Payments for Environmental Services (PES) approach, as potential to reduce land degradation

HAKI KOLA,1* GAZMEND ZENELI,2 JANAQ MALE3

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National Resources Management Project Rruga Sami Frasheri No. 4 Tirana, Albania Phone: +355 68 20 27707 E-mail: haki_kola@yahoo.com *Author for correspondence

University of Technology, Dresden Faculty of Forest-, Geo-, and Hydro-sciences Institute for International Forestry and Forest Products, Chair of East European Forest and Forest Products Pienner strasse 19, 01737 Tharandt Germany

SNV -Netherlands Development Organization P.O.Box 1735 Tirana, Albania

Abstract Introduction Payments for Environmental Services Study area Puka agroecosystems Forest Village and Family Forest Agricultural land Methods and approach proposed Approaches to valuation Forest, pasture and agricultural land as Natural capital Cost- Benefit Analysis of the Natural Capital and Conservation decision Recommended steps toward PES implementation Acknowledgements References Abstract Payments for Environmental Services (PES) are one type of economic incentive for those that manage ecosystems to improve the flow of environmental services that they provide. Paying for the provision of environmental services is an environmental policy tool attracting much attention in both developed and developing countries, but not yet applicable in Albania. This paper discusses the potential of implementation of PES by communities located in Drinis Microcatchment where Albanians biggest Hydropower Plants of Fierza, Komani and Vau i Dejs are established. Over harvesting, fires and overgrazing in forest area within the Drini watershed is proportionally correlated with land degradation, increase of erosion and flooding, causing the load of the hydropower reservoirs, thus increasing the need for public investments for national road maintenance, and building dams for erosion control around the Hydropower Plants. The participation of local communities in forest management in the last decade has demonstrated that sound natural ecosystems perform critical life-support services, beneficial for both local communities and general public, but not all environmental uses generate financial returns to local communities. One of the most important reasons is that forest is considered as public good, owned by the state, and many environmental services fall into the category of positive externalities or public goods because of their non-excludability and nonrivalry. Taking in consideration the impact of extraction or conservation on the natural resources as natural capital, we contrast two scenarios and try to measure how the quantity of each service would change as a result of the forest extraction or conservation, as compared to their quantity without the extraction or conservation; as well as use the degraded non crop land for grazing or its protection. This study needs to be followed by the detailed studies in the impact of farm and forest conservation in decreasing the

erosion and extending the economic life of Hydropower Plants and recommendations are given on improvements of the legal framework. Keywords: Communal forest, ecosystem, forest, land degradation, Payments for Environmental Services (PES), pastures. Introduction Political and socio-economical changes have been occurring very rapidly in Albania. The country has experienced one of the most radical cases of post-socialist reform. Albania was the only country in post-socialist Europe that switched completely from state to private ownership (Lerman, 2001), followed a pure land distribution strategy and also liberalized domestic markets for agricultural products and inputs (Cungu and Swinnen, 1999). Changes in national political systems have resulted in new opportunities for forest sector in a country with economy yet in transition. The government approved the forest development strategy in 2005 (GDFP, 2005) and during the last two years has accelerated the implementation of the decentralization reform. More than 70 % of forest, woodland and pasture area, until recently under the state ownership, has been transferred to the 327 communes and municipalities (Xhuveli, 2008). The transfer to the Local Government Units of ownership and usufruct rights for forest and pastures provides better incentives on managing and protecting these resources, which are now closer to the people that use and protect them. Secure land tenure is considered a precondition to avoid illegal logging and its negative consequences (Kola et al. 2003; Kola and Zeneli, 2008). The participatory process has the added value of not only increasing ownership through the process of identifying boundaries and individual usufruct rights, but also exposing the community to ideas of sustainable management practices (Kola, 2007; Kola, 2008). However, along with the positive improvements, the changes have brought new constraints and have enlarged the complexities of national forest policy processes. Numerous problems in the forest sector remain to be solved and forthcoming constraints to be faced (Naka et al. 2000). The main problem is the loss of forest through degradation which has lead to a high degree of erosion and fills up of the water reservoirs (see also the Chapter from Muharremaj et al. in this book). Loss of forests through degradation means loss of services, which in turn threatens the economic and social well-being of the nation through reduced availability of non-timber forest products, reduced agricultural productivity, floods and storm surges and destruction of unique ecological environment (Laze and Kovai, 1996; Lako and Cerutti, 2004). The degradation of renewable forest resources in now threatens not only the economic prospects of future generations but also the livelihoods of current users as well. It is necessary to search for new approaches that create mechanisms to arrange for transactions between service users and service providers that are in both parties interests. The best way for sustainable management is the support of the people that live by and in

