Financial support for biodiversity protection in developing countries -

1. Financial support for biodiversity protection in developing countries - Does the CBD mechanism lead to an appropriate level of biodiversity protection?

2. Contents • Introduction • „Adequate“ Provision of Biodiversity • Financial Resources, Costs and Negotiations  Efficiency? • Case study – CV • Conclusion

3. Introdution Introduction I -Biodiversity as Global Public Good - Externalities € MB [global] MC MB [LDC] XQuantity of protected biodiversity Xopt Xldc

4. Introduction Introduction II – Idea of CBD • CBD Article 20(2) “... new and additional financial resources....“ • Article 21(1):“... The contributions shall be such as to take into account the need for predictability, adequacy and timely flow ...“

5. ? Adequate = Efficient Adequate = Efficient Provision of Biodiversity € MB [global] MC Provision by GEF = efficient? MB [LDC] XQuantity of biodiversity protection Xopt Xldc

6. Question Efficient Level of Financial Support? • Resources & Costs • Negotiations on replenishment of GEF-Fund

7. Financial Resources & Costs Financial Resources of GEF-Fund for Biodiversity Protection

8. Costs of (Global) Biodiversity Protection

9. Resources & Costs Acceptance Costs  Efficiency € MB (glb=social) MC (private & current) B MC (social) A E C D Xglb Xpot Xover X Quantity of protected biodiversity

10. Negotiations Negotiations on Replenishment - Facts • Every four years replenishment of GEF-Fund • Representatives of donor countries negotiate • National contributions (should reflect)economic power of nation* • But…….

11. Negotiations Contributions of Nations to the GEF-3 (extract) front-runner leader taillights

12. Negotiations Characterisation of Conditions for Negotiations • Reminder: Good in question  global external effects  Need for global collective action • CBD  global collective action • However: agents are representatives of nations

13. Negotiations Public Choice TheoryAssumptions • Governmental agents try to maximise their personal benefits • Personal benefit = reelection

14. Negotiations View of National Agents on Financing Biodiversity Protection in LDC • Aim: Solution of problems • Biodiversity not easy to protect • Important short term problems at home (easier to solve than loss of biodiversity) • Each nation little influence  overall level of biodiversity protection • Success difficult to communicate • Good will be provided anyway

15. Negotiations Activity of Nations • Spend a lot of money on national short term interests • Spend hardly any money on global longterm interests • In other words: Free-rider • Why contribute to GEF at all? • International reputation • Not to lose international credibility

16. Undersupply Thesis Undersupply Thesis • Financial resources smaller than (possible) benefits • Indicators: • Costs >>> financial resources • Hardly any incentives for protection for national agents Test of thesis  Benefits of biodiversity protection for developed countries?  CV-study

17. CV-Study CV-Study: Benefits of Biodiv Protection • How to define „Biodiversity“ • Genes? • Surface area? • Species?! • Subject of valuation: „Protection of half of threatened species (animals and plants) who would become extinct if nothing further would be done in the next ten years“

18. CV-Study (External) Benefit of Additional Biodiversity Protection MB [global] MC MB [MDC] MB [LDC] 25.000 species Xldc X Quantity of protected biodiversity

19. CV-Study Characteristics of Case Study • Basic population: residents in Germany (older than 18 years) • Telephone inquiry • WTP question format: dichotomous choice • Payment vehicle: tax increase • Frequency & duration: monthly for ten years

20. CV-study Case Study – Results • n = 1017 • 92% agree with payments: more developed countries  less developed countries • 62% ‚Yes‘ to WTP-Question

21. CV-Study WTP Result & Discussion I • Mean of sample: approx. 22 Euros per capita per month • But: 59.6% of contacted people refused to participate or dropped out • If they would pay 0 Euros  9 Euros (mean)

22. CV-Study WTP vs. GEF contributions Discussion II • Overall benefit depends on size of basic population • Individuals (9 €) (66.4 million) Euros7 billion • or households (9 €) (34,8 million)  Euros 3.8 billion

23. 3.8 – 7 billion Euros (annual) WTP – Annual Benefit MB [global] MC MB [MDC] MB [LDC] 25.000 species Xldc X Quantity of protected biodiversity

24. Results of Related Studies • Hanley, Spash & Walker (1995):WTP Britain contribute to (GEF)*~ 47-62 £ annual • Kramer & Mercer (1997): WTP for additional 5% of tropical rain forest  21-35 US-$ (one-time) • Horton, Colarullo, Bateman & Peres (2002): • Subjects: people from Italy and UK • Good: additional rain forest in Brasil 5% (20%) • WTP: 30 £ (39 £ ) annual •  WTP = 600 million in Italy and in UK

25. Overall Discussion I • German actual expenditures for Global Environmental Facility •  US$ 60 million •  < 1 Euro per year per capita • WTP >> 1 Euro per year per capita • Study result: undersupply thesis: approved

26. Summary & Overall Discussion II • Developed countries emphasise need of orientation at global benefit • Developed countries interested in cost-sharing  (incremental costs) • No comparable instrument on MDC side • CV study: GEF contributions  global benefit of protection • Efficiency considerations  higher contributions to GEF

28. Methode stößt mit der fragestellung an seine grenze Aber ich weiss keine bessere Verleich der Zahlen mit Kosten!! Geht in gleiche Rtg.

30. Explanatory Variables & Validity • self-efficacy (= belief in effect of payment) (+) • bid level (personal financial costs of contribution) (-) • responsibility (of the respondent for the protection of species) (+) • age (-) • threat appraisal (perceived threat as consequence of loss of biodiversity) (+) • Opinion: right of md countries to interfere in biodiversity protection affairs of ld countries (+) • Pseudo-r2= .34 (Nagelkerkes) • Sample not representative: e.g. “education bias”

31. Case study – results II