Human Development Report--Chapter 6

Chapter 6

Payments for ecosystem services

Photo credit: ADF

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6. Payments for ecosystem services A decade of experience in Cambodia

Even though human development for rural people livelihoods and overall well-being of local people. The concept of PES is not entirely new to stipulate direct payment for biodiversity to
largely depends on the viability of ecosystems, Cambodia. As summarized in Table 6.1, individual villagers or communities living in
the value of ecosystem goods and services is not PES has been introduced in many parts of the various initiatives have taken place over the and around areas targeted for conservation,
directly reflected in economic accounting. The world, but mainly in Latin America. In Costa especially to incentivize the protection of
assumption that these goods and services are in Rica, for example, gasoline users pay fees to forest last decade. All have been implemented by endangered species.191 These contracts have
some sense “free” has resulted in overexploitation owners to increase forest cover and implement NGOs in partnership with the Government.190 been implemented on the basis of informal
and depletion, imposing significant economic, environmentally friendly land-use practices. The sites have primarily been protected or customary property rights, rather than on
social and environmental costs. Many essential In Ecuador and Mexico186 as well as Viet Nam, forests or other protected areas. Most formalized land tenure or resource rights.
ecosystems are now facing critical threats. Governments pay forest owners for forest experiences have been with contracts that
protection. In China, Government payments
Payments for ecosystem One way to address this market failure is through encourage farmers to reduce soil erosion. Table 6.1.
services (PES) seek to Payments for Ecosystem Services (or Payments
address the problem of for Environmental Services, referred to as PES). REDD+ and ecotourism are among the Cambodia has seen a number of PES and similar schemes
This approach provides financial incentives to initiatives defined as payments for ecosystem
resource exploitation by encourage behavioural changes that support services. Under REDD+, developed countries, Payments Location Payer/buyer Service Ecosystem NGO
providing financial incentives ecosystem conservation. multilateral organizations and the private sector scheme provider service involved
make payments in exchange for national and local
for ecosystem conservation efforts to protect and sustainably manage forests. Protection of endangered Wildlife
Ecotourism entails tourists paying to preserve bird species and their Conservation
In Cambodia, Government interest in key ecosystems and biodiversity as well as scenic Community-based Preah Tourists Village fund habitat
experimenting with such payment systems landscapes. Similarly, consumers pay “extra” fees ecotourism Vihear Protection of Society
has been stimulated by Costa Rica’s highly for ecologically certified products such as shade- endangered bird
successful national scheme. In September 2016, grown coffee, fair-trade chocolate and Ibis rice. Agri-environment Preah Urban Individual Wildlife
a Cambodian delegation visited Costa Rica. payments, e.g., Vihear consumers, farmers species (e.g., Giant Ibis) Conservation
This visit prompted Prime Minister Hun Sen While the core objective of PES is conservation for ibis-rice hotels and and their habitat
to create an official order (sochornor) endorsing of ecosystems and biodiversity, the synergy Preah Vihear restaurants Individual Society
development of a national payments scheme between this approach and human development Direct payments and Kom- villagers Protection of the nests of
based on testing at two sites: Phnom Kulen has become increasingly clear. Since most rural for nest pong Tom Wildlife endangered bird species Wildlife
Mountain in Siem Reap and the Kbal Chay poor people depend heavily on natural resources protection, (a) Conservation Conservation
watershed in Sihanoukville. Using lessons from for their livelihoods, the maintenance of viable three separate
these pilots, the Government plans to introduce ecosystems is generally beneficial to human schemes (a, b, c) Kratie and Society (a) Society (a)
a national payments policy. development. This is the case, for instance, when Stung Treng
sustainably managed watersheds supply clean World Wildlife World Wildlife
water to rural and urban settlements,187 or when (b) Fund (b) Fund (b)
forests protected against degradation provide
Agreeing on conservation building materials and marketable products for Ratanakiri (c) BirdLife (c) BirdLife (c)
the people living there. Obviously, however,
Payments for ecosystem services establishes targeted interventions that integrate pro- Direct payments Kratie and Conservation Individual Protection of specific Conservation
voluntary or conditional agreements between poor payments are especially conducive to the for turtle nesting Stung Treng International villagers endangered turtle species International
buyers and sellers of such services.183,184,185 Under improvement of human development.188 This is
these arrangements, buyers who benefit from exemplified by a Nepalese REDD+ pilot project Conservation Koh Kong Conservation Commune Payments for forest Conservation
ecosystem goods and services provide payments that specifically supported poor women and agreements (Cardamom International fund and conservation and species International
to sellers who conserve and protect ecosystems, landless inhabitants of rural villages.189 Mountains) individual
or forego activities that degrade and deplete villagers protection (Siamese Wildlife
ecosystems. Payments encourage ecosystems Crocodile, Dragon Fish) Conservation
management that is not only environmentally
beneficial, but also advantageous for the health, REDD+ Seima, Private Payments for forest Society
Oddar sector conservation
Meanchay

