CHALLENGE
Today around 40 to 50 percent of forests in Bulgaria are classified as high risk for wildfires. While forest fires have their place in nature and can serve an important function in maintaining the health of some ecosystems, there is evidence of a growing number of fires caused directly or indirectly by humans. Conversely, fire prevention and suppression seems correlated with the level of socioeconomic development (contrast efforts in Portugal, Spain and France vs. results in the Balkans). 

Accounting for the full costs of forest fires could help build the case for stepped up investment in this sector and perhaps open the door for carbon financing. However costs associated with increased greenhouse gas (GHG) emissions are very difficult to estimate compared to economic losses in terms of property, timber, and even loss of life and livelihoods. The difficulty stems from a number of factors including the fact that much carbon remains in the form of dead trees; soil carbon content may change depending on the severity of fire; forest fires may weaken trees and increase the occurrence of pests and disease; forests may regenerate in different patterns depending on species, competing vegetation, grazing etc.

APPROACH
PROFOR was planning to supporting a study that would examine the possible causes of forest fires in Bulgaria and evaluate a set of preventive and suppressive measures, including climate change adaption measures, that can be taken to reduce the incidence of forests burnt annually; and  evaluate the different models that estimate GHG emissions associated with forest fires in Bulgaria and propose and test the most robust model/ methodology to estimate these emissions. However this activity was cancelled.

CHALLENGE
Today around 40 to 50 percent of forests in Bulgaria are classified as high risk for wildfires. While forest fires have their place in nature and can serve an important function in maintaining the health of some ecosystems, there is evidence of a growing number of fires caused directly or indirectly by humans. Conversely, fire prevention and suppression seems correlated with the level of socioeconomic development (contrast efforts in Portugal, Spain and France vs. results in the Balkans). 

Accounting for the full costs of forest fires could help build the case for stepped up investment in this sector and perhaps open the door for carbon financing. However costs associated with increased greenhouse gas (GHG) emissions are very difficult to estimate compared to economic losses in terms of property, timber, and even loss of life and livelihoods. The difficulty stems from a number of factors including the fact that much carbon remains in the form of dead trees; soil carbon content may change depending on the severity of fire; forest fires may weaken trees and increase the occurrence of pests and disease; forests may regenerate in different patterns depending on species, competing vegetation, grazing etc.

APPROACH
PROFOR was planning to supporting a study that would examine the possible causes of forest fires in Bulgaria and evaluate a set of preventive and suppressive measures, including climate change adaption measures, that can be taken to reduce the incidence of forests burnt annually; and  evaluate the different models that estimate GHG emissions associated with forest fires in Bulgaria and propose and test the most robust model/ methodology to estimate these emissions. However this activity was cancelled.

CHALLENGE
Central America is one of the world regions most vulnerable to climate change impacts. Most countries in the region have high population densities in areas vulnerable to extreme climatic variation, and experience some of the highest rates of deforestation and landscape degradation in Latin America. These conditions directly contribute to exacerbating the negative impacts of destructive climatic events, which affect a significant growing percent of the population, the landscape, and the economy.

Governments of the region are trying to respond to this new reality by designing and implementing effective policies and programs, and uniting international efforts to help communities living in the most vulnerable landscapes to recover their resilience and adapt to increasingly frequent and damaging meteorological phenomena. El Salvador, for example, has launched the National Program for the Restoration of Ecosystems and Rural Landscapes (PREP) and is preparibng REDD+ readiness plans with an emphasis on Adaptation-based Mitigation.

However the institutional efforts, social capital and financial resources that are needed to address these challenges are enormous. For such policies to be successful, coordination and synergies among the different relevant central (e.g. ministries of agriculture, rural development and environment) and local (e.g. municipalities and community organizations) stakeholders is critical. At local levels, steps to induce collective action and governance and improve access to innovative technologies and extension services also need to be taken.

APPROACH

Through analysis of three case studies—one in Honduras and two in El Salvador—PROFOR helped to identify policies and institutional arrangements that can make a difference. The key factors looked at were the heterogeneity of interests and rights of the actors who influence the landscape, social capital in the territory, knowledge and innovation management systems, and the use of direct incentives and other forms of compensation.

