The limited resources of national budgets and Official Development Assistance will not be sufficient to preserve habitats and key species in the South. Other sources of financing are consequently required. It has become essential to mobilize the private sector more in conservation trust funds and via offset mechanisms. This is how we will be able to limit the biodiversity loss caused by human activities and reconcile economic growth and nature conservation.
The resources required to achieve the Aichi Targets in developing countries alone are estimated at between USD 74bn and USD 191bn for 2014-2018. On a global scale, it is estimated that it would be necessary to mobilize between USD 150bn and USD 440bn a year between 2013 and 2020. Two-thirds would be for investment expenditure and one third for recurrent expenditure. For conservation, the investments required range from several tens of billions of dollars for targets to protect species and conserve genetic diversity in agro-ecosystems to over 100 billion to extend the network of protected areas.
How to finance protected areas?
In 2003, during the International Union for Conservation of Nature World Parks Congress in Durban (South Africa), the President of the Republic of Madagascar made an impact by declaring that his country would triple the surface of protected areas. In a country faced with recurrent political crises, extreme poverty, and urgent needs in the education and health sectors, the “Durban Declaration” could have been among the list of lost illusions.
And yet this commitment has been fulfilled! In ten years, 92 new protected areas have been created, increasing protected areas from 2.9 to 6.9 million hectares, i.e. 12% of Madagascar’s national territory, the equivalent of Ireland. But it is not enough to simply create protected areas. The operating costs need to be covered and are estimated at EUR 14m a year for Madagascar’s system of protected areas. How can this be done?
A conservation trust fund was created in Madagascar in 2005 to offset the lack and irregularity of public financing. The aim is to mobilize the large nature conservation NGOs, donors and other potential donors. This fund now has a capital of EUR 41m invested cautiously on international financial markets. France is the main contributor to the fund with EUR 17m. In 2014, the revenues generated allowed EUR 1.6m to be allocated to finance 28 protected areas covering a surface of 2.5 million hectares of dense rainforests, dryland and coastal forests, wetlands, mangroves and coral reefs.
Madagascar is not the only country to make a commitment to conserving its biodiversity by setting up a conservation trust fund and mobilizing various sources of financing. In Mauritania, the Government has decided to mobilize part of the European Union fisheries agreements to preserve the extraordinary Banc d’Arguin National Park. Belize has earmarked a specific tax on cruise passengers for its marine protected areas. Kenya mobilizes the entrance fees to its national parks (EUR 32m in 2013) to cover over 50% of their operating costs.
This commitment by public actors is important. It does, however, continue to be insufficient. It is consequently necessary to go further and explore other possible channels of financing.
What role for the private sector?
It can be a source of sustainable financing for nature conservation. For example, companies can pay for the environmental services rendered by protected ecosystems. Consequently, contracts can directly be established between users and protected areas in order to remunerate the fight against soil erosion or maintain forest cover, which have an impact on water retention and quality.
In countries that have extractive industries (mines, hydrocarbons) and, more generally, when companies have unavoidable impacts on nature (agriculture, infrastructure), offset mechanisms make it possible to reconcile economic development and biodiversity conservation. On the basis of the polluter pays principle, the promoter of an industrial or development project must implement the measures required to avoid, reduce and compensate the residual impacts that its activity has on biodiversity. It finances activities whose conservation benefits balance, or even exceed, the biodiversity losses related to the implementation of its project, ultimately ensuring that there is no net loss of biodiversity.
In Madagascar, the company Rio Tinto, as part of its Qit Madagascar Minerals (QMM) project, plans to extract ilmenite and zircon from heavy mineral sands over an area of some 6,000 hectares over the next forty years. This project, which is located in the Anosy region (South East) will lead to the loss of 1,665 hectares of coastal forests, i.e. 3.5% of the country’s current surface area (47,900 hectares), with a particularly high rate of endemism. This extremely poor region is subject to very strong pressure from populations: deforestation for slash-and-burn or “tavy” crops and for the production of charcoal remains the main factor in the destruction of natural habitats.
Rio Tinto has pledged to obtain a net positive impact on biodiversity under this project. The needs in terms of conserving endemic or threatened species and restoring ecosystems have been determined in order to ultimately avoid, mitigate or compensate the project’s negative impacts. The measures implemented allow a positive assessment to be made, according to the evaluation work conducted by Rio Tinto and its partners for over fifteen years:
- Creation of the Mandena ecological research center, which includes a nursery (20,000 endemic species have been grown and will be used for trials for ecological restoration after extraction), a seed treatment plant and a teaching center.
- Creation of conservation areas covering a total of 620 hectares (12% of the surface of the deposit), which have not been included in the mining site in order to protect the residual coastal forest, and which are included in the system of Madagascar’s protected areas.
- Creation of conservation areas outside the project area over 31,275 hectares (offset) jointly managed by QMN, the local authorities and Madagascar’s Ministry of Water and Forests.
- Large-scale trials for ecological rehabilitation and restoration methods for ecosystems in wetlands and in coastal forests.
- Reforestation program for 100 hectares a year with fast-growing species in order to supply firewood and charcoal to communities near the mines.
- Income-generating activities from natural resources for local communities (market gardening, beekeeping, ecotourism).
When the Mandena deposit is exhausted, 75% of the area will be rehabilitated using fast-growing plants, 10% will be reserved for the extension of the conservation area using natural forest restoration techniques, and the wetlands will be restored over 15% of the surface area of the deposit.
For a more effective application of good practices
For ten years now, Agence Française de Développement and the French Facility for Global Environment have supported the structuring and capitalization of several conservation trust funds in Africa. In addition, these two institutions are now planning to provide support for the implementation of offset mechanisms in four African countries (Madagascar, Mozambique, Uganda, Guinea) that are experiencing considerable growth in extractive industry projects and where there are major biodiversity conservation challenges. The introduction of offset mechanisms should facilitate the involvement of private companies in terms of conservation under a sustainable partnership with local civil society and the competent authorities. This requires developing skills and environmental equivalence techniques to measure biodiversity losses and gains, establishing legislative and regulatory frameworks for the introduction of offset mechanisms tailored to local contexts, developing legal solutions to introduce and secure offset measures, and monitoring the activities implemented by the private sector to measure their impacts.
In developing countries that chase after foreign direct investments and are seeking high economic growth rates in the short term, applying offset principles that oblige private companies to take better account of damage to ecosystems and biodiversity is a political issue. The pressure of public opinion, the gradual application of the environmental and social performance standards of the International Finance Corporation (particularly Standard n° 6, which concerns biodiversity – PS6), and of principles proposed by the platform Business and Biodiversity Offsets Program (BBOP), should bring about a wider dissemination of these good practices.
In addition to offset measures in kind, project by project, the introduction of monetary offset could be considered in order to pool the financial resources companies have to pay for the global financing of protected areas. In countries where conservation trust funds are soundly structured, the latter could act as the offset operator. However, this would amount to assigning a monetary value to biodiversity, which is certainly another area of complexity.