Cost Effective Conservation A Review of What Works to Preserve Biodiversity Paul J Ferraro and R David Simpson The need to preserve biodiversity is urgent but the financial stakes are high and the debate is heated There has never been a greater need for both a clear understanding of the principles involved and a careful investigation of the facts H umanity has never had a greater impact on the world s land use than we do at the present As a result some natural scientists predict that a third or more of the species on earth could become extinct in this century Such losses are encountered in the geological record only at times of astronomical cataclysm Half of all terrestrial species can be found in the 6 of the world s land area covered by tropical forests and these species face the gravest risk In developing tropical countries the social agenda is dominated by the pressing needs of poor and growing populations Despite the difficulties inherent in influencing behavior in other countries international efforts to preserve biodiversity have been under way for many years Aggregate statistics are difficult to come by but some numbers are indicative of the commitment The World Bank has dedicated well over a billion dollars toward biodiversity conservation A number of donors have allocated the same amount toward retiring developing country debt under debt for nature swaps A recent study of conservation spending in Latin America reported approximately 3 3 billion in expenditures Private foundations have contributed more than 10 million per year to conservation in developing countries Over the past two decades conservation funding has shifted away from the parks and fences approach toward one attempting to integrate conservation and development projects This new approach has been harshly criticized Integrated conservation and development projects as they are called have been labeled as little more than wishful and generally ineffectual thinking in works such as John Terborgh s Requiem for Nature Island Press 1999 Calls to return to a parks and fences approach have sparked another backlash from critics who regard it as little better than stealing indigenous peoples land at gunpoint While these debates are raging other groups are cataloguing extolling or sometimes lambasting a variety of innovative approaches to conservation finance The conservation need is urgent the stakes are high and the debate is heated There has never been a greater need for both a clear understanding of the principles involved and a careful investigation of the facts Direct vs Indirect Approaches Biodiversity conservation is largely a matter of preserving the habitats sheltering imperiled species Effective conservation requires that people who would destroy SPRING 2001 ISSUE 143 RESOURCES 17 RESOURCES FOR THE FUTURE Box 1 A Taxonomy of Habitat Conservation Policy Options Direct approaches pay for land to be protected Examples include Purchase or lease Land is acquired for parks or reserves Easement Owners agree to restrict land use in exchange for a payment Concessions Conservation organizations bid against timber companies or developers for the right to use government owned land Indirect approaches support economic activities that yield habitat protection as a by product Examples include Payments to encourage land use activities that protect habitat and supply biodiversity as joint products These payments can take several forms Subsidies to ecofriendly commercial ventures Subsidies assist ecotourism bioprospecting and nontimber forest product entrepreneurs with facility construction staff training or marketing and distribution Payments for other ecosystem services Payments for carbon sequestration flood and erosion protection or water purification provide incentives to maintain the habitats that both provide these services and shelter biodiversity Payments to encourage economic activities that direct human resources away from activities that degrade habitats This conservation by distraction approach provides assistance for activities such as intensive agriculture or offfarm employment These activities may not be eco friendly but their expansion can reduce local incentives to exploit native ecosystems such habitats be provided with incentives to preserve them Equitable conservation requires that we identify the people who have a rightful claim to such habitats and compensate them People who do not have rightful claims must be prevented from destroying imperiled habitats People will generally do what is in their own interest If they can receive more benefits from protecting an area of habitat than they could from clearing it for other uses they will preserve it 18 RESOURCES SPRING 2001 ISSUE 143 Box 1 identifies a number of conservation policy options We ve grouped them into direct and indirect approaches Direct approaches are straightforward The conservation organization pays for conservation Payments may be in the form of outright purchases or purchases of partial interests such as easements or concessions but the basic idea is to pay for actual conservation Indirect approaches are more complicated Subsidies are provided to activities that are felt to be conducive to conservation A conservation organization might for example assist a local entrepreneur in constructing a hotel for ecotourists or training people to evaluate native organisms for their pharmaceutical potential Indirect approaches raise two questions If the activities local people undertake are profitable why is assistance from conservation organizations necessary If the activities are not profitable might direct approaches be more effective in motivating conservation Ecofriendly enterprises have proved profitable in many parts of the world see Box 2 so subsidies are not always required Many millions if not billions of dollars have been devoted to assisting ecofriendly enterprises however The wisdom of these subsidies is suspect for a number of reasons First such subsidies are generally an inefficient way of accomplishing a conservation objective Consider two options facing an organization that wishes to preserve a certain area of land First it could pay for land conservation If an ecofriendly enterprise can profitably be operated on the land the conservation organization could sell a concession to operate the enterprise The net cost of conservation under this option would be the cost of buying the land less the income received from the concession Under