Aquatic Ecosystems Restoration

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1 Presenter s name Aquatic Ecosystems Restoration Lessons Learned from Asian Development Bank Operations Qingfeng Zhang, Senior Water Resources Engineer Asian Development Bank

2 This Presentation will discuss Challenges for Aquatic Ecosystems in Asia ADB s Responses to Challenges Lessons Learned from ADB Operations A Case Study: Payment for Environmental Services Conclusions

3 Water Challenges in Asia 1in5 Asians (about 700 million) without safe drinking water, and 1 in 2 Asians (1.8 billion people) without basic sanitation. By 2050, more than one billion Asian will experience negative impact on water resources as a result of climate change. Aquatic Ecosystems are threatened by q y y unsustainable exploitation and pollution.

4 Key Challenges for Aquatic Ecosystems in Asia Countries Severe floods and droughts leads to thousands dams and millions km dikes Large scale water scarcity emerged as an urgent issue with current rapid economic growth Ecological and environmental problems are becoming basin wide issue The current river basin management The current river basin management schemes cannot manage basin wide conflicts.

5 ADB Response to the Challenges Strategy t 2020 ADB s long-term strategic framework Water Financing Program for Asia Pacific Water Forum and Water Knowledge Hubs Network of Asian River Basin Organizations Climate Changes Funds

6 ADB Strategies to Help Restore the Aquatic Ecosystems Integrated, Cross-sectoral sectoral Approaches Ecosystem Services Have Real Economic Value Water is a socially vital economic good Increase Regional Cooperation Promote Ecosystem-based IRBM Approach

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8 Wetland Rehabilitation Sanjiang Plain Issues: The largest area of wetlands in PRC: 108,900 KM2; Considerable loss of wetlands due to major focus for agricultural development; Increasing pollution from upstream coal and gold mines and nonpoint pollution; Water flow more and more controlled by engineering works, including reservoirs, drainage and diversions; Competing water use between economic development and ecological conservation. Sanjiang Wetland Protection Program 5 year program of $55.55 million started in 2007; Protect the natural resources of wetlands and watersheds (biodiversity, water and forests) from continued threats; Promote sustainable use of natural resources thru integrated conservation planning; Improve the well-being of local communities.

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10 Lakes Rehabilitation Tonle Sap Environmental Management Project Issues: The largest freshwater lake in Southeast Asia, and nominated as a biosphere reserve in October 1997 under the Man and the Biosphere Program of the UNESCO Clearing of the flooded forest for cash cropping and illegal fishing threaten the Tonle Sap The ecosystems coming under pressure from exploitation of the fisheries but also firewood collection, agricultural encroachment, and hunting and collecting of wildlife resources Weak natural resources management capacity both at the Government and community levels Tonle Sap Environmental Management Project 5 year program of $19.4 million started in 2003; Strengthen natural resources management and planning Organize communities for natural resources management Building management capacity for biodiversity conservation

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12 Coastal Ecosystem Restoration Philippines Integrated Costal Resources Management Project Issues: The marine and coastal areas of the Philippines support a large area of productive coastal ecosystems and habitats About 1 million coastal a residents s and their families are directly dependent on coastal and marine resources for survival Social infrastructure is limited in most coastal areas Overfishing, the use of destructive fishing practices, and habitat conversion have adversely affected coastal ecosystems; Lack of ICRM policy and institutional framework Poor compliance with laws and regulations Philippines Integrated Coastal Resources Management Project 6 year program of $62.32 million started in 2007 Policy and institutional strengthening and development ICRM and biodiversity conservation Enterprise development and income diversification Social and environmental services and facilities

13 Coastal Ecosystem Restoration: Jiaozhou Bay Water Quality Management and Ecosystem Restoration 5 years program of $105.8 million started in 2009 (i) () Improved Water Resources and Flood Management (ii) Strengthened Wastewater Management and Pollution Control (iii) Integrated Water Ecosystem Management (iv) Strengthened Project Management Capacity 2 years TA of $750,000 started in 2009 (i) Strategy Environmental Assessment (i) Water Quality Management (ii) Wetland and Restoration (iii) Climate Change Impact and Adaptation (iv) Integrated Coastal Zone Management

