Costa Rica Real Estate Investment

Forests provide us with a range of essential goods and services ranging from our most basic needs - food, shelter, clean water, and oxygen - to cultural and recreational joys. However, these ecosystem goods and services are often taken for granted. While the economic value of certain natural products such as timber is reflected through global trade, this often isn’t the case for other environmental goods and services provided by forests.

Costa Rica has created a self-financed system of fees imposed primarily on fossil fuels that help support payments to farmers and landowners who make a commitment to preserve private forest land. This program of Payments for Environmental Services (”PSA” for the Spanish Pagos por Servicios Ambientales) was established in the late 1990s. Payments are issued to qualifying owners of private tracts of land in forested areas, in recognition of the ecosystem services their land provides.

The PSA program is a major advance in ecosystem investments, and ensures that those who benefit from environmental goods and services pay those who provide these services.

For example, users of water from a river running through an upstream forest, such as bottling companies or townspeople who extract drinking water from the river, pay those who manage these upstream forests to ensure a sustainable flow of this service into the future.

Sample payments under the PSA program:

• Conservation: $210/ha ($519/acre) in equal installments over 5 years
• Reforestation: $537/ha ($1326/acre), with 50% paid the first year, 20% the second year, and 10% over the remaining 3 years
• Forest management: $327/ha in equal installments over 5 years.

“To participate, landowners must present a sustainable forest management plan prepared by a licensed forester (regente).” The plan must outline the proposed land use, and include information on land tenure and physical access, plans for preventing forest fires, illegal hunting, and illegal harvesting; and monitoring schedules. Once their plans have been approved, landowners begin adopting the specified practices, and receive payments. (PDF link)