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Small dam constructed to capture sediment under RiverCare 2 PES scheme. Photo: Jill Hayde Suggested Citation: Hayde J. 2017. Conditionality in practice: Experience from Indonesia. In: Namirembe S, Leimona B, van Noordwijk M, Minang P, eds. Co-investment in ecosystem services: global lessons from payment and incentive schemes. Nairobi: World Agroforestry Centre (ICRAF).
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Page 1: Small dam constructed to capture sediment under RiverCare ...worldagroforestry.org/sites/default/files/Ch26... · PES scheme. Photo: Jill Hayde . Suggested Citation: Hayde J. 2017.

Small dam constructed to capture sediment under RiverCare 2 PES scheme. Photo: Jill Hayde

Suggested Citation: Hayde J. 2017. Conditionality in practice: Experience

from Indonesia. In: Namirembe S, Leimona B, van Noordwijk M,

Minang P, eds. Co-investment in ecosystem services: global lessons from payment and incentive schemes.

Nairobi: World Agroforestry Centre (ICRAF).

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Chapter 26 | 1

CHAPTER 26 Conditionality in practice: Experience from Indonesia

Jill Heyde

Highlights • Conditionality is a key and dynamic factor in linking actors in PES schemes.

• The elements of conditionality can vary greatly between PES mechanisms.

• Elements of conditionality in the three case studies were more oriented towards incentivizing collective action than a market-like approach.

26.1 Introduction

There is a vigorous debate unfolding about use of market based mechanisms to address problems of environmental governance, and in particular the appropriateness of PES1,2 .With respect to PES, perspectives range from authors who tend towards a market-like view3,4 , to those who propose approaches which incentivize collective action5. At the theoretical extremes of the continuum one could envision a situation where a well-defined contract details the rights and responsibilities of both providers and users of environmental services versus a situation where providers and users meet freely and choose to cooperate and co-invest in the generation of environmental services.a

Notwithstanding these conceptual “ideals,” in reality PES tends to play out somewhere along the continuum between the different approaches, rather than at the extremes. As an early proponent of the market-like definition readily admits, "[c]arbon apart, we see generally very little genuine (competitive) market PES outside the United States and Australia"2. As Vatn6 explains, the market-like definition, “is more about what PES should be according to a certain perspective than what it really is or can be”.

Regardless of where a definition lies along the PES conceptual continuum, “there is almost universal agreement […] on the fact that conditionality – the rendering of payments only if contractual obligations are met – is an essential characteristic of PES programs”7. In this context, conditionality is not an end in and of itself, but rather, is a strategy to ensure compliance in order to achieve environmental impacts that are additional to those that would have been delivered in the absence of the scheme8,9,10. This is an important link and as Pattanayak9 note, “many case studies equate the impact of PES with the area under contract, which confuses additionality with compliance”.

The chapter begins by considering the conceptual underpinnings of PES conditionality and what they might mean for the design of PES schemes ranging along the PES continuum. This

a There is also a perspective that fundamentally rejects the appropriateness PES, although the paper will not focus on this view28

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2 | Conditionality in practice: Experience from Indonesia

is then followed by examples of how conditionality can unfold in practice, drawing on three cases from Indonesia. The focus is on the context in which the schemes were established and how conditionality was designed and implemented in them.

26.2 Conceptual underpinnings of PES conditionality

Strict conditionality, such as that one would expect to find at the market-like end of the PES continuum, can be described as the requirement that, “service providers (sellers) only receive payment if they continuously secure the contractually agreed-upon provision or flow of outputs (flow or “output” conditionality…) or of inputs assumed to produce those outputs (“proxy” conditionality…)”7. Sommerville10 in turn view conditionality as, “the core method for motivating service provision, as it creates a consequence for not providing the service”. Wunder4 describes, “the ‘business-like principle’ only to pay if the service is actually delivered” as “the most innovative feature of PES vis-à-vis traditional conservation tools”. At this end of the PES continuum, drawing on the work of Tomich11, Engel3 explain that conditionality is dependent upon being able to,

“[…] verify the existence of the [environmental service] and to establish a baseline against which additional units ‘provided’ can be measured. This requires understanding causal pathways (‘processes’), recognizing spatial extent and distribution (‘patterns’), developing ‘proxies’ or ‘indicators’ for easy recognition and monitoring, and simplified, yet accurate and validated measures of environmental services provided” (p. 668).