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Various PES schemes in Schemes have been successful in protecting how, when and where the schemes work best.196 Figure 6.1.
Cambodia, which have been biodiversity and delivering livelihood benefits, such As global experience suggests, outcomes are
as increased income generation activities.192,193,194,195 often determined by the context and design of Key design elements of PES
implemented mainly by One REDD+ demonstration project in Mondulkiri different schemes, making it necessary to learn
NGOs, have been successful Province, which entails management of the Seima from actual practice.197 Formulating a national
in protecting biodiversity and Protected Area, has successfully sold carbon credits scheme in Cambodia could benefit from
delivering livelihood benefits to the voluntary carbon market. incorporating lessons from around the world,
especially in making design and implementation
Experiments with direct payments in Cambodia fully inclusive and attentive to the needs of poor
are promising but without sufficient evidence and other marginalized groups.
yet to make firm or universal conclusions about

Putting payments into practice

The design and implementation of PES typically modifying farming practices in environmentally Conditions for success and risks to avoid
entails four steps: first, a diagnosis of the situation, friendly ways.
including forms of land use, property rights and A significant body of knowledge has grown major beneficiary of ecosystem services, such Central conditions for
the main actors (government, local communities, Payments can be made in cash or as in-kind from experiences with PES, underlining as a hydroelectric dam or irrigation project, or successful PES include
NGOs and the private sector); second, design benefits. They can be designed to compensate four particularly central conditions for a substantial number of beneficiaries, such as presence of a major
of the payments scheme; third, negotiation for the opportunity costs of conservation or they success.198,199,200 First, users or beneficiaries water consumers in cities, can make it easier to beneficiary or a substantial
of agreements with stakeholders; and fourth, may reflect a “willingness to accept” an amount of environmental services must be willing to charge fees, either on a larger company with high number of beneficiaries and
implementation and adaptive management. on behalf of the seller. They can be delivered pay providers at least their minimal “willing financing capacity or in small amounts across their willingness to pay for
according to any negotiated time-frame. to accept” amount. Otherwise, the deal is not many beneficiaries. environmental services, clear
As outlined in Figure 6.1, in a typical scheme, Monitoring of ecosystem services mostly uses possible. Second, payments should not conflict Systems tend to succeed by introducing small fees and well-defined tenure,
buyers include NGOs, international donors and proxy measures for ease and efficiency, such as with existing norms and values, and contracts with a limited impact on the cost of the final product, and high-level government
funding schemes (e.g., REDD+), multilateral indicators of environmentally friendly behaviour should be trusted. Third, it must be clear who such as water, energy or fuel. Low opportunity costs commitment for PES
organizations, private companies, national and/or land-use practices by the seller. is responsible for providing environmental can be important, as ceasing activities that generate
governments, philanthropists and tourists. services, such as through well-defined significant revenue, such as mining and highly
Sellers comprise private landowners, resource Conditionalities aim to protect an ecosystem land and resource tenure regimes. Finally, profitable commercial agriculture, can otherwise
users, indigenous communities, national park good or service, for example, through avoiding good governance backs clear, transparent involve significant compensation.
managers, fisherman, hunters or farmers. A deforestation, enhancing carbon sequestration, mechanisms to transfer payments from buyers While there are many ways to broker a payments
behavioural change by an ecosystem services improving biodiversity or species protection, to consumers along with robust monitoring of agreement, some of the best examples have
supplier is usually required. It might be tree or providing clean water. If the promised implementation and results. responded to local conditions based on strong
planting; refraining from hunting, cutting trees environmental services are not delivered, payments Other success factors include high-level knowledge of the context, flexibility and
or the use of particular areas or resources; or or benefits will be withheld or restricted. government commitment to finding solutions, creativity. This lesson has special relevance
and wide recognition of urgent environmental for Cambodia, given promising new legal
problems, such as when a large number of frameworks and payment pilot projects.
stakeholders share a common concern.201 A

