CONSERVATION%20FINANCE

1
CONSERVATION FINANCE

• Limitations and Opportunities
• By Barry Spergel

2
Global Cost of Biodiversity Conservation

• 2 Main Components
• Financing Protected Areas
• Providing Economic Incentives for conserving
  biodiversity outside protected areas
• Current global spending on the first
• approx. 6 billion/year, need to increase to
  45 billion
• Current global cost of environmentally perverse
  incentives and subsidies(especially for energy,
  agriculture, fishing, forestry and mining)
• over 1 trillion/year

3
Macroeconomic Solutions

• Reduce perverse subsidies
• Earmark part of the savings for biodiversity
  conservation
• Charge fees for environmental services and
  earmark these fees for protected areas and
  biodiversity conservation

4
All 3 Approaches will meet strong political
resistance

• By lobbies for each of the affected sectors
• By ministries of finance and IMF, which oppose
  earmarking
• Because of arguments that this will hurt the poor
• By competition for funds from other social
  sectors
• ---health, education,and poverty alleviation
• ---entitlement programs for aging populations
• ---expenses for defense/anti-terrorism

5
Economic Benefits of Biodiversityare OFTEN (but
not always)

• Hard to trace and quantify
• Speculative and in the future
• (e.g., bioprospecting)
• Hard to internalize costs by charging higher
  prices
• Difficult to standardize and trade biodiversity
  as a commodity (cf. carbon emissions trading)
• Provide environmental services which can also be
  provided by industrial forestry (e.g. watershed
  conservation and carbon sequestration)
• Outweighed by non-economic values of biodiversity
  (aesthetic, cultural, spiritual, moral,
  psychological)

6
Difficult for the Private Sector to Make Money
from Biodiversity Conservation

• Look at the Experiences of private investors in
• Ecotourism
• Bioprospecting
• Organic Farming
• Private Protected Areas
• Frequent loss of money due to political risks,
  economic risks, unpredictable natural events,
  preference of investors for short-term returns
• Therefore need forms of government insurance
  (subsidies)

7
Traditional Sources of Funding for Biodiversity
Conservation

• National Government Budget Allocations
• International Donor Agencies
• Private Foundations
• International NGOs
• Protected Area Visitor Fees
• Probably only the last of these can be
  significantly increased in the short term
• Current entry fees are much less than most
  visitors (esp. Intl. Visitors) willingness to
  pay

8
Non-Traditional Finance Mechanisms that have
generated substantial revenues for
Conservation(over 500 million each)

• Bilateral Debt Reduction Agreements
• Lotteries
• Property Tax Surcharges for Land aquisition
  (open-space conservation)
• Property Tax subsidies for Giving Up Development
  Rights (Conservation Easements)
• Fees from Off-Shore Oil and Gas Leases
• Pollution Fines and Judicial Damage Awards
• Caveat But only if each of these is earmarked
  for biodiversity conservation and protected areas

9
Impediments to Wider Use of Debt Reduction
Mechanisms for Purposes of Biodiversity
Conservation

• Western governments have already canceled most
  bilateral debt of HIPC countries (more than half
  of African countries), and most of their
  remaining debt is owed to multilateral financial
  institutions
• Many debtor and/or creditor countries prefer to
  use funds generated through debt reduction for
  other social sectors
• Some developing countries are suspicious that
  debt reduction will infringe their sovereignty
  and/or future development rights/options
• Some creditor countries feel that debts of
  certain countries (e.g. Russia) should not be
  canceled but only rescheduled
• other debtor countries ineligible on political
  grounds

10
Non-Traditional Finance Mechanisms that have not
produced substantial revenues(although they may
be locally significant)

• Bioprospecting
• Commercial Debt-for-Nature Swaps
• Airport Fees
• Hotel Taxes
• Cruise Ship Passenger Fees
• Dive Fees
• Trophy Hunting Fees

11
Impediments to Wider Use of Lottery Revenues for
Conservation

• Many other competing social causes for these
  revenues (health, education, art, science, social
  services)
• In many countries lotteries are either illegal or
  considered immoral

12
Difficulties of Relying on Local Property
Property Tax Surcharges and Conservation Easements

• May be more appropriate for affluent areas
• Can be hard to enforce/maintain
• Some countries legal systems
• dont allow this

13
Impediments to Earmarking Fees from Oil and Gas
for Biodiversity Conservation and Protected Areas

• Political resistance by oil companies
• Other competing social priorities for these
  revenues
• Government policies or laws against earmarking of
  revenues

14
Obstacles to Using Pollution Fines and Damage
Awards to Finance Conservation

• Not permitted under many legal systems money
  cannot be earmarked but must go to the national
  treasury
• Punitive Damages not permitted in many legal
  systems only compensation for direct damages
• Political opposition/lobbying by oil companies