Carbon credits, Payment for Environmental Services and more: key instruments for conservation in Mexico

The great environmental challenges that exist in the world have forced the human population to develop conservation instruments that study and protect the functioning of the natural cycles provided by nature, which allow us to maintain and improve our quality of life. In search of an answer, different instruments have emerged to stop deforestation, land use change (the growth of the agricultural frontier), the unregulated use of non-renewable resources, the excessive release of greenhouse gases and the lack of coordination between public policies that provide support for productive projects in rural areas of southeastern Mexico.

An international legal order has been formed that requires the regulation of greenhouse gas emissions and consists of implementing a series of constitutional rules that each country decides to regulate its territory. These conditions have required the Mexican State to create and implement instruments that aim to protect the natural resources present in the country and are currently regulated by the General Law on Ecological Balance and Environmental Protection (LGEEPA).

Thanks to progressive development in the legal field relating to the environment, there are more than 4,000 agreements and instruments to address environmental degradation, however, in Mexico there is a lack of interrelation between the national and the international; for this reason, the instrumentation is often applied simultaneously on the same territory.

In order to better understand both mechanisms (national and international), we will compare the federal Payment for Environmental Services (PSA) program and the international Carbon Credit program. Both instruments are aimed at environmental protection and seek to ensure that the ecosystem services (ES) that ecosystems provide, such as aquifer recharge, water purification, soil erosion control, carbon capture, habitat maintenance, climate regulation and the formation and maintenance of soil fertility, can be regenerated and maintained sustainably so that they continue to provide benefits to current and future generations.

El Payment for Environmental Services It is a public policy instrument that provides economic support to Owners of the Earth in order to conserve forest cover and guarantee SE through a five-year contract. It includes carrying out sustainable productive activities, which are reflected in a Guide to Best Management Practices (GMPM), and whose compliance is verified by the National Forestry Commission (CONAFOR) once a year.

On the other hand, in the program of Carbon Bonds it seeks to conserve forest cover through a contract of at least 30 years of duration, as well as the carrying out of activities that generate additionality, that is, activities that ensure a tangible and positive impact on the SE. Compliance is regulated and operated by the Climate Action Reserve (CAR) and payment is made by large international companies that by law have to offset the greenhouse gas emissions they generate annually, or by national companies that wish to offset their emissions on a voluntary basis.

Comparing the two programs using five criteria, the following results can be presented:

As we can see, Payment for Environmental Services is of a shorter duration, making it a short-term instrument that requires an accompanying program to prevent future deforestation. For their part, carbon credits are a medium-term instrument that involves planning sustainable productive activities throughout the community, allowing for long-term conservation.

Although both programs have much to improve, it should be emphasized that companies can take initiative in the voluntary market and act from their trenches immediately and in parallel to help conserve natural areas.

At Toroto, we are working on the Metaregister of Carbon Bonds, which is a digital platform that aims to provide a better structure to the current carbon market. Specifically, it is a georeferenced list of carbon bond projects in which various details of these projects can be viewed, helping to improve market transparency. In the Metaregistro, it will be possible to know the buyers of the carbon bond project, as well as to view the exact location of the bonds they purchased. Since this is a completely public record, the Metaregister can also function as a verifier so that third parties can verify the transaction that the company made when buying its carbon credits.

Although the knowledge and research generated around the different instruments of conservation and protection of the environment are constantly growing and developing, we must give credit that even within this uninterrupted dynamism, both PSAs and carbon credits are programs that seek to conserve natural ecosystems, as well as to generate additionality with activities that improve the quality of ecosystem services. However, they can always improve.

For this reason, we want to invite you to be part of the conversation: this February 28th attend our webinar, in which we will delve into the Metaregister, the importance of conserving our forests and what the next generation of carbon credits has in store for us.

We'd love to see you there!