the forest and recognize the benefits from these services. Recognizing benefits, can lead to improvement of land use and halting its further degradation through the policies supporting the clear user right for communities using the forest and paying them for this important environmental services. Ecosystem services represent the benefits that people obtain directly or indirectly from ecosystems (Costanza et al. 1997; Millennium Ecosystem Assessment, 2003). Assessing the economic values of ecosystem services play various and important roles in linking human activity and natural systems. The main objective of this study is to analyze the actual policies, legal framework and ecological and social conditions in three pilot communes, on implementing the Payments for Environmental Services (PES) approach. PES can serve as a tool of conserving and restoring the watersheds of surrounding the hydro plants administered by the Albanian Electro Energetic Corporate (KESH) and to reduce the damages to national roads by flooding, by providing economic compensation to communities who voluntarily protect their forested lands or to those who want to reforest abandoned or degraded marginal land. Payments for Environmental Services Payments for Environmental Services (PES) is a mechanism whereby landowners receive compensation for the environmental services their land provides to the general public (Pagiola and Platais, 2007). It is a market-based approach to conservation financing based on the twin principles that those who benefit from environmental services (such as users of water) should pay for them, and that those who contribute to generating these services should be compensated for providing them (Engel et al. 2008; Wunder, 2008)). The approach seeks to create mechanisms to arrange for transactions between service users and service providers that are in both parties interests, thus internalizing what would otherwise be an externality (Toman, 1998). Although PES programs are not a magic bullet for poverty reduction (Pagiola et al. 2005), there can be important synergies when program design is well thought out and local conditions are favourable. The most important characteristic of this approach is that it changed the traditional concept of subsidy or incentive for economic recognition for environmental services provided through forests, which, in turn, contributes to increase the ecological, social and economic value thereof (FAO, 2007; Engel et al. 2008). PES is based on the beneficiary-pays rather than the polluter-pays principle, and as such is attractive in settings where ES providers are poor, marginalized landholders or powerful groups of actors. An important distinction within PES is between user-financed PES in which the buyers are the users of the ES, and government-financed PES in which the buyers are others (typically the government) acting on behalf of ES users (Engel et al. 2008). In the theoretical literature on PES, it has been suggested that the direct nature of the PES transaction induces PES to be both more effective and more cost-efficient than indirect tools such as ICDPs or eco-friendly premiums requiring investments in

