BIODIVERSITY LECTURE
Today, I’ll talk about the development of market approaches to conserving biodiversity and the private sector as new features of international environmental policy. Market approaches may, or may not, be a positive means of conservation. It depends greatly on who is investing, who is doing the work, who is benefiting, what outcomes for biodiversity result, and the specific settings you look at. However, it’s important to get some perspective on these approaches, so that we can see what, if anything, they can do.
[SLIDE] I’ll discuss four aspects in my lecture, and we can then open up for further exploration.
- Why are some actors increasingly turning to the market and the private sector as a way to protect biodiversity?
- What does relying on the market mean for the concept of biodiversity?
- What are the market strategies being used so far?
- What are some international environmental politics issues?
Over the 1990s, the private sector became more important in conserving biodiversity in both developed and developing countries. Companies opened private parks and began promoting ecological tourism to see wildlife in their habitats. Government institutes made agreements with companies to study biological and genetic material to use in making perfumes or medicines. Scientists acting as entrepreneurs tried to get private funds in return for access to the ecosystem services that national parks can provide. Local communities founded their own ventures to profit from tourists and research investments.
These developments contrast greatly with the traditional roles given to national governments. The Biodiversity Convention envisages governments as the central actors in conservation through setting up protected areas like national parks, making and enforcing laws for land use, and controlling the settlement of people near biologically rich areas. But private actors are apparently emerging alongside governments as new international environmental actors. This is happening at a time when there is growing skepticism of the capacity of governments to decide and act.
Why is there a new focus on the market as a way to conserve biodiversity? I think the explanation lies in a mix of changes in international environmental politics and in the philosophy of protecting biodiversity.
[SLIDE] First, the implementation of traditional strategies, by government actors, is increasingly being seen as ineffective. At the same time, private actors are appearing – not just companies, but non-governmental organizations, local communities, and landowners – alongside government actors. These actors are not just implicated in biodiversity loss, but are now thought to be part of the solutions.
Second, the view of biodiversity as a resource that can be exploited has taken deeper hold. Conserving wildlife and enjoying the beauty of ecosystems aren’t the dominant motivations any more. Instead, governments and international agencies are defining biodiversity as something that people need to benefit from if they are to be motivated to act to protect biodiversity.
First, let’s look at the implementation issue. We need to look back at what you’ve been studying so far. The Biodiversity Convention was negotiated in 1992, but there is widespread agreement that extinction rates and habitat destruction continue to worsen overall.
Conservation can mean different things depending on what you believe is required for the survival of biodiversity. For example, conservation might relate to preserving species, local populations, genetic diversity, biological resources, habitats, and ecosystems. The point is that your ideas about the causes of biodiversity loss and the existing deficiencies in management responses will lead to different ideas about what to do. In the last few decades, in situ conservation in the form of preserves have been the most common solution. National parks are supposed to be sacrosanct in their wildness. By excluding humans, it is thought, the pressures on species and habitats will decrease. To a lesser degree, attention has focused on breeding programs that aim to restore species to the wild.
[SLIDE] However, the reality has been vastly different. In many places, people have “invaded” preserves, converting land by logging and agriculture, killing wildlife through poaching or for bushmeat to eat, and carrying out mining. Intensifying population density makes it harder for people to live off their land, so they need to move to marginal lands. Local communities also resist being excluded from the lands that they have historically used. In turn, government agencies often have been unable to maintain strong boundaries around national parks. They cannot afford to provide the staff or vehicles needed to patrol perimeters. Staff can become demoralized and resign. Staff can also become corrupt and misappropriate funds. Finally, there continues to be a low level of scientific knowledge about biodiversity. There are countless species not known to human science, but likely to disappear before they are recorded. The lack of knowledge is thought to hamper conservation efforts.
These observations and causal explanations have been around for a while. Indeed, this year, the Biodiversity Convention Secretariat made a new Strategic Plan for the next decade. The plan lists a range of obstacles to implementing the convention. [SLIDE] Two examples are: [read from the overheads]. These are conventional views of what the problems are, implying that the solutions are to do with more resources and better enforcement. Later, we can discuss whether or not these views really target “the problem” or not. I personally don’t think they do. For now, the key thing is how international and domestic actors are framing what needs to be done, and by whom.
[SLIDE] One diagnosis that international policy-makers make, then, is that the people who live in or around preserves lack the incentive to conserve biodiversity. They don’t have a reason to care for wildlife. Alternatively, their poverty is forcing them to destroy habitats. If they could somehow find incentives to alleviate the pressures leading to extinction, they would change their behavior. These incentives could be employment, outside investment, community development, and political power to determine their own lives. Another diagnosis is that governments, especially in developing countries, suffer from crushing debts or financial pressures that limit their ability to act. If resources could somehow be infused into the government agencies that run protected areas, these agencies would be able to buy more land and keep humans out.