In Honduras, the most successful case, stakeholders were able to rally around an urgent social and environmental situation of degraded land: without national government involvement, farmers agreed to stop traditional burning for cropland so that lands could be restored. This change in practice was enabled by local knowledge that documented and offered new options for landscape restoration. The no-burn restoration practice had transaction costs for farmers and required the use of incentives accompanied by regulations, with the territory’s different municipalities applying fines to eradicate the use of burning in agriculture. In the two other cases, different interests among stakeholders impeded collective action.

A set of recommendations regarding the policy and institutional arrangements required for successful landscape-level actions are now informing local, national, and regional dialogues on sustainable landscape planning and management regarding climate change adaptation and mitigation. Additionally, the activity developed guidelines for the contribution of REDD+ to the revitalization of the depressed rural economy, which provided a bridge for working with other government priorities such as education, public security, and productivity.

RESULTS
This activity and its final strategic report will serve as a valuable input for the World Bank’s Forest Carbon Partnership Facility’s REDD+ Readiness Preparation activity in El Salvador. More specifically, the strategic report will aid that country’s REDD+ Readiness in terms of organization among government ministries, consultation with relevant actors, and overall national REDD+ strategy. This activity is ongoing. Findings will be shared on this page when they become available. Follow us on twitter or join our mailing list for regular updates.

CHALLENGE
Central America is one of the world regions most vulnerable to climate change impacts. Most countries in the region have high population densities in areas vulnerable to extreme climatic variation, and experience some of the highest rates of deforestation and landscape degradation in Latin America. These conditions directly contribute to exacerbating the negative impacts of destructive climatic events, which affect a significant growing percent of the population, the landscape, and the economy.

Governments of the region are trying to respond to this new reality by designing and implementing effective policies and programs, and uniting international efforts to help communities living in the most vulnerable landscapes to recover their resilience and adapt to increasingly frequent and damaging meteorological phenomena. El Salvador, for example, has launched the National Program for the Restoration of Ecosystems and Rural Landscapes (PREP) and is preparibng REDD+ readiness plans with an emphasis on Adaptation-based Mitigation.

However the institutional efforts, social capital and financial resources that are needed to address these challenges are enormous. For such policies to be successful, coordination and synergies among the different relevant central (e.g. ministries of agriculture, rural development and environment) and local (e.g. municipalities and community organizations) stakeholders is critical. At local levels, steps to induce collective action and governance and improve access to innovative technologies and extension services also need to be taken.

APPROACH

Through analysis of three case studies—one in Honduras and two in El Salvador—PROFOR helped to identify policies and institutional arrangements that can make a difference. The key factors looked at were the heterogeneity of interests and rights of the actors who influence the landscape, social capital in the territory, knowledge and innovation management systems, and the use of direct incentives and other forms of compensation.

In Honduras, the most successful case, stakeholders were able to rally around an urgent social and environmental situation of degraded land: without national government involvement, farmers agreed to stop traditional burning for cropland so that lands could be restored. This change in practice was enabled by local knowledge that documented and offered new options for landscape restoration. The no-burn restoration practice had transaction costs for farmers and required the use of incentives accompanied by regulations, with the territory’s different municipalities applying fines to eradicate the use of burning in agriculture. In the two other cases, different interests among stakeholders impeded collective action.

A set of recommendations regarding the policy and institutional arrangements required for successful landscape-level actions are now informing local, national, and regional dialogues on sustainable landscape planning and management regarding climate change adaptation and mitigation. Additionally, the activity developed guidelines for the contribution of REDD+ to the revitalization of the depressed rural economy, which provided a bridge for working with other government priorities such as education, public security, and productivity.

