Designing Benefit Sharing Arrangements:
A Resource for Countries

Benefit Distribution by Beneficiary Group

Considering the various beneficiaries identified for an emission reductions program, monetary and/or non-monetary benefits can be shared in different proportions and combinations to incentivize participation in program implementation. Providing uniform benefits to all beneficiaries may be simple to communicate and relatively easy to administer, but there are cases where some form of differentiation of benefits for each beneficiary group can address issues of effectiveness, equity, and/or efficiency.

Examples of approaches to benefit distribution:

All or a proportion of benefits could be distributed equitably to all beneficiaries or entities within a beneficiary group to ensure all stakeholders see some level of benefits from the emission reductions program;

Benefits could be distributed according to each entity’s proportionate performance in reducing emissions (or another metric) to directly incentivize delivery on the program’s objectives;

A proportion of benefits could be distributed to stakeholders that have historically contributed to avoided emissions (e.g., in some circumstances, indigenous peoples or land and resource tenure holders, including customary rights holders);

Programs could include provisions to distribute a small proportion of benefits to stakeholders who under-deliver in reducing emissions despite their best efforts (e.g., in the case of force majeure).

These approaches can be used in combination to reach beneficiaries more broadly to address underlying drivers of emissions through changes in behavior.

Beyond specifying benefit distribution across beneficiary groups, programs can also specify how monetary and non-monetary benefits will be distributed within groups of beneficiaries. In some cases:

  • Benefits may be further shared amongst beneficiaries according to their respective performance in emission reductions program implementation, which could be determined through proxies or other means. For example, forest management units within a community may be designated to receive a specified proportion of the community’s benefits given their role in managing and protecting forests.
  • Benefit distribution within a group of beneficiaries could be intentionally based on indicators other than performance. For example, some emission reductions programs specify that community groups will use their share of results-based finance to implement non-monetary benefits that impact the community as a whole, like a forest training program, improvements to the generation and marketing of non-timber forest products, schools, improvements to infrastructure, etc.
  • Benefit distribution can be based on proposals for the use of benefits submitted by beneficiaries within a group. Information on defined application criteria, applicant eligibility requirements, and eligible and/or ineligible activities for these processes should be documented and clearly communicated to stakeholders. This approach may self-select and directly incentivize those beneficiaries that are motivated by this type of support.

Case Studies

Targeting benefits to specific groups through allocations, weighting, and quotas

Costa Rica’s Payments for Environmental Services Program (PSA)

Costa Rica’s incentive program for environmental services uses a point system to prioritize applications from low development areas.

In 2010, the National Forestry Financing Fund (FONAFIFO) moved from a system in which contracts were awarded on a first-come-first-served basis to any submission that meets the basic requirements to a point-system for weighting and prioritizing applications. This new evaluation matrix prioritizes areas of low development indices and high conservation importance (e.g., biological corridors), in addition to favoring small farms. It also sets quotas for women and indigenous peoples’ community groups, stipulating a minimum number of contracts to be awarded to these generally marginalized groups.

Nepal’s Community Forestry

Nepal’s pro-poor approach to community forestry ensures a minimum allocation of benefits to vulnerable and marginalized groups.

Community forestry in Nepal has been explicitly designed to be pro-poor. Community forest guidelines require that 35 percent of the income generated by Community Forest User Groups be used to improve the social and economic condition of the poorest households, Dalits (socially marginalized group), indigenous peoples and ethnic groups, and women through livelihood improvement programs.

Guidelines for implementing community forestry specify how poorer and marginalized individuals and groups should be identified using a participatory well-being ranking to identify those with limited access and control over social, economic, physical, natural, and human resources. There are also requirements for including women, poorer individuals, indigenous peoples, and socially marginalized groups in the decision-making process.