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Common implementation challenges Steps towards forest loss, with coverage on the mountain
a national scheme declining from more than 50 percent to 25
Common inplementation Experience has also shown some common carbon sequestration services are now more percent over the last three decades (Figure Cambodia is now moving
challenges include issues implementation challenges, such as lengthy likely to be financed through bilateral and In 2016, the Royal Government of Cambodia 6.2). Until recently, villagers mainly practiced towards designing a national
of data collection, property processes to operationalize PES. Designing multilateral aid.203 Prospects for sustainable endorsed development of a national PES shifting agriculture or chamka for upland rice PES scheme run by the
rights, fund management, a scheme takes time and persistence, and is financing are enhanced where committed scheme run by the Government. It will draw production. Since 2005, cashew growing has Government based on two
monitoring and sustainability premised on overcoming various challenges private sector buyers or trust funds are on experiences gained at pilots at the Phnom replaced most of the former natural forest and PES pilots: Phnom Kulen and
and facilitating negotiations along the way. available, but these are unusual cases. Kulen Mountain watershed in Siem Reap and shifting agriculture system for villagers on the Kbal Chay watersheds
the Kbal Chay watershed in Sihanoukville. eastern plateau because of its profitability.
Design often involves technically demanding Many schemes are implemented in areas Both are concerned with the protection of Since 2015, many cashew farmers have
tasks such as forest cover monitoring, where property rights are collectively or valuable watersheds in protected areas. These introduced herbicides, which pose additional
collection of biodiversity data, or analysis of customarily held or exercised without formal watersheds regulate water supplies to major risks to human health and water quality.
local property rights and land-use practices. It legal recognition.204,205,206 This raises issues tourist centres, beverage companies and urban
can entail negotiations with potential service around consent.207 Among others, it opens locations. They are threatened by unmanaged In light of these threats, a payments scheme
providers, which are rendered complex by questions such as: How are decisions made in farming, settlements and other economic would need to consider that most farmers do
issues that include language and literacy. the communities? Does everyone agree to join development activities. not have formal tenure rights to the land they
Pragmatic solutions to overcome some of these the scheme? Without community buy-in and farm and are unlikely to obtain land titles due to
costs include the use of proxy indicators (e.g., awareness, schemes are unlikely to succeed. In cooperation with the Food and Agriculture their location in the park. Further, substantial
of land-use practices) and community-based Other challenges relate to equity. Some Organization (FAO) and Conservation earnings from cashew nut production make the
monitoring to track environmental services.202 households are likely to benefit more than others International, UNDP assisted the Government opportunity costs of forest conservation very
from payment schemes, just as some households in conducting feasibility studies for the two high. At the same time, direct compensation for
Capacities and resources to complete complex are likely to bear the costs of conservation pilot sites. These aimed to identify key ecosystem foregoing cashew nut farming in protected areas
