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CONSERVATION
JULY 2010
Saving biodiversity
An economic approach
Why invest?
How much?
Who pays?
WORLD CONSERVATION
Volume 40, No. 1
July 2010
Rue Mauverney 28
1196 Gland, Switzerland
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Managing Editor: John Kidd
Production and distribution: Cindy Craker
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Deborah Murith
Stephanie Achard
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Contents
Your space
Feedback on World Conservation
State of play
IUCNs Chief Economist Joshua Bishop describes the emerging economic approach to
biodiversity conservation
WHY INVEST
Money talks
Evidence is mounting of the economic benefits of saving nature
10
WHO PAYS
Raising the bar
Dr Andrew Seidl describes some of the methods of generating greater funding
for nature conservation
14
Informed decisions
Rainforest Alliance President Tensie Whelan describes how consumer purchasing
power can be harnessed to benefit biodiversity
16
Multi-tasking
Efforts to reduce deforestation under the climate change agenda could generate
biodiversity benefits
17
Smart finance
Peter Carter of the European Investment Bank explains the role banks can play in
safeguarding biodiversity
18
Cashing in
Some nature conservation organizations are developing commercial enterprises
that generate funds for conservation
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LOOKING AHEAD
From the field
21
Some examples of the work under way by IUCN regional offices on ecosystem valuation
and investment
Moving the mindset
22
Juan Marco Alvarez outlines whats needed to make the transition to a green world economy
Off the shelf
A selection of publications related to economics and conservation
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Your space
Dear friends of World Conservation
In the editorial The Road to Copenhagen in your October
2009 issue, you suggest that REDD (Reducing Emissions from
Deforestation and forest Degradation) can simultaneously
reduce emissions, slow global warming and provide a range
of benefits for people and biodiversity. The statement is made
that REDD is a win-win opportunity that the world cannot
afford to pass up.
We consider REDD to be an interesting and important
mechanism both for reducing global carbon emissions and
for narrowing the gap between those who carry the costs
of avoiding deforestation and those who benefit from the
environmental services that sound ecosystems provide.
Nevertheless, we suggest that framing REDD using the rhetoric
of win-win is problematic as there are always unintended
consequences in decisions and mechanisms like this. There
is also the danger that if REDD is not able to deliver on its
promises, the already high expectations on what REDD can
deliver will be negatively impacted to the detriment of REDD.
Instead, we suggest that being explicit about some of the
trade-offs embedded within REDD schemes would allow
for better mitigation of the potential negative implications.
Focusing on trade-offs allows for a more sober appraisal of
REDD and its possibilities and limitations in particular contexts
and cases.
Among the trade-offs involved in REDD (not REDD-plus) is
that of providing benefits only to those sites which are under
the threat of deforestation. The increasing focus on benefits
of trees and forests in terms of carbon mitigation may cause
the redirection of funds that were previously available to sites
that, although under effective management and protecting
important social and ecological values, are not under a
high potential for deforestation. Secondly, the possibility of
leakages (increased deforestation in sites not covered by
REDD programmes) is well known and widely discussed,
and has by no means been solved. Thirdly, REDD may have
important social implicationssome surely positive, but some
possibly negative, including exclusion of those without formal
tenure or legal rights. Fourthly, REDD will have significant
transaction costs (not to mention opportunity costs) that must
be considered against the benefits received. To bring home
this last point, we might want to consider the fate of REDD
programmes if and when technological means of sequestering
www.tradeoffs.org
State of play
IUCNs Chief Economist, Dr Joshua Bishop, introduces this issue by describing the emerging
economic approach to biodiversity conservation.
Money talks
It may be early days in the quest to put a price tag on natures services but the evidence available
already of the economic benefits of conservation should convince any hardened investor.
WHY INVEST
Untapped wealth
An underlying reason for ecosystem
degradation is that conventional definitions
of infrastructure, and the bulk of investment
in it, have not viewed ecosystems as important
and productive components. There is little
recognition, for instance, of how important
wetlands are for wastewater purification and
treatment, how coral reefs and mangroves
defend coastlines against floods and storms,
or how forests protect water supplies.