alternative lines of production (Ferraro and Kiss, 2002). Four ES types currently stand out (Wunder, 2005): 1. Carbon sequestration and storage (e.g. an electricity company paying farmers for planting and maintaining additional trees); 2. Biodiversity protection (e.g. conservation donors paying local people for setting aside or naturally restoring areas to create a biological corridor); 3. Watershed protection (e.g. downstream water users paying upstream farmers for adopting land uses that limit deforestation, soil erosion, flooding risks, etc.). 4. Landscape beauty (e.g. a tourism operator paying a local community not to hunt in a forest being used for tourists wildlife viewing). Study area The study area includes the communes of Blerimi, Qelez and Qerret corresponding to the Micro catchments of Fierza, Koman and Vau i Dejes Hydro Power Plants. Located close to Albanian Alps, the area represents the typical northern 30 villages, with ca. 2000 scattered houses providing shelter for around 8400 inhabitants. Villages are usually apart from each other and accessible only by rugged footpaths. The Communes are situated in north-west and north-east of Puka following the Drinis river southern part. From eight principal river basins (watersheds) with an average annual run-off of 25.7 billion m3, the main large storage dams used primarily for hydro-power production with a capacity of 3.25 million m3 are located in Drini river, being actually the main source of energy in Albania (INSTAT 2008). Puka agroecosystems Climatic regimes of the Puka mountains around Drini watershed, characterized by a period of summer drought and by different distribution and quantity of precipitations, results in a limited productivity of vegetation, as well as duration and distribution of the growing season. Action of the different climatic regimes has deeply affected soil characteristics and water availability, making populations living under such conditions to develop very different agroecosystems. Needless to say, the organization of breeding systems (animal species, proportion of land used for rearing, the way that grasslands and rangelands are exploited) and the social development and old traditional laws (mountain old codes, canuns) has been influenced by the availability and type of vegetation that animals could use (grazing plus hay or silage). In Puka marginal lands, as a consequence of the presence of shallow and rocky soils, grazing lands dominated by sclerophyllous or annual species and the shortage of water, animal husbandry rests on small ruminants, with better ability, compared to cattle, for utilizing poor pastures. Sheep and goats are predominant, representing about 85% of the livestock. Wild fires, increasing pressure of fuel-wood and uncontrolled harvesting and grazing, is damaging topsoil and soil erosion has become a serious problem, which threatens to undermine the main storage dams of

Drini Hydropower plants. Erosion starts in the upper parts, in the forests (Lako and Cerutti, 2004). Their degradation has left the soil without cover and the intense rains have easily washed away the thin soil layer on the steep slopes. Landslides occur frequently. At the foot of the hills, the water merges in the river bed, river which will be dry most of the summer but torrential in winter. Such torrents are carrying gravel and small stones that will be held at the first check dam and the finer particles where the water slow down: in water reservoirs and hydro electrical dams. Forest Forest in three selected communes traditionally is used mainly for firewood and grazing, and to a lesser extend, for timber or construction material. This year government has transfer in the ownership of selected communes 14800 hectare of forest area, formerly owned by the state. From the data collected from the commission of village forest and pasture, in 25 out of 30 villages, the communal forests are considered as the ownership of families. Each family calls it Hamalla, and use it is part of his farm for every day life. Only in the villages of Truni, Dush, Gomsiqe, Karme, Vrith, the whole forests area is in collective village ownership. Based on surveys of NRDP project, from the total forest area by 14800 hectare, in private or family use for the three selected communes was ca. 9156 ha forest (62%, of total forest area). Meantime, village use 5738 hectare or 32 % of total forest area (Management Plans of Communes). According to villagers perceptions, the stage of forest transferred to them has degraded rapidly due to selective extraction without visibly altering the spectral reflectance of the canopy cover. As a result, forests may have experienced a larger extent of degradation than suggested by the relatively small forest-cover changes observed from the satellite images employed (Lako and Cerutti, 2004). Secondly, the village survey reveals a continuous extraction of firewood for subsistence purposes (mainly heating and cooking). Reliable information on firewood trade is not available, however. This shortcoming is likely to hide the forestreducing influence of an active trade in firewood. Frequent wild fires have destroyed large black pine forest areas. Village and family forest Generally the village is considered as the fundamental unit for the transfer of the forests and pastures, their management and for generating income (Muharremaj, 2008). Forest boundaries between villages were established and agreements with the neighboring villages have been signed (Kola and Zeneli, 2008). Forest maps and management plans have been prepared at the village scale. The average forest area of the villages considered on this study is 493 hectare, from which 305 hectare are divided between families based on old traditions coming from the Kanun (Code) of Lek Dukagjini (Turkish: kanun law) considering it as private property, which is expressed by the maxim Every house that billows smoke will have its own property. They have

clear traditional boundaries as stated by the other maxim Every tract of land, whether field or meadow, garden or vineyard, small forest or copse, woodland or pasture, and every village, had boundaries with each other. The rest (average of 188 hectare) of forest area within the villages is named Kujrija and is commonly used by the village for the material of the agricultural tools, fuelwood, pasture, hunting, and the fulfillment of other needs. Kujrija is not divided, but all the families of the village had their rights over it. In the frame of Natural Resources Development Project (NRDP), these two forest use types are considered as two different users, called respectively family and village. Each family has some average indicators on forest, agricultural lands and their use as natural capital based in the needs as indicated in the Table 1. Table 1. Indicators of household average farm
Indicators of use of natural resources Average forest area used by one family Average agricultural land used by one family Agriculture marginal non crop land for one family Average need for fodder Average need for hay Fuelwood for family in year Family forest capacity Difference Unit of measurements ha ha ha ton ton m3 m3 m3

