Trade in Environmental Services and Sustainable Development in Central America: The Cases of Costa Rica and El Salvador

The document examines how Costa Rica and El Salvador can leverage global environmental service markets. Costa Rica is presented as a leader with a robust institutional framework for carbon trading and payments for environmental services. El Salvador is analyzed through the lens of its shade-grown coffee plantations, which provide critical biodiversity and carbon sink services despite the sector's economic decline.

• Costa Rica has established a comprehensive institutional and legal framework to capitalize on the international carbon market, including the creation of the Costa Rican Joint Implementation Office (OCIC) in 1995 and the National Forestry Fund (FONAFIFO).
• Costa Rica implemented a 'user pay' principle through its 1996 Forestry Law (no. 7575), which established payments for environmental services funded by a fuel tax to compensate forest providers.
• Costa Rica has successfully marketed Certified Tradable Offsets (CTOs), including a 1997 sale of 200,000 metric tons of carbon to a consortium of Norwegian companies for $2 million.
• The economic viability of the coffee sector in El Salvador has declined significantly, with its contribution to GDP falling from nearly 10% in 1981 to less than 3% by 1997, leading to land conversion for urban and industrial use.
• Shade-grown coffee plantations in El Salvador act as 'coffee forests,' providing essential environmental services including water recharge for urban centers and habitats for migratory birds.
• El Salvador is utilizing a GEF-supported pilot project to integrate coffee plantations into the Mesoamerican Biological Corridor, aiming to create a biodiversity-friendly coffee category for export.
• While Costa Rica's system of payment for environmental services is advanced, it faces sustainability risks due to the country's fiscal situation and perceived tax injustice regarding the fuel tax.
• The document argues that for El Salvador, trade in environmental services could provide a sustainable livelihood for rural producers in the degraded northern highlands, provided it is linked to a domestic management strategy.

APA

Cuéllar, N., Herrador, D., & González, M. (1999). Trade in Environmental Services and Sustainable Development in Central America: The Cases of Costa Rica and El Salvador. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/prismasum_en.pdf

Chicago

Cuéllar, Nelson, Doribel Herrador, and Martha González. Trade in Environmental Services and Sustainable Development in Central America: The Cases of Costa Rica and El Salvador. International Institute for Sustainable Development, 1999. https://www.iisd.org/system/files/publications/prismasum_en.pdf.

Wikipedia

{{cite report |last1=Cuéllar |first1=Nelson |last2=Herrador |first2=Doribel |last3=González |first3=Martha |title=Trade in Environmental Services and Sustainable Development in Central America: The Cases of Costa Rica and El Salvador |publisher=International Institute for Sustainable Development |date=1999 |url=https://www.iisd.org/system/files/publications/prismasum_en.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{cullar1999trade, author = {Cuéllar, Nelson and Herrador, Doribel and González, Martha}, title = {{Trade in Environmental Services and Sustainable Development in Central America: The Cases of Costa Rica and El Salvador}}, institution = {International Institute for Sustainable Development}, year = {1999}, url = {https://www.iisd.org/system/files/publications/prismasum_en.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }