PINC stands for Proactive Investment in Natural Capital. It is a proposed system to economically reward large areas of intact tropical forests that act as ‘global utilities’ providing ecosystem services (ES) that underpin food and energy security at local to global scales. PINC is therefore not related to carbon emissions reductions but calls for straight-forward funding for forests, which absorb and store carbon, create rain, moderate weather conditions and maintain biodiversity (see Box 1). These are ES that we all currently benefit from but do not yet pay for. Since ES are all public goods, the international community needs to design a system that recognizes and generates revenues to pay for these services. Such a mechanism could come under the remit of the Convention on Biological Diversity (CBD).

There is a danger that REDD could create a perverse incentive among countries with historically low rates of deforestation to begin destroying their forests, which some REDD proposals seek to address.  PINC could also provide incentives to these countries by acting as a complementary funding stream for standing forests.  Furthermore if REDD is to be successful, over the long-term it will need to bring deforestation rates down to zero,  and all payments will then be for standing forests.  We therefore need to think now how to move from REDD to PINC.

It is increasingly recognized that sustainable development cannot be achieved without recognizing the immense value of tropical forests, both in monetary and non-monetary terms. REDD will hopefully help to stop deforestation, but tropical forest ES such as rainfall generation, water supply regulation and atmospheric cooling are likely to become increasingly important as regional climate change impacts occur.  Paying a utility bill to help forest communities, build local capacity and maintain protected areas will be cheaper than the opportunity costs associated with REDD.  Payments for standing forests will also help local, regional and global populations’ resilience and adaptation to the impacts of climate change.

There is an urgent need for capacity-building and governance improvements in order for all forms of ES payment system to be effective; including land tenure reform, clarification of indigenous and local community rights, local participation in decision-making, the development of schemes for the equitable sharing of benefits from payments for ES, and training in participatory forest monitoring and management. PINC funds could play a role in building this capacity in forests that are not currently undergoing rapid deforestation.

As the services provided by natural ecosystems have become more widely recognized, Payments for Ecosystem Services (PES) have grown in popularity as a method of funding conservation and sustainable development. Although they are still experimental in some cases, there are now several instances of downstream water users paying upstream rural communities to protect and manage watershed forests. The challenge now is to find a way to scale-up funding for standing forests.

One way to do this would be to bundle ES payments in with payments for forest carbon. The bundling of ES payments in with carbon, however, may not fully realize the potential future value of these services. Furthermore, carbon payments may be limited to threatened forests or newly-planted forests. PINC proposes to address these shortcomings through a separate mechanism which makes payments solely for the ES provided by standing forests.

A comprehensive strategy for conserving and restoring tropical forests requires three complementary and reinforcing mechanisms (see figure 2). REDD (Reducing Emissions from Deforestation and Degradation) abates greenhouse gas emissions by protecting threatened forests. Afforestation and Reforestation (A/R), under the Clean Development Mechanism (CDM), restores and expands forests through new plantations to provide alternative timber supplies and to sequester carbon. PINC complements these two mechanisms by promoting continued maintenance of standing forests as global utilities.

 

Ecosystem services are fundamental to PINC, but are also critical to the success of REDD and A/R for the following reasons:

REDD and PINC: For REDD to work, it must consider the ES provided by natural forests for two reasons. Firstly, if appropriately designed, REDD will provide ‘co-benefits’ for local people such as poverty alleviation and resilience to climate change, as well as biodiversity conservation. Secondly, REDD must recognize that forests are more than sticks of carbon. They are large-scale ecosystems, with uncertain thresholds for irreversible changes to their functioning. REDD must halt deforestation before these thresholds are reached.

A/R and PINC: Plantations of native species could provide local communities with valuable ES, and are likely to be more resilient to climate change and pests than non-native monocultures. The restoration of degraded land through agroforestry plantations could also help to provide a range of ESS to rural communities.