Towards the other end of the PES continuum, Muradian5 place less emphasis on rigorous conditionality, stating that, “PES schemes put in place an incentive system […] incorporating sanctions to the extent this is feasible in the context of generalized uncertainties regarding service delivery”. The feasibility and appropriateness of strict conditionality are called into question due to, for example, the high costs of enforcement and the fact that intrinsic motivations and other coordination mechanisms may be undermined by monetary incentives in collective action situations12,13. This weaker focus on conditionality may also reflect a general skepticism about the appropriateness of market based mechanisms as a means of addressing environmental governance issues. This is explored by Muradian and Rival14 and underlined starkly in a commentary by 33 authors which critically looks at the challenges facing PES and how “an uncritical commitment to such policy tools can lead to unintended outcomes”.1

Authors exploring the notion of co-investment mechanisms as pioneered by ICRAF have elaborated on the concept of conditionality in PES. For example, van Noordwijk and Leimona15, “distinguish conditionality at the level of input [...], the condition of the system […], or the actual outcomes for environmental services.” In implementation terms these authors recognize four levels of conditionality where,

i) “environmental service contracts link tangible benefits for the environmental service providers to the actual enhanced delivery of environmental services (level I), and/or”

ii) “maintenance of agroecosystems in a desirable state (level II), and/or”

iii) “performance of agreed actions to enhance environmental services (level III), and/or”

iv) “development and implementation of management plans to enhance environmental services or respect for local sovereignty in managing the environment for local plus external benefits (level IV)”.15

Translating the theory of PES conditionality into practice can be challenging, especially when working in complex, multi-functional landscapes such as those characteristic of the

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Chapter 26 | 3

watersheds in Indonesia where PES initiatives have been initiated. Within the framework of designing a PES scheme, establishing the elements of conditionality requires decisions about the form and amount of compensation, the timing of payments, how to link payment to service delivery, the nature of the agreement between parties in the scheme, and development of a monitoring system. It seems likely that the more one moves towards the market-like end of the PES continuum, the more the restrictions posed by the increasingly narrow concept of PES and requirements of strict conditionality will limit the development of options which can be realistically implemented in a cost-effective manner over time.

Hill slope planted with trees under the Brantas PES scheme. Photo: Lestari Sustainable Development Consultants/Jill

Heyde

Reality is further complicated by the fact that in addition to the role conditionality is intended to play in contributing to the realization of environmental impacts (additionality), it also serves as one of the key mechanism linking actors in a PES scheme. For this reason, the way conditionality is designed into a scheme and then implemented is not a purely technical decision that can be derived from links between inputs and outputs. It is a process that is constantly influenced by the interests of different actors. Understanding decisions on conditionality therefore requires unraveling not only what is technically feasible, but also what is politically feasible in any given situation and ensuring that actors fully understand the implications of what they are agreeing to.

Table 26.1 shows some of the considerations that may need to be taken into account when designing elements of conditionality into a PES scheme. Returning to the idea of the PES conceptual continuum, in designing a PES scheme decisions about these elements could vary considerably depending upon whether one moves more towards the market-like or incentivizing collective action ends of the continuum. Even at the very earliest stages of designing a scheme the different theoretical starting points can have an impact on decisions about conditionality. For example, at a simplistic extreme, a scheme oriented towards the market-like perspective might show a preference for a clear monetary payment to ecosystem service providers based on achievement of output-level results. In contrast, a scheme towards

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4 | Conditionality in practice: Experience from Indonesia

the other end of the continuum might instead choose an approach comprised of non-monetary rewards, with an eye towards incentivizing the intrinsic motivations of providers to deliver the environmental services. Granting the rewards might then be based on reaching looser input-level results, achievement of which could be determined by a simple monitoring system. Having said this, the real world is not simple, and schemes departing from points oriented towards either end of the continuum may ultimately need to be re-calibrated in response to emerging information and changing realities during implementation. Realistically the systems cannot be assumed to be static over time.

Many of the elements in Table 26.1 are interlinked, and decisions can significantly affect implementation. This is evident for example with respect to the transaction costs associated with monitoring. As Kroeger7 observes, “output conditionality and higher stringency increase costs because they increase the required measurement accuracy and precision in order to reduce the risk of disputes between providers and buyers”. For example, the costs of monitoring a scheme aimed at reducing sediment loads will vary significantly depending on whether the scheme uses output indicators (for example, measurable reductions in sediment levels) or input indicators (for example, planting an agreed number of trees on a degraded area).

Similarly, decisions about the timing of payments can also have far reaching effects on the continuous supply of services. Front loading payments, for example in a case where compensation is in the form of support for start-up activities or technical training which occur early in the life of a scheme, carries risks16. With no on-going compensation or means of sanctioning non-compliance, providers may over time choose to discontinue the activities upon which the scheme is founded. To avoid this, Fisher16 notes the importance of, “designing payment systems in synchrony with ecosystem service provision”. This is also where a strategy seeking to combine external incentives with internal incentives may become important – if people are not only motivated by the promise of external compensation, there is increased likelihood that changes in land use will persist beyond the duration of the compensation mechanisms.14

Table 26.1 Considerations when designing conditionality into PES scheme

Element of conditionality

Design considerations (examples)

Amount and form of compensation

• Monetary payment • In-kind contributions to support PES activities (e.g. agro-inputs, training,

extension support)17 • Other non-monetary rewards (e.g. tenure security, on-going use of fruit

trees)

Timing of payments

• Up front (e.g. provision of technical training or inputs to implement activities)

• Following achievement of results

Linking payment to service delivery

• Input- or output-based (e.g. actions taken or the impacts of the actions on the ecosystem services)

• Stringency requirements of payments - what level of payment will be made for what level of results?7

Agreement • Agreement which outlines the rights and responsibilities of the parties involved, and serves to ensure that all parties have the same understanding

Monitoring • What indicators to monitor • How indicators will be monitored • Who is responsible for monitoring18 • How monitoring results will be used to determine payments19

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Chapter 26 | 5

With the concept of the PES continuum to help position different approaches to PES conditionality and the elements that may need to be considered in designing a PES scheme, we now turn our attention to exploring in more detail the challenges of translating theoretical expectations into implementation realities.

26.3 PES conditionality in practice: Drawing on examples from Indonesia

At the practical level the concept of PES conditionality plays out in the form of site specific institutions involving multiple actors. There can be significant differences in how conditionality is included in these systems, both in design and implementation. The institutional elements of PES schemes are shaped by pre-existing frameworks underlying the schemes, negotiation between different actors, and socio-economic, policy and environmental contextual factors. This section uses the example of three cases from Indonesia (see Table 26.2) to highlight the relevance of these factors. After introducing the schemes, the section reflects on the contexts in which the three case schemes were established. It then considers how conditionality was designed and implemented in the schemes.

Table 26.2 General characteristics of case studies

Characteristic RiverCare (RC) Brantas Mendalam

Location West Lampung district, Lampung

Kota Batu and Malang districts, East Java

Kapuas Hulu district, West Kalimantan

Status (early 2013)

Active (pilot project 2006-2007; RC phase 1 2008-2009; RC phase 2 2011-2013)

Inactive (implementation of pilot 2004-2006)

Pilot completed (implementation 2009-2012)

Scale of scheme

Small scale. Pilot: 70 households; RC1: 25 households, RC2: 35 members

Small scale pilot. 40 hectares, approximately 140 individuals

Small scale pilot. 212 individuals, typically 1ha per individual

Services targeted

Reduced sediment input to hydropower reserve

Reduced sediment input to hydropower reservoirs

Reduced sediment in municipal water

Land tenure Mixed: private property, protection forest (state land)

Private property Mainly untitled land traditionally used by individuals (treated as private property)

The RiverCare scheme was part of the ICRAF-led RUPES program, which focused on developing practical environmental service schemes that could benefit upland poor. The RiverCare scheme was implemented in the mountainous district of West Lampung in Sumatra. During the pilot and first phase of the program, main funding support came from the International Fund for Agricultural Development (IFAD20). In phase two, the national electricity company (PLN), which was the beneficiary, supported the program. Activities under the scheme aimed to reduce sediment input to a run of the river power plant operated by PLN in the lower reaches of the target sub-watershed.

The Brantas scheme was implemented in the Upper Brantas and Konto sub-watersheds of the Brantas catchment in East Java. The area is part of a string of volcanos that run across Java, and is marked by intense vegetable cultivation. The scheme was part of the “Developing Markets for Watershed Protection Services and Improved Livelihoods” program led by the International Institute for Environment and Development (IIED) and was described as using an

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6 | Conditionality in practice: Experience from Indonesia

action learning approach (IIED21). Funding was provided primarily by DFID (United Kingdom development cooperation), with some support from the beneficiary (the Brantas River Basin Operator). The scheme aimed to reduce sediment input to hydropower reservoirs.