RESULTS
This activity and its final strategic report will serve as a valuable input for the World Bank’s Forest Carbon Partnership Facility’s REDD+ Readiness Preparation activity in El Salvador. More specifically, the strategic report will aid that country’s REDD+ Readiness in terms of organization among government ministries, consultation with relevant actors, and overall national REDD+ strategy. This activity is ongoing. Findings will be shared on this page when they become available. Follow us on twitter or join our mailing list for regular updates.

CHALLENGE
Markets require reliable and transparent information in order to function; this applies equally to new and emerging markets for ecosystems services for carbon, water and biodiversity, as it does to traditional financial markets. Investors need to fully understand the risks and opportunities associated with their ecological dependencies, assets and investments. Only then will substantial private investment move toward supporting sustainable resource outcomes.

APPROACH
The “Ecosystem Marketplace” is a Forest Trends initiative that seeks to consolidate and report free and independent information on ecosystem markets and payments for environmental services through regular market reports. Historically, various businesses and foundations have supported the Ecosystem Marketplace (e.g., Bloomberg, JP Morgan Chase, Moore, Packard, MacArthur).

PROFOR's partnership with Forest Trends aims to secure a sustainable institutional platform for ecosystems market intelligence in order to scale up operations and reduce risks in investment in natural capital. This support is expected to help Forest Trends ramp up its analytical and targeted outreach work. It builds on previous work, including “Mobilization of Ecosystem Services Payments in China” though Forest Trends in 2006, and “Matrix: Mapping Payments for Ecosystem Services”, also through Forest Trends, in 2008.

RESULTS

This partnership helped Forest Trends to successfully organize multiple roundtable meetings (see below). The meetings attracted a wide audience of policymakers, practitioners, foundations, multi-lateral and bilateral institutions. Through wide media coverage, the materials reached international readers and academia.

• Roundtable on “Beyond Carbon: Emerging Market Tools for Business Social Responsibility” (Panel event and media summary/outcomes brief, Carbon Expo – June 2013)
• Roundtable on “Public Investments and Incentives: How to Achieve Effective and Sustainable Demand for Ecosystem Services and Land Use Outcomes” (December 2013)
• Roundtable on “Need to Know Basis: Self-reporting, Self-regulation, and User-driven Environmental Intelligence in the Age of Corporate Disclosure” (February 2014)
• Roundtable on “Supply Change: Corporations, Commodities, and Commitments that Count (March 2015)

The partnership also financed the production of reports that provide strategic and targeted delivery of ecosystem market intelligence:

• The Matrix 2013, a market inventory of policy approaches, results, and projections
• State of the Forest Carbon Market 2013, State of the Forest Carbon Market 2014, and State of the Voluntary Carbon Markets 2014, collectively forming a series of reports highlighting trends in forest carbon offset demand, and tracking performance-based payments for emissions reductions in forests
• State of Water Investment 2014, studying investments in watersheds
• The Results Report 2012: Sharing Progress on the Path to Adoption of Clean Cooking Solutions was published and launched in partnership with the United Nations Foundation as part of an event for the Global Alliance for Clean Cookstoves. The report shows that targeted users were marginal low-income consumers, who benefited from direct distribution. The number of stoves distributed increased two-fold over the previous year, with 8.2 million stoves distributed in 2012.
• Several more reports, news articles, blogs and other market intelligence are available at the Ecosystem Marketplace website and Forest Trends website.

For stories and updates on related activities, follow us on Twitter and Facebook, or subscribe to our mailing list for regular updates.

CHALLENGE
Markets require reliable and transparent information in order to function; this applies equally to new and emerging markets for ecosystems services for carbon, water and biodiversity, as it does to traditional financial markets. Investors need to fully understand the risks and opportunities associated with their ecological dependencies, assets and investments. Only then will substantial private investment move toward supporting sustainable resource outcomes.

APPROACH
The “Ecosystem Marketplace” is a Forest Trends initiative that seeks to consolidate and report free and independent information on ecosystem markets and payments for environmental services through regular market reports. Historically, various businesses and foundations have supported the Ecosystem Marketplace (e.g., Bloomberg, JP Morgan Chase, Moore, Packard, MacArthur).

