COMPENSATION for LOSS

==Background' ==
 *  Regardless of deciding whether to use compensation or not, the long term goal of mitigating HEC is to secure elephants and their habitat. 


 *  Points to consider when determining if a compensation technique may be suitable for an HEC situation 

No type of compensation should be considered in the case of illegal activities either inside or outside a Protected Area (PA).


 * 1) Direct Payments – situations under which these techniques might be considered:

2.1 Alternative income
 * 1) *Loss of life; especially of the household’s major income earner..
 * 2) *Loss of home
 * 3) Indirect Payments- situations under which these techniques might be considered:

· Sites experiencing repeated crop loss and continuing current agricultural activities is not recommended

· Sites where development of an activity could escalate HEC.

2.2 Improving existing income

· Sites where it is feasible to adapt existing income-generating activities in some way that will reduce HEC

2.3 Improving livelihoods

· Sites where it is feasible to link improving livelihoods to change in human behaviour that will in some reduce HEC

===1.DIRECT PAYMENTS === Definition: Direct payments are money given or received as payment or reparation for injury or loss of human life, property, or crops.

1.1 cash payments
Definition: In some range state countries cash payments are a scheme under which an individual/household will be covered for loss due to elephants (e.g. injury and/or loss of life and/or property and/or crops) as per existing rules and regulations. There is no financial contribution expected from the affected individual or household.

References:

· AFESG Compensation Online Document (Simon)

· Guidelines for designing compensation schemes for human-wildlife conflict (Nyhus et al., 2003)[7] A review and assessment process would be needed to identify if and when the use of compensation and insurance is suitable (as with all other mitigation tools).
 * NCD (2008): Bhutan National Human-Wildlife Conflict Management Strategy. Nature Conservation Division. Department of Forest, Ministry of Agriculture. 1-87pp

List of direct payment compensation procedures in range countries:

· Sri Lanka has adopted a compensation scheme – crop damage reported to authority, but very few get – poorly managed, corrupt, inadequate, inefficient. Bandara & Tisdell (2003) published on the subject – Economics of Elephant-human conflict. [8]

· India– long time in existence. All states did not implement simultaneously when introduced. (see details in reference: World Bank/WWF document) 

o Uttarakhand, India. Paid compensation for loss of life. Issue is who to pay when there are claims.

· Nepal- Compensation only for the loss of life, injury and property outside the PA. No compensation paid for loss of crops under any conditions. Reported that this system is working quite well; especially in cases where PAs have very large revenues from tourism (Shant Raj, pers. comm.) Also see the World Bank/WWF document.

· Laos - does not pay compensation under any circumstances; voluntary contributions from individuals/agencies for loss of life.

· Indonesia – compensation for loss of life but not crops.

· Thailand – no formal compensation scheme, however at local level there may be some support for “natural disaster”

· Cambodia – no compensation scheme

· Vietnam

· China – there is compensation for crop loss, injury and loss of human life

· Myanmar – no compensation scheme

· Bangladesh' – no compensation scheme

· Malaysia – Very limited - only in peninsular Malaysia there is some compensation for crop loss but villagers generally unaware of it. There is no compensation in Sabah/Borneo

· Bhutan - no direct compensation; however there is plan to develop for loss of human life or property, or human injury.

Pros and Cons of compensation

Pros

· In areas where compensation is practiced, the absence of compensation in cases where people are engaged in illegal activities (e.g. poaching in a PA, planting crops in a PA) may discourage infractions.

· Compensation for loss of human life and injury may reduce public animosity towards elephants and protected areas.

Cons

· Compensation generally has been viewed as the government accepting blame for HEC. So, the government in India uses the term “ex-gratia relief”.

· In range states where the government is sole manager of protected areas (PA) and wildlife, it is probably not unreasonable for citizens to hold the government responsible for HEC that occurs outside the PA.

· Long drawn out process. Verification of extent of loss takes time.

· Typically it is difficult to find an honest and neutral assesser of HEC incidents to determine if compensation should / should not be paid. Nepal appears to be an exception to this point where they have found a workable means to assess HEC; see detail on structure and system above.

