A study from the United Nations Food and Agriculture Organization (FAO) provides these facts: 70% of the deforestation in Latin America between the years 2000 and 2010 occurred to make way for commercial agriculture.
How did Costa Rica manage to reverse this trend and protect its forests?
The FAO attributes Costa Rica’s stellar sustainability to its support and incentives to conserve forest cover through the Payment for Environmental Services Program (PSA).
Perhaps you have never heard of the PSA, but it is one of the most successful environmental policies in history and it is often used as an example to replicate the model in other countries.
The PSA Program consists of financial compensation provided by the Costa Rican government through the National Forestry Service, FONAFIFO, to forest plantation owners for the environmental services they provide which have a direct impact on environmental protection and improvement.
In accordance with Forest Law No. 7575; Costa Rica recognizes the following environmental services:
- Mitigation of greenhouse effect gas emissions (fixation, reduction, sequestration, storage, and absorption)
- Protection of Water for urban and rural use, and for hydroelectric plants.
- Protection of biodiversity for conservation and sustainable use for scientific purposes, for the pharmaceutical industry, for research, and for genetic improvement, as well as for the protection of various ecosystems and forms of life.
- Protection of the beauty of natural landscapes, to the benefit of both the tourist industry and scientific purposes.
The most important characteristic of this environmental program is that it changed the traditional concept of “subsidy or incentive” to that of providing a “financial reward” to acknowledge the environmental services that forests provide, which in turn contribute to increases in ecological, social, and economic value.
The Basic Pillars of the Environmental Services Payment Program
The Environmental Services Payment, (PSA) Program, is a mechanism to finance the management, preservation, and sustainable development of forest resources and biodiversity; is sustained by four basic pillars:
Institutions – Since its creation, the Environmental Services Payment (PSA) Program has facilitated and promoted the incorporation of several stakeholders in Costa Rica’s forest development sector. This permitted the adoption of a novel financial scheme incorporating various institutions such as SINAC, the National Forest Office (ONF), forest regents, the country’s Association of Agricultural Engineers, cooperatives, cantonal agricultural centers, non-governmental organizations from the farming sector, and beneficiaries in general.
Legal Framework – During the 1990s, Costa Rica experienced a change in the environmental area, with legislation favoring conservation and protection of natural resources, the creation of institutions that strengthen the sector, and a significant change in the way in which society perceives management, conservation and sustainable development of natural resources. Global initiatives from the beginning and middle of that decade, such as the Río Summit, Agenda 21, the Convention on Biological Diversity, the Kyoto Protocol, the Johannesburg Summit, and the Millennium Development Goals, have had an effect on the definition of the route that Costa Rica has followed.
Financing – The primary source of financing for the Environmental Services Payment Program, (PSA) consisted of assigning to it one-third of the resources generated from gasoline taxes collected in Costa Rica. Later, this tax was modified by the Tax Simplification Law, creating a single tax for gasoline, of which 3.5% is assigned to the PSA Program. This action reflects the vision of legislators, who clearly perceived the need to establish a source of financing which guarantees the PSA’s sustainability.
Monitoring and Evaluation – These are carried out through several activities, such as visits of personnel of the PSA and Regional Offices to properties in the PSA Program, revision of reports from regencies provided by Forest Regents, audits of FONAFIFO and the PSA Program, accompanied by follow-up and monitoring tools, which together with the computing platform, make it possible to manage all of the PSA contracts, combining technical criteria, legal, geographic and financial information to provide transparency and support for the PSA Program.
FONAFIFO is the financial backbone of the PSA program and is the leading Costa Rican entity at a national level with international visibility for designing, executing and consolidating promotion mechanisms aimed at the development of forest-related activities. Additionally, it is the public entity in charge of financing small and medium-sized producers of forest goods and services, by procuring and managing national and international financial resources to support the development of the forestry sector.
Furthermore, the forestry service offers incentives for companies and individuals who desire to offset their carbon footprint.
A carbon footprint is the sum of greenhouse gas emissions produced directly or indirectly by an individual, organization, event or activity. In order to calculate total emissions, greenhouse gases are expressed in terms of Equivalent Carbon Dioxide (CO2e). The carbon footprint is expressed as the mass of equivalent CO2e.
By calculating their carbon footprint, individuals and companies obtain a general overview of their contribution to global warming. Once the carbon footprint size has been determined, the implementation of a Greenhouse Gas Emissions, GHG reduction strategy is key. In those cases where carbon footprint reduction is not feasible, a company can balance its carbon footprint through participation in different public or private programs and projects, such as:
The Ecological Seal Program – offers an EcoMarchamo program, which is a voluntary mechanism of compensation for GHG emissions for petroleum powered vehicle users. Since the year 2014, the Eco Marchamo is equivalent to two carbon units and may be purchased by organizations caring for their carbon footprint. The money from sales of Eco Marchamo’s benefits the Sustainable Biodiversity Fund, which is an endowment created for environmental services payments to sites with special ecological value. The Eco Marchamo may be purchased from the cashiers of the Banco Nacional de Costa Rica (BNCR) or through the Internet.
The Living Forest Project – is for eco-competitive companies with social and environmental responsibility programs or companies participating in certification programs. The forestry service offers projects to protect forests and provide financial resources to communities and farm owners located in vulnerable areas with a low development index. Living Forest uses the Payment for Environmental Services financial instruments to allow companies to give recognition to those who voluntarily protect forest ecosystem goods and services for the benefit of society.
The Environmental Services Payment Program – was established for companies that wish to compensate for the use of natural resources or contribute towards the protection of these resources. Payments are made through the Payment for Environmental Services Program, (PES) and can be applied to single or multiple PES schemes.
The Water Use Program – allows institutions that pay Water Use fees to fund the Environmental Services Payment Program (PSA) in geographic areas of their interest.
The writer, Tom Rosenberger has lived and worked in Costa Rica since 1993 and from his travels throughout the country he has acquired a wealth of knowledge about the environment.
If you have any questions or comments you can click here to contact Tom.