The Mendalam scheme was implemented in the Kapuas Hulu district of West Kalimantan and was part of the “Equitable Payment for Watershed Services” program mainly supported by DGIS (Netherlands development cooperation) and DANIDA (Danish development cooperation). The Mendalam scheme, which was led by WWF, focused on development of a business case for PES, which was followed by pilot implementation22. The target beneficiary was the district water company, and the scheme aimed to show reductions in sediment in municipal water.

The foci of the different programs would have influenced negotiations on the design of the schemes. Different types of negotiations at different levels likely took place, including between donors and implementing agencies (ICRAF, IIED and WWF), implementing agencies and local partners, and local partners and farmers (in all cases represented by farmers’ groups) responsible for implementing activities. At each level there would be different opportunities for actors to provide meaningful input.

As Table 26.2 shows, each of the schemes was quite small scale and rather short term. This is in line with the observations of Leimona23 based on a study analyzing knowledge co-production in four PES schemes in Indonesia (two of which – RiverCare and Mendalam – are covered in the current chapter). The authors note that,

[o]ur case studies and other global experiences indicated that currently practiced [payments for watershed services] schemes have remained at relatively small scales and pilot levels (villages or sub-watershed levels) and [the] long-term sustainability of the emerging schemes cannot yet be empirically judged. Most schemes were donor-driven, with a limited budget and time frame, because this approach is relatively new and requires a large investment to mature (p. 59).

26.4 Context in which schemes were established

The space for meaningful negotiation between different actors during the design of a PES scheme can vary significantly, with some schemes having more of a blueprint approach than others. The design phase is critical in deciding whose interests are represented and how. Pre-existing frameworks and the actors involved strongly influenced the design and conditions for payments under the three cases studies.

The schemes were each initially pilot initiatives within larger multi-country donor funded projects focusing on the potential of PES mechanisms. It is therefore useful to look at the frameworks of the larger projects to obtain a sense of some of the pre-defined elements that would have shaped implementation and the roles of different actors (Table 26.3). With respect to the underlying theoretical orientation of the schemes, each was at least nominally based on the market-like definition put forward by Wunder4. At the time the projects were being designed theoretical discussions surrounding PES were still in the early stages and the market-like definition was the most clearly articulated and ready for testing in real world situations. A review of project documents showed that each of the projects focused on livelihood, poverty and/or equity issues, which is to be expected given the international development profile of the donors (including IFAD, DFID, DGIS and DANIDA).24,25,26

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Chapter 26 | 7

Table 26.3 Main actors in schemes

Role in Scheme Actors

RiverCare (RC) Brantas Mendalam

Providers/ Sellers Farmers’ groups representing small scale farmers in three communities

Farmers’ groups representing small scale farmers in two villages

Farmers’ groups representing small scale farmers in six communities

Beneficiaries/ Users

Pilot project: ICRAF as stand in beneficiary. RC1 and RC2: PLN run of the river power plant (parastatal)

Brantas River Basin Operator (Perusahaan Umum Jasa Tirta 1, PJT1) (parastatal)

Potential: PDAM Tirta Dharma in Putussibau (parastatal)

Intermediaries Pilot project and RC1: ICRAF; RC2: FKKT HKm (Communication Forum for Community Forestry Farmers)

YPP (local NGO) WWF

Main external facilitators

ICRAF LP3ES (national NGO), IIED

WWF

26.5 Design and implementation of conditionality

Table 26.4 provides information on the elements of conditionality in each of the case studies.

Table 26.4 Elements of conditionality in the case studies

Element RiverCare Brantas Mendalam

Amount and form of compensation

Capacity strengthening, technical support, provision of micro-hydroelectricity unit or scaled monetary reward if top target not achieved

Capacity strengthening, livelihood activities, extension, provision of seedlings for trees with economic value

Capacity strengthening, technical support, provision of seedlings for trees with economic value

Timing of payments

Both up-front and upon achievement of results

Up-front Up-front

Linking payment to environmental service delivery

De jure, yes; de facto, not necessarily implemented in line with agreement

No No

Agreement RiverCare 2, contract between intermediary and farmers’ group for implementation of activities

MoU between intermediary and farmers’ group for implementation of activities

Contracts between facilitator and village leaders for implementation of activities. Letters signed by individual farmers stating they would care for trees on their land

Monitoring/ type and by whom

Measurement of sediment levels during rainy season, monitoring of activities/ providers and intermediary

Monitoring implementation of agreed workplan (tree planting, soil conservation activities)/ intermediary

Number of trees planted. Pilot activities on monitoring sediment reduction/intermediary

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8 | Conditionality in practice: Experience from Indonesia

As the table shows, conditionality was addressed differently in each of the schemes. For example, in the different phases of RiverCare, payments (rewards) varied dependent on the level of sediment reduction. In addition to water monitoring to determine sediment reduction, the RiverCare program also monitored physical activities aimed at achieving these reductions. These included tree planting, implementing soil conservation measures and building small dams to trap sediment. Payments to providers (farmers) were based on achievement of defined criteria related to the percentage of sediment reduction when compared to a baseline (output conditionality).

