BIODIVERSITY LECTURE



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.

1. Why are some actors increasingly turning to the market and the private sector as a way to protect biodiversity?

2. What does relying on the market mean for the concept of biodiversity?

3. What are the market strategies being used so far?

4. 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.

1. 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.

This project is based on the intimate knowledge of biodiversity that Janzen and his Costa Rican colleagues have built up over decades. So, Janzen is calling for creative uses of ecosystems that raise money, restore their features, and protect biodiversity at once. But in this case, the income doesn’t necessarily go to the people who live around the parks, but to the park rangers to make the park bigger, to enforce boundaries, and to restore habitat. In turn, the market experiment quickly collapsed. A rival orange juice firm succeeded in persuading the government that this was an inappropriate use of national park space. This experiment, then, raises the issue of whether or not market strategies might undermine conservation by favoring specific uses and restoration efforts over others.

[SLIDE] In another part of Costa Rica, the US Quaker Church has taken a different tack in the Monteverde Reserve. Since the early 1980s, the Quakers have owned a spectacular mountainous region that they advertise as “the Children’s Eternal Rainforest”. With the aid of foreign donations, limited eco-tourism, and environmental education fees from inside the country, local residents have founded many community enterprises. A cheese factory has been established to buy milk from local farmers and to employ 100 otherwise jobless peasants as well as benefiting 450 local shareholders. Some of the profits go to re-vegetating the reserve to enhance its habitat. Ecologically-cultivated, expensive coffee is grown for sale to tourists and overseas. That is, the Quakers have focused on building the local economy and creating livelihoods as a way to relieve pressures on the biodiversity in the parks. They seem to have aimed at enabling local people to decide how to make their living, instead of designing projects from the top-down. But an issue is whether or not this community-based development is really improving biodiversity conservation. There is little evidence to date, and there are few means to verify or monitor the links between investment and biodiversity outcomes.

[SLIDE] My second example is from Australia. Because I’m Australian, I couldn’t resist using this example, and introducing you to some strange wildlife names. Australia is not exceptionally rich in biodiversity by world standards, but the country does have “uniquely charismatic fauna”, as Daily and Ellison say in their book. It’s the mix of marsupial, monostreme, and avian species that stands out. You’ll find animals such as kangaroos, echidnas, quolls, wombats, woylies, quendas, and numbats. In case you were wondering what a numbat looks like, here is a handsome picture.

Yet, Australia has had the worst biodiversity losses of any industrialized country. This is because of several causes that Australia shares with other countries. Invasive species such as rabbits and wild cats have been able to outcompete many endemic species for food and habitat. The political economy of Australia has long favored extraction of natural resources by mining, logging, and agriculture. Australia also has one of the world’s highest land clearing rates because of poorly designed state laws that give farmers a perverse incentive to eliminate native vegetation. As a result, many native species are now categorized as endangered.

John Wamsley, a former mathematics lecturer from South Australia, was already famous for his aggressive efforts to suppress wild cats when he thought of the idea of setting up his own company to own private parks. Founded in 1994, Earth Sanctuaries Ltd is the first company in the world to try to capitalize on biodiversity on the stockmarket. Its use of biodiversity -- or “the marsupial experience” to lure eco-tourism isn’t novel, but its emphasis on raising money through being publicly listed on the Australian Stock Exchange is.

Wamsley buys damaged land, fences it off from the world, removes invasive species, and restores the habitat while trying to breed endangered species. The long-term goal is to establish at least 80 sanctuaries around Australia, to represent the great variety of habitats. The company currently has three parks in operation: Warrawong near Adelaide, Little River near Melbourne, and Hanson Bay on Kangaroo Island in South Australia. Its primary activity is eco-tourism.