technical tasks and sustain implementation are more than others. Adequate knowledge of the services, possible buyers and sellers of ecosystem (which is considered illegal according to the
often insufficient, as is the case in Cambodia. local context is vital to account for the fair services, and potential mechanisms for collecting Protected Area Law) could send a misleading
Training and capacity-building are therefore distribution of costs and benefits.208 and transferring payments from buyers to sellers. signal that illegal activities are rewarded.
required, along with skilled support over time.
Various situations create difficulties for the Phnom Kulen: a fund for A feasibility study proposed several options for
Even where protected area management plans or enforcement of sanctions for violations of effective park management a pilot scheme (Figure 6.3). One on the supply
payment agreements exist, PES implementation payment contracts. Vested interests among and environmentally side entails implementation of the Phnom Kulen
can be compromised by weak law enforcement involved parties such as NGOs, governments, friendly farming National Park Management Plan. This plan
or policy conflicts. For example, local park donors and buyers can deter detection and prioritizes boundary demarcation of protected
rangers may find it hard to enforce the law sanctions. Socioeconomic and political With a 37,500-hectare national park, Kulen area zones, clarification and formalization
in the face of powerful interests driving conditions can make it hard for resource users Mountain supplies clean water to Siem Reap of tenure, and effective law enforcement. A
resource and land appropriation. Such outside to report violations committed by others in and maintains the underground aquifer that second proposal involves creating incentives for
interests can also render local community the community or by outsiders. Sometimes stabilizes monuments in the Angkor region. local farmers to adopt sustainable, chemical-
members powerless to fulfill their conservation payment contracts exist on paper only. For villagers living in the area, surrounding free practices, and to become the custodians
commitments. In addition, areas often have ecosystems provide water and lands for of Kulen Mountain. Incentives may include
separate or overlapping land-use mandates. Finally, in highly dynamic “frontier” areas, agriculture, timber for houses, woodfuel for official recognition of villagers’ tenure rights
opportunity costs can change rapidly as prices cooking, non-timber forest products such as on the condition that they will not expand
Many schemes are initially implemented for land and agricultural commodities fluctuate. mushrooms, medicinal plants, and bushmeat farms and will adopt environmentally friendly
with donor funds and technical support. When the local cost of conservation rises, buyers for subsistence and income. farming practices; technical support for new
Donors or NGOs may even act as the buyers of environmental services may be unable to farming practices; and facilitation of links to
of environmental services. Yet PES requires sufficiently compensate local resource users. In Despite their value, Kulen Mountain’s high-value markets for sustainable cashew nuts.
sustainable long-term financing. While global the Cambodian forest frontier, for instance, ecosystems are under threat. The expansion
carbon markets initially seemed promising, escalating land prices have made it difficult to and intensification of cashew nut plantations For the demand side, the study identified
high carbon prices have not materialized, and implement a payment scheme.209 is one of the largest concerns, leading to heavy several opportunities related to Angkor Wat
tourism and the town of Siem Reap, given
that they are the main users of water in the
downstream watershed.