PROFOR's partnership with Forest Trends aims to secure a sustainable institutional platform for ecosystems market intelligence in order to scale up operations and reduce risks in investment in natural capital. This support is expected to help Forest Trends ramp up its analytical and targeted outreach work. It builds on previous work, including “Mobilization of Ecosystem Services Payments in China” though Forest Trends in 2006, and “Matrix: Mapping Payments for Ecosystem Services”, also through Forest Trends, in 2008.

RESULTS

This partnership helped Forest Trends to successfully organize multiple roundtable meetings (see below). The meetings attracted a wide audience of policymakers, practitioners, foundations, multi-lateral and bilateral institutions. Through wide media coverage, the materials reached international readers and academia.

• Roundtable on “Beyond Carbon: Emerging Market Tools for Business Social Responsibility” (Panel event and media summary/outcomes brief, Carbon Expo – June 2013)
• Roundtable on “Public Investments and Incentives: How to Achieve Effective and Sustainable Demand for Ecosystem Services and Land Use Outcomes” (December 2013)
• Roundtable on “Need to Know Basis: Self-reporting, Self-regulation, and User-driven Environmental Intelligence in the Age of Corporate Disclosure” (February 2014)
• Roundtable on “Supply Change: Corporations, Commodities, and Commitments that Count (March 2015)

The partnership also financed the production of reports that provide strategic and targeted delivery of ecosystem market intelligence:

• The Matrix 2013, a market inventory of policy approaches, results, and projections
• State of the Forest Carbon Market 2013, State of the Forest Carbon Market 2014, and State of the Voluntary Carbon Markets 2014, collectively forming a series of reports highlighting trends in forest carbon offset demand, and tracking performance-based payments for emissions reductions in forests
• State of Water Investment 2014, studying investments in watersheds
• The Results Report 2012: Sharing Progress on the Path to Adoption of Clean Cooking Solutions was published and launched in partnership with the United Nations Foundation as part of an event for the Global Alliance for Clean Cookstoves. The report shows that targeted users were marginal low-income consumers, who benefited from direct distribution. The number of stoves distributed increased two-fold over the previous year, with 8.2 million stoves distributed in 2012.
• Several more reports, news articles, blogs and other market intelligence are available at the Ecosystem Marketplace website and Forest Trends website.

For stories and updates on related activities, follow us on Twitter and Facebook, or subscribe to our mailing list for regular updates.

Program Summary

This PROFOR activity aimed to provide evidence to the Government of Nicaragua on the economic benefits of forest landscape restoration activities. The knowledge generated from this activity was intended to improve policy makers’ ability to made decisions on investments going towards rural livelihoods and incomes, reduced GHG emissions, and greater climate risk resilience.

Challenge

Based on climate change projections, water availability is likely to decline in most of Nicaragua's watersheds. A three-year drought, coupled with massive deforestation in the past few decades, has depleted most of Nicaragua’s water sources which is threatening the country’s future water supply. In fact, the country has lost up to 60 percent of its surface water sources and up to 50 percent of its underground sources, which have either dried up or have been polluted. Such diminished water availability will severely impact human health, agricultural productivity, hydropower generation, and a suite of other economic activities.

The government of Nicaragua recognizes that restoring forest cover is indispensable to safeguarding agricultural production and minimizing the impacts of climate variability on economic and human well-being. Under the National Reforestation Plan, the government is not only addressing the reduction of carbon emissions, but also aiming to increase awareness of the importance of reversing deforestation, increasing forest coverage, and improving the production of environmental services provided by forests.

To assist the government’s efforts, PROFOR proposed to provide analysis on the ecosystem service and economic benefits of forest landscape restoration activities, including disseminating information to decision makers on the trade-offs of different restoration scenarios. The results would guide the Nicaraguan government on implementing potential forest landscape restoration programs by providing potential prices for payment for ecosystem services and identifying the low-cost/high-benefit alternatives in watershed conservation, forest protection, and carbon sequestration. PROFOR would generate various restoration and investment scenarios that could open restoration and reforestation opportunities for farmers, local communities, and the private sector, including agribusiness and ecotourism.  

