Public-private partnerships (PPPs) in sustainable natural resources—such as watersheds, oceans, forests, and other natural treasures—need support, management, maintenance, and protection to benefit future generations. Typically, though, talk of PPPs sparks shudders among those who picture greedy corporate robots pillaging the planet’s greatest treasures in search of filthy lucre—alongside the private investors wondering where in the world one can make enough profit from sustainable natural resources to merit working through the regulatory and political complexities of such a sensitive sector.
So the terms of the discussion should be set from the start: natural resource PPPs are a trade-off. The private sector needs access to these sustainable natural resources to make money, create jobs, and pay taxes, while the public sector needs to manage those resources with limited budget and expertise. As compellingly argued by the experts writing in this issue of Handshake, sustainability of trees, seas, and everything in between requires recognition that this is an ideal space to leverage the best of public and private.
Of foxes and farmers
First, let’s address the cynics. One might say that creating PPPs in sustainable natural resources is like putting the fox in charge of the hen house. But if done well, this sort of PPP should be like turning the fox into a tenant farmer responsible for managing the hen house sustainably. If he manages it well, he gets his share of eggs and chickens. If he does not, he gets kicked out, loses his investment, and some other fox takes his place. Equally, the government turns from an angry, gun-wielding farmer to a landlord interested in the success of the fox/tenant farmer: in other words, a partner. The head of Brazil’s Forest Service makes the case eloquently in these pages, explaining the role of government reforms in laying the foundation for the PPPs that have revitalized that country’s forests while continuing to provide livelihoods for its people.
The first step in a PPP for sustainable natural resources requires the government to implement a process for valuing precious resources, putting a monetary and notional value against these resources that are often ignored or taken for granted. This assures government officials appreciate the value for money available from more efficient management and maintenance of the resources (reducing poaching, managing access, and ensuring sustainability). It also underscores the importance of the confluence of interests with the private sector (neighboring commercial activities, property development, and resource access—especially to water).
Although PPPs in natural resources are working, whether or not they’re working fast enough, or at a large enough scale, is another question altogether. M. Sanjayan, Executive Vice President at Conservation International and correspondent for Showtime’s documentary series on climate change, “The Years of Living Dangerously,” believes that the world needs to do better. In a wide-ranging interview, he shares his perspective on how the smallest hiccup in the natural process can have negative health ramifications for humans.
Benefits to government are also important in the natural resource PPP trade-off. By entering into master developer concessions, the government takes on a privately oriented partner that is bound to sustainable management of the natural resources through responsible development plans. In other cases, the sustainable natural resources will be linked to commercial opportunities, as when the private sector exploits a sustainable natural resource for profit but is required (and motivated) to manage that resource sustainably. In agriculture or forestry investments, for example, while they involve exploitation of a sustainable natural resource, the investor must also be careful to manage that resource well to avoid loss of value over time. These are also projects that might normally be managed through leases or licenses with little detail related to investor obligations, but which might be better managed through PPPs setting out exactly what is expected of each of the parties.
The government therefore gets a clear and detailed partnership with the private investor to deliver the sustainable natural resource management services desired. At the same time, the private investor receives a clear, detailed, and contractual (hence easier to enforce) legal right to exploit the resource, through a socially and politically legitimate process and mechanism. It’s a hedge against expropriation, illegal exploitation, land invasion, and local community resistance. Equally as important, establishing the relationship by contract can also reduce the risk of regulatory creep by forcing the government to consider in advance the detailed performance mechanism, and provide a clear mechanism for the parties to work together.
Even where the natural resource itself is not easily translated to a revenue stream, there may be linked activities that create commercial opportunities. Multi-use dams are a good example; in addition to flood mitigation and water resource management, they can provide water for electricity generation and irrigation. Where properly valued, these activities can provide the right mix of incentives for the private investor to manage the sustainable natural resource more effectively than could the public sector.
Payments for Ecosystem Services (PES) is a creative and practical approach. This issue of Handshake contributes several important and original threads to the discussion, sharing ideas and showcasing models from the FAO, the Rockefeller Foundation, and the World Bank to demonstrate the variety of ways this works across sectors and around the globe. We also issue a call to action. Although there are now hundreds of PES programs at a variety of scales, an accurate global overview of the total area covered by PES contracts does not exist. Establishing a reliable and up-to-date global database for PES contracts with consistent definitions would be highly valuable for international policymakers, allowing them to determine the areas with the biggest opportunities for PES projects and to better focus their efforts in stimulating PES contracts.
Getting past perfection
These projects, which determine access to our shared patrimony as world citizens, are not without controversy. John Briscoe, the 2014 Stockholm Water Prize Laureate and director of the Harvard Water Security Initiative, is familiar with the debate over balancing water resources and development agendas. “Development happens in stages,” he tells Handshake readers, urging government officials, NGOs, and experts who work in the natural resources sector to calibrate their expectations. “A vision of perfection,” he says, “means that you can’t do anything right.”