Research Options at Iracambi

Pilot Scheme for Payment for Environmental Services

Piloting a Payment for Environmental Services Scheme in the Territory Serra do Brigadeiro

The 'Rural Enterprise Development Program' is one of 3 programs within the “Community Skills Project”, funded by an IAF grant, for capacity building project in the Serra do  Brigadeiro Territory.
As part of this program, Iracambi is looking at how payment for environmental services (PES) schemes can generate alternative incomes for farmers in the Territory. Government, community organisations and individuals have expressed a high degree of interest in the PES concept. Following a seminar in May 2008, Iracambi agreed to develop a proposal for further work on PES.
Iracambi believes a pilot scheme of PES in a small area could provide useful information on the feasibility of a PES Scheme for the whole Territory. A pilot is a useful way of testing methodologies that can later be scaled-up for a larger region, or a larger scope. In addition, Iracambi is also undertaking specific technical research on the feasibility of PES.  

Objectives of a Pilot Scheme
Environmental services are functions of natural resources that are essential for the maintenance of life – for example, the production of oxygen, regulation of the climate and production of clean water. Payment for environmental services (monetary or other) guarantees maintenance of the natural environment, that in turn can guarantee continued supply of these services.
The objectives of this project are to pilot a PES Scheme in the Territorio do Serra Brigadeiro that:

1. delivers improvements in the provision of environmental services (eg. biodiversity conservation, watershed protection, and carbon sequestration)
2. raises living standards by creating an alternative source of income for farmers
3. is fair and transparent
4. involves community members, NGOs and government groups in its design, implementation and review
5. is cost-effective.

The results of the pilot scheme will be used to develop and implement a Territory-wide scheme, if the pilot scheme is found to be successful.

Strategy and approach

What environmental services will the pilot scheme purchase?
Private land managers in the Territory, through their land use and management practices, can potentially improve the supply of environmental services in 3 areas:

• watershed protection (improvements in water supply and water quality)
• biodiversity conservation, and
• carbon sequestration.

We suggest that this pilot should focus on securing provision of watershed protection services and biodiversity conservation services. This is because the demand for these services is clear, their supply is threatened and there are specific land management activities that have the potential to resolve these supply problems.
How to do it?
A PES Scheme involves the voluntary entry of a landowner ('supplier' of environmental service) into a contract or management agreement with a conservation agent ('buyer' of service) to manage part of his/her land according to agreed-upon rules. The landowner receives a payment, cash or in-kind, conditional upon their compliance with the contract or agreement.
The pilot scheme should be managed adaptively, through the following stages. This means that the pilot scheme will be assessed throughout – so that findings about what aspects are and aren't working can be used to revise the pilot scheme and eventually, to possibly scale-up the pilot scheme to a Territory-wide scheme.


During the Design and Planning stage we will have to make a number of key decisions about how the pilot scheme will be implemented and monitored. Importantly, we have to decide on the type of implementation mechanism and the type of payment. In general, there are two options:

1. Flat rate payments ('take-it-or-leave-it' scheme) where landholders are offered a fixed R$ amount per unit of activity (eg R$50 per hectare revegetated), often based on a calculated average opportunity cost.
2. Differentiated payments (auction scheme) where landholders submit a proposal that outlines the management activities they intend to undertake and the amount of payment they are seeking to undertake these activities. Bids can then be evaluated against each other, and the 'best' bids accepted.

In addition, the payments need not be in cash: landholders may prefer other forms of assistance. The Design & Planning stage will define the management activities that landholders can undertake that are most likely to lead to the environmental outcomes the pilot scheme is seeking to secure. The management activities should be measurable, so that the success of the pilot scheme can be monitored and assessed.
In the design and planning stage, a monitoring and evaluation plan should be made to:

1. monitor landholder agreements – payments are conditional upon fulfilment of pre-established goals and activities;
2. monitor and evaluate the success of the pilot scheme – including biophysical monitoring
3. determine how to scale-up the pilot scheme to a Territory-wide scheme.

Who could be involved?
We would expect the following groups to be involved:

Estimated costs
The total estimated cost is approx. R$480.000 This is based on an estimated 240 hectares within the scheme, with 2/3 of this area assumed to be requiring replanting with native vegetation seedlings (materials, fencing and labour supplied or paid for within the scheme). However, depending on the range of management actions within contracts, it is highly likely that a much greater area than this would be under the scheme.
Of the total, payments to landholders are estimated at approx. R$130.000 (USD$83.000), and the costs associated with plantings are R$180.000 approx (USD$113.000 approx).
The remainder of the estimated costs are for awareness raising, community participation and project management. The attached budget contains more details.

Concept Process for PES Pilot Scheme

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