Approach

This PROFOR activity consisted of the following tasks:

• Output 1: Analysis of the costs of environmental degradation. This task aimed to provide the analytical underpinnings to target interventions for climate change adaptation and mitigation. This task was to estimate the costs of environmental degradation resulting from land degradation and deforestation, droughts, soil degradation, fire, flooding, and other natural disasters. In addition, the analysis was to estimate the costs to Nicaragua associated with climate change.
• Output 2: Benefit analysis of a potential program for watershed conservation and landscape restoration in Nicaragua. This analysis aimed to estimate the benefits of forest and landscape restoration on the value of multiple ecosystem services across the country by estimating the net value of ecosystem service benefits (such as ecotourism, carbon sequestration, water quality, agriculture, soil protection, etc.) under different reforestation scenarios. It would also explore the economic potential of changing land use (such as degraded agricultural land) to restore native forest, or for agroforestry.

By accomplishing these tasks, the program aimed to inform and improve the Nicaraguan Government’s knowledge on how to promote policies and regulations that increase forest conservation, support a nature-based economy, and increase watershed conservation and landscape restoration in the country.   

Results

Due to civil unrest in the country, work for this activity was frozen, delayed, and although eventually reopened, many limitations to activities were put in place due to continual political tensions. The team had initiated the diagnostics and analysis but was not able to collect all the information needed for the studies. Nevertheless, the team was able to put together a draft/preliminary report for Output 1: Analysis of the costs of environmental degradation. The government was very interested in this activity because of their interest in headwater conservation and landscape restoration. Analysis for Output 2 was partially included in this report as the needed data that was difficult to obtain due to the country’s political crisis.

Findings

The preliminary cost of environmental degradation (COED) to Nicaraguan society is estimated at about US$0.9 billion, or 6.7 percent of the country’s GDP in 2016. Among the costs, it is important to note the following:

• Air pollution stands out as the most important driver of degradation (3.8 percent of GDP). This primarily is due to the impacts caused by household air pollution (about 1,060 premature deaths).
• Unsafe water supply, sanitation, and hygiene cause significant damage (1 percent of GDP) largely as a result of the effects of inadequate water supply, sanitation, and hygiene on health (about 260 deaths).
• Agricultural land degradation, deforestation, and natural disasters are also noteworthy because of their negative effects on resource productivity and ecosystem services.
• In case of devastating natural disaster scenario, cost of natural disasters will be comparable to the average annual total national cost.
• All zones in Nicaragua appear to have similar COED, but environmental health costs dominate in the Pacific and Central zones, while natural resource degradation dominates in the Atlantic zone.

The findings of the COED in Nicaragua can be useful for future project GEF preparations, SCD, CPF, and DPLs, among others.

Program Summary

This PROFOR activity aimed to provide evidence to the Government of Nicaragua on the economic benefits of forest landscape restoration activities. The knowledge generated from this activity was intended to improve policy makers’ ability to made decisions on investments going towards rural livelihoods and incomes, reduced GHG emissions, and greater climate risk resilience.

Challenge

Based on climate change projections, water availability is likely to decline in most of Nicaragua's watersheds. A three-year drought, coupled with massive deforestation in the past few decades, has depleted most of Nicaragua’s water sources which is threatening the country’s future water supply. In fact, the country has lost up to 60 percent of its surface water sources and up to 50 percent of its underground sources, which have either dried up or have been polluted. Such diminished water availability will severely impact human health, agricultural productivity, hydropower generation, and a suite of other economic activities.

The government of Nicaragua recognizes that restoring forest cover is indispensable to safeguarding agricultural production and minimizing the impacts of climate variability on economic and human well-being. Under the National Reforestation Plan, the government is not only addressing the reduction of carbon emissions, but also aiming to increase awareness of the importance of reversing deforestation, increasing forest coverage, and improving the production of environmental services provided by forests.

