From Principles to Numbers: Approaches in Implementing Payments for Environmental Services (PES) in the Philippines - Smallholder Tree Growing for Rural Development and Environmental Services - page 365

justified and determined. We propose the use of a tier system of the Intergovernmental
Panel on Climate Change (IPCC) to classify PES projects, which will guide even
small farmholders. We illustrate this with case studies from existing PES projects
in the Philippines.

17.2 Proposed Tier Approach to PES

The use of tiers proved effective in classifying the methods employed in national
greenhouse gas inventories as shown by its wide use in the IPCC guidelines includ-
ing the 2006 Guidelines now under preparation (IPCC 2003, 2006). Its effective-
ness arises from its ease of use and as a way of facilitating communication among
parties under the UN Framework Convention on Climate Change (UNFCCC). Here
we propose adopting a three-tier system for PES projects based on the basis of
determining payments. The three tiers are summarized below:

● Tier 1: Payments based on established ecological principles and local
knowledge
● Tier 2: In addition to the above, payments based on simulation modeling and
limited site information
● Tier 3: In addition to above, payments based on site-specific quantitative meas-
urements on environmental services

Tier 1 can also be called the “default” method which projects can use in the absence
of site-specific data.

17.2.1 Tier 1: Use of Ecological Principles, Default Values,

and Local Knowledge

Tier 1 is basically a qualitative approach to PES. It is based mainly on established
ecological principles. On the basis of these principles, buyers of environmental
services may already be willing to compensate providers even without direct attri-
bution. For example, at the coarsest level, it is widely accepted that forest cover is
desirable because it provides environmental services such as biodiversity protection,
soil conservation, climate regulation, and watershed protection (Angelsen and
Wunder 2003). Thus, protection of existing forest cover may be of value and “buyers”
of environmental services may be willing to compensate stakeholders who can
protect these forests. In addition, certain types of forest cover may be known to be
of more value in providing environmental services (e.g., habitat for rare or endan-
gered species, limited area). For instance, the tropical forests in Mt. Apo are home
to the highly endangered Philippine Eagle ( Pithecophaga jefferyi ). Protecting
these forests may therefore be a service that can be 'sold' on the basis of its known
importance.