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CONSERVATION FINANCE. Limitations and Opportunities By Barry Spergel. Global Cost of Biodiversity Conservation . 2 Main Components: Financing Protected Areas Providing Economic Incentives for conserving biodiversity outside protected areas Current global spending on the first:

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    1. CONSERVATION FINANCE Limitations and Opportunities By Barry Spergel

    2. Global Cost of Biodiversity Conservation 2 Main Components: • Financing Protected Areas • Providing Economic Incentives for conserving biodiversity outside protected areas • Current global spending on the first: approx. $6 billion/year, need to increase to $45 billion • Current global cost of environmentally perverse incentives and subsidies(especially for energy, agriculture, fishing, forestry and mining): over $1 trillion/year

    3. Macroeconomic Solutions • Reduce perverse subsidies • Earmark part of the savings for biodiversity conservation • Charge fees for environmental services and earmark these fees for protected areas and biodiversity conservation

    4. All 3 Approaches will meet strong political resistance • By lobbies for each of the affected sectors • By ministries of finance and IMF, which oppose earmarking • Because of arguments that this will hurt the poor • By competition for funds from other social sectors: ---health, education,and poverty alleviation ---entitlement programs for aging populations ---expenses for defense/anti-terrorism

    5. Economic Benefits of Biodiversityare OFTEN (but not always) • Hard to trace and quantify • Speculative and in the future (e.g., bioprospecting) • Hard to internalize costs by charging higher prices • Difficult to standardize and trade biodiversity as a commodity (cf. carbon emissions trading) • Provide environmental services which can also be provided by “industrial” forestry (e.g. watershed conservation and carbon sequestration) • Outweighed by non-economic values of biodiversity (aesthetic, cultural, spiritual, moral, psychological)

    6. Difficult for the Private Sector to Make Money from Biodiversity Conservation Look at the Experiences of private investors in: • Ecotourism • Bioprospecting • Organic Farming • Private Protected Areas Frequent loss of money due to political risks, economic risks, unpredictable natural events, preference of investors for short-term returns: Therefore need forms of government insurance (subsidies)

    7. Traditional Sources of Funding for Biodiversity Conservation • National Government Budget Allocations • International Donor Agencies • Private Foundations • International NGOs • Protected Area Visitor Fees Probably only the last of these can be significantly increased in the short term: Current entry fees are much less than most visitors’ (esp. Intl. Visitors’) willingness to pay

    8. Non-Traditional Finance Mechanisms that have generated substantial revenues for Conservation(over $500 million each) • Bilateral Debt Reduction Agreements • Lotteries • Property Tax Surcharges for Land aquisition (open-space conservation) • Property Tax subsidies for Giving Up Development Rights (Conservation Easements) • Fees from Off-Shore Oil and Gas Leases • Pollution Fines and Judicial Damage Awards Caveat: But only if each of these is earmarked for biodiversity conservation and protected areas

    9. Impediments to Wider Use of Debt Reduction Mechanisms for Purposes of Biodiversity Conservation • Western governments have already canceled most bilateral debt of HIPC countries (more than half of African countries), and most of their remaining debt is owed to multilateral financial institutions • Many debtor and/or creditor countries prefer to use funds generated through debt reduction for other social sectors • Some developing countries are suspicious that debt reduction will infringe their sovereignty and/or future development rights/options • Some creditor countries feel that debts of certain countries (e.g. Russia) should not be canceled but only rescheduled • other debtor countries ineligible on political grounds

    10. Non-Traditional Finance Mechanisms that have not produced substantial revenues(although they may be locally significant) • Bioprospecting • Commercial Debt-for-Nature Swaps • Airport Fees • Hotel Taxes • Cruise Ship Passenger Fees • Dive Fees • Trophy Hunting Fees

    11. Impediments to Wider Use of Lottery Revenues for Conservation • Many other competing social causes for these revenues (health, education, art, science, social services) • In many countries lotteries are either illegal or considered immoral

    12. Difficulties of Relying on Local Property Property Tax Surcharges and Conservation Easements • May be more appropriate for affluent areas • Can be hard to enforce/maintain • Some countries’ legal systems don’t allow this

    13. Impediments to Earmarking Fees from Oil and Gas for Biodiversity Conservation and Protected Areas • Political resistance by oil companies • Other competing social priorities for these revenues • Government policies or laws against earmarking of revenues

    14. Obstacles to Using Pollution Fines and Damage Awards to Finance Conservation • Not permitted under many legal systems: money cannot be earmarked but must go to the national treasury • Punitive Damages not permitted in many legal systems; only compensation for direct damages • Political opposition/lobbying by oil companies