Amount 4.3 0.71 0.49 1.3 1.5 15 6 9

Agricultural land Every family owned 0.3 hectare to 1.5 hectare agriculture land, privatized after 1991 according to the Law No.7501. The agricultural land is planted mainly with maize, beans, vegetables, Alfa Alfa. The level of mechanization is very low and the yield is low too. The main concern is irrigation system, all degraded and out of function. The agricultural products do not fulfill the need of villagers for cereals and fodder for livestock. In the commune of Qelez only 27% of the registered agricultural land is used. The rest is not being used for agricultural crops, but only used spontaneously as extensive pastures. Origins of refused/abandoned land range from former forest or pasture land that had been converted to agricultural land to the land that had been used for fruit orchards or vineyards during the Hoxhas era and then denuded upon collapse of the regime in a spree of wild destruction or simply out of desperation for firewood. Reasons for non-use or refusal to accept the land, included qualms over quality, fear of taxation or the desire to remain under the land holding ceiling determining eligibility for social assistance. Non crop degraded areas are eroding quickly, and the landscape look devastated.

Table 2. Production farm components and their pre-generating capacities

Annual revenues per farm (Lek) 36260 10360 4144 1036 51800 42000 Annual revenues per capita (Lek/capita) 6973 1992 796 199. 9961 Annual revenues per area (Lek/ha) 43687 12482 4992 1248 62410

Production trend Agricultural products (70%) Animal products (20%) Vegetables (8%) Fruit trees/vinery (2%) Average Off farm (fuel wood, fodder, grazing)

Source: Socio-Economic Survey, ACER, 2001 Methods and approach proposed Several studies have showed the effect that implementation of PES approach might have on carbon sequestration, restoring biodiversity, avoid deforestation, strengthen community livelihoods and, creating rural assets (Swart, 2003; Bruijnzeel, 2004; Pagiola et al. 2005; Wunder, 2005; Pagiola and Platais, 2007; Engel et al. 2008; Pagiola et al. 2005; Singh, 2008). However, methods and techniques of PES have still to be adapted to the present Albanian context, and institutional arrangements have to be established. One detailed desk study need to identify different experiences in PES, implemented in other countries and national policies, strategies, legal frame work and similar experiences that can help in piloting the PES in Albanian conditions. Community based forest management, institutional arrangements, village commissions on forest and pastures, contract arrangements between village and forest and pasture users, can serve as a foundation for implementing this approach. The analysis of cost benefit on ecosystem is the first step in PES implementation. Since the terms value, valuation and value system have a range of meanings in different disciplines (Farber et al. 2002), no uniform definition for value system of ecosystem services is available. One possibility is the use of the Total Economic Value concept (TEV). The TEV concept has been recently used to identify and, to a certain extent, quantify, the full value of the different components of natural resources, such as forests. Traditional use and exchange values (Smith, 1776), have been complemented by other value types, including option values (Arrow and Fisher, 1974), and vicarious, existence and bequest values (Krutilla, 1967). INSERT FIGURE 1 The theoretical framework of the TEV can be related to a pragmatic view of market, potential market and non-market values of forests, depending on whether forest outputs are sold, can be sold, or cannot be sold on real markets (Figure 1). Market values are linked to the goods and services for which a market exist, for example, timber, fuelwood,

