Payments for Environmental Services: ATIBT publishes three opportunity studies of these services for forestry companies

A reflection on remuneration or payment mechanisms for environmental and social services was initiated in April 2020 by ATIBT with the help of the financial expert firm Venturexpert, whose main activity is the research and development of cognitive and financial technologies to develop an innovative approach for the financing of Ecosystem Services.

The overall objective of the project is to diversify the revenues of certified sustainable forest concessions by improving the performances of environmental and social services (ESS) of companies in the Congo Basin through a mechanism of remuneration of these companies for the positive impacts demonstrated by the creation and/or protection of these services:

• By making the green labeling services used in the financial world accessible to the forestry sector;
• By simplifying the production of GRI reporting, a reference in the financial world, allowing for a PES mechanism that is not expensive in terms of monitoring.

As part of the FLEGT-REDD project, three studies were conducted to deepen the knowledge of PES applied to Central Africa, to identify the environmental and social services of certified companies, and to explore the feasibility of remunerating these services based on the Vertdeep platform (© Venturexpert).

Study A: State of the art, concepts and terminology of PES - Contextualizing the issue of forest concessions in Central Africa

This study provides knowledge on PES development initiatives applied to forest management in the Congo Basin. It presents:

• A glossary of the main concepts related to PES: what is a PES, the difference between ecosystem services and environmental services? What do the principles of additionality, leak and reference level mean?
• An overview of PES in Africa (experience in the Congo Basin, limitations and perspectives, and a review of initiatives in Africa);
• and excerpts from the literature on PES.

Study B: Identification and evaluation of Environmental and Social Services in certified concessions in the Congo Basin eligible for the Greendeep payment mechanism (© Venturexpert).

This study allowed us to contextualize the issue of ESS in the Congo Basin, to analyze the potential and the performance of the impacts of the actions implemented by certified forestry companies, to analyze the technical feasibility and the methodologies to measure, evaluate and guarantee the ESS.

A total of 6 major services were identified and divided into 16 positive impacts (whose positive image could be improved). They have been linked to the SDGs. These 16 positive impacts are supported by 28 intentional actions that can be implemented by the concessionaires. These were analyzed by the consultants according to a scoring system based on 6 evaluation criteria (monitoring capacity, cost, technical feasibility, image value, changeability, additionality). They were also submitted by a survey to the participants of Think Tank #3 in November 2020.

Five topics were highlighted in these assessments:

• Protecting endangered, threatened, protected, endemic, sensitive species;
• Maintaining the general functionality of forest habitats and landscapes;
• Reducing deforestation and greenhouse gas emissions;
• Enable access to health care;
• Promote access to education.

The study also proposes initial framing elements for the Proof of Concept, based on the orientations and reflections resulting from the previous analyses, and identifies the questions that the Proof of Concept will have to answer todevelop an attractive, credible, and operational mode of financing for forestry companies and providing guarantees for all stakeholders.

Study C: Vertdeep Solution: How to remunerate environmental and social services provided by certified forestry companies in the Congo Basin

The main objective of this study is to clarify the conceptual and methodological framework developed for the remuneration of Environmental Services provided by certified forestry companies in the Congo Basin according to Venturexpert's Vertdeep solution.

The definition of concepts related to ecosystem services is indicative of the difficulties to formulate a solution to their financing. Beyond the confusion and contradictions, it appears that the debates around these concepts should not be ignored and that the solution to PES will require a paradigm shift and innovation. VENTUREXPERT proposes to bring the topic of Ecosystem and Social Services in the context of Finance and the SDGs and brings innovations through the Positive Impact Certificate and its platform VERTDEEP, in connection with forest certification.

The certificate is registered in a "token" that contains all the elements characterizing the SES, attesting to its certification, justifying its reality, its evaluation and its value.

The Positive Impact Certificate represents only the image value of this impact, and contains all the guarantees of the virtuous aspect of the underlying project, its quantification, and its valuation. It is only this value that the Greendeep Token allows to make tradable. This makes it possible to overcome the difficulties encountered in the development of PES, and in particular on the subject of additionality and ownership of services. On this last point, we refer to the principles of brand management, which are the subject of a recognized formalization, already accounted for in the business world as an intangible asset, valued as "goodwill". In the case of the Vertdeep Token, it is an intangible asset representing the image of the service provided by the forester.

The study also enabled the formulation of an approach to validate the concepts of this response through a proof of concept (or POC) project, detailed in the study.

Perspectives:

The next step will be to share and discuss the results of these studies, in particular through the ATIBT certification commission, in order to gather the interest of forestry companies for this new opportunity to remunerate the services they provide as part of their certification process.

The next step will be to develop a proof of concept (POC) to demonstrate through examples the relevance of the Vertdeep approach and platform, based on some environmental services identified in Study B. ATIBT and its partners are seeking funding to implement this phase.

About the ATIBT FLEGT-REDD project

Since 2013, ATIBT has implemented a wide FLEGT-REDD project to improve private sector involvement in the implementation of the FLEGT Action Plan (VPA process and REDD+ mechanism). This project is entitled "Integration of the Central and West African tropical timber sector into the FLEGT and REDD+ mechanisms". It is partly funded by FFEM (French Facility for Global Environment) and has the overall objective of getting the private forestry sector to actively contribute to the sustainable management of tropical forests and to the socio-economic development of timber-producing countries.

The project ended on April 30, 2021, you can consult the end of the project brochure to learn more about the activities and results of this project.