ESSD Roundtable G Finance II Barry Spergel PPT

CONSERVATION FINANCE: 

CONSERVATION FINANCE Limitations and Opportunities By Barry Spergel

Global Cost of Biodiversity Conservation : 

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

Macroeconomic Solutions: 

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

All 3 Approaches will meet strong political resistance: 

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

Economic Benefits of Biodiversityare OFTEN (but not always): 

Economic Benefits of Biodiversity are 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)

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

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)

Traditional Sources of Funding for Biodiversity Conservation: 

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

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

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

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

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

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

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

Impediments to Wider Use of Lottery Revenues for Conservation: 

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

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

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 don’t allow this

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

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

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

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