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During the last few decades, there has been a Extra levies or fees could be charged to Figure 6.3.
remarkable increase in the number of tourists international tourists at the airport or to
in Siem Reap city, reaching approximately 1.8 major water users such as large luxury hotels in Proposed components of the Phnom Kulen PES pilot
million international tourists in 2018. Along with Siem Reap (Tables 6.2 and 6.3). These could
the increase, the rate of annual underground water in turn be channelled into a fund to finance
extraction increased dramatically from less than 1 implementation of the park management plan.
million cubic metres per year before 2006 to 6.8 Ideally, such funds could also be used to further
million cubic metres by the end of 2018 at a value incentivize environmentally friendly farming and
of $1.9 million ($0.28 per cubic metre) in 2018. other activities.

Forest clearing and herbicide use for cashew production near Kulen Mountain in 2017. Table 6.2.
Photo credit: ADF.
The numbers of hotels and rooms in Siem Reap
Figure 6.2.
Source: Data are derived from the Siem Reap Department of Tourism 2018b, 2018a. *The estimation is based on the data (average
Agriculture is overtaking forests in Phnom Kulen National Park, 2001-2017 number of rooms per hotel) provided by the Department of Tourism. The data from TripAdvisor are included as another reference
due to a large number of unregistered hotels.
Source: ADF 2017.

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Table 6.3. Table 6.4.

Options for payments from different dimensions of tourism in Siem Reap City The numbers of hotels and rooms in Preah Sihanoukville

*The minimum and maximum values are applied only to the 3-, 4- and 5-star hotels as their units/rooms are not always fully Source: Data are derived from the Preah Sihanoukville Department of Tourism 2018b, 2018a, and the TripAdvisor website. *The
occupied. Minimum is an estimation based on half the rooms being occupied, and maximum is based on them being fully estimation is based on the data (average number of rooms per hotel) provided by the Department of Tourism. The data from
occupied. TripAdvisor are included as another reference due to a large number of unregistered hotels.

Kbal Chay: Leveraging fees users including hotels and restaurants. Industrial Table 6.5.
for water and instituting water users near Sihanoukville include a special
a management plan economic zone that uses 1,000 cubic metres a Options for payments from different dimensions of tourism in Preah Sihanoukville
day, and the Angkor beer company, which uses
5,000 cubic metres a day. *The minimum and maximum values are applied only to the 3-, 4- and 5-star hotels as their units/rooms are not always fully
occupied. Minimum is an estimation based on half of the rooms being occupied and maximum is based on them being fully
The second payments pilot is located in the Kbal The rapidly growing number of tourists as well as occupied.
Chay watershed, which provides the primary the expansion of new Chinese developments and
water supply to Sihanoukville, Cambodia’s the special economic zone has led to a dramatic
main port, and a hub for tourism and industry. increase in the total volume of water demand.
Given the strategic importance of its ecosystem The number of tourists rose from about 586,000
services, a 7,000-hectare forested area is reserved in 2010 to over 2 million in 2018. Today,
as a protected area. Sihanoukville hosts over 100 hotels, according
to TripAdvisor (Tables 6.4 and 6.5), and 200
The ANCO company is responsible for reservoir restaurants. The overall supply of water increased
management, water pumping and water treatment fivefold from 2.1 million cubic metres in 2010
within the Kbal Chay protected area. ANCO to 10.7 million cubic metres in 2018, at a value
sells water to the Sihanoukville Water Authority, of around $3.2 million in 2018 ($0.3 per cubic
which supplies town residents and commercial metres).212

