[ ] socio-economic aspects of biodiversity offsets joshua bishop iucn-the world conservation union...
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Socio-economic aspects of biodiversity offsets
Joshua Bishop
IUCN-The World Conservation Union
29 September 2006
Pretoria, RSA
[ http://www.iucn.org ]
Biodiversity offsets andsustainable development
• Ecological sustainability– “no net loss” → “net positive impact”
• Economic efficiency– cost effectiveness → sustainable production
• Social equity– no harm to the poor → poverty reduction
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Improving the socio-economic sustainability of biodiversity offsets
1. Information and analysis
2. Decision-making processes
3. Financing mechanisms
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1. Socio-economic information and analysis for biodiversity offsets
• Institutional context– Demographic trends (e.g. migration)– Regulatory framework (offset requirements; rights to trade offsets)– Resource ownership, access, use and control– Direct and underlying threats to biodiversity– Capacity of NGOs, CBOs, government, etc
• Assessment of values– Net benefits of resource uses (= opportunity costs of an offset)– Financial costs of creating an offset (land purchase, environmental enhancement,
validation, management in perpetuity)– Non-market benefits of benchmark, impact and offset sites
• Social impact analysis– Costs and benefits of impact AND offset to vulnerable groups (e.g. landless and
female-headed households, children)
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2. Decision making processesfor biodiversity offsets
• Participation– Consultation– Local involvement– Local initiation and control– Distant stakeholders (regional, national, global)
• Transparency– Who provides what information when, how and to whom?
• Credibility– What institutions are trusted to assess impacts, to design,
validate and implement sustainable offsets?
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3. Financing mechanismsfor biodiversity offsets
• Sufficiency– Long-term funding (duration of impact)
• Autonomy– Independence from expropriation (trust funds)
• Risk management– Insuring against failure or non-performance (over-
compensation, performance bonds)
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Biodiversity and human well-being
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Assessing biodiversity values
• Qualitative methods– Expert opinion– Focus groups– Participatory assessment
• Quantitative methods– Market values (surveys, cost models)– Non-market values (revealed preference, stated
preference, dose-response function)– Benefits transfer (“fit” data from elsewhere)– Macroeconomic models (for indirect impacts)
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Participatory assessment• Wealth ranking• Calendars of activities
(livelihood and forestry)• Map of forest product flows• Ranking and scoring of
livelihood benefits• Ranking and scoring of forest
benefits• Discussion of costs or
disadvantages of conservation• Key informant calculations• Barter game to establish values
of non-marketed products• PRA sustainability of stock and
product flows exercise• Feedback by research team
Source: Richards M., Kanel K., Maharjan M. & Davies J. 1999. Towards Participatory Economic Analysis By Forest User Groups In Nepal. Overseas Development Institute in collaboration with the Nepal-UK Community Forestry Project (June).
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Market Valuation Techniques
Market Valuation Techniques
Non-market Valuation Techniques
Non-market Valuation Techniques
Physical Linkages Behavioural Linkages
Revealed PreferenceDose-response Functions
Change in Outputs (productivity)
Change in Outputs (productivity)
Change in Inputs (resource costs)
Change in Inputs (resource costs)
Cost-of-illnessCost-of-illness
Replacement CostReplacement Cost Preventative ExpenditurePreventative Expenditure
Travel Cost MethodTravel Cost Method
Hedonic Property Analysis
Hedonic Property Analysis
Hedonic Wage-risk Analysis
Hedonic Wage-risk Analysis
Contingent Valuation Method
Contingent Valuation Method
Stated Preference
Benefit TransferBenefit Transfer
Conjoint Analysis (choice models)
Conjoint Analysis (choice models)
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Costs and benefits of reforestation at selected sites in Coastal Croatia
-2,000
-1,000
0
1,000
2,000
3,000
4,000
Jase
nje-
Bis
ernj
akov
ica
Mus
apst
an-
Zem
unik
Nov
igra
d
Per
uca
Tro
gir
Sla
no
Pod
imoc
Rud
ine
Ost
rikov
ac
Brs
ecin
e
Pet
rinj
Srd
j
Ave
rage
Costs Landscape Hunting Wood production Erosion protection
NPV ($/ha)IRR (%)
86019
-300 1,37018
-1,190 1,75025
1,42023
-390 -450 1,44022
1,38023
2,79034
79017
Cos
ts a
nd b
enef
its o
f re
fore
stat
ion
($/h
a)
World Bank, 1996. “Croatia Coastal Forest Reconstruction and Protection Project: Staff Appraisal Report.” Report No.15518-HR. Washington: World Bank
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Atlantic forests of E. Paraguay Adapted from: Naidoo R, Ricketts TH (2006) Mapping the Economic Costs and Benefits of Conservation. PLoS Biol 4(11): e360
Ecosystem services valued:
• Sustainable bushmeat harvest
• Sustainable timber harvest
• Bioprospecting
Benefit-cost ratios of corridor options:
1) 0.22
2) 0.27
3) 0.76
Indigenous Reserve
B>C ($/ha)
B<C ($/ha)
Agricultural uses:
• smallholder agriculture (12%)
• large-scale cattle ranching (14%)
• soybean production (2.4%)
Mbaracayu Forest Biosphere Reserve
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Social distribution of biodiversity benefits (impact and offset sites)
Extraction of forest
products
Downstream water
services
Biodiversity conservation
Recreation
Benefits to… Local communities
Global community
Rest of country
Local communities
Global community
Rest of country
Ben
efits
from
the
eco
syst
em
(U
S$
or
US
$/h
a)
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Distribution of the costs and benefits of Madagascar’s protected areas
-150
-100
-50
0
50
100
150
200
Total Local population Water users Tourism sector ANGAP
To
tal b
enef
its
ove
r 10
yea
rs (
US
$ m
illio
n) Watershed protection Ecotourism
International biodiversity payments NTFP foregoneFuelwood foregone Agricultural revenue foregonePA management costs
Carret, J.-C., and D. Loyer. 2003. “Comment financer durablement le réseau d’aires protégées terrestres á Madagascar? Apport de l’analyse économique.” Paris: AFD and World Bank
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Questions for discussion
• What are the roles of different stakeholders to ensure the sustainability of offsets?
• How to ensure equitable decision-making and sharing of costs and benefits over the very long-term?
• How to avoid ‘leakage’ i.e. the transfer of damaging activities to other locations?
• How to quantify the indirect impacts of a project and offset (e.g. migration, product use)?
• Should developers be liable for indirect impacts, and to what extent?