| European
Tropical Forest Research Network |
This section contains two articles that focus on financing mechanisms aimed primarily at biodiversity conservation in the South. The global community's willingness to pay for this global environmental service is the basis for new financing mechanisms developed by international nature conservation organisations. Markets for biodiversity are thus being created. In different ways, the needs and interests of local communities are taken into account, and linked with objectives of nature conservation. Further information on market mechanisms can be found in Section III, and on sustainable livelihoods and poverty alleviation in Section VII of this issue. In his article, Richard Rice describes how Conservation International has developed and is actually implementing the mechanism of conservation concessions. National governments and/or local communities are being paid as a compensation to forego commercial resource exploitation. Esther Blom and co-authors present two other mechanisms developed by the Netherlands Committee for IUCN: the creation of a Trust Fund for conservation and sustainable management of the Guiana Shield ecoregion, and ‘Purchase of Nature', a small grants programme supporting local NGOs in purchasing threatened nature areas of critical importance.
By Richard Rice
Conservation can present a challenge to nations wishing to develop their natural resources for economic ends. Resource development activities offer the prospect of tangible economic benefits, but are often environmentally destructive. Although sustainable resource management seeks to provide these benefits while conserving natural ecosystems, experience suggests that a number of obstacles limit both the adoption of sustainable practices and their usefulness in conservation strategies.
To address this problem, the Center for Applied Biodiversity Science at Conservation International (CI) has been working in collaboration with Hardner & Gullison Associates, LLC, to develop the concept of a "conservation concession", a novel approach that seeks to directly reconcile resource protection with development.
Principles
Conservation concessions hold the potential to protect a wide variety of critical
terrestrial and marine habitats, ranging from vast tracts of Amazonian rain
forest to sensitive fisheries and coral reefs in the South Pacific.
Under a conservation concession agreement, governments or local resource users agree to protect natural ecosystems in exchange for a steady stream of structured compensation. The opportunity costs of foregoing natural resource exploitation, including lost employment and government revenue from taxes, may serve as a basis for determining the amount of the payment. Payments may also reflect other costs, for instance government administration and enforcement burdens required as a part of concession operations. The benefits that are preserved by maintaining resources intact, such as traditional uses or watershed protection as well as the low-risk nature of the conservation payments should also be considered.
In its simplest form, a conservation concession might be modelled after a timber concession, whereby a logging company pays the government for the right to extract timber from public forestlands. Rather than log the concession area, the conservation investor would pay the government for the right to preserve the forest intact. The conservation concession thus presents an alternative opportunity for countries to capitalise on vast tracks of forest or other areas of high conservation value. With ultimate objectives that include both the long-term protection of biodiversity and the stimulation of economic development, this new mechanism offers a land use alternative that conservationists, development agencies, governments, and local communities alike can support.
First
agreements
CI's efforts to establish conservation concessions have met with groundbreaking
success in a number of countries. In September 2000, CI obtained an "exploratory
permit" from the Government of Guyana to establish a conservation concession
that will protect approximately 80,000 hectares of pristine forest. In April
2001, the Indonesian Minister of Forestry issued a public declaration in support
of conservation concessions. In Peru, the government recently approved new
regulations for its Forest and Wildlife Law that for the first time enable
conservation bidders to compete for the land-use rights of its 67.6 million-hectare
forest estate. In late July 2001, the country's first conservation concession
under this law was granted to ACCA, a Peruvian NGO.
Components
of a conservation concession agreement
A conservation concession requires a negotiated agreement between an investor
and a government or other resource owner. Negotiated elements of the agreement
might include:
Benefits
and limitations of the conservation concession approach
Conservation concessions are one of many possible conservation interventions
and are more appropriate in some situations than others. Conservation concessions
may not be appropriate, for example, where guaranteed permanence is of pre-eminent
importance or payments are impractical for political or institutional reasons.
It is therefore important to view conservation concessions as a complement
rather than as a replacement to national parks and other traditional protected
areas.
Nevertheless, the use of conservation concessions for resource protection offers a number of distinct benefits.
Stable source of funds for economic development: Many economic activities, including conventional natural resource extraction yield revenue flows that are subject to unpredictable fluctuations. Alternatively, a conservation concession offers regular, low risk payments of a known amount, denominated in a stable foreign currency, for as long as the terms of the agreement are met.
Direct, transparent conservation investments: A conservation concession yields immediate, transparent conservation that can be easily identified on a map and monitored based on readily verifiable norms. Although international willingness to pay for conservation is substantial and increasing, there is a growing trend emphasising outcome-based rather than process-based indicators of effectiveness of conservation funds. The methodology and concrete geographic basis of conservation concessions respond to this trend.
A market mechanism for conservation: Under a conservation concession, conservation becomes a product that can be purchased directly and provided according to clearly established criteria. In combination with payments, the limited term of a conservation concession makes it an attractive option for resource owners. At the same time, permanent protection is possible because of renewable terms, low opportunity cost, and high willingness and ability to pay.
Next
steps
The conservation concession approach creates a new market for biodiversity,
a market that is now in its infancy. Several parallel efforts are needed to
move this market forward. First, the search for concession opportunities must
deliberately target a diversity of ecosystems and geographic locations, and
demonstrate the wide range of possibilities for this biodiversity conservation
mechanism. For example, CI is examining the potential for a conservation concession
in Namibia's biologically diverse arid coastal region, as well as marine concessions
in Southeast Asia. Second, exploring a variety of partnership arrangements
with governments, development agencies, NGOs, indigenous groups, and private
corporations will expand the number of market participants and draw on the
strengths of various actors in conservation and development. Third, on the
supply side, market development will require the creation of appropriate institutional,
legislative, and regulatory infrastructure in host countries, such as the
legal instruments CI has promoted in Peru and Guyana. Finally, initiatives
to leverage new sources of funding could catalyse the demand side of this
budding market for biodiversity, for example by targeting private sector companies
seeking environmental offsets.