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Such rapidly-growing demand for water from On the demand side, private beneficiaries, including Recommendations
tourism and industrial development is likely to the Angkor Beer company and other industrial users
exceed the carrying capacity of the reservoir, in the special economic zone, could be willing to pay The two PES pilots suggest that there are development and livelihood needs of local The two PES pilots suggest
which can only provide 27.6 million cubic to secure their water supply. The Sihanoukville water significant opportunities for achieving outcomes people. For indigenous communities and long- that there are significant
metres. authority (via ANCO) may provide an institutional that both benefit the environment and advance established villages, customary and traditional opportunities for achieving
In spite of the obvious need for protecting Kbal structure to leverage fees from water users. A human development. The need to secure rights must be recognized. This can be done, outcomes that both benefit
Chay, the watershed is threatened by illegal voluntary or private sector scheme could direct ecosystem services is increasingly urgent, given for example, through community-based natural the environment and advance
settlements and land encroachment, both payments to an executive body that could initially the vital importance of water supplies to Siem resource management mechanisms, including human development
of which lead to forest loss or degradation. oversee the funds, contracts and management Reap and Sihanoukville, and surrounding rural community forestry.
Only half of the protected area is properly systems. In the long run, other payment channels populations. In addition, there are possible
demarcated. Other challenges relate to limited can be explored, such as an additional mandatory buyers whose payments could be easily leveraged, Payment schemes should be clear, simple
law enforcement. Visitor management at fee paid by the special economic zone for water and such as international tourists in Siem Reap. and equitable to demonstrate their
the waterfall site is weak, with no systems by water users in Sihanoukville. potential and foster buy-in from all
for dealing with sewage or rubbish. This On the supply side, the study outlined actions Specific recommendations for stakeholders. Buyers need to know where
affects water quality as well as the aesthetic involving the proper management of the reservoir priority actions for Kulen Mountain their money is going. Service providers need
appreciation of the site. and the surrounding watershed, including and Kbal Chay to see clearly what they are accountable for and
The feasibility study identified a number of through instituting a management plan. Sellers why. Monitoring systems should be created
potential buyers and institutional arrangements of ecosystem services are likely to be ANCO and Assess the carrying capacity of water resources to easily and transparently detect impacts.
to operationalize a pilot payments scheme the Ministry of Environment, although other as well as needs for groundwater extraction Transparent payment mechanisms will also
(Figure 6.4). actors such as NGOs, tourist operators and third- to ensure the long-term sustainability of the help achieve an equitable distribution of
party contractors may become involved. two watersheds, paying attention as well to benefits among providers and sellers.
issues related to the structural integrity of
Figure 6.4. Angkor Wat in Siem Reap. Measures to achieve equity, pro-poor and
Enforce business registrations for star-hotels gender equality objectives should be in
Proposed components of the Kbal Chay PES pilot to ensure effective fee collection. place. Payments should be at a minimal level
Formalize mechanisms for payment broadly targeted to people with higher income
collection, and fund management and use for levels (e.g., international tourists, medium and
ecosystem services, including decisions on fee large industries, and large hotels) or in small
collection options, fund management structures amounts across many beneficiaries. The design
and responsibilities, land uses and priority of PES schemes at all stages needs to factor in
actions for sustainable watershed management. the human development priorities of users of
Develop and implement management plans ecosystems. Explicitly pro-poor and gender-
for the two watersheds. sensitive measures should be geared towards
the full participation of marginalized groups in
General recommendations for PES decision-making and the distribution of benefits.

Strong political and financial support The idea of paying for ecosystem services is
are pre-conditions for a PES scheme to likely to encounter resistance, at least initially.
work. High transaction costs and technical Bringing about real change, including at policy
requirements to start and run payment levels, will take time. It will require recognition
schemes underline the need for support from that resources like fresh water have “production”
the Government, donors and the private sector. costs and hold values that must be reflected in
environmental policies and pricing mechanisms.
Property rights should be clarified to
balance livelihood needs and environmental If the payment pilots prove successful in
sustainability. With recent reforms to protected capturing buyers’ willingness to pay, the models
areas, there are significant opportunities for should be expanded to other protected areas.
resolving the resource rights and tenure claims of Hydropower companies could be engaged
people living inside conservation areas, thereby as buyers to protect forests, for example. The
providing a sustainable basis for implementing proposed Phnom Kulen environmental fund
payment schemes, and securing the human could be scaled up to regional or national levels
to mainstream a notion of “green” taxes. Direct
payments schemes for biodiversity offer other
avenues for exploration.

103 NATIONAL HUMAN DEVELOPMENT REPORT CAMBODIA 2019

During the last few decades, there has been a Extra levies or fees could be charged to
remarkable increase in the number of tourists international tourists at the airport or to
in Siem Reap city, reaching approximately 1.8 major water users such as large luxury hotels in
million international tourists in 2018. Along with Siem Reap (Tables 6.2 and 6.3). These could
the increase, the rate of annual underground water in turn be channelled into a fund to finance
extraction increased dramatically from less than 1 implementation of the park management plan.
million cubic metres per year before 2006 to 6.8 Ideally, such funds could also be used to further
million cubic metres by the end of 2018 at a value incentivize environmentally friendly farming and
of $1.9 million ($0.28 per cubic metre) in 2018. other activities.

Forest clearing and herbicide use for cashew production near Kulen Mountain in 2017.
Photo credit: ADF.

