Financial support for biodiversity protection in developing countries

1
Financial support for biodiversity protection in
developing countries -

• Does the CBD mechanism lead to an appropriate
  level of biodiversity protection?

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Contents

• Introduction
• Adequate Provision of Biodiversity
• Financial Resources, Costs and Negotiations ?
  Efficiency?
• Case study CV
• Conclusion

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Introduction I -Biodiversity as Global Public
Good - Externalities
Introdution

MB global
MC
MB LDC
XQuantity of protected biodiversity
Xopt
Xldc
4
Introduction II Idea of CBD
Introduction

• CBD Article 20(2) ... new and additional
  financial resources....
• Article 21(1)... The contributions shall be
  such as to take into account the need for
  predictability, adequacy and timely flow ...

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Adequate Efficient Provision of Biodiversity
Adequate Efficient

MB global
MC
Provision by GEF efficient?
MB LDC
XQuantity of biodiversity protection
Xopt
Xldc
6
Efficient Level of Financial Support?
Question

• Resources Costs
• Negotiations on replenishment of GEF-Fund

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Financial Resources of GEF-Fund for Biodiversity
Protection
Financial Resources Costs
8
Costs of (Global) Biodiversity Protection
9
Acceptance Costs ? Efficiency
Resources Costs

MB (glbsocial)
MC (private current)
B
MC (social)
A
E
C
D
Xglb
Xpot
Xover
X Quantity of protected biodiversity
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Negotiations on Replenishment - Facts
Negotiations

• Every four years replenishment of GEF-Fund
• Representatives of donor countries negotiate
• National contributions (should reflect) economic
  power of nation
• But.

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Negotiations
Contributions of Nations to the GEF-3 (extract)
front-runner
leader
taillights
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Characterisation of Conditions for Negotiations
Negotiations

• Reminder Good in question ? global external
  effects
• ? Need for global collective action
• CBD ? global collective action
• However agents are representatives of nations

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Public Choice Theory Assumptions
Negotiations

• Governmental agents try to maximise their
  personal benefits
• Personal benefit reelection

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View of National Agents on Financing Biodiversity
Protection in LDC
Negotiations

• Aim Solution of problems
• Biodiversity not easy to protect
• Important short term problems at home
• (easier to solve than loss of biodiversity)
• Each nation little influence ? overall level of
  biodiversity protection
• Success difficult to communicate
• Good will be provided anyway

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Activity of Nations
Negotiations

• Spend a lot of money on national short term
  interests
• Spend hardly any money on global longterm
  interests
• In other words Free-rider
• Why contribute to GEF at all?
• International reputation
• Not to lose international credibility

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Undersupply Thesis
Undersupply Thesis

• Financial resources smaller than (possible)
  benefits
• Indicators
• Costs gtgtgt financial resources
• Hardly any incentives for protection for national
  agents
• Test of thesis ? Benefits of biodiversity
  protection for developed countries? ? CV-study

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CV-Study Benefits of Biodiv Protection
CV-Study

• How to define Biodiversity
• Genes?
• Surface area?
• Species?!
• Subject of valuation
• Protection of half of threatened species
  (animals and plants) who would become extinct if
  nothing further would be done in the next ten
  years

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(External) Benefit of Additional Biodiversity
Protection
CV-Study
MB global
MC
MB MDC
MB LDC
25.000 species
Xldc
X Quantity of protected biodiversity
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Characteristics of Case Study
CV-Study

• Basic population residents in Germany (older
  than 18 years)
• Telephone inquiry
• WTP question format dichotomous choice
• Payment vehicle tax increase
• Frequency duration monthly for ten years

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Case Study Results
CV-study

• n 1017
• 92 agree with payments more developed
  countries ? less developed countries
• 62 Yes to WTP-Question

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WTP Result Discussion I
CV-Study

• Mean of sample approx. 22 Euros per capita per
  month
• But 59.6 of contacted people refused to
  participate or dropped out
• If they would pay 0 Euros ? 9 Euros (mean)

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WTP vs. GEF contributions Discussion II
CV-Study

• Overall benefit depends on size of basic
  population
• Individuals (9 ) (66.4 million)? Euros 7 billion
• or households (9 ) (34,8 million) ? Euros 3.8
  billion

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WTP Annual Benefit
MB global
MC
MB MDC
MB LDC
25.000 species
Xldc
X Quantity of protected biodiversity
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Results of Related Studies

• Hanley, Spash Walker (1995) WTP Britain
  contribute to (GEF) 47-62 annual
• Kramer Mercer (1997) WTP for additional 5 of
  tropical rain forest ? 21-35 US- (one-time)
• Horton, Colarullo, Bateman Peres (2002)
• Subjects people from Italy and UK
• Good additional rain forest in Brasil 5 (20)
• WTP 30 (39 ) annual
• ? WTP 600 million in Italy and in UK

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Overall Discussion I

• German actual expenditures for Global
  Environmental Facility
• ? US 60 million
• ? lt 1 Euro per year per capita
• WTP gtgt 1 Euro per year per capita
• Study result undersupply thesis approved

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Summary Overall Discussion II

• Developed countries emphasise need of orientation
  at global benefit
• Developed countries interested in cost-sharing ?
  (incremental costs)
• No comparable instrument on MDC side
• CV study GEF contributions ? global benefit of
  protection
• Efficiency considerations ? higher contributions
  to GEF

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Methode stößt mit der fragestellung an seine
grenze Aber ich weiss keine bessere Verleich der
Zahlen mit Kosten!! Geht in gleiche Rtg.
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Explanatory Variables Validity

• self-efficacy ( belief in effect of payment) ()
• bid level (personal financial costs of
  contribution) (-)
• responsibility (of the respondent for the
  protection of species) ()
• age (-)
• threat appraisal (perceived threat as consequence
  of loss of biodiversity) ()
• Opinion right of md countries to interfere in
  biodiversity protection affairs of ld countries
  ()
• Pseudo-r2 .34 (Nagelkerkes)
• Sample not representative e.g. education bias

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Case study results II