In RiverCare 2 (on-going at the time field work was conducted in 2013), which was two years instead of the one year of RiverCare 1, there was an interim reward based on achievement of planned activities (input conditionality). In RiverCare 1 the conditionality criteria were not actually followed precisely as outlined, to the benefit of farmers. The criteria required that the RiverCare group achieve a sedimentation reduction level of 30% to obtain the final reward of a micro-hydro electricity generating unit. Less than this would result in a scaled financial reward. By the time the scheme was completed, measurements showed that sediment reduction was approximately 20%. This should have resulted in a lower reward, but PLN, which was a co-funder of the scheme with ICRAF, nevertheless provided the unit. This was reportedly due to the commitment that the community showed in implementing sediment reduction activities.

In contrast to RiverCare, under the Brantas and Mendalam schemes there were no explicit links between levels of sediment reduction and payments (rewards). In both the Brantas and Mendalam schemes, support for tree planting, capacity building for farmers’ groups and other livelihood activities were provided by project or beneficiary funding. In Brantas there was also support for soil conservation activities. In both cases farmers chose the trees to plant and one of the rewards envisioned was the longer term ability to harvest fruit or latex (in the case of Mendalam) from the trees.

With respect to the timing of payments, in general the schemes reviewed tended toward the use of up-front payments in the form of agro-inputs, capacity strengthening, technical support, and extension services. RiverCare was the only scheme that also included a payment upon achievement of results in the form of measurable reductions in sediment levels. In each of the schemes the up-front payments to support implementation were not linked to delivery of environmental services. They were based on the implementation of agreed-upon workplans which included activities and budgets, not unlike other rural development programs. The Brantas and Mendalam schemes in particular seemed to have been in part based on the assumption that one of the ways of ensuring continual delivery of environmental services in the absence of payments would be harvests from trees planted under the schemes.

Each of the schemes had some kind of agreement to formalize the relationship with environmental service providers (see Table 26.4). The agreements provided information on the activities to be implemented and financial and technical contributions from intermediaries and facilitators. In each of these schemes the agreements were rather short term, ranging from around six months to two years. Agreements under the Brantas and Mendalam schemes were tied to donor funded projects, as were the early phases of RiverCare.

The expectation was that the Brantas scheme, following the pilot project implemented with a mix of donor and user funding, would continue and expand with direct payments from the Brantas River Basin Operator, but this did not occur. Similarly, the Mendalam scheme, following the completion of the pilot, was trying to secure on-going funding for the scheme. The latest RiverCare scheme (which was being implemented during field work in 2013) (RiverCare 2), which had an agreement of two years, was no longer dependent on donor

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Chapter 26 | 9

funds, and was completely funded by PLN through its corporate social responsibility (CSR) mechanism.

In terms of monitoring systems, as Table 26.4 shows, the three schemes differed in terms of what was monitoring and by whom. In each of the phases of RiverCare, sediment levels during the rainy season were monitored and compared against a baseline to determine reductions. Water samples were taken by providers and given to intermediaries for analysis. There was also monitoring of the activities implemented against workplans. In the Brantas scheme monitoring was based on agreed workplans, and was on-going through the presence of extension workers who stayed in the target communities. The intermediary in the Mendalam scheme monitored implementation of agreed activities, and also piloted a scheme for monitoring sediment reduction.

Ultimately, in contrast to the RiverCare scheme, neither the Brantas nor the Mendalam schemes showed indications of conditionality in implementation. In Brantas monitoring was based on implementation of agreed workplans rather than indicators linked either directly or indirectly to environmental services. For the Mendalam scheme, the scheme’s facilitators (WWF) envisioned a performance (output) based system, with reduction in sediment as a primary indicator, but this was not realized during the pilot scheme. In both cases support for the implementation of tree planting, soil conservation and livelihood activities was guided by plans agreed with providers but was not contingent upon first reaching some level of achievement of environmental services or proxy thereof (e.g. certain number of trees planted on each hectare of land).

