Download Feasibility of Funding & Cost-effectiveness Assessments

Feasibility of Funding
& Cost-Effectiveness
Assessments
Peter Nowicki - ECNC - [email protected]
Expert Workshop on Biodiversity and Economics
EEA, Copenhagen, 5 October 2006
Funding: Market based instruments
Market based instruments seek to address
the market failure of ‘environmental
externalities’ …
(through) the establishment of a proxy market
for environmental services.
hhtp://glossary.eea.int/EEAGlossary/M/market-based_instrument
Biodiversity in the market place …
… conserves a public good (water quality, stream
flow, wild life), but the incentive to do this comes from
the resulting enhanced ability to sell an associated
private good. The presence of a public good means
that the market incentives to conserve are less strong
than required for overall economic efficiency, but by
capturing some of the value of that good the market
improves on the pre-existing situation.
Geoffrey Heal, 1998: Markets and Sustainability
To date, markets have not performed notably well in
conserving our planet’s environment. Indeed, they
have done quite the opposite. But this is not intrinsic
in markets. They can be reoriented in a positive
direction, in which case their potential for good is
immense. Markets need legal infrastructure….
Geoffrey Heal, 1998: Markets and Sustainability
International donors invest billions of dollars to
conserve ecosystems in low-income nations. The
most common investments aim to encourage
commercial activities, such as ecotourism, that
indirectly generate ecosystem protection as a joint
product. We demonstrate that paying for ecosystem
protection directly can be far more cost-effective.
P.J. Ferraro & R.D. Simpson, 2002: The Cost-Effectiveness of
Conservation Payments
Managing ‘markets’ for biodiversity
• Access rights
• Use rights
• Ownership
• Defining clear
objectives
• Time-scale needs to
be accounted for
• Prompt monitoring in
order to be effective
• Evaluation after
implementation
Break-down of MBIs
Taxes /
Charges
Subsidies
support
Tradabl e
permits
Ecolabelling
Financial
mechan.
Liability
& Comp.
Total
Flora
7
1
2
0
0
0
10
Fauna
35
4
19
1
0
0
59
Habitat /
Ecosystems
57
56
12
5
4
1
136
Total
99
61
33
6
4
1
205
DG Env (July 2006): The Use of Market
Incentives to Preserve Biodiversity
Environmental Service Index
FAO (May 2004): Paying for Biodiversity Conservation
Services in Agricultural Landscapes
Cost-effectivesness
• Policy level: Sum of measures costs
less than another array of measures
• Individual measure: Generates a higher
level of conservation for a given amount
of costs
DG Env (July 2006): The Use of Market
Incentives to Preserve Biodiversity
Biodiversity financing: EU
The cost (including income foregone) of
those activities / investments which
serve to protect or to enhance the
favourable conservation status of
species and habitats.
In reference to Article 2 of the Habitats Directive
Actions beneficial for biodiversity
1. Add to territory
2. Manage territory
3. Promote conservation measures
4. Protect migration pathways
5. Regulate land use (positive)
Actions to avoid harm to biodiversity
6. Compensate past / future disruption
7. Reintroduce species
8. Forbid certain uses of biodiversity
9. Monitor species
10. Regulate land use (negative)
Metric of assessment - 1
• Ecological coherence
• Habitat / species resilience over time
• Conservation measures implemented
• Perenity of migration assured
• Land use maintained or enhanced
Metric of assessment - 2
• Restoration or substitution
• Species implantation successful
• Biodiversity deterioration prevented
• Population dynamics registered
• Land use stopped or diminished
Feasibility of funding and
cost-effective assessment
• Benchmarking and monitoring:
indicators
• Analyze objectives very carefully
(target, target, target…)
• Consider all costs, including transaction
• Remember the relevant time horizon!