Today, we are witnessing a new phase in the extinction of species under the triple effect of the human destruction of ecosystems, the increase in concentrations of greenhouse gases in the atmosphere and climate change. Without a strong mobilization of all human communities, this extinction will be fatal to humanity. This implies taking simultaneous action to stabilize climatic parameters and protect nature. A specific difficulty of such a challenge lies in the fact that it is not easy to quantify the value of nature. What instruments and financial mechanisms need to be set up to protect nature? Can the damage caused be compensated ? These questions were debated at the Agence Française de Développement.

Organizers

Today, we are witnessing a new phase in the extinction of species under the triple effect of the human destruction of ecosystems, the increase in concentrations of greenhouse gases in the atmosphere and climate change.

Without a strong mobilization of all human communities, this extinction will be fatal to humanity. This implies taking simultaneous action to stabilize climatic parameters and protect nature.

A specific difficulty of such a challenge lies in the fact that it is not easy to quantify the value of nature. The services rendered by nature have an impact on a whole host of geographical and temporal areas. They apply to various functions combining the production of goods and services, the regulation of cycles (water, soils, carbon, nitrogen…) and cultural values.

In addition, the biodiversity crisis has a particularly strong impact on tropical areas due to the specific wealth of these regions, the population dynamics of these regions, as well as their economies, which are highly dependent on the quality of ecosystems.

How and on what bases can a value be attributed to nature? What instruments and financial mechanisms need to be set up to protect nature? Can the damage caused be compensated, and at what price?

Who should finance nature conservation?

Date

Tuesday 19 May 2015

Hour

17:30 - 19h30

Place

Agence Française de Développement
5 rue Roland Barthes
75012 Paris

The conference-debate will be coordinated by Claire Hédon, journalist at RFI.

With:

  • Christophe DU CASTEL, Responsible for Biodiversity issues, AFD
  • Laurent GILBERT, Advanced Research International Development, Director at L’Oréal
  • Emmanuel GROUTEL, Economist, FAO Consultant
  • Aurélien GUINGAND, Economist, CDC Biodiversity
  • Alain KARSENTY, Economist, CIRAD

The debate was coordinated by Anne-Cécile Bras, journalist at RFI. The speakers were Christophe DU CASTEL, Responsible for Biodiversity issues, AFD ; Laurent GILBERT, Advanced Research International Development, Director at L’Oréal ; Emmanuel GROUTEL, Economist, FAO Consultant ; Aurélien GUINGAND, Economist, CDC BiodiversityAlain KARSENTY, Economist, CIRAD.

 

At a time when an increasing number of species are becoming extinct, biodiversity conservation is recognized as a major challenge. It is necessary to mobilize considerable volumes of financing, which public actors cannot provide alone. A number of mechanisms have been set up over the past decades, but their effectiveness has proved to be limited. Today, there is a twofold challenge: firstly, it is necessary to determine who should finance nature conservation and using which tools; secondly, there is a pressing need to consider the sustainability of our economic models.

 

Change approach to make investments equal to the challenges

28,000 of the 1.8 million species identified become extinct every year. There is an urgent need to protect biodiversity. Yet in financial terms, “the resources available are well below needs”: to achieve the targets of the Strategic Plan for Biodiversity 2011-2020, “worldwide needs are estimated at between USD 150bn and USD 440bn a year until 2020”. Yet only “USD 52bn are available” for the moment (Aurélien Guingand).

Certain solutions developed to finance biodiversity have failed: for a time we thought “we were going to be able to value this dormant resource via the market”, through bio-prospecting for example. Yet “what was announced has boiled down to very little” (Alain Karsenty).

Other tools have had more satisfactory results: for example, certification improves “the social and environmental practices, the traceability of the products” of a company or area (Emmanuel Groutel). It is applied to certain zones (protected areas, national parks) and has made it possible to value “nature itself through tourism consumption” (Alain Karsenty).

