 Thanks for being here. So the research that I'm presenting today is actually part of a project that is called Invaluable and that was funded by several European research agencies. As a presentation is going to last for about 10 minutes, information will be limited but you will have access to more on the publications. All of these has been published already. The Invaluable project is about market-based instruments for ecosystem services and biodiversity. The fact is that there's been a heavy trend about since the 90s towards these MBIs, MBIs for market-based instruments for ecosystem services and that was even amplified in the 2000s because of the spectacular emergence of the concept of ecosystem services that became a priority in terms of policies but also in terms of research. The fact is that these MBIs were presented as innovative policy instruments especially as compared to previous approaches such as more common and control policy instruments or approaches and even ICDPs for integrated conservation development projects. But we find that there are very few commonalities or very few similarities among all of these so-called market-based instruments. So that triggers some confusion and we argue that this confusion is a problem for a number of reasons that I don't really have time to elaborate but I will quote only two of these reasons. One is that it's an impediment to proper evaluation of policies if we don't really know what we talk about if we cannot really compare between instruments and evaluations and that opens the door to many ideology-driven discourses and statements about these market-based instruments and that in turn has delayed a number of international processes and decisions especially in the context of very hot controversies about the commodification of nature. So the way we address this problem very briefly today is by defining and proposing a number of categories with more emergent instruments in each of these categories in order to have a better understanding of what's an MBI. And if I have time but I adopt I have time I will talk more about some empirical assessment we did about some payments for ecosystem services experiments in Indonesia so maybe I will have some questions about it in the future who knows. So let me present very briefly these six categories so it's kind of a typology of MBI's that we proposed and that was published and you may have different kinds of typologies different different ways to categorize instruments but this one is very much based on the interactions I mean on how these policy instruments interact with markets how they use the markets to operate and with what kinds of markets with what characteristics. So the first category would be direct markets where the ecosystem goods and services are directly consumed by the beneficiaries or by the users in order to provide more value to the ecosystem and to lead to its conservation. So here you can think of as an illustration you can think of the trade in NTFPs non-timber forest products for instance or even nature tourism. A second category would be tradable permits here you set a cap on the use of a given resource so you artificially create scarcity for that resource and then the resource users can exchange permits amongst themselves in order to reach the cap. So that's what we see with the carbon markets and in another field that what we see with the ITQs for individual transferable quotas for fisheries. A third category would be what I call regulatory price changes where a regulation is set that leads effectively to a change in the relative prices of goods and services depending on the attributes depending on their impact on the environment whether positive or negative. So here you can think as an illustration of ecotaxis and more specifically you can think of a carbon tax where you change the relative prices of gasoline for instance. A fourth category would be voluntary price signals. Here the producers of a given good or service try to send a signal to consumers saying my goods is better than the others in terms of impact on the environment for instance and in exchange you should give me a price premium or I will strengthen my market share just because I tell you it's good and here you can think of the well-known FSC certification as an illustration. A fifth category would be what I call cohesion type agreements. So this is based on the co-theram which is central to environmental economics dating from the 60s and the co-theram says that whatever the initial allocation of rights if the right holders can exchange the rights amongst themselves and if the transaction costs I mean pursuing their own interest and if the transaction costs are very low then you will reach an optimal situation and here that's that's that's that the theory that works for lots of p.s. payments for ecosystem services schemes for instance and I will just conclude with a fifth category which is reverse auctions so everybody knows about the principle of auctions here it's reversed so instead of having buyers compete amongst themselves you have sellers compete amongst themselves and this is a way to to get a maximum output with minimal resources spent and as an illustration I can just mention the conservation reserve program in the US where farmers can get payments for putting some of the land on follow. So once these six categories are defined we test we test these we see to what extent they're relevant with a literature review with a sample representative sample of about a hundred references we see how social scientists actually define and view these MBIs and what we find is that about a quarter of these articles do not really define these MBIs did not really define the topic of research and it's difficult to then put these instruments in one or the other category. Another quarter or another 25% of these articles deal with tradable permits which is a category we defined before and the other categories are represented in the range of 6 to 12% of the articles