Streamlining Monitoring for Smallholder and Community PES (SMS-PES)

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Transaction costs are one of the main challenges for smallholders and communities in accessing international carbon and other, nascent, ecosystem services (ES) markets. A large proportion of these costs are associated with the development of credible methodologies for monitoring to offer reassurance along the value chain that land use practices result in the delivery of ecosystem services. This is especially true for smallholders and community projects with multiple, scattered small properties, for whom meeting environmental thresholds and economies of scale remains difficult, yet the social and environmental cost of leaving them out is not a viable option in many developing countries. At the core of our proposal is the testing of scientifically robust methodologies for cost-effective monitoring of small farmers and community ES projects, which will contribute to poverty alleviation by 1) improving access to these emerging markets, and 2) allowing a higher proportion of the money to go to farmers rather than project management.Monitoring of emerging markets for ES presents a varied picture across the world, and it is strongly linked to how indicators for ES are initially defined. Many watershed and/or biodiversity protection projects combine type of activity (e.g. forest protection) with some level of targeting (e.g. riparian areas, biological corridors) as indicators of provision. Monitoring is then focused on monitoring land cover or land use, rather than outcomes (e.g. number of species). International carbon markets have been stricter in approaches to carbon stocks and monitoring to ensure that offsets are real and verifiable. International standards provide credibility and can lead to price premiums, however they often are expensive and cumbersome (Corbera and Brown, 2010a; Skutsch et al., 2009) and the transaction costs associated become active barriers that often lead to the exclusion of smallholder and community projects (De Pinto et al., 2010) . With a budget under 500k, this sleek proposal integrates cutting-edge scientific analysis, with a novel application of choice experiments, to address the question of what is an optimal level of monitoring in carbon forestry projects. By 'optimal', we mean a monitoring strategy that satisfies the needs of buyers of ecosystem services credits and minimises effort and resources required such that these resources can reach smallholders. We focus directly on monitoring carbon and other ecosystem services (biodiversity and to a smaller degree watershed services) and their implications along the overall value chain for these ES: 1) at the Offset Creation level (eligible smallholder and community-based practices and measurable indicators for carbon, BD, and social co-benefits); 2) at the Verification of Value of offset stage (third party Standards); and 3) at the Articulation of Demand for Offsets stage (platforms for specific characteristics).Following a literature review, we will examine four different methodologies according to their scientific robustness and capacity to measure and monitor carbon and associated ecosystem services. We will then test at the local level in three different locations (Plan Vivo certified projects in Mexico, Uganda and Sri Lanka) to account for the practicalities of implementation it in terms of protocols for approved practices and offset creation, but also in terms of available information, costs and local capacity. At the other end of the value chain, we will test how buyers react to these methodologies in terms of perceived project credibility for service delivery, and their potential willingness to pay for different combinations of ecosystem service credit offsets against cost of monitoring them. Throughout the project we will work with the Plan Vivo Foundation and local project implementers, to ensure that the methodology responds to the practicalities of verification and aggregation of offsets.