Terms of Reference for developing
National Policy on Payment for Ecosystem Services
1. Background
Millennium Ecosystem Assessment (2005) defines the ecosystem services as the benefits people
obtain from ecosystems. They are categorized, as a) provisioning service, b) regulating services c)
cultural services and d) Supporting services: This assignment, however, will focus on all ecological
services except provisioning services.
Payment for Environmental Services (PES) schemes exist mainly for four services: carbon sinks
functions, hydrological functions, and biodiversity and landscape aesthetics/ecotourism. PES is
defined as a voluntary, conditional agreement between at least one "seller" and one "buyer" over a
well-defined environmental services - or a land use presumed to produce that services i.e. if the
provider continuously secures the provision of the service (conditionality) (Wunder et al, 2005). The
theory indicates that PES schemes can make both sellers and buyers of ecosystem services better off
while helping better protect the resource base.
PES is a mechanism to improve the provision of indirect environmental services in which providers
of ecosystem services receive direct payments (‘provider gets’) from the users of these services
(‘user pays’). PES mechanisms are implemented for hydrological services as upstream land uses
affect quantity, quality, and timing of water flows downstream. Service providers (upstream
catchment managers) and service users (downstream beneficiaries) negotiate on desired land use
practices upstream and the amount of payment to compensate for making such changes. Intuitively,
it is in the interest of downstream users (the beneficiaries) to compensate upstream catchment
managers (the providers) to maintain or even improve the provision of ecosystem benefits. Thus,
PES provides a fair and equitable mechanism for capturing the benefits and allocating funding to
offset the direct and indirect costs of catchment ecosystem conservation. It provides economic
incentives to motivate and enable upstream landholders to engage in sustainable ecosystem
management practices.
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The basic principle behind PES is that resource users and communities that are in a position to
provide ecosystem services should be compensated for the costs of their provision, and those who
benefit from these services should pay for them, thereby internalizing these benefits.
With an increasing recognition of a need for ecosystem management and to ensure a continuous
supply of ecosystem goods and services, a number of innovative financing mechanisms have been
adopted in different countries, especially when public budgets for this purpose are inadequate.
Various efforts are made in Nepal for the implementation of PES. For example Makwanpur District
Development Committee has developed Guidelines (2006) to operationalize the 12% fund for the
upstream-downstream of the Kulekhani watershed that it receives from the Nepal Government as
per revised Local Self-Governance Act (1999); National Parks and Wildlife Conservation Act (1973)
with its amendment in 1993 has made legal provision to share 30-50% of the revenue generated
from the protected area for the local community development; MOU has been signed for PES in
Baijnath Community Forest User Group (Seller) and Sitaram Lake Irrigation User Group of
Kanchanpur (ES buyer); Kavre Dhulikhel drinking water supply (buyer) is paying to upstream people
of Lalitpur VDC (seller) for conserving the watershed areas since long; These all initiatives are
implemented at project level and there is no specific policy for the PES implementation in Nepal.
Hence, this assignment tries to develop national level PES policy, which could be a guiding document
for PES project development and implementation in future.
2. Objectives
The overall objective of this assignment is to support government of Nepal, Ministry of Forests and soil
conservation in developing a national policy on Payment for Ecosystem Services while providing guiding
action for its Implementation in Nepal. The specific objectives are:
o
o
o
Review PES related existing international and national policies and plans;
Conduct policy analysis and identify policy gaps; and
Develop draft national PES policy
3. Scope and limitation
The national policy for PES will cover all the forest based ecosystem services Activities/Methodology
The outline of the policy development method is presented in the table below. The consultant
should propose a detailed methodology while submitting proposal.
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Mainly, the activities will be divided under the following broad categories:
Desk literature review:
a. Review relevant national and international PES related policies, strategies and plans that
are applicable for Nepal
b. Identify PES policy Gaps
Preparing draft Policy for PES in Nepal:
a. Consultation with relevant stakeholders
b. Field observation of the some of the PES liked program implementation in Nepal
c. Write up draft policy;
d. Share the draft with technical committee, incorporate feedback from the committee
and improve the draft
Consultation and finalization of Policy:
a. Present the draft policy with concerned stakeholders (Government, CSOs,
private sectors) at national, regional and district levels
b. Refine the policy draft incorporating suggestions from the consultation
meetings
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c. Incorporate feedback from the technical committee
Finalize the PES policy:
a. Share the policy at national level multi-stakeholders for endorsement
b. Submit the plan to the Ministry of Forests and Soil Conservation
4. Team composition and responsibilities
The Consultant will provide a team of specialists to undertake this consultancy, including a team leader
and members with various specializations. The Consultant must ensure that during consultation the
cross cutting issues of gender and social inclusion, livelihoods and internal governance are well
considered developing the policy draft.
The Consultant’s team needs to have the following competencies:
i. Natural resource economist familiar with the PES costs and benefits (team leader)
ii. Environmental Lawyer Proven experience, skill and knowledge in environmental rules and
regulations, with particular reference to PES
iii. Environmentalist with sound knowledge on PES
iv. Sociologist with sound knower on social dynamics in natural resource management
5. Supervision and Coordination
The overall assessment will be supervised by the Chief, Biodiversity and Environment Division, Ministry
of Forest and Soil Conservation. A technical team including WWF staff member formed by the ministry
will provide technical inputs to the consultant.
6. Consultant Selection Process:
Consultant will be selected by following WWF policy.
7. Deliverables
Deliverable
Due date
Inception report –with detailed methodology
Review report
Draft PES Policy
Final draft PES Policy report
Proceeding of the national level multistakeholder
consultation meeting
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8. Duration and Time Frame
This assessment will take maximum of 12 weeks (60 working days). A detailed timeframe will be worked
out with the Consultant once the Consultant has been selected.
9. Budget
The financial cost proposal should include a detailed breakdown of the total budget
proposal including: fee, travel cost, communication costs, and reproduction of documents
as need by consulting work. The amount should be quoted in local currency. The
payment is subject to tax deduction as per prevailing government rules. Please refer to
Annex 1 for preparing the financial proposal.
8. Location
The Consultants should be based in Kathmandu but will travel to different regions and districts for data
collection and sharing the draft policy framework.
9. Proposal Submission Details
Technical and financial proposals should be submitted in separate sealed envelopes by post, along with
application letter with official legal documents at the following address:
Sustainable Landscapes Coordinator
WWF/Hariyo Ban Program
Baluwatar, Kathmandu
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Annex 1: Estimated budget for the study on human migration
S.N
Description
1
Consultant Fee based on deliverable
and timeframe
2.
Field travel
2.1
Air fare
2.2
Accommodation and food
2.3
Field interactions
2.4
Transportation in field
3.
Local transportation in Kathmandu
4.
Communication cost
4.1
Mobile re-charge
4.2
Reproduction of documents
Unit
No of
Units
Rate
Amount
4.2.1
TOTAL
-
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