platforms for specific characteristics).

Following a literature review, we will examine four different methodologies according to their scientific robustness and capacity to measure and monitor carbon and associated ecosystem services. We will then test at the local level in three different locations (Plan Vivo certified projects in Mexico, Uganda and Sri Lanka) to account for the practicalities of implementation it in terms of protocols for approved practices and offset creation, but also in terms of available information, costs and local capacity. At the other end of the value chain, we will test how buyers react to these methodologies in terms of perceived project credibility for service delivery, and their potential willingness to pay for different combinations of ecosystem service credit offsets against cost of monitoring them. Throughout the project we will work with the Plan Vivo Foundation and local project implementers, to ensure that the methodology responds to the practicalities of verification and aggregation of offsets.

The project will generate key information on empirical knowledge on indicators and monitoring systems for carbon and associated ecosystem services. This information will help communities in developing countries access to sustainable markets (e.g. not just Plan Vivo) for payments for services rendered by their ecosystems, which in turn would incentivize ecosystem conservation/restoration, and contribute to poverty alleviation.

Our beneficiaries fall into:
1. local stakeholders including local practitioners and implementers of Ecosystem Services Projects; local universities, small local and regional NGOs and community organisations,
2. conservation organisations locally and globally (e.g. TNC, WWF, WCS, IUCN)
3. investors in ES interested in buying and trading in ecosystem service credits. This includes commercial stakeholders (i.e. those buying PV credits), oil and gas, industry, and energy sector.
4. bilateral aid agencies (DfID, Danida, Sida, Cida, GTZ), and development banks (e.g. IDB, ADB),
5. policy organisations and platforms interested in promoting pro-poor ES deals (e.g. IPBES, UN-REDD, REDD in-country focal points). We will target regulatory processes and standard setting bodies for REDD+ (e.g.CCBA and VCS) and national and international safeguarding processes (World Bank FCPF promoting SESA alongside the developing UN-REDD Social and Environmental due diligence process).
6. Governments interested in including ecosystem services in their planning.
7. We will link to current sustainability initiatives in which consortium members are involved including TEEB (UNEP-WCMC), the Green Economy Initiative (UNEP-WCMC) and the Green Economy Coalition (IIED).

The consortium has significant on the ground presence and partnership in the regions and strong partnerships with development, policy and commercial stakeholders. Through the Plan Vivo project partners we ensure our work in Latin America, Africa and Asia. Over the years, IIED has developed a substantial information exchange platform. Internally, it has a dedicated communications team that advise on the best way to ensure use of adequate and targeted communication of policy-impact findings and recommendations at different levels. The expertise from the University of Edinburgh and the University of Exeter will provide the scientific and academic robustness required for ESPA.

We will ensure that our outputs are written in a language accessible to different audiences. This includes materials for practitioners, like guidance tools; journal and peer-reviewed publications for the academic audience, policy briefs oriented to policy-makers (see form example the format of IIED Briefings and Reflect and Act), and blogs oriented to generate reaction from the media and wider audience. The team will also participate in ESPA hosted events, like conferences and other events. For this, we have budgeted £20,000 for publications, and another £20,000 for workshops, conferences, and travel, equivalent to 10% of the total funding.