Payment of Environmental Services

The Program for Payment of Environmental Services (PPSA) has facilitated and promoted, since its beginning, the inclusion of different entities with interests in the development of the Costa Rican forestry sector. In this way, the adoption of a new financial scheme was allowed, where various institutions are integrated, among them: SINAC, Fonafifo, the National Forestry Office (ONF), the Forest Regents, the College of Agronomists, cooperatives, agricultural associations centers, non-governmental organizations in the sector and beneficiaries in general. The Fonafifo is the financial axis of the PPSA.

Within MINAE, Fonafifo works in coordination with SINAC; in this way, the State Forestry Administration (AFE) is integrated, where national policies are defined for the investment of resources in priority areas in the PPSA. In addition, elements derived from the framework of the Mesoamerican Biological Corridor - Costa Rica Section, as well as other commitments for the conservation of ecosystems and biodiversity are taken into account. Currently, Fonafifo has eight Regional Offices in strategic areas for the development of its activities.

In recent years, as a result of the expansion of the coverage of the Program, management and operational capacities have been gradually developed to guarantee the efficient management of the investment resources assigned to the institution, in order to adequately respond the requirements of current regulations in terms of financial administration and public budgets, as well as to maintain a productive dialogue with the country's finance authorities.

During the 1990s, Costa Rica experienced a change in the environmental area, with legislation that favors the conservation and protection of natural resources, the creation of institutions that strengthen the sector and a significant change in the way society perceives the management, conservation and sustainable development of natural resources.

The global initiatives of the early and mid-decade, such as the Summit and the Rio Declaration on Environment and Development, the Agenda 21, the international conventions on climate change, the Fight against Desertification and Biological Diversity, the Protocol of Kyoto, the Forest Principles and, more recently, the Millennium Goals and the Johannesburg Summit, have influenced the definition of the route that the country has decided to follow.

Likewise, Costa Rica included the necessary legal provisions to safeguard the right of all inhabitants to the enjoyment of a healthy and balanced environment and several sub-regional agreements were ratified, such as the Regional Agreement for the Management and Conservation of Natural Forest Ecosystems. and Development of Forest Plantations, in addition to the promulgation of new laws, such as: Forest Law No. 7575, Public Services Regulatory Authority Law, Organic Environmental Law, Soil Conservation Law and Biodiversity Law, which , together, they constitute the framework within which the execution of the PES Program is carried out.

Also, the current legal framework establishes the scope of application and recognition of environmental services, funding sources and the government mechanism of FONAFIFO, thus ensuring the institutional sustainability of the aforementioned Program.

The PSA Area of ​​FONAFIFO is responsible for ensuring the proper functioning of the PES Program. From there, all activities related to the guidelines (decrees, PSA procedure manuals), technical procedures, statistics, payment process to beneficiaries of PSA contracts, evaluation and monitoring of the PES Program are coordinated.

Initially, the main source of financing for the Program for Payment of Environmental Services (PPSA) consisted of allocating one third of the resources generated by the consumption tax to fuels, in accordance with article 69 of Law 7575. Subsequently, this tax it was modified by the Tax Simplification Law, creating the single tax on fuels, of which 3.5% is destined for PPSA. This determination reflects a clear vision of the legislator, by establishing a funding source that guarantees the sustainability of the Program.

The same legal framework (Forestry Law) establishes in its article 47, other potential sources of resources to strengthen the programs developed by the institution, such as:

Financial contributions received from the State, through ordinary and extraordinary budgets of the Republic or other mechanisms. Donations or credits received from national and international organizations. Credits obtained by the National Forestry Financing Fund, as well as resources raised through the issuance and placement of credit instruments. Among others.

In addition, FONAFIFO has encouraged the participation of international entities such as the World Bank and the Global Environment Facility, through the Ecomercados Project and the German Government, through KfW, which provides resources for the Huetar Norte Forestry Program.

However, to date, the resources available for investment have not been sufficient to supply the growing demand. Given this, FONAFIFO has developed mechanisms and agreements with the local private company to generate alternative sources of financing for the PES Program, which have been extremely successful and have allowed more producers to benefit from the resources mobilized through the application of this instrument. The investment that the private company has made is approximately US $ 7 million during the last years.

FONAFIFO designed a monitoring and evaluation scheme supported by modern technology and qualified personnel. Through this tool, the necessary tasks are carried out to ensure that the resources invested are used efficiently and reach those who effectively provide environmental services. This monitoring is carried out through several activities: the visit of the personnel of the PSA Area and of the Regional Offices to farms subject to the PSA, the review of reports of regencies contributed by the Forest Regents, the audits to which the FONAFIFO is subject and the Program PSA, accompanied by the SIG and SIAP as tools in monitoring and monitoring, which allows, in conjunction with the IT platform, to manage all the information of PSA contracts, combining different elements, such as technical criteria, legal, geographical and financial aspects, in this way, transparency and support of the PES Program is provided.

The PSA program has made it possible to achieve objectives, in combination with other actions of the Government of the Republic, which have had a positive impact on:

• Reduction of the rate of deforestation.
• Recovery of forest cover and degraded lands.
• Effective mechanism to combat illegal logging.
• Promotion of non-traditional production and exports and use of potential markets.
• Promotion of the forest industry.
• Contribution to rural development.
• Contribution to national strategies to fight poverty.
• Contribution to compliance with global environmental goals.