«EUI Working Papers RSCAS 2012/23 ROBERT SCHUMAN CENTRE FOR ADVANCED STUDIES Global Governance Programme-18 MULTILEVEL GOVERNANCE OF INTERDEPENDENT ...»
Certification schemes The use of certification for products and services which are drawn from nature is perhaps the most widely used market mechanism for biodiversity conservation. The idea behind certification is to present the consumer with a choice to purchase a product at a premium price, and channel part of the revenue for conservation purposes. The benefit for the seller is improved markets access and a better price. The consumer is believed to get a better quality product, and to signal their support for the ecological option. The idea begun as an alternative to a failed inter-state governance structure in the field of forestry, and based on its relative success spread into fisheries and other areas, such as ecotourism. Literature on certification schemes is abound. For a recent volume, see for instance Gulbrandsen, (2010). Its popularity is manifested in the widespread presence of eco-labels, even competing ones (for an excellent critique of the attempt to harmonise the diversity, created through different certification procedures and standards in the case of agrodiversity, see Mutersbaugh and Klooster, 2010). The certification programmes differ in the products and areas they cover, their design and institutional structures, and the level of protection they grant, but they are jointly regarded as one of the most innovative policy designs.
Biodiversity Investment Funds The concept of ‘biodiversity investment funds’ commonly refers to funds that provide loans to small and medium-sized, sustainable enterprises, whose work contributes to conservation of biodiversity, and - strongly linked to that - local livelihoods. In insisting that the entrepreneurs share the cost of investment, rather than providing them outright with grants, these arrangements are endorsing the functioning of financial markets. All of the known cases of such funds, however, are run with some support from public or NGO funding, which suggest that these ‘investment funds’ do not share the fundamental features of collective investment undertakings, but are better described as investment vehicles. The institutions in charge of ‘biodiversity funds’ are usually located in North America or Europe, and invest in the ‘developing world’. Two illustrative examples should be sufficient to paint the picture of these schemes. A fund called EcoEnterprises was developed in 2000 by the NGO The Nature Conservancy and the Inter-American Development Bank’s Multilateral Investment Fund. The latter focuses its activities on Latin America and the Caribbean region. Another one, Verde Ventures, was created in 1998 as an investment in itself from the joint International Finance Corporation/Global Environmental Facility Small and Medium Enterprise program. Today it is managed by an NGO, Conservation International.
Apart from these strictly ‘biodiversity’ oriented funds, there is a fast expanding and intriguing world of ‘sustainable’ or ‘ethical’ investment, composed of a variety of financial instruments, and encompassing even more diverse sectors which are conceived as ‘sustainable’. The extent to which these take into account, or are even motivate by, biodiversity considerations specifically, is poorly understood. A recent, excellent study in the field is by Benjamin Richardson, (2008). However, it does not look at the specific role of biodiversity considerations in ethical investments.
(Business) biodiversity offsets Built on the US-pioneered wetland banking, 28 biodiversity offsets are schemes that provide businesses with a possibility to make up for the damage to biodiversity which they have caused in the phase of developing their investment, or core-business projects. The underlying assumption of the scheme is that offsetting comes at the end of the so-called ‘mitigation-hierarchy’, i.e. after all measures for prevention and minimisation of damage have been accomplished (Ten Kate et al., 2004). Only when no further measures are possible on-site, offsetting should be pursued, and must be in kind. The goal of offsetting is at least ‘no net loss’ - compensation of the damage business is responsible for -, or even, taking it a step further, ‘positive net loss’ or ‘net gain’ - compensation that goes beyond ‘no net loss,’ by not only mitigating the impact, but also financing and providing for a completion of projects with an ecological value which is higher than the ones they are responsible for.
In view of the ambition of the concept, and the level of commitment required of the actors involved in an offsetting activity, it may be surprising to learn that business offsetting is required by law in around thirty countries around the world (Parker and Cranford, 2010). But legal obligation is only one source of commitment that companies undertake, and voluntary projects are at least just as common.
Participating companies are mostly those that are involved in extractive industries, or businesses with a high impact on biodiversity and local livelihoods. They mainly seek to secure a positive image for themselves, and a “social license to operate” (Gunningham et al., 2004), but also an improved access to capital, and a first-comer advantage in case these become regulatory requirements in the future. On the international level, the activity is largely coordinated by the Business and Biodiversity Offsets Programme (BBOP). BBOP was established by two NGOs, but now has its own secretariat, based in The wetland mitigation banking in the US is based on a legal requirement for all project developers to offset their residual impacts on wetlands by buying wetland credits from others. For literature suggestions, see in particular Salzman and Ruhl (2000 ;2006); Ruhl and Gregg, (2001).
International incentive mechanisms for conservation of biodiversity and ecosystem services Washington. BBOP implements the projects, shares and promotes relevant management practices, which are valuable contributions to the study of this complex scheme. An important element for its evaluation is the existence of appropriate standards against which to measure the success or failure in delivering results for biodiversity and the communities involved (Ten Kate et al., 2004).
Payments for ecosystem services The market approach of payments for ecosystem services (PES) is based on the principle that those who help to provide environmental services should be paid, while beneficiaries of environmental services should pay for the benefits received. As the current economic system generally rewards those uses of land that do not necessarily preserve the flow of ecosystem services, PES are designed to provide incentives for land users or land owners to manage the land in such a way as to provide broader public benefits.