In short, governments and international agencies are confronted with the realities of trying to address the needs and demands of many more actors than they had originally envisaged. These actors, moreover, are private actors that traditional policies and regulatory methods can’t easily direct.
Equally important, there is finite funding available from international financial institutions. Between 1991 and 2000, the Global Environmental Facility spent about $1 billion on 345 biodiversity projects around the world, which isn’t that much money when you think about the magnitude of the losses. Governments, too, have not been able to mobilize substantial resources. The sources of funding, then, are in doubt. But a different view is that of Barbara Harkness, an Australian investor in Earth Sanctuaries Limited that we’ll talk about later. She says: “It takes an enormous amount of money to save wildlife and where is it? In the market.” This attitude is starting to spread across the world.
The second part of the explanation is that governments, industry, and local communities are re-defining biodiversity as a resource to be exploited, not just preserved. They are arguing that the solution isn’t just to find more resources, but to change the relationships between people and biodiversity, to enable people to become actors themselves in conserving biodiversity. The meanings of biodiversity are different from 15 years ago. To conserve biodiversity, it is thought, people need to be able to use it as a commodity and as a source of livelihood. There are many critical questions about whether this is a good direction, and I’ll touch on them later.
[SLIDE] First, we need to ask what the philosophy of market-based conservation is. What can the private sector do that governments can’t do? The US economist Geoffrey Heal is one of the leading proponents of market approaches to protecting biodiversity. He argues that conservation frameworks that are flexible and offer incentives will work better than regulatory frameworks such as the Endangered Species Act that restrain landowners from using their land freely. Under regulatory systems, landowners are more likely, he thinks, to have perverse incentives to eliminate biodiversity.
In the book chapter that you read, Heal argues that the problems of conserving biodiversity are to do with the ways in which biodiversity is a “privately provided public good”. That is, wildlife and ecosystem services benefit everyone, but “the total biodiversity remaining in the world is the result of millions of independent and decentralized decisions on what to grow, where to grow it, how to grow it, what land to clear, and so forth.” Heal’s solution is to find ways to create property rights in biodiversity. If people own rights to use or benefit from biodiversity, and can sell these rights to other people for money, then they will have the incentive to conserve biodiversity as private actors. He also argues that new ways need to be found to value biodiversity economically, so that people will be motivated to protect it. For example, ecosystem services could be quantified.
Underlying these arguments is the idea that the market can be an effective way of drawing in the dispersed private actors that government-centered approaches have left out. The market, then, is a response to the perceived implementation problems and sheer inertia of current efforts. The market could be harnessed to mobilize new resources and actors at the same time.
[SLIDE] Generally, it has been at the national level that experiments have started to happen. There are many market strategies that are now being tried out. In my opinion, Geoffrey Heal takes far too static a view of market approaches and focuses only on a very limited, theoretical sense of giving value to biodiversity. But what is the market? How do people give value to biodiversity through their everyday efforts? We need to take a more dynamic view of what the market might be, and what it can do. Most of the policy and political science attention has been on companies profiting from genetic material. But I think there’s a much richer range of market approaches than is acknowledged. Moreover, the market isn’t just the kind of market that we think about in industrialized countries, like making and selling goods and services for consumption. It can be the kind of market that local communities create for themselves – making local economies based on livelihoods and ecosystem services. It’s not just industry and companies who are setting up the market, but people living in villages in Costa Rica and people running butterfly farms in Kenya. These are people-oriented market approaches, not technocratic, top-down efforts to make biodiversity valuable to industry.
[SLIDE] I’ll summarize the market experiments so that you can see the variety -- and then I’ll discuss two novel examples in detail.
- Debt-for-nature swaps. In this approach, actors relieve a national or regional government in a developing country of some of its debt pressures so that it can then afford to strengthen protected areas. NGOs, generally American-based, work with private banks to buy governmental debt cheaply and then retire it in return for an agreement by the government to create new national parks, provide more staff, or strengthen regulation.
2. Running private parks or facilities for eco-tourism. The second strategy that has been around for a while is the concept of private parks. Private actors can run their own land as private parks, either for profit, or for voluntary reasons. Some countries provide regulatory incentives for private parks. The operators of private parks generally use biodiversity as a tourist attraction, luring people to see endangered wildlife, or to enjoy ecosystems. Income can come from cafes, guided tours, environmental education programs, and the like.
