INVALUABLE Final Concept Paper - June 2015

INVALUABLE Final Concept Paper

Governing biodiversity and ecosystem services through market-based instruments?

THEORY AND PRACTICE FOR DECISION-MAKERS

June 2015

 Abstract

This final concept paper presents policy-relevant results from the INVALUABLE Project.
It serves as a basis for discussions to be held.

Overall, the INVALUABLE project found that, pushed by environmental economists, the Market-based Instruments (MBIs) concept emerged in the biodiversity sector during the second half of the 2000s within an advocacy coalition of big international NGOs, think tanks, environmental international institutions and the private sector. In developing countries and transition economies, the concept is however seldom used and is rather part of a broader green growth agenda. At the implementation level, various institutional arrangements of Payements for Ecosystem Services (PES) and Biodiversity Offsets (BO), often grouped under the unique label of MBIs, are actually far from displaying market characteristics. Rather than markets for environmental services, these are either specific contracts, simple payments, or hybrid structures. In this context, some of these so-called innovative financial mechanisms actually adopt the market language in order to be more acceptable in a context of decreasing States’ influence.

Against this backdrop, scientists, policy-makers and practitioners should avoid the term MBIs and rather adopt the term ‘economic incentives’, which encompasses a broader variety of institutional options (not only markets) and allows to think about diverse, multilayered institutional architectures which are better adapted to local specificities. Indeed, at the empirical level, case studies of PES and BO undertaken during the project (in Belgium, Germany, France, Indonesia, Cambodia, Guatemala, Costa Rica, Mexico, Brazil, Madagascar) show that institutional design varies largely across regions and contexts. Many actors are involved in PES and BO, including NGOs and intermediary institutions (e.g. parastatal agencies, watershed stakholders’ forums, etc.). The latter’s role, promoting or hindering procedural equity, is shown to be essential to explain success and failure of many of the projects. In this regard, beyond evidencing successfull environmental outcomes in Mexico, Brazil or Germany, as well as greater involvement in Mexico, some weaknesses were identified.

On the one hand, additionnality was found to be limited as most PES schemes, for instance, would not enroll farmers with the most harmful degrading activities. Secondly, pre-existing pro-social and pro-environment motivations should be seriously taken into account when designing those schemes. If not, motivations could be adversely modified and sustainability could be highly jeopardized.

In order to usefully relay some of this generated knowledge to policy-makers, the INVALUABLE project aimed at reviewing Science-Policy Interfaces (SPI) in the field of biodiversity policies. Compared with knowledge exchange exercises for climate change, we found that SPI practices for biodiversity were limited, especially at the local level. Further, our research on conservation triage in Australia and New Zealand uncovered that such methods may falsely reduce uncertainty and lead to overconfidence in wrong decisions. One of the decision support system (DSS) tools to facilitate SPI, QUICKScan, was then evaluated during the project. A Spatial DSS, QUICKScan was shown to increase knowledge, learning and shared understanding in participatory decision-making processes, and thus could be of great interest to enhance MBIs’ effectiveness.

Finally, a legal analysis of PES case studies carried out in INVALUABLE showed that the binary distinction between ’public’ and ’private’ PES is not appropriate. Policy-makers and practitioners should rather greatly focus on the scheme normative framework, e.g. the presence of monitoring and enforcement procedures and knowledge integration. In the latter case, the strong role of regulation is further to be stressed, especialy in establishing arenas for dialogue and public participation within MBIs’ design processes.

This final concept paper is organized as follows:

  • Beyond confusions: characterising conservation instruments and their relation with markets
  • Implementing market-based conservation instruments on the ground: achievements and challenges
  • Engaging with policy-makers on market-based instruments: decision support tool, knowledge and the law
  • INVALUABLE publications

 
Online access: http://www.iddri.org/Projets/Invaluable
Download pdf : Concept Paper INVALUABLE – June 2015