honey medicinal plants, forest fruits, etc. By contrast, non-market values are related to goods or services that have no market price the so-called free goods: firewood for self-consumption, biodiversity conservation, watershed protection and carbon sequestration ((Kaiser and Roumasset, 2002; Croitoru, 2007a; Croitoru, 2007b). The positive outputs can be easily divided among the TEV categories. Also some negative outputs can be easily attributed to the different value categories. For example, erosion, floods and avalanches due to poor forest management are negative externalities mostly affecting the indirect use values of forests. Other negative outputs are however more difficult to separate, as they affect two or more categories of value. For example, the damages due to forest fires reduce not only the direct use values, but, above all, the indirect, option and non-use values (Bishop, 1998; Bishop, 1999). Based on the TEV framework, a structured list of data to be collected was developed. It primarily aimed at identifying and quantifying in physical and monetary terms the environmental services provided by the forests within the watershed. Approaches to valuation The valuation methods used are different, but the most common and used in this study are the demand curve approaches and non-demand curve approaches (Bateman, 1993). Here we discuss the specific application of this technique to the issue of valuing the environmental services provided by the forests within the watershed. Direct use values. Estimating direct use values is usually more straightforward than other TEV components. Market prices (or shadow prices, in absence of efficient market prices) were used to value both WFPs and NWFPs, based on the quantities traded on the market. For some quantities - usually sold on thin local markets - market price data were not available; in these cases, the opportunity cost of labor or cost of harvest were used. The quantities collected for free were estimated according to the market price of similar goods (Bishop, 1999). Other direct uses, such as grazing were estimated by using the substitute goods approach, in reference to barley as a comparator and its shadow price (Croitoru, 2007a; Croitoru, 2007b) Indirect use values. The indirect use values are much harder to estimate than the direct use values (Croitoru, 2007b). The valuation focused on watershed protection and carbon sequestration. Watershed protection is quite problematic to estimate, due to the difficulties in establishing a clear cause-and-effect relationship between forests and downstream water services. To provide this valuation we used a variant of the damage costs avoided approach combined with the defensive expenditures (Bishop, 1999; Croitoru, 2007a). Similar approaches were used to estimate the damage that can occur in cases where forests are poorly managed (for example, erosion), except that, rather than using the hypothetical costs that would be borne in the absence of forests, the actual costs were used (Dano, 2005; Croitoru, 2007a; Croitoru, 2007b).

After a preliminary memorandum of understanding between the representatives of service providers and service buyers, the approach could be achieved through some consecutive steps covering technical, socio-economic and institutional issues. Figure 2 shows schematically the steps coordinating three main ecological, socio-economical and institutional components on preparation of the PES program. INSERT FIGURE 2 Step one: Building of local structures (commission of forest and pastures in the villages selected to participate and study the relation of the farmers with natural resources. Step two: Ecological diagnosis through surveys on geophysical indicators capturing the natural suitability of a location for a certain land use such as the elevation of the village nucleus, proxies for the terrain roughness, and average rainfall within the village boundary. Step three: Focusing on variables mirroring largely socio-economical village-level characteristics like the village surface area, population density, migration movements, agricultural intensity and input use, and land-use strategies. Step four: Traditional and actual land tenure and land use analysis: Models of land use proposed and constraints for their rehabilitation will be identified. The main models of land use in erosion reduction, and increase biomass and forage would be proposed. Step five: Estimation of ecosystem as capital natural and preparation of the proposal for the service payers and other donors. Step six: Proposal of policies and legal framework supporting PES approach. Contractual arrangement as contract models between buyers and communes as well as the model of the contract between the participants in the project and the communes. Forest, pasture and agricultural land as Natural capital Efforts to value natural capital are a variation of this approach. As produced capital is generally considered machinery, equipment, and infrastructure and commercial land, ecosystems can also be considered a form of capital (Pagiola et al. 2004). Forests represent wealth in terms of the flow of timber and non-timber products and services they provide. Ecosystems, considered as a form of natural capital, have the advantage that unlike produced capital, they can regenerate themselves - if they are managed appropriately (Pagiola et al. 2004). But like produced capital, natural capital is subject to depletion which reduces future production possibilities. In the case of forests, for example, harvest rates that are greater than the rate of growth will come at the expense of the stock of the resource. This will undermine future harvests, as well as any other services that depend on the extent of forests in the ecosystem. Estimates of the value of ecosystems as natural capital are very closely related to the estimates of the flow of