To assist the government’s efforts, PROFOR proposed to provide analysis on the ecosystem service and economic benefits of forest landscape restoration activities, including disseminating information to decision makers on the trade-offs of different restoration scenarios. The results would guide the Nicaraguan government on implementing potential forest landscape restoration programs by providing potential prices for payment for ecosystem services and identifying the low-cost/high-benefit alternatives in watershed conservation, forest protection, and carbon sequestration. PROFOR would generate various restoration and investment scenarios that could open restoration and reforestation opportunities for farmers, local communities, and the private sector, including agribusiness and ecotourism.  

Approach

This PROFOR activity consisted of the following tasks:

• Output 1: Analysis of the costs of environmental degradation. This task aimed to provide the analytical underpinnings to target interventions for climate change adaptation and mitigation. This task was to estimate the costs of environmental degradation resulting from land degradation and deforestation, droughts, soil degradation, fire, flooding, and other natural disasters. In addition, the analysis was to estimate the costs to Nicaragua associated with climate change.
• Output 2: Benefit analysis of a potential program for watershed conservation and landscape restoration in Nicaragua. This analysis aimed to estimate the benefits of forest and landscape restoration on the value of multiple ecosystem services across the country by estimating the net value of ecosystem service benefits (such as ecotourism, carbon sequestration, water quality, agriculture, soil protection, etc.) under different reforestation scenarios. It would also explore the economic potential of changing land use (such as degraded agricultural land) to restore native forest, or for agroforestry.

By accomplishing these tasks, the program aimed to inform and improve the Nicaraguan Government’s knowledge on how to promote policies and regulations that increase forest conservation, support a nature-based economy, and increase watershed conservation and landscape restoration in the country.   

Results

Due to civil unrest in the country, work for this activity was frozen, delayed, and although eventually reopened, many limitations to activities were put in place due to continual political tensions. The team had initiated the diagnostics and analysis but was not able to collect all the information needed for the studies. Nevertheless, the team was able to put together a draft/preliminary report for Output 1: Analysis of the costs of environmental degradation. The government was very interested in this activity because of their interest in headwater conservation and landscape restoration. Analysis for Output 2 was partially included in this report as the needed data that was difficult to obtain due to the country’s political crisis.

Findings

The preliminary cost of environmental degradation (COED) to Nicaraguan society is estimated at about US$0.9 billion, or 6.7 percent of the country’s GDP in 2016. Among the costs, it is important to note the following:

• Air pollution stands out as the most important driver of degradation (3.8 percent of GDP). This primarily is due to the impacts caused by household air pollution (about 1,060 premature deaths).
• Unsafe water supply, sanitation, and hygiene cause significant damage (1 percent of GDP) largely as a result of the effects of inadequate water supply, sanitation, and hygiene on health (about 260 deaths).
• Agricultural land degradation, deforestation, and natural disasters are also noteworthy because of their negative effects on resource productivity and ecosystem services.
• In case of devastating natural disaster scenario, cost of natural disasters will be comparable to the average annual total national cost.
• All zones in Nicaragua appear to have similar COED, but environmental health costs dominate in the Pacific and Central zones, while natural resource degradation dominates in the Atlantic zone.

The findings of the COED in Nicaragua can be useful for future project GEF preparations, SCD, CPF, and DPLs, among others.

Program Summary

This PROFOR activity aimed to provide evidence to the Government of Nicaragua on the economic benefits of forest landscape restoration activities. The knowledge generated from this activity was intended to improve policy makers’ ability to made decisions on investments going towards rural livelihoods and incomes, reduced GHG emissions, and greater climate risk resilience.

Challenge

Based on climate change projections, water availability is likely to decline in most of Nicaragua's watersheds. A three-year drought, coupled with massive deforestation in the past few decades, has depleted most of Nicaragua’s water sources which is threatening the country’s future water supply. In fact, the country has lost up to 60 percent of its surface water sources and up to 50 percent of its underground sources, which have either dried up or have been polluted. Such diminished water availability will severely impact human health, agricultural productivity, hydropower generation, and a suite of other economic activities.