This comprehensive set of efforts, which combines research and development with direct implementation of the conservation concession approach, is expected to expand the horizons of the market, clarify the potential roles of different participants, and set in motion this novel market for biodiversity conservation.
Richard
Rice Ph.D.
Chief Economist, Center for Applied Biodiversity Science, Conservation International
1919 M Street, NW Suite 600, Washington, DC 20036, US
A E-mail: d.rice@conservation.org
by Esther Blom, Dave Zwaan and Willem Ferwerda
The Netherlands Committee for IUCN (NC-IUCN) manages several programmes for conservation and sustainable use of nature. Innovative financing mechanisms play an important role in two specific programmes: the Small grants for the Purchase of Nature and the Guiana Shield Initiative. After a brief introduction, these programmes are further elaborated to illustrate the specific financing mechanisms concerned.
Small grants
programmes of NC-IUCN
International Union for the Conservation of Nature (IUCN) is the world's largest
nature conservation organisation, bringing together both state members and NGOs.
Since 1948, it has promoted nature conservation in a just world. The Netherlands
Committee for IUCN is a co-operative agreement between the Dutch members of
IUCN and those of six international IUCN commissions. Members support and interact
with each other in pursuit of IUCN's mission. One of the core activities of
NC-IUCN is (co-)financing of local nature conservation projects in the framework
of small grants programmes, based on the ecosystem approach of the Convention
on Biological Diversity. Currently, four small grant programmes are operational:
Small
grants for the Purchase of Nature
The programme Small grants for the Purchase of Nature provides financial support
to local NGOs for strategic purchase of nature areas in tropical countries,
Eastern Europe and the Commonwealth of Independent States (CIS). The National
Postcode Lottery is funding the programme with an amount of €453.800 per year.
In principle, nature areas should not be for sale according to the viewpoint
of NC-IUCN, for these areas belong to everyone. In practice however, purchase
appears to be a strong instrument in saving highly threatened nature areas from
destruction.
Since the overall magnitude of the fund and the money granted per project (maximum €75.000) are limited, the purchases need to have a strategic significance for the conservation of local biodiversity. An example of a strategic choice is the acquisition of an area that links up two nature reserves, thereby increasing the conservation value. Purchases with a political, policy or urgent character are also possible. Most NGOs applying are experienced in nature conservation and seek support to – now or never – buy a piece of land in order to prevent conversion into other land uses such as agriculture, plantations and infrastructure. Obviously, a strict condition of the programme is that the legal system of the country involved should allow purchase of nature by NGOs. To date, three projects have been assigned a grant: in Poland, Costa Rica and Ecuador.
The Guiana
Shield Initiative
An entirely different initiative aimed at financing nature conservation is the
Guiana Shield Initiative (GSI). The Guiana Shield covers the countries of Suriname,
Guyana, French Guyana and parts of Colombia, Venezuela and Brazil. The Shield
is one of the oldest geological formations in the world, containing unique flora
and fauna.
The countries of the Shield share common problems and threats such as mining, timber cutting and infrastructural development. Another reason to address the Guiana Shield as an ecoregion is the transboundary nature of indigenous peoples' territories and of major river systems. The GSI aims to develop an innovative financing mechanism for the conservation and sustainable management of the Guiana Shield ecoregion. One of the main premises of the GSI is that the international community should compensate the countries of the Guiana Shield for providing ecological services to the world. These ‘public good' services, such as the mitigation of the effects of climate change, the conservation of biodiversity and the regulation of hydrological cycles, can only be provided by keeping the vast forests of the Guiana Shield intact. Alongside and in conjunction with the public good services is the development of private sector activities. The GSI intends to promote the development of sustainable business activities, such as sustainable ecotourism, the production of non-timber forest products for local and regional markets, and possibly sustainable timber extraction.
The structure of the financing mechanism is in its earliest stages, as input is needed from the region and from the international donor community. The general concept is that the ecological goods and services would be delivered by local ecosystem managers, such as local communities, forest managers, park authorities, (semi-) government institutions and environmentally responsible businesses. In doing so they would be eligible for income generating payments and financial incentives provided by the regional financing mechanism. At present, the interpretation of the concept of the financing mechanism is still somewhat general and it can still develop in many directions. Until now, the basic idea is to develop a Trust Fund in which private companies as well as donors can participate.
The first phase of the GSI is currently underway with funding from the Dutch Ministry of Foreign Affairs (DGIS). The central activity of Phase I is to prepare a proposal for a more extensive programme to be submitted to the Global Environment Facility (GEF). Other Phase I activities relate to the compilation of baseline information necessary to set up sustainable management and conservation activities under a regional financing mechanism. These activities include: organising a regional conservation priority-setting workshop (in partnership with Conservation International and the UNDP); examining the possibilities for generating income under the Kyoto Protocol of the Climate Change Convention and establishing the regional carbon baseline; assessing the current situation and potential for developing NTFP, timber and ecotourism projects; and assessing the feasibility for ecosystem monitoring.
For further
information, please contact:
Esther Blom
NC-IUCN
Plantage Middenlaan 2b, 1018 DD Amsterdam, The Netherlands
Tel.: +31-20-6161732, Fax: +31-20-6279349
E-mail: mail@nciucn.nl
Http://www.nciucn.nl