When investments are made, the
accounts rarely tally up the economic
benefits that ecosystem services provide,
or recognize that their conservation yields
tangible economic returns. At the same time,
the economic costs and lost opportunities
resulting from ecosystem degradation are
not considered when land use alternatives
are weighed against each other, says Lucy
Emerton of the Environment Management
Group.
Studies by IUCN and its partners have
yielded some compelling statistics. In Lao
PDR, biodiversity-related goods and services
contribute more than 75% of per capita
GDP, 90% of employment, 60% of foreign
exchange earnings and a third of government
revenues. Yet national economic indicators
and development statistics rarely reflect these
broader values.
Coral reefs support the richest marine
biodiversity in the world but also provide food,
storm protection, jobs, recreation and other
sources of income for more than 500 million
people. The economic losses that would be
incurred should coral reefs cease to exist are
enormous, and yet this is precisely the forecast
under business-as-usual climate projections.
Reliable income
Protecting the oceans through marine
protected areas can provide higher and
more reliable income, through tourism
and well-managed fisheries, than is derived
from continued uncontrolled exploitation.
Fishermen near the Kulape-Batu-Batu Marine
Protected Area, in the Philippine TawiTawi province, were able to increase their
income by about 20% only one year after
the establishment of the Kulape-Batu-Batu
marine sanctuary. Marine protected areas also
attract tourism, another important source of
income from marine conservation. Since all
fishing was banned in the British Lundy Island
No Take zone, a small marine protected
WHY INVEST
Evidence is growing
that incentive-based
policies can achieve
environmental objectives
at a lower economic
cost than conventional
regulatory approaches.
The debate
If there was an extra $US 100 billion per year to spend on biodiversity conservation, what would
be the most cost-effective way to use it? We asked leading environmental economists and
conservation specialists.
The economists
Pablo Gutman is Director of Environmental
Economics at the World Wildlife Fund, Washington
D.C.
First, we should change the wording in the question to investing,
not spending. Nature and their stewards would pay back many
times that investment, through improved flow of ecosystem
services and improved quality of life for all.
Second, we should celebrate. An extra US$ 100 billion per year for
nature conservation would be 10 times what the world invested in
it in recent years, and would give a definitive and positive answer
to the nagging question of the late great environmental economist
David Pearce, Do we really care about biodiversity?
Third, we should reassure society that US$ 100 billion per year is
not too much, considering that comprehensive conservation and
the adoption of sustainable agriculture practices worldwide may
require some US$ 300 billion per year.
Fourth, my list of the most cost-effective way to use the extra
US$ 100 billion is as follows:
Invest 30% to 40% of it in traditional biodiversity conservation.
This should be enough to support a representative worldwide
system of terrestrial and marine protected areas to halt humaninduced biodiversity losses. Why? Because once a species is
gone, it is gone forever.
Invest the rest of it in the economy of ecosystem services such
as payments for ecosystem services, and enlarged markets
and price premiums for sustainable agriculture products. Why?
Because in the long run, nature conservation cannot be achieved
if confined to protected areas; what we need is nothing short of a
new rural-urban compact where cities acknowledge and pay for
environmental sustainability.
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The conservationists
Nikita (Nik) Lopoukhine is Chair of IUCNs World
Commission on Protected Areas and former Director
General of Parks Canada.
Over the past couple of decades, the world has built up an
incredible estate of protected areas. Many drivers are behind
this dramatic transformation of land and water use. But, the
fundamental reason is biodiversity conservation. Protected areas
are the primary tool for conserving in situ biodiversity. Indicative
of their importance in this role is that over 80% of the Red Listed
species occur in protected areas. Protected areas provide the
habitat critical to the survival of a species.
Protected areas amount to almost 14% of terrestrial area. But, on
the marine side, we are still below 1% representation. Meanwhile
marine ecosystems are being transformed through unsustainable
fishing practices and other uses. The result is an alteration of
the structure and function of many marine ecosystems and at
a dramatic rate. Hence the first priority of investment must be
to bolster the extent of marine protection. Near-shore and High
Seas protection must be a priority. Terrestrial expansion in underrepresented biomes and ecosystems is also a priority.