· Rangers/other government employees have many duties in addition to administering the crop damage complaints and verification.

· Many cases claims are not filed.

· In some states it works better than in others, especially in communist states (West Bengal)– more efficient due to people oriented governance. Many states prone to abuse, false claims, corruption, etc.

· Compensation does not resolve conflicts or crop damage.

· May have an unintended impact of making HEC worse in cases where compensation results in farmers guarding crops and property less rigorously than if compensation was not paid.

· If done properly, compensation could end up being extremely expensive for the government and use resources that may be better spent on other aspects of HEC mitigation.

· Most schemes that compensate for crop damage do not require guarding. Under conditions where compensation for crop damage is paid, difficult to verify if farmers are actively engaged in protecting.

“Monetary compensation schemes for elephant damage appear to suffer from a considerable number of deficiencies. These can be divided into reasons for "a flawed concept" (1 - 3 below) and reasons for "practical problems" (4 - 8 below)[9]

1. Compensation is unable to decrease the level of the problem (because the cause of the problem is not being addressed). 2. Compensation reduces the incentive for self-defence by farmers (and therefore could even exacerbate the scale of the problem). 3. Compensation cannot address the unquantifiable social 'opportunity costs' borne by people who are affected by the threat of problem elephants (Hoare 2000; Naughton et al 1999). This is a considerable component of HEC. 4. Compensation is cumbersome, expensive and slow to administer (because of the need to train assessors, cover large areas, have stringent financial controls etc) and once embarked upon, potentially has no end point. 5. Compensation is open to considerable abuse or blatant corruption (e.g. through: bogus claims; inflated claims; deliberate cultivation in places where crops are likely to be damaged). 6. There are usually never sufficient funds to cover all compensation claims. 7. Payment of compensation to only some victims may cause disputes or social problems. 8. Where compensation schemes need to be promulgated in law, their ability to keep pace with changing economic circumstances or changes in social policy are hopelessly slowed down.

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Management Agencies  =====

1.1.1 Government
· Relevant pros and cons listed above apply here.

1.1.2 Government/NGO based
· Are there any examples, other than in Nepal, of a government / NGO based schemes? If so, how are they working and have they been objectively assessed?

· Transboundary issues of HEC. Suggest governments working through INGOS to facilitate transboundary means of compensation, i.e. payments. Some examples from Nepal-India (Shant Raj)

1.1.3 Community based
· May be easier to find the independent neutral assessor that the community would respect, if structured properly (see Nepal example) (Ref: Evaluation of buffer zone initiatives-including compensation-in Nepal; contact Shant for reference).

· where is the funding going to come from to finance these schemes.

· Check to see if any village self-help schemes are in existence where money is contributed and used to cover loss[10].

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Source of Funds for Cash Payments =====

1. 'Industry

Funds sources from industry and the schemes they support could be administered by an agency headquarted in industry, government or NGO. Some examples are as follows:
 * 1) *LAOS. Compensation from NT2 hydropower project for PA management, which is administered by a government agency responsible for PA management. This should be expanded to specifically identify how much of the revenues will be used for compensation/cash payments for HEC. reference: Arlyne Johnson)
 * 2) *Large scale plantations on edge of PAs could be asked to provide small percentage of profits in a fund for HEC compensation

2. 'Tourism

· '''Park entry fees. '''Administered by government.

· '''Community-based tourism. '''The community sets up a fund to pay cash payments for HEC. See the Bagmara model from Nepal,(Chitwan NP).

· '''Private sector. '''A portion of profits from private sector lodges, operators,

i.     Chitwan, Nepal. Lodge administers the fund and pays to victims of HEC.

ii. Taxes on private sector operators that would be administered by government

3.

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Monitoring Requirements ===== There needs to be an evaluation of compensation schemes to determine if there is a:

· change in community attitudes (e.g. increase in tolerance, not taking retaliation for elephant damage, etc) as a result of compensation schemes.

· if conservation of elephants is improved as a result of compensation schemes.

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Identify actions that may be needed =====
 * Compensation is a complex issue for addressing losses caused by HEC and requires further investigation and assessment. For example, review the current Nepal community-based compensation scheme as a structure for potentially applying compensation for HEC losses.


