Natuurlijk Kapitaal Nederland | natuur & economie verbinden

Governance reforms in economic chains for tropical products to protect ecosystem services

cocoa farmingThrough better governance of international economic chains governments and the market parties can help to protect ecosystem services in tropical regions.

Research issue

The Netherlands is one of the largest soy importers in the European Union, the second largest importer of crude palm oil and a major importer of extracted palm kernel (for livestock feed). This major role gives the Netherlands avenues by which it can influence the economic chains. This is already taking place in various sustainable trade initiatives, e.g. for tropical timber. The idea is that these initiatives can also be applied to ecosystem services in the regions where these raw materials are produced. This is not only to safeguard future production for the Netherlands but also for services of global importance, such a carbon capture and the supply of food and materials for the local population.

Approach

The LEI research institute investigated how governance reform takes place in economic chains. The researchers looked at eight initiatives for sustainable production and trade in tropical resources. Examples are the Sustainable Trade Initiative (IDH) which encourages public-private partnerships, and the establishing of payment mechanisms for carbon capture in cocoa production.

Results

It appears that many such initiatives have been built up on the basis of voluntary market standards for sustainable production and trade, like FSC and PEFC for timber and RSPO for palm oil. Ecosystem services are often already included in these standards, but not always fully or overtly.

Example: Sustainable Trade Initiative (IDH)

IDH does not make specific reference in its strategy to the value of ecosystem services. But there is an indirect link, because IDH uses the UTZ certification system, for example, to encourage the sustainable production of cocoa. This in turn makes reference to the Good Agricultural Practices (GAP) initiative which, for example, makes specific mention of the ecosystem service ‘natural crop protection’. The GAP also includes the protection of parts of a production area that includes valuable nature. Such landscape elements could play a part in the supply of ecosystem services, but that relationship is not specifically mentioned which means that it is not necessarily the case that they will be automatically protected or fostered.

The voluntary market standards are generally widely accepted by consumers and the market parties and are being increasingly used in international trade. Some market standards include proper provision for improvement processes and various stakeholders are represented in the decision-making process. The standards therefore provide suitable opportunities for governance reform for the protection of ecosystem services.

The protection of natural capital and ecosystem services are specifically mentioned in the present Dutch policy, as set out in the Natural Capital implementation agenda. However, there is no systematic and fully considered approach in policy for protecting and promoting ecosystem services in economic chains.

Recommendations and policy options

  • The researchers recommend that more attention be devoted to ecosystem services in the principles and criteria for existing standards. In the GAP, for example, ‘natural fertilization’ could be specifically mentioned as an ecosystem service for landscape elements that are to be protected.

Policy options:

  • The government could develop a policy strategy which more clearly underlines the importance and role of ecosystem services in economic chains.
  • The Netherlands’ government could use a mix of policy instruments to protect ecosystem services more through the economic chains. In sustainable government purchasing, for example, the criteria could be expanded to include ecosystem services more specifically. This requires the involvement of the parties in the economic chains, as well as civic and consumer organisations. The open consultative process that preceeds the drawing up of the criteria for timber purchasing serves as a good example in this context.
  • The government could further apply financial measures for the protection of ecosystem services. Offering certified products will involve additional costs, resulting in an unequal market position. Tax incentives and reduced import tariffs for sustainably produced raw materials could help to overcome this barrier.

Study conducted by

LEI Wageningen UR research institute

More information