Updated on June 9, per the latest Payment for Environmental Services Taskforce discussions, which will be discussed with the Senate’s Environment Commission
Introduction
1 – The main goal of this document is to offer technical support and subsidize both the legislative consultancy of the Federal Senate and the team of the current Rapporteur for Bill No. 5028/2019, Senator Fabiano Contarato, in adapting some essential points for the National Policy on Payment for Environmental Services (PNPSA) to be designed as to ensure its effectiveness, adequateness to the practices already existing in Brazil and consistency with the principles and concepts accepted in the literature and legislation inherent to the theme.
2 – Currently under examination by the Environment Commission, the proposal for the Senate Bill No. 5028 of 2019 aims not only to set out the National Policy on Payment for Environmental Services (PNPSA) but also to establish legal certainty for environmental service valuation schemes.
3 – Statute No. 12651, of May 25, 2012 (Article 41 of the Forest Code) already acknowledges environmental services provided in both Legal Reserve and Permanent Protection areas and provides incentives for their maintenance and/or recovery. Bill No. 5028 of 2019 therefore timely provides for the establishment of a National Policy on Payment for Environmental Services, which is strategic as it expands the coverage on the topic and allows for compatibility between the development of productive actions and the preservation of natural assets in Brazil.
4 – The Payment of Environmental Services experiences already underway in the country¹, whether with public/private funds or both, have also been demonstrated in the results achieved given that using this category of economic incentive can cause a behavioral change in favor of the provision and/or recovery of environmental services, which would be unfeasible in the absence of such incentive.
5 – This process is the result of an accumulation of discussions on the topic that have already been held in the Chamber of Deputies under Bill No. 0792/2007 by Representative Anselmo de Jesus and Bill No. 312/2015 by Representative Rubens Bueno.
6 – This opinion was guided by the discussions held at the Dialogue Forum Public Policies and Economic Instruments of the Brazilian Coalition on Climate, Forests and Agriculture² involving several professionals in the area and the business sector. Institutions that have historically worked on the theme have engaged in the document draft, such as: the Institute for Environmental Research in the Amazon (IPAM), The Nature Conservancy (TNC), Grupo Boticário Foundation for Nature Protection, the Business Council for Biodiversity and Sustainable Development (CEBDS), World Wildlife Fund (WWF), BVRio, World Resources Institute (WRI), Proactiva, among others.
Recommendations
• Considering the need to promote a broader policy to accommodate the different PES schemes without prejudice to the advances in this agenda that have been achieved through public and private subnational initiatives, we suggest the displacement of Section II (of PNPSA actions), section III (PNPSA application criteria), Section IV (of the PES contract), Section V (Governance); Section VI (National Registration of PES) for the Payment for Environmental Services Federal Program.
• Considering that there are several ways to pay for the environmental service provided, for example by means of direct payment to the individual (contractual relationship) or by means of financial compensation of another nature (tax credits), we suggest the exclusion of the word “contractual” from the definition of PES provided for in article 2, item IV, so that other modalities are not excluded.
• This policy should not have governing among one of its objectives; instead, it should bring legal certainty and recognize the topic within a broad approach that allows the implementation of the various possible PES schemes at the subnational level, which encourages changes in behavior in favor of provision, recovery and/or maintenance of environmental services, without creating obstacles to those experiences that are already underway.
• It is essential that the policy guidelines recognize the environmental services generated in agricultural, agroforestry and agrosilvopastoral systems conducted under sustainable management, which contribute to the capture and retention of carbon and the conservation of soil, water and biodiversity.
• The joint body should have the task of suggesting metrics (instead of proposing) for the valuation of contracts and of proportionality criteria in the payment for environmental services that involve public resources. It should not be forced. It must respect the autonomy of plans and programs, because there is no metric that covers all PES profiles. In addition, it is important that the joint body’s composition provides for the election of civil society representatives who support environmental defense, as well the representatives from indigenous peoples and traditional communities, ensuring regional diversity.
• There would not be any additions here had the incentive not existed, that is, the economic incentive causes behavioral change and therefore allows for: 1. The programs that today promote the recovery of Permanent Preservation Areas in areas of small rural producers that would not have the capital to invest in recovering their liabilities are still PES references in the country, fulfilling the role of restoring multiple associated environmental services; 2. Those who have historically promoted the conservation and/or recovery of environmental services are compensated and recognized for their role, among other actions; 3. Priority areas for conservation are to be recovered and the associated environmental services are to be maintained, among other actions.
• Among the criteria for applying the PES Federal Program, we have added Extractive Reserves (Resex) and Sustainable Development Reserves (RDS) to the criteria for the application of the PES Federal Program for the important role that traditional communities in these areas play in the conservation of natural resources and associated environmental services.
• Among the private properties eligible under the PES Federal Program, we include Private Natural Heritage Reserves (RPPN) for the opportunity to value the voluntary effort of owners engaged in environmental conservation and the protection of biodiversity.
• The text inserted in Article 24 aims to ensure that the provision of contracted environmental services must be maintained in the event, for example, of the sale of the property. If an owner adheres to the PES Program and then sells the area under the PES contract, the text guarantees that the buyer will be bound by the contract and must guarantee the continuity of the same environmental services. The obligation to provide the services does not lie with the owner, but with the property (“propter rem”).
• In order to contribute to overcoming any tax obstacles, we suggest the premium sanction as the legal nature of payment for environmental services. Premium or compensatory sanctions are those resulting from a positive conduct, of beneficial results for society. The premium sanction would not be levied on service tax, since there is consideration in the interest of the payer itself, but only income tax. Therefore, it is not a classic service provision for tax purposes, but a “prize” for those who have adopted conservation measures.
Finally, our role is to support decision makers and facilitate understanding of the adjustments that are necessary. It is a consensus in this group that we do not want a legal framework that creates obstacles to existing PES schemes. This legal framework should create legal certainty and a favorable environment for various public and private PES schemes, capable of attracting investments and effectively contributing to the conservation of natural capital and the recovery of environmental liabilities.
1 Among the initiatives worth mentioning: the Water Producer (National Water Agency), Oasis project (Fundação O Boticário) and Conservador das Águas project (Municipality of Extrema, ES in partnership with TNC).
2 The Brazilian Coalition on Climate, Forests and Agriculture is a multisectoral movement, comprising leading agribusiness entities in Brazil, the main civil organizations in the area of environment and climate, representatives of the academic environment, sector associations and leading companies in the areas of wood, cosmetics, steel, paper and cellulose, among others. The main role of the Brazilian Coalition on Climate, Forests and Agriculture is to articulate and facilitate actions for the country to promote a new model of economic development based on the low carbon economy, and, in this way, respond to the challenges of climate change.