14 Ensuring Ecological Flow: Hai River TA 3963-PRC: study of the carrying capacity of water resources Environmental flow requirement levels high, medium, low Evaluating environmental conditions Water quality index developed for the basin Level of environmental flow + water quality index Ecological areas studied river course, wetland, and estuary with different environmental targets

15 Ensuring Ecological Flow: Pakistan: Barani IWRM Sector Project PRC: Guiyang IWRM Sector Project Dam operational guidelines require an e-flow To maintain basic ecological system stability, natural river flows will be maintained at no less than 10% of historical average flows. Each subproject considers ecological water demand with appropriate project design in allocation of water resources

16 Ecosystem Services Have Real Economic Value: Integration of PES into ADB Operations Issues: Nearly two-thirds of the World s ecological services now under threat (Millennium Ecosystem Assessment, 2005) Poor incentives for conserving ecological services is a key contributory factor to the rapid environmental deterioration ADB Response: Integrating PES Mechanism in the Operations PRC-GEF Partnership to Combat Land Degradation in Dryland Ecosystems (GEF supported) Preparations of National Guidelines on Eco-compensation in the key river basins ADBI 2009 Publication: Lessons from PES in Asia (Indonesia, Philippines, India, PRC and Viet Nam) PES Practices in Greater Mekong Region Recent RETA: Payment for Ecosystem Carbon Sequestration and Sink Services

17 What Lessons Can Be Learned from these Operations In light of the mixed performance of lake/wetland restoration program over years, whether any lessons can be learned from these experiences and applied to current and future efforts..

18 Knowledge Product:

19 Key for Success in Restoring Aquatic Ecosystem(1): Strong and consistent political leadership Restoration take time and resources that are often beyond the narrow focus of the typical governmental term (4 or 5 years). Restoration need the consistent commitment of political leaders who understand the seriousness of the problems and have the ability to ensure the effective cross-sectoral and cross- jurisdictional coordination.

20 Key for Success in Restoring Aquatic Ecosystem(2): Integrated Planning and Analysis Ạll of key factors affecting.wetlands/lakes need to be addressed in the project designs to prevent the reemergence of the same issues that led to the ecosystem s crisis in the first place. Plans needs to take into account issues governing land use and management within the catchment as well as maintenance and operation.

21 Key for Success in Restoring Aquatic Ecosystem(3): Effective Management Structure Catchment boundaries are rarely. ṫhe the same as jurisdictional boundaries. Needs effective management structures taking in particular account the need to ensure coordination across administrative boundaries

22 Key for Success in Restoring Aquatic Ecosystem(4) Effective Financial Engineering (i) Poor incentives for conserving environmental services. is another key contributory factor to the failure of restoration program. (ii) Too many programs have failed due to the inability of lower level governments to raise financial sources, or have been distorted t d due to the need for local l governments to focus spending only on activities that create short and medium term revenue raising possibilities.

23 Why is PES important t for Ecosystem Restoration? Nearly two-thirds of the World s ecological services now under threat (Millennium Ecosystem Assessment, 2005) Poor incentives for conserving ecological services is a key contributory factor to the rapid environmental deterioration Environmental Externality: While the benefits of ecological Environmental Externality: While the benefits of ecological services are public goods, the cost of ensuring their provision often falls on local communities/land owners

24 PES for Ecosystem Services in Greater Mekong Subregion: the case for PES in the Biodiversity Corridor in Xishuangbanna Main Challenge Uncontrolled rubber expansion Main Policy Question Are rain forests providing ecosystem services valuable enough hto justify conservation? How would such a PES system look like [nuts & bolts] and how will it be funded?