so it's much lower so this is actually I find that actually not not not bad in the sense that the tradable permits as a category really meets many conditions for economists to be understood and to be accepted as a market-based instrument in the sense that you have competition you have many buyers and sellers and you can expect an efficient allocation of the resources. What we find as well is that the analytical approaches that are used in all of these articles that deal with the MBIs are very diverse that diverse in terms of methods diverse in terms of scale it can be local to national to global and also diverse in terms of evaluation criteria so whether you're interested in looking at the efficiency at the effectiveness at the equity at the poverty alleviation and many other evaluation criteria so that in the end the overall statistic of about half and half of positive and negative assessments for these MBIs the statistic is difficult to to understand it's difficult to interpret so what can we say about the MBIs whether they're good or bad whether they meet the expectations or not is still subject to discussion so I presented these six categories if we want to simplify further we can even think of two big ensembles of market-based instruments and the distinction could be made between what I call market governance and what I would call bilateral governance so you would have market or bilateral governance the market governance would be using a real market with lots of exchanges with standard goods that would be traded in order to reach an equilibrium price in an optimal situation on the contrary by contrast a bilateral governance would refer to more bilateral transaction bilateral agreements specific transactions for specific problems usually local and involving a very limited number of actors buyers or sellers and whose nature whose identity matters you make a deal with someone because you know who this is for instance because she's got a specific or she's got a specific role to play and that's important to make that broad distinction because it's all about market-based instruments at least in the minds of many people but the implications of being in one or the other category are extremely different the risks the opportunities are extremely different if you deal with fluid markets market governance you may have a risk of a commodification of nature of losing control for instance but you don't have the you you you also have the opportunity to efficiently allocated resources for instance and to have a better outcome with bilateral governance you have usually higher transaction costs it's more difficult to implement but you have something that may be in a better position to solve your problem in a given context so I will just maybe mention just to conclude some of the conclusions from some of the findings from the study we did on two different sites where PES payments for ecosystem services were implemented in Indonesia one in the western part of Java and the other one and on the island of Lombok because PES are supposed to be a market-based instrument it's it's it's defined as such by by many researchers and even policymakers and what we find is that even though the theory of signal is at the very heart of these payments for ecosystem services in practice the signal is is kind of lost in translation as I would say it's not very well transmitted to the receivers who would make the decisions on the ground based on these incentives that would be provided and and that's maybe a problem in terms of of market because this is what we can expect from markets you know it's to guide decisions based based on a number of signals so if it doesn't operate in practice it may be an impediment to the effectiveness and I think I will stop. Thank you Romain I think you've raised lots of very important questions and so I'd like to open up the floor to to comments or questions from colleagues Jacob. I'm hoping that you can elaborate a little bit more about what you found from these Indonesian examples and and the categories that they fall into market or excuse me yeah market or bilateral. Okay yeah thanks there is an ambiguity I think regarding the status of payments for ecosystem services actually the connections to market-based instruments are kind of ambiguous I would myself not really consider many of these experiments as as marketing the sense that usually make in advance an economic valuation of the services and then you set you make the agreements based on this but when you have a market I mean the market is supposed to to lead you to these to these prices so so just just to tell you that in the first place these experiments in Indonesia were about watershed services and they were very prominent so you have lots of talks lots of discourses about the potential of these payments for ecosystem services to deal with you know to to trigger conservation to contribute to poverty alleviation as well in many places where you know the sources of income are very limited but what we see in practice with these two experiments is that it's very difficult and it takes so much time to take off it takes so much so much time to be implemented at scale and sometimes it's never it's even never implemented at scale what reason why it is so is that the transaction costs are extremely high and so it's usually heavily subsidized you have a number of donors you have development agencies that push for the design and implementation of this but you know it's difficult what reason is I say it's that the signal itself is difficult to transmit and what reason for that is that you have lots of institutional layers you have lots of governance layers I would say in the case of Chida now in West Java you've got you've got the donors you've got a company actually who pays for that pays for it and then you've got a multi-stakeholder agency that is supposed to represent a number of stakeholders and geos first agencies and so on and then you have farmer groups and then in