PES schemes have existed for a while in the national contexts (a prominent example is that of New York city paying for conservation of land where its water comes from, as a means of ‘paying for the service’ of watershed and water purification, see Daily and Ellison, 2002, chap.3; McManis, 2007, chap.7), but the only international mechanism for the payment for ecosystem services so far is the REDD mechanism (Reduced Emissions from Deforestation and Forest Degradation), which originated in the UNFCCC regime around 2005. The idea behind it is that preserving forests, in particular those in tropical countries, saves emissions, and that countries which forgo revenues from logging should be compensated for the benefit they provide to the global community. It is predicted that in the near future REDD will become a fully-fledged mechanism of the UNFCCC regime, similar to the Clean Development Mechanism, by which the countries will be able to fulfil their obligations.
One of the important issues in the complex, highly technical, and controversial, negotiations about REDD is the extent to which REDD activities will actually safeguard biodiversity. In that context, REDD presents itself as both an unprecedented opportunity for the forest regime and a potential threat.
One of the real concerns is that the zeal to reduce carbon emissions will overshadow a number of other ecosystem services. While intergovernmental negotiations are ongoing, a number of projects are being run in the meantime on a voluntary carbon market and through bilateral arrangements. To safeguard the interests of biodiversity and communities, these projects use voluntary standards, the methodologies for which were developed by expert coalitions, exclusively outside the UNFCCC.29 The compliance with these voluntary standards is the main assurance for the positive impact of REDD+ projects on biodiversity.
Efforts to secure the REDD scheme a credible future have failed to rebut harsh critiques. They are concerned with carbon policies undermining many other policy goals, including respect for local communities and preserving the integrity of nature. The case of REDD, in particular on careful examination, brings to mind of how dividing ‘environmental’ measures can be. Major challenges in designing an international PES will relate to the process of their design, the criteria and standards for measuring the services, the scale at which they are managed, the possibility of 'bundling' different ecosystem services together, and many other seemingly technical issues. Unavoidably, the real challenge lies in reconciling different conceptions of fairness, and in defining what ‘environmental protection’ - including ‘conserving biodiversity’ - is really about.
The Voluntary Carbon Standard (VCS) is a standard used to account greenhouse gases. In addition to that, many REDD projects undergo a separate certification process set by the Climate, Community and Biodiversity Project Design Standards (CCB) that attest of their compliance with additional environmental and social criteria beyond reducing emissions, such as respect for biodiversity and rights of local people (Harvey et al., 2010, p.54). See generally ‘Climate, Community and Biodiversity Project Design Standards’, 2005, on the CCB standards, ‘Climate, Community and Biodiversity Projects’ (2005), for a database of projects undergoing auditing.
Attempts at a “Green Development Mechanism” The international experience with flexible mechanisms in the context of carbon markets, in particular its ability to attract the private sector, has had direct consequences for the biodiversity regime. In 2006, the United Nations Environment Programme (UNEP) and the International Union for Conservation of Nature (IUCN), in cooperation with the Secretariat of the CBD, begun looking into the options for an ‘international payments for ecosystem services’ (IPBES) mechanism with a special emphasis on biodiversity, and a broad range of ecosystem services. 30 In these efforts, Green Development Initiative has asserted itself as a coordinator in the field. It intends to establish a standard and a certification process for land management, which would be based on the rules as provided by the CBD. Its aim is to mobilise the private sector financing of biodiversity “through an international, nonODA, business-focused, voluntary, transparent, and politically supported approach.” (‘Green Development Initiative’, 2011). The high complexity of the mechanism accounts for this initiative still being at an early stage, but it seems that the direction is one of biodiversity banking, presented briefly above.
Integration, Mainstreaming Biodiversity Apart from creating separate incentive mechanisms, the CBD - as well as other avenues - have employed other strategies to incentivise biodiversity protection. In these cases, advantage is taken of existing methods of influencing decisions in order to promote goals of conservation. In this section, I outline some legal and policy tools and processes, which have accommodated biodiversity considerations. Obviously, the strategies presented here act as incentives for biodiversity conservation only to the extent that these unbinding, ‘soft,’ methods are used. Nevertheless, these are not necessarily marginal ways of making environmental commitments. Environmental law literature has dealt with the scope and effectiveness of the tools mostly as individual phenomena. I frame them within the debate on incentives as a way of suggesting that some of these successful strategies may work as a new impetus for biodiversity conservation if they are adjusted so as to accommodate biodiversity-related provisions.
Codes of conduct and guidelines Codes of conduct are perhaps most representative of the new modes of governing global affairs, and their proliferation and elaboration have also had impact on biodiversity. The codes are being developed for individual production sectors and industries. Particularly targeted are the sectors of extractive industries, tourism, forestry, finance, and agriculture. The development of guidance has fallen mostly to the large environmental organisations – the CBD, IUCN, and UNEP –, but also international organisations outside the environmental field have been involved – such as the UNWTO(2010), in the case of guidelines for tourism; or the International Tropical Timber Organisation (ITTO and IUCN, 2009), in the case of tropical forest guidelines –, as well as NGOs and industry groups – International Council on Mining and Metals (ICMM, 2011), in the case of mining guidelines. In particular the IUCN, a hybrid organisation of governments and other NGOs, seems to enjoy the confidence and credibility of the private sector, and thereby the capacity to initiate and draft guidance for specific production sectors or elaborating the desirable conduct in certain policy fields including those in sensitive sectors. Consistently, businesses themselves are involved in the preparation of relevant guidelines. Guidelines are usually presented as an attractive option for forwardlooking businesses. Besides sector-specific guidelines, the CBD and the IUCN have drafted guidelines that provide more precise substantive framework on ways of managing biodiversity in general See UNEP/CBD decisions UNEP/CBD/VIII/26, paragraph 6 (c); UNEP/CBD/VI/15 Annex, paragraph 37, and UNEP/CBD/VIII/13, paragraph 4.