Economic valuation of land and incentive and market-based mechanisms, Bonn

UN Campus, Platz der Vereinten Nationen 1, 53113 Bonn, Germany Postal Address: PO Box 260129, 53153 Bonn, Germany Tel. +49 (0) 228 815 2800 Fax: +49 (0) 228 815 2898/99 E-mail: secretariat@unccd.int Web-site: www.unccd.int

Economic valuation of land and incentive and market-based mechanisms for promoting sustainable land management in Central America TERMS OF REFERENCE – PHASE 2 January – December 2014

Background

The Global Mechanism (GM) of the United Nations Convention to Combat Desertification (UNCCD) has been established with the objective 'to increase the effectiveness and efficiency of existing financial mechanisms' for the implementation of the Convention. The support is delivered through 'actions leading to the mobilisation and channelling of substantial financial resources, including for the transfer of technology, on a grant, and/or on concessional or other terms, to affected developing country Parties' (Article 21, of the Convention).

The GM is a partnership builder that actively works together with developing countries and donors for mobilising substantial resources for combating desertification and drought. In particular, the GM assists in integrating responses to combat desertification and land degradation (LD) into overarching national development programming frameworks as well as into donor programming strategies.

The GM approach to resource mobilization focuses on developing an Integrated Financing Strategies (IFS) with countries that are affected by drought and land degradation. This approach involves the systematic generation and exploitation of a vast amount of information on traditional and innovative financial opportunities, as well as the development of compelling arguments to make the case for a large spectrum of stakeholders involved in land-use decisions.

For these reasons, the GM is actively engaged in the integrated economic valuation of land (EVL) as a vehicle to unlock the investment potential for sustainable land management (SLM). Through a consortium called OSLO (Offering Sustainable Land-use Options), the GM aims at promoting responsible land use by demonstrating the total economic value of terrestrial ecosystems and generating socio-economically viable and environmentally sustainable land use change options.

In the context of IFS development and implementation, the GM also supports affected developing countries in identifying and accessing innovative financing opportunities, including those arising from microfinance institutions and impact investors, and to take advantage of economic and financial instruments that can enable and promote private investments in SLM and adoption of SLM-compatible technologies and practices.

Particular emphasis is placed on incentives and market-based mechanisms (IMBMs)which include several types of payment for environmental services (PES), as well as REDD+ mechanisms, ecotourism and eco labelling of sustainably produced products. These mechanisms are based on the premise that ecosystem services have a value and those who protect, steward or maintain these services should be compensated and/or provided with adequate incentives to do so.

The establishment of adequate IMBMs is therefore instrumental to the realization of the investment priorities identified through the EVL studies.

Land degradation in Panama

In 1992, the Republic of Panama committed to the United Nations on Environment and Development Conference and reaffirmed its engagement as Country Party of the UNCCD through the adoption of Law No. 9 of 1996. The principles and objectives of the UNCCD then inspired the elaboration and design of the National Action Plan (NAP) in 2004.

The NAP was developed with the participation of national institutions of the Government, universities, non-governmental organizations and civil society. Through this national commitment, the National Committee for fight against the desertification and drought (CONALSED) was created. The National Authority of Environment (ANAM) was nominated the institutional focal point, in charge of UNCCD related affairs.

As from the 1999 and 2001 consulting process made by the ANAM to the civil society, four critical areas were prioritized, which are the nominated 'Arco Seco' in the Azuero Region and central part of the Istmo and the 'Corregimiento Cerro Punta', in the high lands of the Chiriqui´s Province. Thereafter, during 2004 the SabanaVeraguense and the Comarca Ngabe-Buglé were proposed, which represent around 30% of the national territory, which means approximately 20, 787.57 skm. The prioritized four areas are:

• Cerro Punta, which is located between from 1,300 to 2,400 m of altitude, with irregular topography and steep slopes of up to 45%. The area is characterized by intensive crop (vegetables), being the production mainly for national consumption. This zone presents degraded soil and the soil erosion due to the intensive use of chemical fertilizers and pesticides in high quantity to keep up the production levels.
• SabanaVeraguense, which is characterized by vast plains of degraded soils; the zone presents natural pastures and low natural forest. The zone is defined at north since 400 m of altitude approximately. The mainly use of the zone is for cattle production.
• Comarca Ngobe-Buglé, is occupied by indigenous population, characterized by highly degraded soil, malnutrition and poverty. A part of its territory includes the 'Central Mountain' which presents elevations up to 2,000 m of altitude, its borders defined a watershed which draining to the Pacific and the Caribbean.
• Arco Seco, which is characterized by lack of water, soil degraded and deforestation. The lands of the have been received less precipitation rather than the evapotranspiration, therefore, the loss of nutrients by lixiviation has been minimal, which has originated medium fertility soils. In terms of productivity these areas are economically different. It has been estimated that around 150,000 families of farmers live in these four areas with severe economic constraints and without sustainable land management practices. The Government of Panama considers that the land degradation at national level has a high impact in economic and environmental terms. Scope of the study In response to a request from ANAM, the GM is coordinating a 2-phase project for a study on the economic value of land resources, the costs of LD and the benefits of introducing SLM practices in the area of Cerro Punta. The study also includes an assessment of incentives and other mechanisms that could be introduced or developed to trigger larger investments into SLM in the study area and beyond. Specifically, the study is intended to explore new and innovative financial approaches to SLM implementation including opportunities for development of small-scale private sector activities, opportunities to attract impact investments from national and foreign investors, and compensations for environmental services, such as PES schemes, amongst others.Goal The goal of this study is to increase public and private investments in SLM through (i) demonstrating the economic benefits of sustainable land management as opposed to the costs of unsustainable, business-as-usual, land use/management practices, and (ii) the pilot testing of adequate incentives to promote SLM investments in priority areas/activities identified in (i).
• Objectives The overall objectives of this assignment are to

• Contribute to Panama's NAP implementation process; Prepare the country for the achievement of the UNCCD goal of Zero-Net Land degradation (ZNLD); Generate evidence-based economic arguments in support of SLM in areas affected by LD in Panama; Pinpoint priority areas of intervention to form part of a long term integrated investment framework (IIF), including the necessary enabling activities; Identify key activities in the integrated financing strategy (IFS) that will concretely support the implementation of the IIF.

The specific objectives are as follows:

1. Through an economic valuation study in the study area conducted using the OSLO methodology, generate economic arguments that will inform land-related decisions made by the Government, its development partners, and private actors to support NAP implementation, the scaling up of SLM and the achievement of the ZNLD goal in Panama;

2. Analyse the drivers and root causes of LD in the most vulnerable ecosystems in the study area, as well as the socio-economic and environmental impacts that LD in the study area generate across all economic sectors, and by comparison, the value of the ecosystem services provided to these sectors by the study area. The analysis will include both on-site and off-site effects at local, regional, and national level, and will draw as much as possible on relevant expertise from all relevant disciplines and domains;

3. Provide a comprehensive analysis of political, regulatory, legislative, technical and financial barriers to SLM in the study area and, possibly, beyond;

4. Prioritise opportunities for scaling up SLM across all relevant land use sectors in the study area based on good practices known in Panama and abroad, in terms of technologies, finance, legislation, knowledge and other enabling activities;

5. Prioritise the most effective incentives and market based mechanisms (IMBMs) that promote investments and adoption of SLM, and develop recommendations for their implementation based on good practices and using GM's framework and screening tool;

6. Estimate the costs of inaction and the net benefits of introducing the prioritised options identified in points 4 and 5;

7. Identify major financial gaps and opportunities to bridge these gaps in terms of financial institutions (e.g. banks, insurance companies, development finance institutions, microfinance institutions, investment councils, financial intermediaries, etc.), products/services (e.g. loans, grants, credits, risk management products, advisory services, financial/investment management services, etc.);

8. Increase capacity at the national level to undertake future economic valuation studies within the framework of NAP/IFS implementation and to integrate the findings of such studies into relevant policy processes and for the establishment of IMBMs and other relevant instruments.