 * Clear guidelines / recommendations are needed regarding how to administer cash payments. For example, when a loss occurs, what steps should be taken to address the following questions:


 * Who should be paid?


 * How should they be paid?


 * How much should they be paid?

2. Insurance
Definition: Insurance is a mechanism where a premium is paid by an individual, a household and /or a community in exchange for reparation for loss from HEC (e.g. injury and/or loss of life and/or property and/or crops) under previously agreed conditions of protection and payment. There is generally a third party involved that assesses the amount of the premium based on a set of variables such as crop type, willingness to guard, guarding mechanism, etc.

References: NCD (2008): Bhutan National Human-Wildlife Conflict Management Strategy. Nature Conservation Division. Department of Forest, Ministry of Agriculture.1-87pp

Review of the use of insurance schemes in range states:
 * Sri Lanka: Insurance schemes are now available with private companies in Sri Lanka. This is optional for farmers to participate in. Many farmers are not participating because of the cost of the premium.
 * India– - state governments have made attempts but they have generally been refused 
 * Nepal- No insurance scheme, but trying to develop mechanism
 * Laos – No insurance scheme.
 * Indonesia – Trialed by NGO (WCS) but premiums were relatively high and farmers did not participate. Government pays premium for life insurance for 100 people every year and then pay for loss of life due to human-wildlife conflict
 * Thailand – no insurance scheme
 * Cambodia – no insurance scheme
 * Vietnam
 * China – no insurance scheme so far but being negotiated with insurance company
 * Myanmar – no insurance scheme
 * Bangladesh' – no insurance scheme (but for tiger conflict there is a scheme)


 * Malaysia' – no insurance scheme


 * Bhutan - no insurance scheme. There is a plan to initiate crop insurance scheme to protect crops from wildlife damages.

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Pros and Cons of insurance =====

Pros

· Insurance for loss of human life and injury may reduce public animosity towards elephants and protected areas.

· Is insurance less likely than compensation to lead to considerable abuse or blatant corruption (e.g. through: bogus claims; inflated claims; deliberate cultivation in places where crops are likely to be damaged). May be transparent in private sector.

· Insurance operated by private companies may reduce the pressure on governments to solve HEC problems through compensation schemes. Governments may be able to use funds otherwise used for compensation for solving HEC problems.

Cons

· Long drawn process. Verification takes time? More info needed to determine if this is the case or not.

· Check for more information to determine if is difficult to find an honest and neutral assesser of HEC incidents to determine if insurance should / should not be paid.

· HEC will still occur but check for more information to determine if insurance reduce conflict or animosity towards elephants.

· May have an unintended impact of making HEC worse in cases where potential insurance payments results in farmers guarding crops and property less rigorously but this needs checking.

· If done properly, insurance premious could end up being extremely expensive for the farmers and use resources that may be better spent on other aspects of HEC mitigation. Check below.

· Scheme that insure for crop damage may or may not require guarding. Under conditions where insurance for crop damage is paid, would need to have methods to verify if farmers are actively engaged in protecting. Needs more checking.

2. Insurance may reduce the incentive for self-defence by farmers (and therefore could even exacerbate the scale of the problem). Needs checking. 3. Does insurance address the unquantifiable social 'opportunity costs' borne by people who are affected by the threat of problem elephants (Hoare 2000; Naughton et al 1999). For example, like a life insurance policy for loss of life. Social opportunity costs are a considerable component of HEC. 4. Insurance may be cumbersome, expensive and slow to administer (because of the need to train assessors, cover large areas, have stringent financial controls etc) 7. Payment of insurance to only some victims may cause disputes or social problems. 8. Would insurance schemes be able to keep pace with changing economic circumstances or changes in social policy? For example, a premium increasing after a single claim?

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Management Agencies and Source of Funds ===== An insurance scheme could be managed and funded by either government, private sector /INGO/ NGO, community or any combination of these agencies. This could be in the form of matching funds, administration of the scheme, etc.