the end you have the land owners who make decisions so I mean the signal is is is is kind of blurred it's not well understood because of this long process and another problem is that the multi-stakeholder agency that is supposed to represent all of these usually is dominated by one local very influential player so in the case of Chida now it was a local NGO trying to pursue its own development agenda on the case of Lombok it was a local forest agency that saw here an opportunity for getting more financial resources to to promote sustainable forest management that might not be a bad thing in itself but then the the issue of ecosystem services is kind of forgotten in the process so it might not lead you know eventually to a proper and efficient provision of ecosystem services and this is kind of unavoidable as as we saw actually Christoph more general question so like if you if we look over over the let's say over the last several years maybe a decade or so it seems that there's there's been a lot of sort of you know reliance on on this market-based mechanisms to know to you know for for sustainability and for those of these a lot of hopes associated with that and then the last few years you I don't know at least in my opinion you see kind of like a reaction on the part of the governments in certain countries like Indonesia that okay these market-based mechanisms you know they were promising but they didn't really pan out in many ways so there is seems to be some kind of tendency to maybe I don't know go back to these kind of bilateral or government government government-based arrangements or schemes and so on what is your opinion on that do you really do you actually you know do you see this kind of tendency in the in the market for pests yeah and and what what what you know are they the real reasons for this or maybe there's something else I think there's been there's been very high expectations and some sort of fantasy on behalf of economists you know and what happens in the minds I mean some people say what happens in the minds of economists when they sit at the desk is very different from what's going to happen on the ground once these policies are designed and implemented and this is exactly what we I think witnessed what we saw these instruments faced I would say the face the principle of reality and the faced very great inertia high transaction costs misunderstandings and so on and so forth there are many reasons that I won't elaborate right now but the fact is I mean I would summarize all of these problems with facing the principle of reality you can look at the carbon markets for instance that that's something that everybody knows in this room and you can think also of biodiversity offsets so this is more about biodiversity and of course it's themselves biodiversity offsets it's supposed to be a market mechanism in fact in the end it's all about making deals between project developers and those who would provide the offsets for very specific situations and it's very time-consuming it's very resource-consuming so that in the end it cannot be qualified as a market even though it was supposed to be so and that's that's how it was conceived we studied the case in France for instance where I mean very complicated it doesn't really happen very few transactions the whole thing about the market is that you would have lots of transactions you know to reach the optimal situation if you have if you don't have the fluid of fluid exchanges and many buyers and sellers it doesn't really make sense anymore so that in the end people tend to mistake payment schemes or simple incentive schemes for market-based instruments I would argue it's it's not really the case so the PES experiments you were mentioning are usually more alike subsidy programs and that's for instance the case of Costa Rica which is like the emblematic payment for ecosystem services it's a subsidy program I would argue it's about the state I mean the the money is collected through you know taxes paid by hydrocarbon industry which has nothing to do with the services provided on these lands where you would have sustainable first management and so this is managed by a fund that provides incentives to lend owners to do either conservation sustainable first management reforestation or whatever so I mean the innovation here can be challenged I would say Peter thanks I think so thanks I think this topic is really at the core of what we are working on so it's really interesting to hear listen to the discussion and the way I read it is not really about market versus non-market it's more to understand how the whole mix of decision-making is operating and so you said lost in translation it seems more to be lost in transaction so it's really one one of the efficiency dimensions is the is the transaction cost and the other dimension that I would like to ask you more also more about this that even if it was a zero cost transaction how much of the decision making does it does the scheme or payment system actually influence on the ground is that something you're planning to research more about in the sense that there is the economic dimension but there might also be other dimensions for the disease of the decision-making on the ground that is not strictly economic or at least not neoclassical economics indeed yes I will just remember the last transaction thanks for it it's indeed it summarizes one of the problems in terms of decisions I mean I think that now many people understand that so many decisions are not made strictly for financial reasons indeed and so that's one of the limitations as well I would say to the effectiveness of many of these approaches and actually there is an emerging thinking of corpus that looks as it's related to what you say that looks at the motivation crowding out effect that means it's kind of a barbarian term that means that people would forget about the intrinsic motivations once they can get incentives one they can get rewarded for conservation with