Incentives for a green economy in El Salvador

The United Nations Environment Program (UNEP), the Ministry of Environment and Natural Resources (MARN) and the Environmental Investment Fund of El Salvador (FIAES) are implementing the Incentives for a Green Economy Project as part of the International Climate Initiative (IKI) of the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU). 

Based on the use of soils in El Salvador, considering the agricultural vocation of 80% of the territory and the urgency of developing actions to minimize soil degradation due to environmentally unfriendly agricultural practices, "the initiative arose to support the National Ecosystem and Landscape Restoration Program, between 2016 and 2017, through an incentive project that would sustain the implementation of the program through support to the productive sector of El Salvador," explained Carolina Dreikorn, coordinator of the Incentive Project for a green economy UNEP/IKI.

Pilot program of economic and financial incentives

In order to concretize the implementation of the pilot program of green incentives, it was necessary to make a political decision at the highest level to respond to the environmental legal framework and the national environmental policy. "The Government of El Salvador promoted the creation of a national program of environmental incentives and disincentives, unifying agreements and being approved by the Council of Ministers in March 2022," Carolina mentioned. 

To date, the project has made significant progress in the implementation of a package of economic and financial incentives to support the process of restoring ecosystems and productive landscapes in the country, generating three incentive schemes: credit, management and payment for environmental services. 

Credit incentive

provides beneficiaries at different scales and sectors with innovative access to credit for productive activities, with interest rates lower than conventional ones, a guarantee fund, specialized technical assistance and inputs to incorporate agro-environmental techniques such as agroforestry, silvopastoral and soil, water and biodiversity conservation systems. 

Management incentive

involves and encourages small and medium-sized producers of basic grains and livestock. This incentive seeks to transform and strengthen restoration activities as a key strategy for ecological integrity and to generate local, national and global social and economic benefits. 

Payment for Environmental Services

will give recognition and retribution to community actors involved in ecosystem and landscape restoration, who are already generating and taking advantage of ecosystem services.

Members of the Asociación Sistema de Agua Potable, Salud y Medio Ambiente (ASAPSMA) are measuring the soil conservation works they have built to protect the water sources that supply the municipality of Joateca, Morazán. This community association will benefit from the Payment for Environmental Services (PES) pilot program.

UNEP, MARN and FIAES are working together to promote support for the Green Protocol of the Public Financial System, under an alliance with Banco Hipotecario, joining their technical and financial capacity to execute the incentive with coffee producers in six farms located in Apaneca, in the Apaneca-Ilamatepec Biosphere Reserve.

In the other incentive scheme, a pilot program is being implemented with cattle ranchers and producers in the department of Chalatenango,         

this phase is part of a larger environmental strategy to restore ecosystems and agricultural lands, joining efforts with the compensation and conservation system that seeks to ensure no net loss of biodiversity.

Payment for Environmental Services (PES) is one of the most challenging schemes to implement, as it implies starting on a small scale under a watershed approach, where the trigger is the water resource, which is vital for all agro-environmental, human and productive activities. This pilot phase will recognize the work of farmers who have transformed or maintained their plots with forests, including soil and water conservation techniques to improve their land and quality of life, giving special attention to those areas located in buffer zones of natural areas that also strengthen connectivity between ecosystems and biological corridors in the department of Morazán.

Nelson Rodríguez
FIAES Communications Technician

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