But overall, the private actors who have established it do not always reap the expected benefits. In the timber sector, “the virtuous companies have almost been penalized”. The market has not allowed them to give value to their certification work (Emmanuel Groutel). The results are similar for L’Oréal: the company, which is engaged in a responsible approach, notes that according to consumer surveys, “the consumer is quite unwilling to pay” (Laurent Gilbert).

 

Role of public authorities in protecting biodiversity

As biodiversity is “a public good”, the role of public authorities “in direct financing or incentive frameworks is essential” (Aurélien Guingand).

They can take direct action through grants: “It is the component with the highest amounts for AFD”. AFD “provides resources for protected areas either directly, or via trust funds or other instruments for grant allocations” (Christophe du Castel).

This financial leverage must be part of a coherent political project. Governments currently subsidize sectors such as chemical-based farming or coal “to support their national champions in the name of employment”. Yet “redirecting a fraction [of these] subsidies, which have adverse effects on biodiversity, would generate very substantial resources” (Alain Karsenty).

Public authorities can also establish systems with statutory charges, as is the case in Mexico and Costa Rica, which protects its biodiversity through a tax on fuel and water. This finances the bulk of the program for payments for environmental services (Alain Karsenty).

Finally, the role of governments is to develop “incentive frameworks” for the private sector. The approaches taken by companies like L’Oréal are far from being universal: “If we waited for companies to offset their residual impacts on biodiversity themselves, we could wait a long time” (Aurélien Guingand).  In any case, this type of approach has limited impacts: “When the private sector plays its role, it is only in its industry” (Alain Karsenty). Consequently, it is up to public authorities to mobilize private actors and coordinate their action in order to start an overall momentum capable of having substantial impacts, and supplement actions in industries. Certain firms are starting to take action towards producers who supply them with agricultural products: it is the “zero deforestation supply chain” approach. But this is still insufficient, as the drivers of deforestation in a territory are not simply limited to one or two industries. Hence the interest of establishing, at the same time, direct incentives for conservation (PES) for communities via collective projects for “sustainable territories”. This will supplement the sectoral approach which primarily targets individual producers.

 

What tools need to be developed to involve private actors more?

Encouraging private actors to include the biodiversity issue in their business model requires devising a wide range of instruments. The certification instrument needs to be extended: “It is necessary and essential to support large certified companies and help others to move towards these good practices” (Emmanuel Groutel).

 Other more innovative tools are gradually appearing. They include the offsetting mechanisms. To be effective, offsetting must be part of a specific sequence: “Avoid a number of impacts; reduce the unavoidable impacts; offset the residual impacts”. In Coussouls de Crau, an area in France’s Provence region, private or public contracting authorities “can offset their impacts by purchasing compensation units from previously conducted environmental actions”. It is a question of the ex ante application of the polluter pays principle.

Payments for environmental services are another tool: this incentive instrument involves “paying actors to refrain from exercising certain rights that are recognized as being legitimate” (Alain Karsenty). Vittel pays farmers to change their practices and this allows the company to benefit from a service: access to low-nitrate water. The principle here is of the beneficiary-payer.

 

Biodiversity put to the test of political and social realities  

The development of instruments by economists is just one stage: financial leverage is subsequently “vested with social and political objectives that are given to it by the actors who seize upon it” (Alain Karsenty). Its implementation “involves field work based on local issues” (Laurent Gilbert).

 The challenge of biodiversity protection, raised at global level, can only find solutions tailored to specific contexts. Yet, faced with the population explosion in Africa or the consumption of African forest products by Asia, “our European certainties are very feeble” (Emmanuel Groutel). The situation of emerging countries highlights tensions: “there are choices to be made between development and conservation” (Aurélien Guingand).

In the end, we can clearly see that there are various sources of financing to conserve biodiversity: “Wealth creation is not a problem, this is demonstrated by the abundant liquidity at global level” (Alain Karsenty). But the major issue goes beyond the economic sphere: it is that of “political choices made by the different parties to mobilize these institutional resources” (Christophe du Castel). The challenges posed are fundamental: biodiversity protection suggests that there may be the beginning of “an ecological transition that would be based on a more comprehensive questioning of the existing economic model(Aurélien Guingand).

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