All my foreign friends long to see a kangaroo in the wild. I’ve seen plenty, but I have never seen a platypus in the wild despite hundreds of hikes because they are so difficult to spot in streams in the eucalyptus forests. So, both Australians and foreigners are likely to want to “Come and visit each paradise to experience the TRUE Australia” as the company says. In the last two years, around 50,000 people have paid to take guided tours of a park. As well, Earth Sanctuaries makes money from selling animals to zoos overseas, letting people take commercial photographs or make documentary films, housing people in expensive tent camps through which wallabies roam, and running cafes that have kangaroo meat on the menu. You can see that the model is similar to the Costa Rica examples. That is, income is generated from multiple uses of biodiversity.

At the same time, the firm needed money to start establishing the parks and to re-introduce native species, before it could attract tourists. The idea was that ordinary Australian citizens would be motivated to invest ethically. Before being publicly listed in May 2000, Earth Sanctuaries already had 6,700 private shareholders willing to wait many years before making any money from their investment. If you look at their website, you’ll see that the reason they offer to invest is: a picture of kangaroos and the slogan “You benefit. They benefit from your shares.” That is, if you invest, you are acting morally.

Wamsley eventually decided to try listing Earth Sanctuaries on the stock exchange to raise more money. The listing took place in May 2000 and was deemed successful because several institutional funds decided to invest. But the capitalization quickly evaporated by 40% because these funds took the profit of selling soon after the initial public offering. The firm has never been heavily capitalized; its highest stock value was $24 million. At the moment, its shares are trading at only 21 cents.

Early this year, the company started a “major restructuring” and sold four sanctuaries to the Australian Wildlife Conservancy, and another to a former chairman. Last month, Earth Sanctuaries said that the sales were to “streamline the portfolio of sanctuaries to those that have the best potential for achieving a better future balance of ecotourism and conservation program costs”. What does this mean? Is the company going to select only these species and these habitats that will be attractive to eco-tourists? Are they going to choose only a few parks based on their proximity to the major cities in Australia, to guarantee ease of access, even if not representative protection of threatened habitat?

This brings me to the final part of the lecture. What are the implications of market-based approaches for international environmental politics? I’ll just mention four examples and we can discuss more implications later.

[SLIDE] First, market strategies are inherently vulnerable to unpredictable changes in the political and business climate. What happens to the biodiversity if a deal or a company disintegrates? Are there ways to ensure that biodiversity will continue to be protected?

Second, who is controlling biodiversity through the market? Do we want private actors like Daniel Janzen and John Wansley to control biodiversity resources, or the local communities dependent on biodiversity for livelihoods, or government actors? Around the world, there have been cases where governments and private investors have met with great opposition when they have tried to use market approaches. Surprisingly, given their history of not caring much about Amazon deforestation, many Brazilians opposed the Brazilian Biodiversity Institute’s deal with a pharmaceutical company in 2000. This reflects the country’s preference for self-reliance and suspicion of foreign interests, but may also signal a preference for government oversight.

Third, how do we guarantee oversight of private actors under international environmental frameworks? Who is, or should be, responsible for the outcomes of market-based efforts inside countries when the stakes could be very high? Should governments take the responsibility of ensuring that private actors don’t do anything to jeopardize biodiversity? Are private actors to be disciplined by international bodies such as the Biodiversity Convention Secretariat? Already, the Productivity Commission in Australia – an industry-oriented government body – has reported this year that governments should “facilitate more efficient and effective private provision of biodiversity conservation by removing regulatory constraints, creating new rights and markets, and streamlining administrative processes”. But this might in fact weaken oversight over private actors.

Finally, how do we judge the results of market-based conservation? In this course, you’ll probably be addressing issues such as what the appropriate conservation outcomes should be determined as. These issues are likely to be magnified in market approaches. For example, eco-tourism is likely to be biased towards protecting charismatic species, not insects or fishes. Many people in industrialized countries may want to invest their money in buying more land, instead of the unglamorous work needed to make a protected area work.

So, while market approaches are developing as a new area of biodiversity conservation efforts, they may have many problems. International environmental policy has only started to address these problems. On the other hand, market approaches may be a very positive way to shift attention to how implementation actually happens on the ground level. The examples that I’ve cited show that community-level development can be a key market approach. The trick is finding ways to make clearer who is investing, with whose priorities, and for whose benefit.

................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download