Why does the potential for PES implementation differ?

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1 Why does the potential for PES implementation differ? Guillaume de Buren, PhD student IDHEAP, Lausanne, Switzerland Conference on PES and their institutional dimension Berlin

2 Research and partnership This research takes place in the framework of an Interreg project financed by European Union and Swiss government. Partners are: Research sites take place in Switzerland and in France

3 Forest for water Forests provide an active protection of groundwater through the natural filtration and purification processes provided by forest soil during infiltration. Without securing the uses of the service-providing resource (forest), water quality might be endangered. Some facts: In Switzerland, 47% of groundwater protection areas are located in the forest (Brändli, 2010). Thanks to the good quality of groundwater, 38% of drinking water is piped without any treatment (SSIGE, 2008).

4 Research question PES has initially been designed as an operational tool for developing countries. Our partners attempt to implement PES schemes as alternative instruments for managing natural resources in industrialized countries. We identified, however, few implementation examples in continental Europe. Empirical studies reveal the existence of various opportunities for PES implementation on both sides of the French-Swiss border. These observations prompt our research question: How can we explain the diverse potential that exists for PES implementation in different countries?

5 Explanatory variable 1: institutional context (1) Institutional context matters! Distinction between the institutional environment and institutional arrangements is necessary (Davis & North 1970). Analysis of the institutional regime: We applied the Institutional Resource Regimes analytical framework (Gerber et al. 2009). Presented in EE 68 (2009) This framework allow us to determine the influence of property-rights and public policies in the effective uses of a resource. It identifies the institutional regime of the resource. However we propose a reinterpretationinspired by the lessons drawn from New Institutional Economics (Williamson 2000).

6 Explanatory variable 1: institutional context (2) The potentials and limits for PES implementation depends on the existing regulation. PES schemes take place in the leeway available for the actors. Hypothesis: The more integrated an institutional regime, the narrower the scope for manoeuvre available to the actors for concluding PES. Conversely, the less integrated a regime, the greater the scope for manoeuvre available to actors in establishing PES. Institutional Regime The institutional regime prevails (in so-called complex institutional regime ) Level of integration Scope for manoeuvre The scope for manoeuvre pervails (in so-called simple institutional regime ) activation possibilties

7 IRR analytical framework IRR considers public policies and property rights as complementary (Gerber et al. 2009). By applying IRR, the researcher lists and analyses the connections between the different institutions that influence the effective use of the resources. The two analytical dimensions of extentand coherenceenable the definition of the institutional regime: 1.The extent of an IRR refers to the number of goods and services in use that are regulated by the institutional regime. -> identification of gaps in regulation 2.The coherence measures the degree of coordination of the various user-actors within the regime. -> identification of incoherence in regulation Strong COMPLEX REGIME INTEGRATED REGIME Extent INEXISTENT REGIME SIMPLE REGIME Weak Coherence Strong

8 Explanatory variable 2: actors action resources Some actors are richer than other and it seems that only the richest conclude PES in European countries(perrot-maître 2006, de Buren 2011, etc.) It is necessary to take this variable into consideration. Analysis of the actors resources endowment: Public policy analysis considers a broad range of resources as actions resources (not only finance, but also organization, time, political support, law, information, etc.). Actors manage them (production, combination, substitution, etc.) in order to influence the policy implementation (Knoepfel et al. 2006, Hill 2002, etc.). If PES appears suitable for the poor communities in developing countries, it is not the case where institutional regimes are complex.

9 The forest has much more to offer.

10 Research design In order to face the high complexity and the blurred distinctionbetween the object and the context, we decided to use the comparison of case studies (Yin, 2003). In order to control the second variables in the comparison, we have drawn an embedded research design. This allows us to compare our object in different institutional contexts. Context 1 Swiss forest and water regimes Context 2 French forest and water regimes Case study 1 rich actors Case study 2 poor actor Case study 3 rich actors Case study 4 poor actor Observations (rights activation when rivalries occur) Observations (rights activation when rivalries occur) Observations (rights activation when rivalries occur) Observations (rights activation when rivalries occur)

11 Preliminary limitations as first result 1. Our case studies take place only in civil law context. Our findings cannot be generalized to common law legal system. 2. We excluded incentive policies in our understanding of PES. In such cases, implementation acts cannot be considered as autonomous decisions. It is more a question of compliance with policy objectives than a voluntary transaction.

12 Results Swiss forest and water institutional regimes tend towards integration. There is almost no potential for concluding PES. Actors have no scope of manoeuvre outside the regulation. In both case studies (Montant et Bassin) water producers use the service provided by the forest. However concluding PES would not provide any additionality. The implemented public policies guarantee the groundwater quality. French forest and water institutional regimes are typical of complex regimes. There are limited potential for concluding PES. In Les Moisescase study, the rich actor (SIEM) seems able to conclude PES (process is ongoing). However, in the Ramble case study, the local actor don t have the capacities to conclude PES. These observations and results strengthen our two general hypothesis.

13 Results Switzerland France Level of integration Institutional Regime Scope for manoeuvre Close to integration = no PES implementation Complex regime = PES possible only for the richest The institutional regime prevails (in so-called complex institutional regime) The scope for manoeuvre pervails (in so-called simple institutional regime) activation possibilties To complete this research, we will conduct two additional case studies in simple institutional regimes (weak property rights and policies) in Indonesia in partnership with CIFOR.

14 Conclusions Some statements can be held: 1.Implementation of PES does not take place in an institutional vacuum. On the contrary, the PES are an extra institutional layer that adds to the context. 2.The existing rules influence the implementation of PES (strongly in complex regime) and predetermine, in part at least, the actors strategies. 3.A complete understanding of the institutional context is an indispensable prerequisite for the implementation of PES (at least in European countries). The institutional context can be operationalized with the IRR analytical framework. The analysis of the institutional regime, allows the researcher to identify the scope of manoeuvre available for the actors to conclude PES. Therefore, we believe that the IRR analytical framework can determine ex ante the potential for PES implementation.

15 Discussion Our approach is not critical to the implementation of PES in European country, but only in Switzerland and France for securing forest ecoservices for water. We do not generalize. Institutional regimes are specific to one resource at one time. They are simpler regimes also in industrialized countries when the policies and property rights present gaps and incoherence (noise, biodiversity, landscape, etc.) Our approach explains why the formal regulation has more importance in complex than in simple regimes. This interpretation show the complementarity between literature on CPR and environmental policy. Our approach can also be seen as a justification for using PES when the existing regulation is not appropriate to secure environmental services. PES are results of actors games and not an technical solution; sometimes an end rather than a means. Actors games in PES implementation should also be treated.

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