3. Deals struck between parks and private industry to allow the latter to benefit from ecosystem services in return for money or services. I’ll talk about this later in my Costa Rica example. But for example, local farmers may use water generated from the clouds that mountains attract and that rainforests store. They generally don’t pay for this water, but could be made to.
4. Ethical investment. You invest in a mutual fund or company that is in the business of biodiversity conservation or community-based development. I’ll talk about this in my Australian example.
5. The creation of gene and plant variety banks. Selling wildlife to zoos has long been an important source of income for government agencies. However, with the rise of biotechnology and genetically modified food, databases with genetic information can be sold to industry as well, to advance research and development.
6. Deals struck between biodiversity institutes and companies. Pharmaceutical, clothes, food, perfume, and body products companies pay money in return for the right to prospect for desirable materials or characteristics that can be used to make consumer or industrial products. These may, or may not, be genetic. The Costa Rican National Institute for Biodiversity (or INBio) is probably the most famous proponent of this approach, though others have appeared across Latin America. In 1991, INBio negotiated an agreement with Merck, a drug company, to do “bioprospecting”. About 12 similar deals have been made. But according to a recent study by the German economist Michael Sturm, just $7 million worth of deals have been struck in the 10 years since then. Compared to the scale of the problem, this is a tiny amount. The attention given to genetic prospecting is therefore disproportionate in my opinion.
7. Tradeable biodiversity rights. In the US, one example is “woodpecker credits” that landowners can earn in Florida, if they agree to protect woodpeckers at a certain population level. If they can support breeding pairs, they get more credits, and if they support extra woodpeckers, they can earn credits to sell to other private actors.
8. Land trusts aimed at protecting biodiversity through agreements between landowners and NGOs. For example, Ted Turner’s land trust foundation is now one of the largest private landowners in the US. Conservation trust funds can be used to provide financial support for landowners if they promise not to damage habitats or to eliminate biodiversity.
9. Philanthropic support. Private donors may set up private funds to reward people for not destroying biodiversity or habitats. This was important in the restoration of wolves to the Yellowstone National Park in 1995. The new international biodiversity assessment process is largely privately financed.
An important observation of market approaches is that a new range of actors is appearing in international environmental politics. Instead of just governments, researchers, and treaty organizations, we are seeing business people, financiers, consultants, companies, mutual funds, stockbrokers, banks, villagers, tourists, and others appear as potentially powerful actors. People are taking on new roles. Scientists can turn into business people; local leaders can become financiers; stockbrokers can be investors in community development.
I’ll now talk about two examples of market-based approaches in Costa Rica and Australia respectively. Costa Rica is supposed to be one of the most biodiversity-oriented nations in the world. The reality used to be different. By 1980, Costa Rica had already lost most of its forest cover, and had the world’s worst deforestation rate. However, the Costa Rican government has adopted many policies and laws encouraging conservation efforts.
[SLIDE] I’ve already mentioned INBio, the research institute that makes agreements with foreign companies. But INBio is just one of the developments in the country. In my opinion, it’s more interesting to look at what Daniel Janzen, an American biologist, is trying to bring about through the market. Janzen was one of the actors most responsible for creating a massive protected area in Costa Rica, the Area de Conservacion Guanacaste (ACG), which has over 235,000 known species. This area has jaguars, howler monkeys, scarlet macaws, tapirs, and the guanacaste tree. To make the area, Janzen helped buy up pasture land between existing protected areas, using the money from a conservation trust fund created by a debt-for-nature swap in the late 1980s. That is, the park is endowed with its own private funding source, so it doesn’t need to rely on government support. Its employees are paid for by the private trust.
Recently, Janzen has argued that the implementation problems of national parks can be rectified if their ecosystem services are given economic value. What are ecosystem services? Here is an example. In 1998, Janzen helped make an agreement between the ACG and a local citrus fruit company, Grupo del Oro, that wanted to find a way to dispose of its orange juice processing pulp waste. The company was allowed to dump the pulp on badly degraded pastureland in the park for a period of 20 years in return for donating 3445 acres of logged forest land to the ACG. No money changed hands, only land to make the park bigger. The fungi, bacteria, and fly larvae living in the pastureland would eat the pulp, thus achieving biodegradation. Just as important, the pulp would help kill invasive grasses that supported the wildfires damaging the entire park and allow native vegetation to regenerate over time. Other examples of ecosystem services are water supply, soil creation, weather generation, forest cover, and biological control of pests by insects. Janzen argues that humans can make agreements to generate funds from these services, and that so-called “wilderness” needs to be used if it is to survive.