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benefits they provide (Kaiser and Roumasset, 2002). Rather than looking at the flow of benefits from an ecosystem in a single year, the natural capital approach considers the present value of all current and future benefits that the ecosystem will generate. Estimating this value requires projecting how the flow of services, and their value, would evolve over time. Cost- Benefit Analysis of the Natural Capital and Conservation decision Average annual growth of forest in the studied area is in the range of 1.6 - 4 3 m /ha/year. Considering that for fuelwood are used mainly broadleaves species, in the actual stage the forest in three communes can not fulfill the needs. In the simple case, if each of the forest users will cut fuelwood to fulfill the family needs, harvest rates will be three times greater than the growth rate, and this will come at the expense of the stock. Such a harvesting will undermine future harvests, as well as any other services that depend on the extent of forests in the ecosystem. In addition, rate of fillings the Drinis dams is high. It is essential that a vegetative cover need to be established soon, land use need to change to halt erosion. To assess whether a specific conservation intervention is worth undertaking, we must know two things: what would happen if we did nothing? And what would happen if we did intervene in a specific way? By using the entire flow of benefits as a yardstick for policy decisions, we are implicitly assuming that doing nothing would result in the complete and instantaneous loss of all ecosystem services, and that conversely conservation would result in the complete and instantaneous halt of all degradation processes (Pagiola et al. 2004). Thus is it necessary to ask if whether the total economic value of the services provided by an ecosystem managed in one way (with conservation) is more or less than the total value generated by the ecosystem if it were managed in another way (without conservation), after allowing for the cost of changing management (implementing the conservation measures). Using the model of Pagiola et al. (2004), two scenarios with and without conservation are analyzed and the results are given in the Table 3 and Figure 3. Amount extracted from each family from forest and non crop lands is calculated based on the questionnaires on the family need in three studied communes. Data for the value on biodiversity recreation are interpolated based on the forest value in Mediterranean countries (Croitoru, 2007b). While it is quite likely that a change in management will increase the value of some services and decrease the value of others; what we considered as the most important is the net difference between the total values of all services. Table 3. Cost - benefit analysis of two scenarios with and without conservation schemes
Without conservation With conservation Cost-benefit analysis

Human activities/NC functions

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Cost of protection Use/protect non croplands Extraction of forest products Recreation Protection HP from erosion and flooding Biodiversity conservation

5 42 6 10 9

-910 -55 25 14 27 23

-10 -10 -17 8 17 16

Figure 3 seeks to measure how the quantity of each service would change as a result of the forest extraction or conservation, as compared to their quantity without the extraction or conservation; as well as use the degraded non crop land for grazing or protect it. The first column on the left shows the value of the total flows of benefits that an ecosystem is providing today. The pattern of use is assumed to be unsustainable: the ecosystem is being degraded by excessive extraction of forest products, reducing its future capacity to provide services. The next two columns show two alternatives. The middle column illustrates what might happen under current degradation trends, if nothing is done. In this scenario, the overall value of services provided by the ecosystem declines. We assume that the high level of extraction of forest products is the reason for the overall degradation. As extraction rises, recreational opportunities, watershed services, and biodiversity conservation are all diminished. The difference between this column and the previous column can be considered to be the impact of degradation. The third column shows the value of the services the ecosystem would provide if it were conserved. Conservation, as seen in the figure, is not fully effective: the overall value of services still falls compared to the present situation. However, conservation does succeed in improving conditions over what they would have been otherwise, although it does this at a cost. The conservation measures (whose cost is shown as a negative value) severely restrict the extraction of forest products. By doing so, they preserve a good part of the recreational, watershed protection, and biodiversity conservation services the ecosystem is providing. The difference between this column and the without conservation column can be taken as the benefit of conservation. Figure 3: Change in ecosystem benefits resulting from the forest conservation project in the Drini watershed

