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UCSB ESM 204 - Cost effective conservation

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Cost-Effective Conservation: A Review of What Works to Preserve BiodiversityPaul J. Ferraro and R. David Simpson The need to preserve biodiversity is urgent, but the financial stakes are highand the debate is heated. There has never been a greater need for both aclear understanding of the principles involved and a careful investigation of the facts.Humanity has never had a greater impact on the world’sland use than we do at the present. As a result, somenatural scientists predict that a third or more of the specieson earth could become extinct in this century. Such lossesare encountered in the geological record only at times ofastronomical cataclysm. Half of all terrestrial species canbe found in the 6% of the world’s land area covered bytropical forests, and these species face the gravest risk. Indeveloping tropical countries, the social agenda is dom-inated by the pressing needs of poor and growingpopulations. Despite the difficulties inherent in influencing behav-ior in other countries, international efforts to preservebiodiversity have been under way for many years. Aggre-gate statistics are difficult to come by, but some numbersare indicative of the commitment. The World Bank hasdedicated well over a billion dollars toward biodiversityconservation. A number of donors have allocated thesame amount toward retiring developing country debtunder debt-for-nature swaps. A recent study of conser-vation spending in Latin America reported approximately$3.3 billion in expenditures. Private foundations havecontributed more than $10 million per year to conser-vation in developing countries. Over the past two decades, conservation funding hasshifted away from the “parks and fences” approach towardone attempting to integrate conservation and develop-ment projects. This new approach has been harshlycriticized. “Integrated conservation and developmentprojects,” as they are called, have been labeled as littlemore than wishful, and generally ineffectual, thinking inworks such as John Terborgh’s Requiem for Nature (IslandPress, 1999). Calls to return to a parks and fencesapproach have sparked another backlash from criticswho regard it as little better than stealing indigenouspeoples’ land at gunpoint. While these debates are rag-ing, other groups are cataloguing, extolling, or sometimeslambasting a variety of innovative approaches to conser-vation finance. The conservation need is urgent, the stakes are high,and the debate is heated. There has never been a greaterneed for both a clear understanding of the principlesinvolved and a careful investigation of the facts.Direct vs. Indirect ApproachesBiodiversity conservation is largely a matter of preserv-ing the habitats sheltering imperiled species. Effectiveconservation requires that people who would destroySPRING 2001 / ISSUE 143 RESOURCES 17RESOURCES FOR THE FUTURE18 RESOURCES SPRING 2001 / ISSUE 143such habitats be provided with incentives to preserve them.Equitable conservation requires that we identify the people whohave a rightful claim to such habitats and compensate them.People who do not have rightful claims must be prevented fromdestroying imperiled habitats.People will generally do what is in their own interest. If theycan receive more benefits from protecting an area of habitat thanthey could from clearing it for other uses, they will preserve it.Box 1 identifies a number of conservation policy options.We’ve grouped them into direct and indirect approaches. Directapproaches are straightforward. The conservation organizationpays for conservation. Payments may be in the form of outrightpurchases or purchases of “partial interests” such as easements orconcessions, but the basic idea is to pay for actual conservation.Indirect approaches are more complicated. Subsidies areprovided to activities that are felt to be conducive to conserva-tion. A conservation organization might, for example, assist alocal entrepreneur in constructing a hotel for ecotourists, or train-ing people to evaluate native organisms for their pharmaceuticalpotential. Indirect approaches raise two questions:• If the activities local people undertake are profitable, why isassistance from conservation organizations necessary?• If the activities are not profitable, might direct approaches bemore effective in motivating conservation?Ecofriendly enterprises have proved profitable in many partsof the world (see Box 2), so subsidies are not always required.Many millions, if not billions, of dollars have been devoted toassisting ecofriendly enterprises, however. The wisdom of thesesubsidies is suspect for a number of reasons.First, such subsidies are generally an inefficient way of accom-plishing a conservation objective. Consider two options facing anorganization that wishes to preserve a certain area of land. First,it could pay for land conservation. If an ecofriendly enterprisecan profitably be operated on the land, the conservation organ-ization could sell a concession to operate the enterprise. The netcost of conservation under this option would be the cost of buy-ing the land less the income received from the concession.Under the second option, the conservation donor would sub-sidize the ecoentrepreneur by, for example, investing in hotelfacilities to be used by tourists. The ecoentrepreneur would thenacquire land for the ecotourism facility. The conservation donormay be able to motivate the protection of more land by pro-viding a higher subsidy. The conservation organization’s net costof conservation under this option would be the value of the sub-sidy it offers.The second approach is more expensive. The basic princi-ple at work is that “you get what you pay for,” and the cheapestway to get something you want is to pay for it, rather than thingsindirectly related to it. While it is extremely difficult to estimatereliably the earnings of ecofriendly projects, we have been ableto construct a number of examples that demonstrate dramaticdifferences in costs under the alternative approaches. The costBox 1. A Taxonomy of Habitat ConservationPolicy OptionsDirect approaches pay for land to be protected. Examplesinclude:• Purchase or lease—Land is acquired for parks or reserves.• Easement—Owners agree to restrict land use in exchangefor a payment.• Concessions—Conservation organizations bid against tim-ber companies or developers for the right to usegovernment-owned land.Indirect approaches support economic activities that yieldhabitat


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