financial payments so there would be a motivation crowding out in the sense that they would not do conservation anymore for social reasons but just for financial reasons and so here we see that there could be a shift in how people would make decisions indeed and that could be kind of perverted by the implementation of these schemes I personally don't really think this is a case and I actually think the risk is very limited just because a level of implementation the scale of implementation is extremely limited itself so that's why I also challenge usually people who who talk about the commodification of nature which is kind of I think it's more in their minds than than in practice so in terms of decisions yeah indeed it's it's not it's not all about you know financial calculations and there are many other ways to influence how people make decisions if you look at certification you may have certified products but in the end the prices are quite the same with the other ones you know and actually I had a discussion also with Steve about maybe novel approaches to to guide a virtuous to lead to virtuous decisions that will not be based on these grounds actually and it's like consumers would take responsibility by themselves to lead to positive outcomes without having these all of these policies in place I'm not sure yeah thank you Romain do we I think we have time for one more question or comment then I'll so step in and offer a comment and with respect to you just your reflections perhaps on the role of institutions at the local level in all of this and there seems to be one of the issues that you've identified is that the instruments the signals coming from these marketplace instruments are not getting through and I'm wondering if you know what the scope is for further sort of understanding about what's inhibiting those signals reaching local producers and and one would imagine that local institutions are key in this and I wonder if you know if they're always if you will those institutions are fit for purpose that is fit for receiving and disseminating those kinds of these kinds of signals at least in the context of some of the cases we've looked at and I wanted to put in the mix the example of IHITOs in Mexico where you have these sort of collective institutions that are quite old if you will in relative terms to you know the notion being that it takes time for institutions to find their feet to develop their kind of quite a bit early to work out procedures but you know the IHITOs in Mexico have been very successful vehicles for payment for environmental services schemes with respect to water conservation and tree planting and in the uplands it's a huge national benefit and I'm wondering if some of the cases we've looked at might not have had the same kind of experience or maturity with respect to engaging with transfers and marketing signals in the ways that say the Mexican case has and if that makes a difference right yeah I think there is maybe a dilemma a dilemma here because you would have the temptation to go straight to the decision makers indeed but at the same time you have all of these you know local dynamics social dynamics that are difficult to you know bypass of course it's maybe not even a good thing so you mentioned the case of IHITOs in in Mexico in the case of Indonesia indeed I think it would be a bad idea anyway to to try to bypass all of these local institutions such as farmer groups even though in the shorter term it poses a number of problems just because the signals are difficult to to be transmitted effectively to the decision makers and you have lots of you know local manipulations but even not intentional sometimes you have lots of lots of problems to deal with so I think that you may expect actually I think we should we should keep going that way just to try to answer your question and you we may expect the positive outcomes in the longer term because I I emphasized the fact that the signal was was not perfect this is from the perspective of these PES right payments for ecosystem services but in terms of longer term impacts and with slightly different approaches as this is in practice it might not be a problem and it might even be better so these you know these people will make decisions not necessarily on financial grounds but it might not be even a problem because we also observed that there was a higher level of understanding and of awareness by these people about the environmental issues which is kind of indirect and unexpected consequence of having these experiments on the ground and which is actually which actually contradicts the negative effect of motivation calling out in the fact that people would be obsessed by the financial returns of making one or the other decision actually it's not exactly what we observe we observe something different people pay attention to the environment in many cases just because there's been all of these meetings you know and there are kinds of incentives as well so I think this is actually the way forward maybe a last comment would be that many of these schemes are based on the notion of voluntary payments it's like the service beneficiaries would pay for it you know not relying on the state for instance but in practice it's difficult because of you know you have public goods you want your neighbor to pay for you and you have many problems of transaction costs are high and so on so actually what we find is that it's better to rely on mandatory ways to do resource collection like establishing a tax and then the way you spend the money can be through bilateral agreements with these people so actually these instruments are usually multi-dimensional so you've got different instruments in one single mechanism for instance how you collect the money how you spend it how you set the price you could have you could use reverse actions in order to set the price in order to set the level of payments for instance you know and and so on and so forth remain thank you very much