The government of Nicaragua recognizes that restoring forest cover is indispensable to safeguarding agricultural production and minimizing the impacts of climate variability on economic and human well-being. Under the National Reforestation Plan, the government is not only addressing the reduction of carbon emissions, but also aiming to increase awareness of the importance of reversing deforestation, increasing forest coverage, and improving the production of environmental services provided by forests.

To assist the government’s efforts, PROFOR proposed to provide analysis on the ecosystem service and economic benefits of forest landscape restoration activities, including disseminating information to decision makers on the trade-offs of different restoration scenarios. The results would guide the Nicaraguan government on implementing potential forest landscape restoration programs by providing potential prices for payment for ecosystem services and identifying the low-cost/high-benefit alternatives in watershed conservation, forest protection, and carbon sequestration. PROFOR would generate various restoration and investment scenarios that could open restoration and reforestation opportunities for farmers, local communities, and the private sector, including agribusiness and ecotourism.  

Approach

This PROFOR activity consisted of the following tasks:

• Output 1: Analysis of the costs of environmental degradation. This task aimed to provide the analytical underpinnings to target interventions for climate change adaptation and mitigation. This task was to estimate the costs of environmental degradation resulting from land degradation and deforestation, droughts, soil degradation, fire, flooding, and other natural disasters. In addition, the analysis was to estimate the costs to Nicaragua associated with climate change.
• Output 2: Benefit analysis of a potential program for watershed conservation and landscape restoration in Nicaragua. This analysis aimed to estimate the benefits of forest and landscape restoration on the value of multiple ecosystem services across the country by estimating the net value of ecosystem service benefits (such as ecotourism, carbon sequestration, water quality, agriculture, soil protection, etc.) under different reforestation scenarios. It would also explore the economic potential of changing land use (such as degraded agricultural land) to restore native forest, or for agroforestry.

By accomplishing these tasks, the program aimed to inform and improve the Nicaraguan Government’s knowledge on how to promote policies and regulations that increase forest conservation, support a nature-based economy, and increase watershed conservation and landscape restoration in the country.   

Results

Due to civil unrest in the country, work for this activity was frozen, delayed, and although eventually reopened, many limitations to activities were put in place due to continual political tensions. The team had initiated the diagnostics and analysis but was not able to collect all the information needed for the studies. Nevertheless, the team was able to put together a draft/preliminary report for Output 1: Analysis of the costs of environmental degradation. The government was very interested in this activity because of their interest in headwater conservation and landscape restoration. Analysis for Output 2 was partially included in this report as the needed data that was difficult to obtain due to the country’s political crisis.

Findings

The preliminary cost of environmental degradation (COED) to Nicaraguan society is estimated at about US$0.9 billion, or 6.7 percent of the country’s GDP in 2016. Among the costs, it is important to note the following:

• Air pollution stands out as the most important driver of degradation (3.8 percent of GDP). This primarily is due to the impacts caused by household air pollution (about 1,060 premature deaths).
• Unsafe water supply, sanitation, and hygiene cause significant damage (1 percent of GDP) largely as a result of the effects of inadequate water supply, sanitation, and hygiene on health (about 260 deaths).
• Agricultural land degradation, deforestation, and natural disasters are also noteworthy because of their negative effects on resource productivity and ecosystem services.
• In case of devastating natural disaster scenario, cost of natural disasters will be comparable to the average annual total national cost.
• All zones in Nicaragua appear to have similar COED, but environmental health costs dominate in the Pacific and Central zones, while natural resource degradation dominates in the Atlantic zone.

The findings of the COED in Nicaragua can be useful for future project GEF preparations, SCD, CPF, and DPLs, among others.

Program Summary

This PROFOR activity aimed to provide evidence to the Government of Nicaragua on the economic benefits of forest landscape restoration activities. The knowledge generated from this activity was intended to improve policy makers’ ability to made decisions on investments going towards rural livelihoods and incomes, reduced GHG emissions, and greater climate risk resilience.