Terms of Reference (TOR) – Phase 2

The present Terms of Reference (TOR) covers the implementation of the activities initially foreseen under Phase 2 of this project. This consists of two components, as further illustrated below: 1

. Economic Valuation of Land in Panama

The GM has, in collaboration with international research organisations and the OSLO consortium, developed a methodological framework and approach for the integrated socio-economic and environmental assessment of the values of land resources, the costs of land degradation and the benefits of SLM at national level. The emphasis of this approach is on generating evidence to support SLM policies and investments, based on demonstrating their existing and potential contribution to national development and poverty reduction. Given the scalability of the methodology, the same approach can also be applied at sub-national or international level. References on the OSLO methodology, as well as related publications, case studies and contacts can be found on www.theOSLO.net.

Phase 1 on this assignment identified the total economic value of land in the study area, the current costs of LD, and alternative land use/management scenarios, and outlined priority areas of intervention based on concrete economic, financial and technological opportunities, including recommendations for policy-makers, development partners, investors and land users. Building on the findings of the first phase of the work as well as the OSLO approach methodology, and in close consultation with the GM, the OSLO consortium, ANAM, CONALSED, other relevant governmental organizations, non-governmental organizations, academic/research institutions and other partners in Panama, the contractor shall: A. Organize a validation workshop in Panama City to present the findings of the study conducted under Phase 1, gather feedback from national stakeholders and illustrate the next steps, including mainstreaming and capacity building plans; B. Build capacity of relevant the national stakeholders to undertake or upscale integrated EVL studies in the country to support the implementation of the NAP/IFS, and to benefit from existing, emerging or potential financial opportunities to enable SLM investments; C. Facilitate the process of integrating or mainstreaming the results of the EVL study into national development planning processes and to inform decisions made by Government Authorities, development partners, and private sector entities in relation to policies, investments and activities affecting land use. 2. Incentive and market based mechanisms (IMBMs) in Panama The GM, in collaboration with the Tropical Agriculture Research and Higher Education Centre (CATIE), has identified 14 mechanisms that provide incentives for land users to invest in sustainable land management practices and a tool to screen the most applicable mechanism in a given national and/or local context. The framework and tool are outlined in the publication Incentive and market-based mechanisms to promote sustainable land management: framework and tool to assess applicability, found at http://www.global-mechanism.org/en/GM-Publications.

Phase 1 of the assignment produced an inventory of current initiatives, programmes, stakeholders and actors with an overview of current efforts to develop and apply IMBMs relevant for SLM in Panama as well as an opportunity study, using the screening tool and a cost-benefit analysis to identify the most applicable IMBMs in Panama, and analyse the enabling conditions and other success factors that must be in place for the establishment and good functioning of the selected IMBM(s) and the barriers, constraints, gaps to the implementation of the selected IMBM(s) and recommend adequate measures that would allow to overcome those limitations. It also identified current and desirable private sector engagement in SLM in Panama Based on the findings of phase 1 and the tools and methodologies the contractor shall in consultations with the Government and other partners: A. Support capacity building to prepare relevant stakeholders to understand and support the implementation of the identified IMBMs in Panama. B. Support the development of project ideas for 2-3 IMBM pilot activities including: i. design roadmaps outlining the development and implementation of the pilot (e.g. identify needed baseline studies, partners, funding options etc.); ii. identify potential partnerships with relevant national and international organizations that should be involved in the establishment of the pilot. C. Keep an updated record of all the steps, meetings, lessons, and findings and produce all the relevant documentation (e.g. project proposal) required to mobilize resources from key donors and financial institutions for the scaling-up or replication of the work conducted in Panama in other countries or (sub)regions. Under Phase 2, the contractor will also produce two synthesis reports of about 60 pages each (single spaced) of the five reports delivered under components 1 and 2, respectively. These reports will be made available in both Spanish and English. Furthermore, the present TOR includes a third component related to the organization of an OSLO capacity building event at an international expert conference to be held in Costa Rica in August October 2014, and a fourth component that targets the Mesoamerican sub-region and will draw among other areas from the outcomes of component 1 and 2. These components are further illustrated below: 3. OSLO capacity building session at the EcoAlternativas 2014 conference A capacity building event on the OSLO methodology for EVL-IMBM – approach and case studies – is to be organized as a special session of the international conference of the Mesoamerican Society for Ecological Economics, to be held on 4-8 March 2014 in Costa Rica (http://ecoecomesoamerica.org/). The meeting will focus on the 'Varieties of Ecological Economics: Advancing Towards Alternatives for People and Ecosystems in Latin America'. The meeting will address the importance of the region's strategic resources (water, biodiversity, forests, minerals, energy resources, etc…), and solutions for the increased pressures they face. To this effect, an abstract must be prepared according to the specifications and submitted to the International Society for Ecological Economics and the University of Costa Rica, for consideration. The session should include participation from two speakers from ANAM (Panama) to present the findings of the study undertaken under the present project, as well as other national and international speakers (e.g. from the GM and OSLO consortium). A report of the session and the material presented will be posted on the OSLO capacity building website (www.capacitybuildingOSLO.com). In close consultation with the GM and other OSLO consortium members, the contractor shall:

A. Support as local host the organization of the OSLO capacity building session at the EcoAlternativas 2014 conference. This would include all the aspects related to the organization of the session, such as abstract development, the identification and invitation of relevant speakers, organisational aspects (e.g. logistics, venue, accommodation, etc.), moderation of the session and preparation of inputs and material for the session; B. Engage in consultations with relevant Costa Rica authorities and concerned stakeholders, with a view to designing detailed terms of reference for an EVL-IMBM study in Costa Rica. 4. Public-private dialogue on green economy for Mesoamerica As part of GM's regional support to the Mesoamerican region falling under a programme finance by the Ministry of Norway, a public private dialogue on green economy is to be organized in Panama City in August - October 2014 (dates to be decided). The overall objective of such dialogue is for participants from public and private sector to explore emerging opportunities in natural wealth management that might arise in the context of green growth, and in turn catalyse a dialogue on enabling conditions for sustainable natural wealth management that promotes green economic development in the sub-region. In close consultation with the GM and with the other partners collaborating in this initiative, the contractor shall : A. Support as local host the organization of a public-private dialogue on green economy and the sustainable management of natural resources in the Mesoamerica sub-region and possibly countries in the Caribbean. The event is tentatively planned to take place in Panama City in August – October 2014 (TBD). This would include all the aspects related to the organization of the dialogue, such as concept development, the identification and invitation of relevant speakers, organisational aspects (e.g. logistics, venue, accommodation, etc.), moderation of the dialogue and preparation of inputs and material for the dialogue. A report of the dialogue and the material presented will be posted on the OSLO capacity building website (www.capacitybuildingOSLO.com). Deliverables of Phase 2 Output No. 1: EVL work in Panama A. Report on validation workshop to be held in Panama City; B. Report on capacity building activities (e.g. validation workshop and knowledge products) on EVL; C. Document on mainstreaming initiatives and related efforts to facilitate integration the results of the EVL study into relevant planning and investment processes; D. Synthesis report of all outputs under components 1, in both Spanish and English. Output No. 2 IMBM work in Panama A. Report on the capacity building activities (e.g. workshop and knowledge products) on IMBMs; B. Project proposal document for design, development and/or implementation of 1 pilot IMBM to be submitted for funding to potential donors, investors or financial institutions; C. A document of the records of all the steps, meetings, lessons, and findings and compilation of all the relevant documentation (e.g. project proposal) required to mobilize resources from key donors and financial institutions (in English); D. Synthesis report of all outputs under components 2, in both Spanish and English.