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Recommended steps toward PES implementation In the fragile Mediterranean environment, the role of forests in water conservation is particularly important (Croitoru, 2007b). Although forests have usually been seen as unambiguously good for water services, a more nuanced view of forestwater relationships is emerging from recent research (Bruijnzeel, 2004). Asking how valuable can be the ecosystem in Blerimi, Qelez and Qerreti Communes and how much can contribute to have a long life for the Drinis Hydropowers also begs the question how valuable to whom? The benefits provided by the given ecosystem as a result of less forest extraction is a way to have a longer economically life for Drini Hydropower stations. While forests usually improve water quality, their impact on dry season water flows varies depending on local conditions and their impact on total annual flow tends to be negative. Forest usually help to reduce downstream flood risk, but do not contribute to reducing the most catastrophic floods (Kaimowitz, 2004). On the other hand this can be translated in less revenue for each family, with other words the result fall unequally across different groups. The proposed ecosystem uses in three communes seem highly

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valuable to hydro energy production group in one side, in other side it looks to cause losses to the communities. Understanding the distribution of costs of benefits is also important when considering how to mobilize funds for conservation. As noted by Pagiola et al. (2005), PES should not be considered a silver bullet that can be used to address any environmental problem, but a tool tailored to address a specific set of problems: those in which ecosystems are mismanaged because many of their benefits are externalities from the perspective of ecosystem managers. According to the concept of social capital (Woolcock, 1998) groups in time develop trust, mechanisms of reciprocity, and shared experiences in the collective solution of societal problems. This is argued to enhance the chance that they will have fewer problems solving collective action problems (van Laerhoven, 2006). Local communities in the studies area are interested to participate in the PES program. Based on contractual arrangement on pilot bases, they can contribute on protecting from grazing the sensitive eroded areas in total more than 1200 hectares. In addition, the community can contribute in improving the forest cover and topsoil through silvicultural interventions converting degraded black pine forest to mix with broadleaves species. However, an authorized change of "destination" of more than half of farm areas, actually abandoned but legally yet "agricultural land" will be required for those areas. It is necessary to understand that the most suitable form of use from an agro-ecological point of view of this land is either reforestation or reversion to improved pastures. It is important to note, however, that payments in PES programs should generally be on-going rather than finite. Considerable concern has also been expressed by some as to whether the benefits of PES programs would continue once payments end (Swart, 2003). If the externality underlying PES is permanent, as for instance in the case of forest conservation, there is no reason to believe that a service will be provided after payments end. Payments should not be based on the cost of implementing land use changes (as in traditional subsidies to natural resource managements investments), but should be proportional to expected service delivery and conditional on having undertaken activities expected to provide the desired services. The implementation of PES needs a very detailed study in each village and farm based on proposals coming from the households and the village commission facilitated by experienced consultants and accepted by the service payers. A key factor in sustainable forest management is to secure stable and long-term property rights or long-term tenure rights. This leads to management for the future and strong attachment to forestry also to the benefit of local communities. A number of key policies already address ecosystem conservation and protection, revenue generation, and poverty alleviation, providing indirect support to the objectives of PES. However, current legislation does not specifically require that funds be earmarked directly to service providers or that beneficiaries pay for environmental services. This presents a significant challenge to start implementation and scaling up of successful local pilot project in these communes. It is crucial to screen actual legal frame and at the very least, to avoid critical

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policy or legal constraints that could prevent implementation. To support this program, the forestry law would explicitly recognize the environmental services provided by natural forests and forest plantations. Under this framework, private land and forest owners can change actual land use, work to stop further degradation, and reduce poverty through being compensated for providing these services.

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FIGURE 1: Total economic value of forests in the Mediterranean region (Source: Croitoru, 2007a)

FIGURE 2: Components on preparation and implementation of the PES program

Diagnosis

Initial scoping: - MoU with Service User

Ecological

Socio-economical

Institutional:

Identification of problem sources Assessment of natural capital possible solutions

Survey of providers Analysis of cost and benefits of alternative land uses

Assessment of social capital Stakeholder consultations

Specific detailed work plan

Approval by service user

Implementation

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