However, creation of a protected area is in itself not enough. To
be effective, we need more and better trained personnel with a
robust budget. It is only through enhanced capacity that one can
work towards the integration of stakeholders in management
decisions and ensure their compliance with the protection regime.
Furthermore, investment is needed in Connectivity Conservation
that links protected areas and facilitates wildlife movement, as a
means of buffeting the growing effects of climate change.
While tool development such as rapid assessment of biodiversity,
management effectiveness and knowledge dissemination through
publications and the Web are good investments, it is beginning
to be very clear that investment in education and training is as
significant, if not more so. One important option is to develop
scholarships and other institutional incentives to encourage the
training of protected area personnel.
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13
WHO PAYS
Low-hanging fruit
Conser vation finance calls for fiscal
responsibility. One vast pot of potential
conservation finance lies in the billions of
dollars that are tied up in environmentally
harmful or perverse subsidiesgovernment
fiscal policies that give an advantage to
some consumers or producers, but also
create unintended incentives to damage the
environment. These include agricultural
subsidies that destroy forests and deplete water
supplies, or fossil fuel subsidies that contribute
to climate change. If countries followed the
example of New Zealand and greatly reduced
their agricultural subsidies, the global footprint
of agriculture would be reduced and taxpayers
would have billions of dollars of savings to
reallocate to other priorities.
Green markets
Increasingly, companies see profitable
opportunities from sowing and capturing
natures services. Sectors such as nature-based
tourism, natural health products, and organic
or eco-agriculture are experiencing healthy
growth and represent significant potential for
biodiversity conservation. The growth rate of
Fast forward
With a multitude of market mechanisms for
conservation either already available or in the
pipeline, there remains a gap in international
biodiversity finance. In response, proposals
are being developed for a Green Development
Mechanism (GDM), which would enable
the private sector to play a greater role in
biodiversity conservation.
Like the Kyoto Protocols Clean
Development Mechanism, a Green
Development Mechanism could enable the
supply of an environment servicein this
case, biodiversity-protected areas, and in
so doing, allow companies and consumers
to buy certified biodiversity protection,
explains Francis Vorhies who is coordinating
the GDM 2010 Initiative.
In July 2010 the study The Economics of
Ecosystems and Biodiversity (TEEB) will publish
its report for the business community. This
will be a major landmark, providing practical
guidance on how business can reduce
biodiversity risks but also realize the many
new and profitable opportunities created
by including biodiversity considerations in
mainstream business practices.
Some companies are beginning to
undertake economic valuations of ecosystems
and incorporate them into their operations,
thanks to initiatives such as the World Business
Council for Sustainable Developments
(WBCSD) Ecosystem Valuation Initiative
(EVI), in which IUCN is a partner. These
initiatives aim to show that there is a robust
business case for sustainable resource
management, across a range of business
sectors.
Building support for reducing ecosystem
degradation and halting biodiversity loss
means we need more information and a wider
understanding of the benefits of ecosystem
services, as well as the full costs of ecosystem
and biodiversity conservation.
Dr Andrew Seidl is Head of IUCNs Global
Economics and Environment Programme.
15
Informed decisions
How can ordinary people contribute to biodiversity conservation through their purchasing power?
farms and forests, it helps to ensure a longterm supply of raw materials, it often leads to
more efficient management and it opens up
new markets all of which can help to bolster
a companys bottom line.
Take Finca Buenos Aires in Guatemala.
Planted more than a century ago above the
ruins of a Mayan city, the 182-acre, familyowned coffee farm provides habitat for deer,
wild boar, wildcats, armadillos and 65 bird
species. It supports nearly 150 tree species, has
an on-site nursery and provides a buffer zone
for a neighbouring forest reserve, says Ms
Whelan. And because the farm is Rainforest
Alliance Certified, Kraft Foods pays farmer
Felipe Guzmn a premium of 10% above the
market price for his coffee, providing him
with an economic incentive to maintain his
agro-forest.
Individuals, communities and
businesses around the globe are working to
ensure that the needs of today can be met
without compromising our collective future.
