funding mechanisms for biodiversity jeffrey a. mcneely chief scientist iucn-the world conservation...
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FUNDING MECHANISMS FOR BIODIVERSITY
Jeffrey A. McNeelyChief Scientist
IUCN-The World Conservation [email protected]
27 July 2006Inter-American Development Bank
Workshop on Biodiversity Loss
The Millennium Ecosystem Assessment used ecosystem services as a new way to think about the benefits provided by nature
The Millenium Ecosystem Assessment model
The MA Balance Sheet
CropsLivestockAquacultureCarbon sequestration
Capture fisheriesWild foodsWood fuelGenetic resourcesBiochemicalsFresh waterAir quality regulationRegional & local climate
regulationErosion regulationWater purificationPest regulationPollinationNatural hazard
regulationSpiritual & religious Aesthetic values
TimberFiberWater regulationDisease regulationRecreation & ecotourism
Enhanced Degraded Mixed
Bottom Line: 60% of Ecosystem Services are Degraded
Degradation of forest ecosystem services often causes significant
harm to human well-being
– The total economic value associated with managing ecosystems more sustainably is often higher than the value associated with conversion
– Conversion may still occur because private economic benefits are often greater for the converted system
One approach to conservation is creating markets for ecosystem services
Source: Forest Trends
Fiber
Food
Spiritual & religious
Freshwater
Genetic resources
Climate regulation
Water purification
Disease regulation
Flood/Fire regulation
Recreation & tourism
Aesthetic
Economic Value ($)
Economic Valuation
Difficult or impossible
Easy
Private Benefit Capture
Difficult
Easy
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Many ecosystem services are public goods
Services Revenue
Carbon Sequestration
Biodiversity Conservation
Cultural Value
Watershed Protection
Carbon Trading
Pharmaceuticals Pollination Biodiversity Offsets
Eco-tourism Conservation concessions
User Fees
Tree Growth Certified Timber
Potential markets for ecosystem services
Source: Forest Trends
Ecosystem services: Carbon sequestration
Carbon sequestration, often supported under the Kyoto Protocol, is one of the best-known forest ecosystem services.
Market value of carbon trading in 2005: US$ 11 billion.
The growth of trade in carbon offsets
Using Carbon Emissions Trading to Finance Sustainable Development and Conservation
Above-ground and total soil carbon(0-20 cm) for sites in the humid tropical lowlands of Brazil, Cameroon and Indonesia
SOURCE: Forest Trends
Climate Action Project with Government of Bolivia, Fundacion Amigos de la Naturaleza, TNC, BP-Amoco, American Electric Power, and PaficiCorp. Initial investment $9.6 million doubled size of park; will prevent emission of 10 million tons of carbon over 30 years.
Noel Kempff Mercado National Park, Bolivia
Vilcanota Assessment, Peru
Cultural services can be the most valuable, but beyond monetary prices
Other cultural values can bring significant profits for local people
0
20,000
40,000
60,000
80,000
100,000
1873
1878
1883
1888
1893
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1903
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1913
1918
1923
1928
1933
1938
1943
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1998
2003
Year
Num
ber o
f Site
s
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
18,000,000
20,000,000
Are
a in
Km
2
Cumulative area sites of known date
Cumulative no. of sites of known date
Note: 38,427 PAs covering approximately 4 million km² have no date and are not included in the cumulative graph
The remarkable growth of protected areas demonstrates their value
The Forest Climate Alliance
Strategic Advice to National Policy Initiatives
Biodiversity Offsets
Forest ecosystem services: Watershed Protection has multiple benefits
• Provision of water• Hydropower, navigation• Water storage to buffer floods, droughts• Control of erosion and sedimentation• Maintain river channels, riparian habitats• Maintain coastal vegetation requiring freshwater• Maintain water quality• Control groundwater levels, reducing salinity
Cloud forests provide substantial climate benefits as well as conserving biodiversity
Mangrove ecosystem
shrimpshrimp
housinghousing
cropscrops
Mangrove Services:
• nursery and adult fishery habitat
• fuelwood & timber
• carbon sequestration
• traps sediment• detoxifies
pollutants• protection from
erosion & disaster
Trade-offs among ecosystem services
Value (per hectare)
0
$2000
$4000
Mangrove Shrimp Farm
Coastal Protection (~$3,840)
Timber and Non-timber products ($90)
Fishery nursery ($70)
Net: $2,000 (Gross $17,900 less costs of $15,900)
Pollution Costs (-$230)
Less subsidies (-$1,700)
Restoration (-$8,240)
Mangrove Conversion
Private Net Present Value per hectare
Mangrove: $91
Shrimp Farm: $2000
19871999Public Net Present Value per hectare
Mangrove: $1,000 to $3,600
Shrimp Farm: $-5,400 to $200
Source: Millennium Ecosystem Assessment; Sathirathai and Barbier 2001
Source: UNEP
0
50
100
150
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1950s 1960s 1970s 1980s 1990s
Flood events per decade
Asia Americas Africa EuropeSource: Millennium Ecosystem Assessment
Hurricane Mitch
Protected areas can help prevent such damage. How much is this service worth? To whom?
Payments for ecosystem services:Build on established markets
Eco-tourism• “the fastest growing sector of the largest
industry on earth”• annual exports up to US$100 billion (estimated
from data reported at www.world-tourism.org and www.ecotourism.org)
Organic foods• market value of organic products reported
as US$25 billion in 2004 (www.ifoam.org)
Certified “sustainable” products• Worldwide certified forest area is
approaching 5% of total forest area (www.unece.org)
Source: Joshua Bishop, IUCN
Payments for ecosystem services:Create new incentive mechanisms
Biodiversity-friendly carbon storage• 18 percent of approved emission reduction
projects are LULUCF or biomass-related, as of 2003/04 (www.prototypecarbonfund.org)
Incentives for watershed protection
• Over 7 million ha of fragile cropland re-forested in China, under the US$40 billion Sloping Land Conversion Program (www.cifor.cgiar.org)
Biodiversity offsets and mitigation• 72,000 ha of wetland and endangered species habitat in
over 250 approved “banks” selling habitat “credits” in the USA (two-thirds of banks are privately owned)
Source: Joshua Bishop, IUCN
Status of Ecosystem Service Markets
* The retail carbon market is currently 0.7m t/CO2 and is expected to grow to 15m in
Carbon: 2008-2012
* The Kyoto compliant market was 1.16m t/CO2 in 2002 and is expected to grow to
a minimum of 15m t/CO2 in 2008-2012
* Private corporations and international NGOs are the main buyers
Biodiversity: * Fastest growing components: Eco-labeling and easements for high-
conservation value land
* Municipal water systems and industrial
Watershed Protection: users are most likely to pay
* Investments in sustainable watershed management proven cost-effective
Current obstacles to markets for forest ecosystem services
• Lack of information about value of ecosystem services, especially non-market values, and what benefits they provide
to the poor
•Limited institutional experience with compensation mechanisms, and the problem of free riders
• Inadequate legal framework or supporting institutions
• Equity concerns – how can benefits be delivered to the poor?
• Payments for ecosystem services have been shown to work.
• Biodiversity supports all ecosystem services.
• A package of ecosystem services will have a higher value than a single service, but trade-offs may sometimes be required.
• The approach will only work if creative people apply the general principles to specific cases.
• Institutional and policy support from government is essential.
CONCLUSIONS