Challenge

Based on climate change projections, water availability is likely to decline in most of Nicaragua's watersheds. A three-year drought, coupled with massive deforestation in the past few decades, has depleted most of Nicaragua’s water sources which is threatening the country’s future water supply. In fact, the country has lost up to 60 percent of its surface water sources and up to 50 percent of its underground sources, which have either dried up or have been polluted. Such diminished water availability will severely impact human health, agricultural productivity, hydropower generation, and a suite of other economic activities.

The government of Nicaragua recognizes that restoring forest cover is indispensable to safeguarding agricultural production and minimizing the impacts of climate variability on economic and human well-being. Under the National Reforestation Plan, the government is not only addressing the reduction of carbon emissions, but also aiming to increase awareness of the importance of reversing deforestation, increasing forest coverage, and improving the production of environmental services provided by forests.

To assist the government’s efforts, PROFOR proposed to provide analysis on the ecosystem service and economic benefits of forest landscape restoration activities, including disseminating information to decision makers on the trade-offs of different restoration scenarios. The results would guide the Nicaraguan government on implementing potential forest landscape restoration programs by providing potential prices for payment for ecosystem services and identifying the low-cost/high-benefit alternatives in watershed conservation, forest protection, and carbon sequestration. PROFOR would generate various restoration and investment scenarios that could open restoration and reforestation opportunities for farmers, local communities, and the private sector, including agribusiness and ecotourism.  

Approach

This PROFOR activity consisted of the following tasks:

• Output 1: Analysis of the costs of environmental degradation. This task aimed to provide the analytical underpinnings to target interventions for climate change adaptation and mitigation. This task was to estimate the costs of environmental degradation resulting from land degradation and deforestation, droughts, soil degradation, fire, flooding, and other natural disasters. In addition, the analysis was to estimate the costs to Nicaragua associated with climate change.
• Output 2: Benefit analysis of a potential program for watershed conservation and landscape restoration in Nicaragua. This analysis aimed to estimate the benefits of forest and landscape restoration on the value of multiple ecosystem services across the country by estimating the net value of ecosystem service benefits (such as ecotourism, carbon sequestration, water quality, agriculture, soil protection, etc.) under different reforestation scenarios. It would also explore the economic potential of changing land use (such as degraded agricultural land) to restore native forest, or for agroforestry.

By accomplishing these tasks, the program aimed to inform and improve the Nicaraguan Government’s knowledge on how to promote policies and regulations that increase forest conservation, support a nature-based economy, and increase watershed conservation and landscape restoration in the country.   

Results

Due to civil unrest in the country, work for this activity was frozen, delayed, and although eventually reopened, many limitations to activities were put in place due to continual political tensions. The team had initiated the diagnostics and analysis but was not able to collect all the information needed for the studies. Nevertheless, the team was able to put together a draft/preliminary report for Output 1: Analysis of the costs of environmental degradation. The government was very interested in this activity because of their interest in headwater conservation and landscape restoration. Analysis for Output 2 was partially included in this report as the needed data that was difficult to obtain due to the country’s political crisis.

Findings

The preliminary cost of environmental degradation (COED) to Nicaraguan society is estimated at about US$0.9 billion, or 6.7 percent of the country’s GDP in 2016. Among the costs, it is important to note the following:

• Air pollution stands out as the most important driver of degradation (3.8 percent of GDP). This primarily is due to the impacts caused by household air pollution (about 1,060 premature deaths).
• Unsafe water supply, sanitation, and hygiene cause significant damage (1 percent of GDP) largely as a result of the effects of inadequate water supply, sanitation, and hygiene on health (about 260 deaths).
• Agricultural land degradation, deforestation, and natural disasters are also noteworthy because of their negative effects on resource productivity and ecosystem services.
• In case of devastating natural disaster scenario, cost of natural disasters will be comparable to the average annual total national cost.
• All zones in Nicaragua appear to have similar COED, but environmental health costs dominate in the Pacific and Central zones, while natural resource degradation dominates in the Atlantic zone.

The findings of the COED in Nicaragua can be useful for future project GEF preparations, SCD, CPF, and DPLs, among others.