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Identify actions that may be needed =====
 * Insurance is still a novel idea for addressing losses caused by HEC and requires further investigation and assessment. For example, review the current Nepal community-based compensation scheme as a structure for potentially applying insurance to HEC losses.

===3. Indirect payments === Definition: Indirect payments are assistance to develop, support and / or implement means to address income loss caused by HEC, with the intent of increasing the resilience of people to HEC. This approach can take the shape of developing alternative sources of income or it can focus on enhancing/improving existing sources of income (e.g. improving marketing options for existing crops to increase income, etc) and / or improving livelihoods. Any type of indirect payment scheme needs to be regularly and systematically evaluated to determine if the scheme has a positive impact on people’s attitudes and behavior towards HEC and elephant conservation.

Notes:
 * Schemes would have to be designed carefully to avoid providing incentives that would encourage habitat conversion in PAs by increasing cash income through enhanced crop production.
 * If incomes cannot be enhanced to a level of a “reasonable” livelihood (requires definition of standard), then managers may need to consider options in relocation of communities away from PAs to reduce HEC.
 * some people will do this (i.e. alternative income) on their own and they do not see it as compensation any more. In those cases any “compensation” may have to go above and beyond the current compensation activities.

===3.1 Alternative sources of income === Background and definition: In cases where individuals, households and/or communities continuously suffer relatively high levels of loss of income due to HEC, alternative sources of income may be considered for these sites. This assistance is provided to recover the loss due to HEC and/or develop positive attitude towards the conservation of elephants and their natural habitats.

3.1a Agro-forestry related

 * Techniques being trialed
 * Sri Lanka. Reforestation project operated by community (teak, wood apple, timber trees, fruit trees). Can also cultivate mixed cash crops that are not a target for crop raiding. Addresses the HEC problem, because you have trees in place. Need for quantifiable data. (Reference: SLWCS reports/documents).
 * Sri Lanka. Home gardens for sale of annuals, perennials, (Jackfruit, breadfruit, wood apple, etc). Need for quantifiable data on income, change in attitudes, linkage to tolerance for elephants (Reference: SLWCS reports/documents). Key point: The gardens are a great distance away from areas where elephants are present but largely meant to provide improved incomes. The technique is linked to farmer guarding and maintaining fences. This also results in farmers harvesting less firewood (loss of habitat) because they are able to purchase other fuel sources.
 * India - Terai Arc Landscape. Vermi composting so farmers do not have to buy fertilizers; sold for forest nurseries, etc. (References: contact Hem Tewari for documents that have evaluated this technique.)


 * Cautions to observe with these methods
 * Alternative cash crops that have the tendency to contribute to habitat loss and rapid encroachment –e.g. Oil palm, rubber
 * Avoid the use of potentially invasive species.
 * Avoid planting species that increase HEC in elephant areas.
 * These methods likely work best where there are good systems of governance.

3.1b Cultural/handicraft related

 * Techniques being trialed
 * Sri Lanka. Protected Area management and conservation (Reference: Upul). Making woven rattan bags that were sold in the PA. The problem was that there was no good market for the products.
 * India – Corbet National Park. Jute bags. Good cooperation with Forestry department. All visitors to the park had to buy the bag and it did make money for a few household but on a very small scale (2-3 families).
 * India- Villagers weaving elephant shawls. (Reference: Bibhuti Lahkar)
 * Cautions to observe
 * All need evaluation to show linkages to reduced HEC and increased tolerance for elephants.

