Payment for Ecosystem Services: Himalayan states should demand more

Their demand for “green bonus” triggers the payment for ecosystems debate

By Richard Mahapatra
Published: Monday 29 July 2019
10 Himalayan states demanded a ‘green bonus’ from the Union government for keeping critical ecosystems intact. Photo: Getty Images

When the 10 Himalayan states demanded a ‘green bonus’ from the Union government for keeping critical ecosystems intact, it appeared as the usual demand they have been making for the last 15 years.To some extent, in fact, these states have been getting incentives based on their forest cover under a Finance Commission formula since 2005.

But this ‘regular’ demand is an emerging global mode to conserve ecosystems called payment for ecosystems services (PES). And this demand has triggered interest on PES in India which has been experimenting this though in sporadic ways.

The biggest challenge is how to monetise the ecosystem’s services, which can be compensated to the states. By far, if the Finance Commission incentive fund is termed as PES, it is one of the major such schemes in the world at this scale.

Globally, the services an ecosystem provides are getting increasing policy attention. In October 2010, the Conference of Parties to the Convention on Biological Diversity held in Nagoya witnessed acceptance of environmental goods part of the national accounts.

Himalayan states provide critical and huge ecosystem services to the country. They have forest in around 41.5 per cent of their geographical area. This means a third of the country’s forest cover, according to the National Mission for Sustaining Himalayan Ecosystems, under the National Action Plan for Climate Change.

The total value of forest ecosystem services flowing from Uttarakhand is about $2.4 billion / year (Rs 10,700 crore /  year). At the Indian Himalayan-level, it is Rs 94,300 crore / year.

This is one of India’s major carbon sink. Besides it averts soil erosion from the world’s youngest mountain range.

“Estimates of forest carbon pool in Indian Himalaya is about 5.4 billion tonnes (forest biomass + forest soil), which is about equal to the annual carbon emission from fossil fuels in Asia,” according to the non-profit Central Himalayan Environment Association.

More to it, these states can be termed as the water reservoir of the country. Annually, 1,200 billion cubic metres of water flow through the Himalayan rivers.

So, these states, by protecting forests and ecosystems, ensure larger life-saving services to the country. For these, they also face numerous restrictions in their usual development works such as taking up big projects that destroy forests.

What they demand now as ‘green bonus’ is called the payment for ecosystem services.

This demand has been the country’s longest ever bid for PES at this scale that involves formalised distribution of incentive fund between the Union and state governments. The 12th Finance Commission (2005-10), for the first time, recognised the need to invest in resources and earmarked Rs 1,000 crores for five years to be given to states for preserving forests.

The 13th Finance Commission allocated Rs 5,000 crore, based on the area under forest cover with an added parameter of Canopy density.

The 14th commission reformed the revenue-sharing formula between the Union and the states. It brought the landmark change of including forest cover as a determining factor in a state’s share.

Though it is for all states, the Himalayan states are perceived to be the natural beneficiaries given their high forest cover.

In the distribution of funds to states, the commission attached a 7.5 per cent weight to forest cover. Population, demographic change, income distance and area are the other factors that decide the share of a state in central tax pool.

But the Himalayan states have not been a clear winner under this arrangement.

An assessment of individual state shares, as recommended by the commission, reveals that states cumulatively received over Rs 39,300 crore for forest conservation in 2015-16. While 19 states, which have substantial proportion of forest land, have gained due to this, large states with marginal forest cover — for instance, Bihar and Uttar Pradesh — have lost out in comparison to previous allocations.

Among the top five beneficiary states, only Arunachal Pradesh featured.

Let’s look at the few estimates made on the value of ecosystem services these states provide.

In 2006 a study by the Indian Institute of Forest Management (IIFM) put the value of Himachal Pradesh’s forest and services provided at Rs 1 3.23 lakh crore. The state government in a few presentations put its watershed services at Rs 1.06 lakh crore annually.

And how much did it get under the 12th Finance Commission incentive funds? A meagre Rs 20 crore / year during 2005-10.

PES is fast turning into a mode of conservation, even though not that wide in India. Some 14 years ago, Kuhan village in Himachal Pradesh's Kangra district, scripted a formula to pay for ecosystem services rendered by an ecosystem.

Hardly talked about for years, this village’s cash payment to another village in upstream ensured the latter stopping grazing in a common land. This led to less silt flow downstream and saved Kuhan village’s crucial check dam that caters to its water demand. 

The municipality of Palampur city in Himachal Pradesh pays the communities living in the upstream water source for keeping the catchment intact.

At present, ecological services payment schemes cover carbon sequestration and storage, watershed development and protection, non-domestic biodiversity protection and forest protection. In the climate change regime, carbon emission reduction and other mitigation activities make huge businesses.

But agriculture and farmers have been kept out of the formal carbon market that is worth more than $100 billion. Farmers, particularly those practicing traditional farming including in Himalayan states, have been rarely considered eligible for payment for their ecological services.

Now, it is being felt that farmers should be rewarded for their ecological services. Traditional farming is considered climate-resistant and less harmful to the environment.

Under the climate change mitigation and adaptation plans, agro-biodiversity is mentioned as a potential instrument to be explored. The poorest farmers living in degraded environment usually practise this type of farming.

When agriculture with low ecological footprint is encouraged for payment for ecological services, it would serve two purposes — bring down poverty and make agriculture climate-resistant.

A Kerala Agriculture University research on Muthuran tribe’s traditional ragi (finger millet) farming found it contributed greatly to the protection of biodiversity and made local sources of earning climate-resistant.

If the tribe is paid for this ecological service, the government would annually give Rs 1,668 / hectare for each variety of finger millet.

The demand for a ‘green bonus’ by Himalayan states, thus, is not only a valid one but also an ecological necessity. They should demand more, because by giving them more India’s plains can be saved from many disasters.

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