Figure 6.2.

Agriculture is overtaking forests in Phnom Kulen National Park, 2001-2017

Source: ADF 2017.

NATIONAL HUMAN DEVELOPMENT REPORT CAMBODIA 2019 104

Figure 6.3.

Proposed components of the Phnom Kulen PES pilot

Table 6.2.

The numbers of hotels and rooms in Siem Reap

Source: Data are derived from the Siem Reap Department of Tourism 2018b, 2018a. *The estimation is based on the data (average
number of rooms per hotel) provided by the Department of Tourism. The data from TripAdvisor are included as another reference
due to a large number of unregistered hotels.

105 NATIONAL HUMAN DEVELOPMENT REPORT CAMBODIA 2019

Table 6.3.

Options for payments from different dimensions of tourism in Siem Reap City

*The minimum and maximum values are applied only to the 3-, 4- and 5-star hotels as their units/rooms are not always fully
occupied. Minimum is an estimation based on half the rooms being occupied, and maximum is based on them being fully
occupied.

Kbal Chay: Leveraging fees users including hotels and restaurants. Industrial
for water and instituting water users near Sihanoukville include a special
a management plan economic zone that uses 1,000 cubic metres a
day, and the Angkor beer company, which uses
5,000 cubic metres a day.

The second payments pilot is located in the Kbal The rapidly growing number of tourists as well as
Chay watershed, which provides the primary the expansion of new Chinese developments and
water supply to Sihanoukville, Cambodia’s the special economic zone has led to a dramatic
main port, and a hub for tourism and industry. increase in the total volume of water demand.
Given the strategic importance of its ecosystem The number of tourists rose from about 586,000
services, a 7,000-hectare forested area is reserved in 2010 to over 2 million in 2018. Today,
as a protected area. Sihanoukville hosts over 100 hotels, according
to TripAdvisor (Tables 6.4 and 6.5), and 200
The ANCO company is responsible for reservoir restaurants. The overall supply of water increased
management, water pumping and water treatment fivefold from 2.1 million cubic metres in 2010
within the Kbal Chay protected area. ANCO to 10.7 million cubic metres in 2018, at a value
sells water to the Sihanoukville Water Authority, of around $3.2 million in 2018 ($0.3 per cubic
which supplies town residents and commercial metres).212

NATIONAL HUMAN DEVELOPMENT REPORT CAMBODIA 2019 106

Table 6.4.

The numbers of hotels and rooms in Preah Sihanoukville

Source: Data are derived from the Preah Sihanoukville Department of Tourism 2018b, 2018a, and the TripAdvisor website. *The
estimation is based on the data (average number of rooms per hotel) provided by the Department of Tourism. The data from
TripAdvisor are included as another reference due to a large number of unregistered hotels.

Table 6.5.

Options for payments from different dimensions of tourism in Preah Sihanoukville

*The minimum and maximum values are applied only to the 3-, 4- and 5-star hotels as their units/rooms are not always fully
occupied. Minimum is an estimation based on half of the rooms being occupied and maximum is based on them being fully
occupied.

107 NATIONAL HUMAN DEVELOPMENT REPORT CAMBODIA 2019

Such rapidly-growing demand for water from On the demand side, private beneficiaries, including
tourism and industrial development is likely to the Angkor Beer company and other industrial users
exceed the carrying capacity of the reservoir, in the special economic zone, could be willing to pay
which can only provide 27.6 million cubic to secure their water supply. The Sihanoukville water
metres. authority (via ANCO) may provide an institutional
In spite of the obvious need for protecting Kbal structure to leverage fees from water users. A
Chay, the watershed is threatened by illegal voluntary or private sector scheme could direct
settlements and land encroachment, both payments to an executive body that could initially
of which lead to forest loss or degradation. oversee the funds, contracts and management
Only half of the protected area is properly systems. In the long run, other payment channels
demarcated. Other challenges relate to limited can be explored, such as an additional mandatory
law enforcement. Visitor management at fee paid by the special economic zone for water and
the waterfall site is weak, with no systems by water users in Sihanoukville.
for dealing with sewage or rubbish. This On the supply side, the study outlined actions
affects water quality as well as the aesthetic involving the proper management of the reservoir
appreciation of the site. and the surrounding watershed, including
The feasibility study identified a number of through instituting a management plan. Sellers
potential buyers and institutional arrangements of ecosystem services are likely to be ANCO and
to operationalize a pilot payments scheme the Ministry of Environment, although other
(Figure 6.4). actors such as NGOs, tourist operators and third-
party contractors may become involved.