26.6 Discussion and Conclusions

With respect to the potential for PES to enhance social capitals among community members, it is worth considering whether differences in conditionality might have resulted in different levels of community acceptance or commitment to the schemes. As mentioned above, the RiverCare scheme took a stricter approach to conditionality, so one would expect any such differences to appear in a comparison of RiverCare with the other schemes. In fact, the three cases did not seem to show significant differences in social capitals in a way that could be attributed to differences in conditionality. Having said this, it is important to note that these observations are preliminary and based on schemes that were relatively small scale and time bound. Over the longer term the conclusions could be different.

What each of the schemes did do, however, was make a concerted effort to mobilize and strengthen existing social capitals to support implementation. In the early phases of the programs, farmers’ groups were established specifically for implementation of the PES schemes. This also involved developing and strengthening bonds of trust and common purpose. For example, in the Brantas case a full-time extension worker was assigned to each of the two communities where the program was implemented. One facilitator told of the challenges and intense effort required to build the trust necessary to proceed with the program. In the Mendalam and RiverCare schemes the external facilitators invested significant effort in supporting the groups in the start-up and implementation phases.

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10 | Conditionality in practice: Experience from Indonesia

River bank erosion, Mendalam River. Photo: Lestari Sustainable Development Consultants/Jill Heyde

The analysis of the three cases suggests that farmers (the providers of environmental services) had limited influence on the overall design of the PES programs, including the elements of conditionality. There was some space for farmers to negotiate the location and species of trees planted on their lands and the type and location of soil conservation activities, but at a broader level their ability to influence institutional elements appears to have been minimal. This is in line with the findings of Lapeyre27 from the Cidanau watershed where one of the longer-running PES schemes in Indonesia has been implemented. The authors noted, among other things, that farmers had little say in the level of payments or contract conditions and were in fact often unaware of the amount or the timing of payments.

This is not to say that in the cases presented in this chapter there were no attempts to incorporate the interests of farmers on the part of facilitators, intermediaries, donors or government. Project documents and field interviews show that this was in fact an important priority. However, there were likely many assumptions underlying these attempts and as such limits were already in place before there was any interaction with farmers. These would have flowed from the pre-defined frameworks of the programs which generated the schemes and which the farmers would have had little chance to influence.

The types of assumptions involved in the design of a PES scheme can be expected to link back to the theoretical starting point of the actors involved, and these can vary between different actors in the same scheme. For example, in the Brantas scheme it appears that during the design phase different actors within the scheme were at slightly different starting points along the PES conceptual continuum, although still tending very much towards incentivizing collective action. As a representative from the NGO intermediary explained, in the early stages there were negotiations as to the balance between environmental service results and addressing more directly the livelihood priorities of target communities through interventions resembling traditional rural development approaches. Ultimately a broader approach towards the scheme was adopted. Such negotiations can be expected during the design stages of a

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Chapter 26 | 11

scheme, but may also be necessary during implementation if it becomes necessary to modify the conditionality elements of a scheme.

The elements of conditionality in the three schemes seem to indicate that each had a tendency to be more oriented towards the incentivizing collective action rather than the market-like end of the PES conceptual continuum. With the exception of the RiverCare scheme, there were few indications of strict conditionality in the schemes and even in the RiverCare scheme there was flexibility evident in implementation of that conditionality. This would seem to support the idea that in complex, multi-functional landscapes the market-like approach would limit options to cost-effectively implement strict conditionality measures. In these environments, a looser approach to conditionality, more in line with the incentivizing collective action end of the PES conceptual continuum, might prove more realistic, and also serve to leverage existing social capitals and systems of collective action and cooperation.

Acknowledgements

The author wishes to thank Michael Flitner and Martin Lukas at artec | Research Center for Sustainability Studies, University of Bremen for their constructive comments and support, and Umi Latifah Purnamasari and Rendy Enggar Suwandi of Gadjah Mada University’s Faculty of Geography’s Master Program on Coastal Zone and Watershed Management for their assistance in the field research. Thanks also goes to various organizations and individuals too numerous to mention who generously shared their time and experience with the author during field work. The research was conducted in the frame of the Indonesian-German research program SPICE III (Science for the Protection of Indonesian Coastal Marine Ecosystems) and was sponsored by the German Federal Ministry of Education and Research (BMBF).

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