THE ACTIVE engagement of indigenous peoples (IPs) and local communities is  deemed critical to the success of a payment for ecosystem services (PES) scheme, the Philippine Institute for Development Studies (PIDS) said, citing the results of a study.

PES schemes compensate individuals or communities for their role in protecting the environment or ecosystem. The value generated by their services is quantified via the impact of keeping water clean, mitigating floods, and sequestering carbon.

“This entails multiple consultations for awareness building and scoping out possible entry points as well as challenges to the agreement. External support from private entities, civil society organizations, non-government organizations, and international development organizations help facilitate protected areas without consistent government funding towards the path of sustainability,” PIDS said.

Global indicators on ecosystem extent and condition decreased 47% from their natural baselines and will continue to decline by at least 4% per decade, PIDS said, citing a United Nations report.

“This presents dire forecasts for the Philippines which topped the World Risk Report in 2022. Missing environment markets hinder the full capture of immediate and slow-onset damage from disasters and climate change and the extent of repercussions to national accounts,” the study concluded.

“This weakness facilitates the emergence of valuation approaches for economic contributions, one of which is PES. As evaluation and empirical data contribute to the greater inclusion of the environment in economic development, it becomes integral to look at how financing tools inform management and conservation mechanisms,” it added.

The study said that the country lacks a definitive national policy and framework on PES.

“The PES concept remains intangible to local government units (LGUs) and policymakers. Communication of process and benefits should be well-packaged with concrete and actionable ways forward, but the success of this rests on the assumption of trust among parties,” it said.

“At the moment, LGUs have no mechanisms to receive funds from non-government entities, but public finances are limited and unsustainable …User fees remain a grey area in the fiscal landscape which calls for imminent standardization of methodology. While its institutionalization is also encouraged, setting the process in stone might have several setbacks,” it added.

PIDS also recommended capitalizing on the increased interest from the government, frame sustainable PES templates, and augment accounting and auditing rules to reflect PES and natural capital accounts. — Luisa Maria Jacinta C. Jocson