25 PES for Ecosystem Services in Greater Mekong Subregion: the case for PES in the Biodiversity Corridor in Xishuangbanna Q1: What is the value of ecosystem services in Xishuangbanna BCI Pilot Site? Q2: Which h development pattern is sustainable? Business as usual or conservation with development? Q3: How to secure and capture the value of ecosystem services? (Policy implications)

26 Types of Ecosystem Services in the Biodiversity Corridor in Xishuangbanna (a National Nature Reserve in PRC) Watershed Protection Water Quality Regulation Soil Erosion Protection Nutrient Cycling and Carbon Sequestration Oxygen Generation Air Purification Others

27 Ecosystem services Valuation Method Data requirements Data Collection NTFP (Non- Market estimation Biophysical data Local survey and studies Timber Forest Cost inputs Products) Prices of outputs Climate Regulation -CO 2 Cost saving Capacity of CO 2 Sequestration & O 2 generation Prices of CO 2 &O 2 Local monitoring and studies Market prices -O 2 Water Regulation Cost saving Annual water storage capacity Local studies -Storage Reservoir construction cost Benefit transfer -Quality Price of urban water supply

28 Ecosystem services Valuation Method Data requirements Data Collection Soil erosion Damage Cost Erosivity Local studies prevention Cost of sediment removal Benefit transfer Nutrient Cost saving Erosivity Cycling N,P,K contents in ecosystem soil Local studies Price of fertilizers Benefit transfer Ratio of pure N,P,K to N,P,K contained fertilizer Air purification Damage Cost Capacity of pollutants absorption Local studies Treatment cost Benefit transfer

29 Ecosystem Services Mengla- Shangyong (135,932 ha) Nabanhe- Mangao (28,981 ha) Total value ($million) Unit Value (US$/ha/yr) 1. NTPF Carbon Sequestration , Oxygen Generation Watershed Protection (Storage/Quantity) Water Quality regulation , Soil erosion protection Nutrient Cycling , Air purification Total ,162 7,047

30 Scenarios Design

31 Total Net Present Value (NPV)= NPVforest + NPVrubber + NPVagriculture NPVforest = Forest area (ha) * NPVforest ($/ha) NPVRubber = Rubber area (ha) * NPVrubber ($/ha) NPVAgriculture = Agriculture area (ha) * NPVagriculture ($/ha)

32 Results Land use options NPV ($/ha) (10% discounting rate, 35 years) Forest conservation 67,962 Forest restoration 29,294 Rubber Plantation 6,386-17,923 Rice 3,558 12,708 Corn 8,895 Sugarcane 6,777 Tea 1,431-12,953

33 NPV ($) Base case* Discounting rate Rubber Prices Carbon Price Rice Yield 8% 6% RMB/kg RMB/kg USD/t USD/t t/ha t/ha Nabanhe-Mangao Corridor Segment Status Quo Development Conservation Mengla-Shangyong Corridor Segment Status Quo Development Conservation Total Status Quo Development Conservation *Base case: 10% Discounting rate, Rubber 20RMB/kg, Carbon Price 10 USD/ton, Rice Productivity 9ton/ha

34 PES Case Study: Findings and Policy Implications 3. Policy implications 1. What is the value of ecosystem services? Over $1 billion annually, $7047 per ha/yr 2. Which development option? Conservation scenario preserves the value with improvement, while development scenario incurs huge loss. The value should be well considered into decision making in land use, forest management and BCI Corridor development 1)Incentives for forest conservation, restoration and watershed protection. 2)Disincentives for uncontrolled expansion of rubber and forest conversion on marginal soil and steep slopes.

35 PES Outline for Xishuangbanna Objective: From monoculture rubber to jungle rubber. Step 1: Valuation of ecosystem services Step 2: Determining market value as a basis for compensation and incentives Step 3: Determining contractual obligations within a conducive, enabling PES policy framework Step 4: Setting up performance standards and monitoring methods Step 5: Identifying funding source [compensation] Step 6: PES contract execution with growers and land users and local administration Step 7: Channeling compensation funds through grass-root based Village Revolving Funds Step 8: Evaluation, ecosystem check, adjustments

36 Conclusion When there is a political willingness to change the course of the deteriorating ecosystem, to realize the ecosystem-based IRBM approach, ADB DMCs are still facing great challenges in: Legal and institutional reform Policy Integration Capacity of Integrated Planning Meaningful Public Participation, and Consistent Political Leadership The Knowledge Hub for Healthy Rivers and Aquatic Ecosystems Can Help in: Capacity building advisory services on planning for integrating water and the surrounding ecosystem Transferring the knowledge and lesson of success stories worldwide to the ADB DMCs Host training on the ecosystem-based Integrated River Basin Management

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