Researchers for Nature Journal, who conducted a study in 60 protected areas of Africa, Asia and South America, found that even these “final refuges” of threatened species are “vulnerable to human encroachment and environmental stresses.” “Habitat disruption, hunting and forest-product exploitation were the strongest predictors of declining reserve health,” said the study released last year.
In a way, the issue boils down to the fact that the world is losing species and ecosystems because the economic system has a blind spot. It sends the signal that cutting down a rainforest to grow soybeans or palm oil plantations makes more economic sense than leaving that forest intact. This economic system says that building a shopping mall to sell iPods is more valuable than having a wetland that buffers coasts against storms, filters water, and provides nesting ground for birds.
But that equation is changing. Priceless nature is becoming increasingly scarce, and therefore needs to be made valuable once again. It may sound strange, even counterintuitive, but the solution to the loss of biodiversity may actually lie in the very same markets that appear to be causing the problem. It may lie in creating payment schemes for biodiversity; mechanisms that give nature a value and that force the economy to look into its blind spots. Luckily, a good number of countries – from Australia and Brazil to the United States – have been experimenting with such schemes, sometimes for more than 20 years, and there is much to be learned.
The questions may seem crass and materialistic – and in some ways they are – but they are essential if the world is to conserve the species and ecosystems that sustain humankind. The reason is simple: like many other important matters, the staggering loss of biodiversity is really a matter of values – and not just the principles that allow people to distinguish right from wrong, but also the more mundane concept of economic values.
BioBanking is a market-based scheme that provides a streamlined biodiversity assessment process for development, a rigorous and credible offsetting scheme as well as an opportunity for rural landowners to generate income by managing land for conservation.
BioBanking enables ‘biodiversity credits’ to be generated by landowners who commit to enhance and protect biodiversity values on their land through a biobanking agreement. These credits can then be sold, generating funds for the management of the site. Credits can be used to counterbalance (or offset) the impacts on biodiversity values that are likely to occur as a result of development. The credits can also be sold to those seeking to invest in conservation outcomes, including philanthropic organisations and government.
Countries use a variety of mechanisms for giving value to ecosystems and the services they provide. In essence, these can be summarized as follows:
- Government sets the price: This is done either by fining those who damage the ecosystems (through endangered species laws, for instance) or by paying those who conserve it (providing tax breaks or subsidies for conservation, for example). While these systems are useful and play an important role in protecting biodiversity, they suffer from a fundamental flaw: they do not send the right signals to the economy; they do not permit society, via markets, to determine and understand the actual value (the price) of biodiversity.
- Voluntary transactions set the price: Users of ecosystem services voluntarily agree on the value with those who provide the services. These “self-organized private deals” are sometimes mislabelled as “markets,” but true markets depend on multiple buyers and multiple sellers meeting regularly to exchange goods and services. In contrast, in most cases these are one-time-only deals. They may also take the form of “voluntary biodiversity offsets,” in which an individual or company that damages biodiversity pays to “protect, enhance, or restore” an equivalent amount of biodiversity somewhere else.
- A hybrid system sets the price: In this case, scarcity of a traditionally “public” good is established through government regulation, which then forces buyers and sellers to negotiate in order to set a price for the good or service in question. Examples of this include various “cap-and-trade” schemes in the United States for sulphur dioxide and in Europe for greenhouse gases. These schemes create true markets because they generate demand for services from multiple buyers and therefore lead to the provision of services from multiple sellers.
Whether through voluntary offset mechanisms, government-mediated payment schemes, or full-fledged markets in offsets, the concept of payment for biodiversity services is beginning to take hold. More important, these approaches are beginning to subvert the current economic model that is blind to the value of biodiversity, to the services that species and ecosystems provide, and to the costs inherent in destroying the natural wealth on which human well-being depends.
I think we in India also need this type of system, which acts on the principle of Polluter will pay. Better yet, we can hope that through a form of economic jiu-jitsu these market mechanisms will make it possible for the pavement and the iPods to co-exist comfortably with the whales and the wetlands. In short it will optimize between economic or industrial growth and bio conservation.