Ecosystem services valuation to build a matching funds scheme to finance adaptation to climate change in Puerto Vallarta, Mexico

Abstract

To foster the implementation of Mexico’s adaptation component of its Nationally Determined Contributions (NDC) under the Paris Agreement, both its nationwide payment for ecosystem services (PES) program and its National Strategy for Reducing Emissions from Deforestation and Forest Degradation (ENAREDD+) are regarded by the Ministry of Environment as solutions to improve the economic feasibility of adaptation measures. Mexico is reallocating its public expenditure to attend country-wide social needs causing budgetary constraints, which hinders PES and ENAREDD+ as funding sources. This led the National Institute of Ecology and Climate Change (INECC) to consider a PES with a matching funds approach to provide sufficient financial resources for adaptation measures. To estimate the available funds, INECC developed an exercise of economic valuation of ecosystem services. The watershed of Puerto Vallarta in Jalisco, Mexico, was the chosen location given its ecological and touristic importance and because of its urgent need to implement adaptation measures due to its heighted vulnerability to climate change. This article intends to showcase the value that upstream ecosystem services provide to tourism, the potential to implement adaptation measures in the region and to estimate local available funds to develop ecosystem-based adaptation measures (EbA). A literature review was conducted to understand the regional environmental, social, and economic dynamics and to identify the main ecosystem services; then, the value of ecosystem services was estimated via the willingness to pay and accept (WTP and WTA) using contingent valuation. Also economic data regarding forestry and agriculture was collected to calculate the forest conservation opportunity cost. The results showed that tourist and residents would be willing to pay circa $150 million USD per year and farmers would be willing to accept circa $75 million USD. This evidences the potential to implement forest conservation activities that will contribute to adaptation and mitigation objectives of Mexico’s NDC.