3.1c Eco-tourism related

 * Techniques being trialed
 * Laos. Ban Na Elephant Tower. (Reference: Arlyne Johnson). Started to reduce HEC in a village that was suffering crop loss and loss of life from elephants. Money is being generated and shared among several villages that are impacted by HEC. No quantifiable data available yet to demonstrate if the technique is increasing tolerance to HEC or not.
 * Nepal. Money from tourism being fed into compensation scheme and HEC mitigation activities. Evaluation upcoming – PhD. Thesis. (References: contact Shant Raj for documents that have evaluated this technique.)
 * India. 0.1 million people visting Terrai Arc Landscape. Tourists buying agriculture produce and handicrafts. No scientific evidence yet that this technique is actually reducing HEC directly. (References: contact Hem Tewari for documents that describe this technique.)
 * Sri Lanka. Field Scouts Program. (Reference: Ravi Corea). Provide local residents with training in field research methods – GIS, compass, field data collection. Then these people are monitoring the HEC mitigation methods and alternative income schemes. This also serves a foundation for ecotourism project – called experiential travel. International experiential travelers (Earthwatch, Frontiers, etc) pay to come work- conducting research and monitoring at the field site – also teach English. Earning ~100,000USD per year. This money in turn is used to hire the field scouts and pay for other village-assistance activities – pay for fences, etc for HEC materials. Also using this money for helping in other parts of Sri Lanka. Always HEC related. Has been run since 2002 so have now worked out logistics for operating relatively smoothly. Evidence of effect on HEC is Upul, one individual that joined as a field scout and then became active in elephant conservation.


 * Cautions to observe
 * All need evaluation to show linkages to reduced HEC and increased tolerance for elephants.
 * Tourism is a volatile market and dependent on security and economic situations beyond control.

3.1d NTFP
====
 * Techniques being trialed
 * Sri Lanka. Protected Area management and conservation (Reference: Upul). Making woven rattan bags that were sold in the PA. The problem was that there was no good market for the products.
 * India – Corbet National Park. Jute bags. Good cooperation with Forestry department. All visitors to the park had to buy the bag and it did make money for a few household but very small scale (2-3 families).
 * India- Villagers weaving elephant shawls. (Reference: Bibhuti Lahkar)
 * Sri Lanka. Wild bee honey harvested in the dry season. Concept was to determine if increasing income from wild honey might lead to increased tolerance of PAs. Is harvesting wild honey in PAs a potential source of HEC with people in PAs? Now only assessing the situation.
 * Cautions to observe
 * All need evaluation to show linkages to reduced HEC and increased tolerance for elephants.

====

3.1e. In Sumatra, farmers get paid for guarding through a cooperative structure.
===3.2 Improving income from existing sources === Background and definition: In cases where individuals, households and/or communities are suffering loss of income due to HEC, methods of improving existing incomes may be considered for these sites. This assistance is provided to recover the loss due to HEC and/or develop positive attitude towards the conservation of elephants and their natural habitats.

3.2a Improved agricultural practices
· Improving existing crops could magnify HEC if the HEC has not been addressed

· Providing alternative crops (discussed in another group).

· Potential to trial but not many examples.

Sri Lanka. (Reference: Upul) In Upul’s village, they erected a fence to keep elephants away and this allowed family to increase income from agriculture, which allowed the family to send Upul to university and receive an education.
 * Items being trialed

·

3.2b Improved marketing

 * Items being trialed
 * Loki. Elephant pepper (see below under ‘value added’).

· Recommend to engage interdisciplinary team or business specialists to assess and improve marketing before engaging in improving income from existing sources.
 * Cautions to observe

3.2c Value addition
Definition: Adding incentive for villagers to ‘process’ crop one step further to get better return for sale of crop.


 * Items being trialed
 * WWF (Christy Williams). Producing coffee in BBS NP Sumatra as “certified not grown in PA”. Pay higher price for coffee grown outside BBS so coffee is no longer grown in NP encroached areas


 * Africa. Loki Osborne. Elephant Pepper Development Trust. Both value added and marketing to increase income through existing chili production.
 * Sri Lanka. The SLWCS has initiated a program to cultivate orange (Citrus sinensis) as an alternative crop and deterrent. Feeding trials using captive elephants showed that elephants do not preferentially eat citrus varieties. While the prognosis for the project is good the project is still being monitored and evaluated to quantify its benefits to minimize HEC.