Output No. 3: OSLO capacity building at EcoAlternativas 2014 conference A. Training session on the OSLO methodology for EVL-IMBM at the EcoAlternativas 2014 conference, including facilitation of participation by relevant national and international speakers from Panama and beyond to present the results of the study under components 1 and 2, moderation of the session, and preparation of inputs, presentations and other relevant material; B. Session report of the training session to be posted on the OSLO capacity building website, together with all the relevant background documents, presentations, inputs, and material presented during the session; C. Terms of reference for an EVL-IMBM study in Costa Rica. Output No. 4: Public-private dialogue A. Organisation of a public-private dialogue on green economy, including identification of relevant speakers, organisational aspects, preparation of inputs and material for the event, in consultation with the organizing committee consisting of the GM and other partners; B. Report of the public-private dialogue to be posted on the OSLO capacity building website, together with all the relevant background documents, presentations, inputs, and material presented during the dialogue. Indicative Timeline The expected implementation schedule is presented below:

MONTHS COMPONENTS 1. EVL in Panama

• A – validation/synthesis
• B – capacity building
• C – mainstreaming 2. IMBM in Panama
• A – capacity building
• B – project proposal elaboration
• C – proposal follow-up 3. OSLO training in Costa Rica
• A – organization of session
• B – TOR for EVL study 4. Public-Private Dialogue in Panama
• A – Organization of dialogue
• B – Report of the dialogue

Organization of work The consultant/institution is expected to deliver on all the above mentioned objectives, under the overall coordination of the GM and in close consultation with the OSLO consortium. The GM will facilitate the technical/scientific backstopping from the OSLO consortium.

The assignment is expected to be carried out over a period of 6 calendar months, starting on 1 January 2014 and ending on 31 December 2014. The consultancy contract will be issued by the UNCCD, in conformity with the rules and regulations of the United Nations Office of Geneva (UNOG), given the new administrative arrangements governing the Global Mechanism established by the UNCCD Conference of Parties at its eleventh session (COP11). The GM will provide overall coordination and supervision on all the components foreseen under the present TOR. Specific coordination arrangements for components 1 and 2 For the work falling under components 1 and 2, the contractor will work under the co-supervision of the GM and the Climate Change and Desertification Unit (CCDU) of ANAM. Two weeks after signing of a contract, the contractor will prepare a draft approach paper and detailed work plan for the execution of the same, to be submitted to the GM and ANAM for inputs and comments, prior to finalization. Once the detailed work plan is approved by the GM and ANAM, the selected candidate will commence the substantive work. The contractor shall maintain direct communications with GM and CCDU for the purpose of keeping all concerned parties informed. The contractor is requested to submit monthly updates on implementation of the approved work plan to the GM and ANAM, who will provide appropriate feedback in a timely manner. The CCDU will have 10 business days to send the observations to the products delivered by the contractor according with the schedule of activities. These observations must be incorporated by the contractor in a time no more than 10 business days. Any specific workplan, schedule of activities, dates and products to be delivered under components 1 and 2 will be discussed and approved by the CCDU. The contractor must coordinate the visits and activities with the CCDU, who will have the responsibility of the monitoring, supervision, coordination and evaluation of the assignment. For conducting working meetings and workshops in Panama, the contractor will be accompanied by technical personnel assigned by the CCUD and personnel of the Regional office. This must be coordinated in advance. As a product of each meeting and participatory workshops, the contractor must keep a registry in written form including photographic material and a signed list of participants, including information on gender balance. The CCUD will facilitate access by the contractor to the national and local authorities, institutions and organizations for the purpose of collecting relevant information, data, and expertise for a successful delivery of the outputs foreseen under these components. The CCUD will also support the contractor in accessing relevant national data bases, information and documents available, upon written request to be made by the contractor in advance.

Any costs related to implementation of the activities foreseen under each component must be borne by the contractor, including logistics (e.g. food, lodging, transportation) and other administrative costs. The costs of the field trips, meetings and participatory and induction workshops, reproduction of materials, release of materials and any other expenses related to this assignment, including payment of any tax obligation thereof must borne by the contractor and should be reflected in the budget.

• ---Contractual Terms A contract will be issued for the period from 10 January 2014 to 31 December 2014. Fees will be based on qualifications and the level of experience. Submission of applications Applications should be submitted by e-mail to staffing@unccd.int, together with a UN Personal History Form or CV, specifying the position. The deadline for applications is 3 January 2014. Only applications submitted by the deadline will be considered. No telephone calls will be returned. Please address your application as indicated above and please do not address or copy your application to an individual at the Secretariat.