As beneficiaries are identified, emission reductions programs also consider the form of benefits they are expected to share, which include monetary and/or non-monetary benefits (e.g., inputs, capacity building, trainings, equipment, infrastructure, alternative livelihood development, etc.).
Throughout this process, programs weigh various considerations, which may include, but are not limited to:
The identification of forms of benefits that will incentivize beneficiaries to continue to support the emission reductions program and its successful implementation;
Outcomes of stakeholder consultations where different forms of benefits have been discussed and stakeholders have provided feedback on their expectations, preferences, and priorities; and/or
An understanding of the forms of benefits that stakeholders are receiving under other existing benefit sharing programs, such as Payment for Environmental Services (PES) schemes, and their proven impacts.
This process is highly context specific and will vary per emission reductions program. The ultimate identification of benefits should be informed by the stakeholder consultation process to reflect beneficiaries’ expectations, preferences, and priorities. It is typical for emission reductions programs to specify that benefits should be used, at least in part, to fund activities that further reduce emissions, which can have compounding effects on the potential to generate additional emission reductions and results-based finance. Some benefit sharing arrangements also include benefits for community development (e.g., schools, health facilities, boreholes, etc.).
Depending on feedback received during stakeholder consultations, programs may find that some stakeholders within a community have an interest in sustainable land use activities, while others do not and are more likely to be motivated by community development projects. This is an interesting example of mixing different types of non-monetary benefits to effectively incentivize different beneficiaries given the specific emission reductions program context.
A differentiated approach can be effective, providing different types and/or amounts of benefits to different groups of beneficiaries to reflect their different rights and contributions with respect to the objectives of benefit sharing. This approach should consider monetary and/or non-monetary and individual and/or community benefits as appropriate, bearing in mind that greater complexity could increase operational and transaction costs for delivery of benefits.
Specific outcomes can be facilitated by making benefits performance-based or linked to conditions, such as clear commitments in an agreement or contract, and/or by requiring an investment plan for the use of monetary benefits received. Conditions should be clear, with monitoring to assess compliance and consequences or penalties consistently applied when the conditions are not met.
Benefits should outweigh opportunity costs and the efforts and inputs needed to participate in the program, so a cost-benefit analysis for different stakeholder groups can be helpful. However, this may not be easy, so participatory identification of benefits—enabling the beneficiaries themselves to decide on the benefits they receive—is often the most effective approach.
Consideration can be given to the value of individual versus community benefits. Although benefits to individual households can be appropriate and effective in some contexts, community benefits can reinforce and reward collective responsibilities and can ensure that all community members—including the vulnerable and marginalized—share in the benefits.
Benefits in the form of revenue-generating activities are often popular and can help ensure long-term sustainability if there is good market access, but care should be taken in their design to link revenue-generating success to the maintenance of the forest or other environmental objectives to avoid perverse or unintended outcomes.
The timing, duration, and consistency of benefits over time can have an important impact on their effectiveness, bearing in mind that some activities may require up-front investment (such as tree planting), whereas later delivery provides an opportunity to link benefits to performance.
Monetary benefits can provide strong incentives by giving beneficiaries decision-making control about how they spend the cash they receive. Monetary benefits can be efficiently delivered where beneficiaries have bank accounts, and they are generally more appropriate where there is clear land tenure and landowners have the capacity to implement activities on their own land.
Non-monetary benefits can be targeted to achieve social or environmental objectives but, to be effective, beneficiaries should identify which benefits are implemented and whether they are able to effectively benefit from them. Capacity is also needed to deliver non-monetary benefits, which can be more challenging than monetary ones, both administratively and logistically.
It is useful when programs document and clearly communicate information on eligible and/or ineligible uses (i.e., ‘positive or negative lists’) of benefits for each beneficiary group. This provides a greater sense of clarity to beneficiaries and other stakeholders on the intended use of benefits, and therefore their potential impacts.
Non-carbon benefits are generally referred to as benefits that are produced by or in relation to the implementation and operation of an emission reductions program. Non-carbon benefits can include improvements to livelihood opportunities, governance, and environmental services, amongst others, and are therefore important to the overall emission reductions program’s success. However, non-carbon benefits are distinct from monetary and non-monetary benefits, which are funded with results-based finance from the emission reductions program. That said, non-carbon benefits should be well understood as part of the broader context of benefits that each emission reductions program may provide to stakeholders and monetary and non-monetary benefits funded by results-based finance should be designed to complement these to maximize the potential for the emission reductions program’s impact and sustainability.
Tailoring and targeting benefits to specific beneficiary groups
Tailored benefits for specific beneficiary groups help address drivers of environmental change in Peru’s Alto Mayo Protected Forest (AMPF).
The Alto Mayo program in Peru initially focused on the AMPF and illegal settlers who drove deforestation through coffee cultivation. Much of the benefit package emphasized technical support to shift coffee cultivation to more sustainable and more productive practices. Later, the program expanded to include indigenous peoples adjacent to the protected area where communities were facing declining socioeconomic conditions and cultural values linked to high deforestation in their territories. This required defining a new, specific theory of change related to drivers of forest loss on indigenous peoples’ lands, often resulting from renting land to outsiders who then cleared forest for agriculture.
The process was participatory, following principles of free, prior, and informed consent, reflected the Shampuyacu community’s Life Plans (community-driven assessments of their collective needs and desires), and included social and gender considerations which included prioritization of support to retain and recover traditional practices. The process employed a conservation agreement approach, like the one in the protected area, but tailored to the indigenous peoples.
A combination of collective and individual incentives in Brazil’s Bolsa Floresta Program has helped to engage a broader range of stakeholders, including women.
Beneficiaries in Brazil’s Bolsa Floresta program in the State of Amazonas are eligible for funding in four sub-programs:
Increased land tenure security as a significant non-monetary benefit
A pilot program in Indonesia enables villages to secure tenure rights to surrounding forest land.
The Katingan Mentaya Project in Indonesia is piloting a program to enable villages to seek formal recognition and tenure over forest estate land (designated by government to be preserved as permanent forest) in the immediate vicinity of the village. The project facilitated two villages (Mendawai and Telaga) to design and propose to government a “Village Forest” (Hutan Desa) application seeking clearer management rights on between 2,000 and 10,000 hectares of forest estate land in the buffer zone of the project area, adjacent to those villages. If successful, the village forest license will grant the village a 30-year concession license to manage the forest in that area sustainably. As part of the application process, the village must outline a restoration and sustainable use plan for the area (including forest and hydrological restoration).
The challenges of assisting villages to obtain village forest licenses vary from village to village, and the approach must always be tailored to the exact circumstances and desires of the village in question. In this case, the process typically includes lengthy initial discussion, further participatory mapping, formulation of a detailed land use plan for the targeted area, and formulation of a village business unit (if one does not already exist), followed by formal application to the Ministry of Forestry.