3.3c Microfinance as a tool for improving income from existing sources

 * Sumatra - adding microfinancing will give more incentive to people to manage their crops (in addition to guarding, etc.), raise their income, and is used in case something (crop?) might fail. Trial for fishing ponds (using local govt assistance) in S Sumatra. Find out local markets of what is easy to do/raise and sell. Don’t give everything (i.e. if fishing concept don’t give all the equipment, just the bait) so that people are encouraged to become involved and try.
 * Nepal – groups of 10 women, gave each family a piglet (seed money came from NGO NTNC), women save money from sale of pigs, established a saving/credit scheme (i.e. pay 1 Rp/month) and they can borrow short-term loans. With each new member a piglet from an existing litter is provided.
 * India- Microfinance and field scout program. Adopt models used by Nepal – cross pollination of a good idea. Still being tested. (Reference: Bibhuti Lahkar)
 * Sri Lanka – ADB, PAM Project (add details/reference)


 * Cautions to observe
 * Microfinancing needs transparency to remain successful when savings get too high. Insurance policy could also come out of microfinancing option.

===4. Livelihood improvement linked to reducing HEC === Definition: Improving the quality of life of individuals, households and/or communities where their livelihoods are adversely affected by HEC. This assistance is provided to mitigate negative impacts on livelihoods due to HEC and/or develop positive attitude towards the conservation of elephants and their natural habitats.

Items being trialed or to be considered

1. Kalimantan – habitat protection for wildlife; could potentially be applied to elephant habitats in other areas. Health and Harmony doctors have a clinic outside orang-utan PA. People living near the PA receive subsidized health care. There is a level of payments that is based on how much habitat protection / restoration the individual / household is doing. Need to examine the assessment tool used for measuring the level of protection / restoration. (Reference: Mini, USFWS)

2. Nepal. Used in several PAs. NGOs (WWF, ZSL, etc) administer with funds generated from donors. Pays school fees for families that have suffered loss from HEC. Also, children from these families have first opportunities for jobs in the PA system. (reference: Shant Raj)

3. Nepal. (See diagram for structure). If communities protect elephant habitat, people who are injured receive free health care. For others, the health care cost is subsidized. (Reference: Shant Raj)

Good information to add to group on methods for reducing HEC through pressure reduction

 * India –Terai Arc Landscape. Biogas production to reduce firewood harvest and loss of habitat. People are not entering the PA. (References: contact Hem Tewari for documents that describe this technique.) There has been no retaliation in areas where this is being trialed by 50+ households.
 * Nepal. Biogas production to reduce firewood harvest and loss of habitat. People are not entering the PA. (References: contact Shant Raj for documents that have evaluated this technique.)

References
 * 1) Talukdar, B.K, Boruah, J.K. & Sarma, P. (2007) Multi-dimensional mitigation initiatives to human-elephant confl icts in Golaghat district and adjoining areas of Karbi Anglong, Assam, India. A technical report of Aaranyak.
 * 2) Awely’s Red Cap Project in India (www.awely.org)
 * 3) Islam,M.A. and Al-Zabed, A. 1992. Man-elephant interaction at Chunati Wildlife Sanctuary in Bangladesh. Proc. Asian Elephant Conservation Centre, Bangalore, India. pp. 60-67.
 * 4) Islam, M.A., Khan, M.M.H., Kabir, M.M., Das, A.K., Chowdhury, M.M. Feeroz, M.M. and Begum, S. 1999. Man-elephant interactions in Bangladesh in 1997. Bangladesh J, Life Sci, II (1&2): 31-36.
 * 5) IUCN-Bangladesh. 2004. Conservation of Asian Elephants in Bangladesh. IUCN Bangladesh Country Office, Dhaka, Bangladesh.

Definition List

[6] We have focused this specifically on loss of human life or property, or human injury

[7] Nyhus, P., H. Fischer, et al. (2003). "Taking the bite out of wildlife damage: the challenges of wildlife compensation schemes." Conservation in Practice 4(2): 37-40. [8] Ex. Crop insurance scheme run by Ceylinco Insurance -http://www.indiaenvironmentportal.org.in/node/7613 [9] Ref. African Specialist Group [10] One option is for NGO’s/Govt to contribute a single bulk payment and then the system to run off the interest and so that funds continue to grow some money could be given as Micro-Finance loans. The system has to be community managed with no funds to outside organizations except that the funding agency (NGO/CBO) and govt should have a vote on the committee and to sustain this they should be paid a fixed sum from the fund every quarter/year.