If every time we reach for a bag of coffee,
a bunch of bananas or a ream of paper,
we check to make sure that it features the
Rainforest Alliance Certified seal, each one of
us has the power to help turn this vision into
a reality.
www.rainforest-alliance.org
Is it really green?
With the proliferation of eco-labelling and environmental certification schemes, how can we ensure that they are delivering on their
promises?
The ISEAL Alliance, the global association for social and environmental standards is on the case. It is working to strengthen the effectiveness
and impact of both established and emerging voluntary standards systems. It also works with companies, non-profits and governments
to support their use of such standards. Several of ISEALs member organizations, including the Rainforest Alliance, and those dealing
with organic agriculture explicitly cover biodiversity conservation and how to incorporate it into their supply chains.
ISEAL develops a code of good practice to assess the impacts of standards systems which involves methods to measure their impact
against a range of indicators, including biodiversity.
Over time, we hope this will lead to changes in the standards systems and improved performance on biodiversity and other aspects of
sustainability, says Wiebke Herding, ISEALs Communications Manager.
ISEAL is also working on a scaling up initiative, trying to increase the uptake of credible standards systems. As part of this were
mapping our members coverage of sectors and sustainability criteria to identify gaps and overlaps. This will help standards systems
to better position themselves in the market and ultimately consumers in deciding where they place their priorities, adds Ms Herding.
www.isealalliance.org
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WHO PAYS
Multi-tasking
Biodiversity could benefit from funding being directed towards efforts to reduce deforestation
under the climate change agenda.
17
Smart finance
Peter Carter of the European Investment Bank explains the role banks can play in safeguarding
biodiversity.
18
WHO PAYS
Cashing in
With companies capitalizing on markets for natural products and services, some nature
conservation organizations are also developing commercial enterprises that generate funds
for conservation.
Many organizations,
including IUCN
Members, are tapping
into the growing demand
for responsible products
and services.
The Flower Valley Conservation Trust,
established in 1999, through a project with
Fauna and Flora International (FFI) promotes
the sustainable use of Cape Floral Kingdom
fynbos flower products in the retail flower
market. Wild flower harvesting has been a
major source of traditional livelihood and
employment in South Africas Western
Cape region for decades but the region has
been affected by the systematic removal
of commercially-valuable species such as
the King Protea and land conversion to
agriculture. Through the engagement of
scientists, sustainable harvest levels were
defined for commercial varieties, to reduce
risk to businesses while maximizing gains
from the regions natural capital. The King
Protea and other species are sold to retailers
in Europe such as Marks & Spencer and
South African retailers including Pick n Pay, a
nationwide retailer that, like Marks & Spencer,
is interested in securing a sustainable supply as
well as helping with the development of the
industry.
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LOOKING AHEAD
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Strength in numbers
The Green Economy Coalition (GEC) is an alliance of organizations dedicated to accelerating the transition to a more sustainable global
economy. IUCN and several of its members are supporting the establishment of this broad network which also includes trade unions,
development organizations, as well as businesses and consumer groups. The Coalition aims to foster a common understanding of green
economy issues and to promote learning, creativity and innovation across all sectors of society.
We have been living beyond our means, with crises in climate, energy, food, water, poverty, jobs and finance all linked to unsustainable
economic activity, says Green Economy Coalition Programme Director Sally Jeanrenaud.
The Green Economy Coalition offers creative solutions to multiple global problems by linking people, the planet and prosperity. Reaching
across multiple sectors of activity and engaging stakeholders across the world, it provides an inclusive and well-informed platform from
which the transition to a green economy can be debated and planned.
The coalition has produced a Core Script which outlines a vision for the future, assesses the main challenges, and draws a roadmap for
action. Later this year, the GEC will prepare its fourth consecutive high-level communiqu for the G20 Summit of World Leaders, articulating
how decision makers can support the transition to a green economy. While staying active in international fora, the GEC is also facilitating
a series of regional dialogues, with two events scheduled for later this year in India and Brazil.
www.greeneconomycoalition.org
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LOOKING AHEAD
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