Figure 6.4.

Proposed components of the Kbal Chay PES pilot

NATIONAL HUMAN DEVELOPMENT REPORT CAMBODIA 2019 108

Recommendations

The two PES pilots suggest that there are development and livelihood needs of local The two PES pilots suggest
significant opportunities for achieving outcomes people. For indigenous communities and long- that there are significant
that both benefit the environment and advance established villages, customary and traditional opportunities for achieving
human development. The need to secure rights must be recognized. This can be done, outcomes that both benefit
ecosystem services is increasingly urgent, given for example, through community-based natural the environment and advance
the vital importance of water supplies to Siem resource management mechanisms, including human development
Reap and Sihanoukville, and surrounding rural community forestry.
populations. In addition, there are possible
buyers whose payments could be easily leveraged, Payment schemes should be clear, simple
such as international tourists in Siem Reap. and equitable to demonstrate their
potential and foster buy-in from all
Specific recommendations for stakeholders. Buyers need to know where
priority actions for Kulen Mountain their money is going. Service providers need
and Kbal Chay to see clearly what they are accountable for and
why. Monitoring systems should be created
Assess the carrying capacity of water resources to easily and transparently detect impacts.
as well as needs for groundwater extraction Transparent payment mechanisms will also
to ensure the long-term sustainability of the help achieve an equitable distribution of
two watersheds, paying attention as well to benefits among providers and sellers.
issues related to the structural integrity of
Angkor Wat in Siem Reap. Measures to achieve equity, pro-poor and
Enforce business registrations for star-hotels gender equality objectives should be in
to ensure effective fee collection. place. Payments should be at a minimal level
Formalize mechanisms for payment broadly targeted to people with higher income
collection, and fund management and use for levels (e.g., international tourists, medium and
ecosystem services, including decisions on fee large industries, and large hotels) or in small
collection options, fund management structures amounts across many beneficiaries. The design
and responsibilities, land uses and priority of PES schemes at all stages needs to factor in
actions for sustainable watershed management. the human development priorities of users of
Develop and implement management plans ecosystems. Explicitly pro-poor and gender-
for the two watersheds. sensitive measures should be geared towards
the full participation of marginalized groups in
General recommendations for PES decision-making and the distribution of benefits.

Strong political and financial support The idea of paying for ecosystem services is
are pre-conditions for a PES scheme to likely to encounter resistance, at least initially.
work. High transaction costs and technical Bringing about real change, including at policy
requirements to start and run payment levels, will take time. It will require recognition
schemes underline the need for support from that resources like fresh water have “production”
the Government, donors and the private sector. costs and hold values that must be reflected in
environmental policies and pricing mechanisms.
Property rights should be clarified to
balance livelihood needs and environmental If the payment pilots prove successful in
sustainability. With recent reforms to protected capturing buyers’ willingness to pay, the models
areas, there are significant opportunities for should be expanded to other protected areas.
resolving the resource rights and tenure claims of Hydropower companies could be engaged
people living inside conservation areas, thereby as buyers to protect forests, for example. The
providing a sustainable basis for implementing proposed Phnom Kulen environmental fund
payment schemes, and securing the human could be scaled up to regional or national levels
to mainstream a notion of “green” taxes. Direct
payments schemes for biodiversity offer other
avenues for exploration.