Financial support for biodiversity protection in developing countries -

Susanne Menzel • Institute of Agricultural Economics • University of Göttingen

Graduiertenkolleg ‘Valuation and Conservation of Biodiversity‘

Financial support for biodiversity protection in developing countries -

Does the CBD mechanism lead to an appropriate level of biodiversity

protection?



Contents

• Introduction

• „Adequate“ Provision of Biodiversity

• Financial Resources, Costs and Negotiations Efficiency?

• Case study – CV

• Conclusion



Introduction I -Biodiversity as Global Public Good - Externalities

€

MC

MB [LDC]

Xopt

MB [global]

XQuantity of protected biodiversity

Xldc

Introdution



Introduction II – Idea of CBD

• CBD Article 20(2) “... new and additional financial resources....“

• Article 21(1):“... The contributions shall be such as to take into account the need for predictability, adequacy and timely flow ...“

Introduction



Adequate = Efficient Provision of Biodiversity

Provision by GEF = efficient?

€

MC

MB [LDC]

Xopt

MB [global]

XQuantity of biodiversity protection

Xldc ?

Adequate = Efficient



Efficient Level of Financial Support?

• Resources & Costs

• Negotiations on replenishment of GEF-Fund

Question



Financial Resources of GEF-Fund for Biodiversity Protection

Source Period Spending Annual spending

GEF 2002b 1992-2002

US$ 1.4 billion US$ 140 million

GEF (gefweb.org)

1991-1999

US$ 991 million (grants) plus US$ 1.5 million (co financing)

US$ 310 million

Financial Resources & Costs



Subject of protection

Annual costs

(US$ million)

Author

Traditional protection of tropical rain forests

170 Reid & Miller (1989)

2000 species (500 individuals per species)


Comprehensive global conservation programme

300,000 James et al. (1999)

Global network of protected areas

27,500 James et al. (1999)

1.4% of the land surface of the earth

500 Myers et al. (2000)

Costs of (Global) Biodiversity Protection



Acceptance Costs Efficiency

XQuantity of protected biodiversity

€

MC (private & current)

MC (social)

MB (glb=social)

Xover

A

Xglb

C

B

Xpot

E

D

Resources & Costs



• Every four years replenishment of GEF-Fund

• Representatives of donor countries negotiate

• National contributions (should reflect) economic power of nation*

• But…….

Negotiations on Replenishment - Facts

Negotiations



Nation Contribution in US$ million

GEF/GDP (%)

Sweden 72 0.03

Denmark 36 0.023

UK 190 0.012

Germany 264 0.012

Japan 423 0.011

France 163 0.011

… …. ….

USA 500 0.0023

Spain 19 0.0023

front-runner

leader

taillights

Contributions of Nations to the GEF-3 (extract)Negotiations



Characterisation of Conditions for Negotiations

• Reminder: Good in question global external effects

Need for global collective action • CBD global collective action• However: agents are representatives of

nations

Negotiations



Public Choice Theory Assumptions

• Governmental agents try to maximise their personal benefits

• Personal benefit = reelection

Negotiations



View of National Agents on Financing Biodiversity Protection in LDC

• Aim: Solution of problems• Biodiversity not easy to protect• Important short term problems at home

(easier to solve than loss of biodiversity)

• Each nation little influence overall level of biodiversity protection

• Success difficult to communicate• Good will be provided anyway

Negotiations



Activity of Nations

• Spend a lot of money on national short term interests

• Spend hardly any money on global longterm interests

• In other words: Free-rider

• Why contribute to GEF at all?– International reputation– Not to lose international credibility

Negotiations



Undersupply Thesis

• Financial resources smaller than (possible) benefits

• Indicators:– Costs >>> financial resources

– Hardly any incentives for protection for national agents

Test of thesis Benefits of biodiversity protection for developed countries? CV-study

Undersupply Thesis



CV-Study: Benefits of Biodiv Protection

• How to define „Biodiversity“– Genes?– Surface area?– Species?!

• Subject of valuation:„Protection of half of threatened species (animals

and plants) who would become extinct if nothing further would be done in the next ten years“

CV-Study



(External) Benefit of Additional Biodiversity Protection

MC

MB [LDC]

MB [global]

Xldc

MB [MDC]

X Quantity of protected biodiversity

25.000 species

CV-Study



• Basic population: residents in Germany (older than 18 years)

• Telephone inquiry

• WTP question format: dichotomous choice

• Payment vehicle: tax increase

• Frequency & duration: monthly for ten years

Characteristics of Case Study

CV-Study



Case Study – Results

• n = 1017

• 92% agree with payments: more developed countries less developed countries

• 62% ‚Yes‘ to WTP-Question

CV-study



WTP Result & Discussion I

• Mean of sample: approx. 22 Euros per capita per month

• But: 59.6% of contacted people refused to participate or dropped out

• If they would pay 0 Euros 9 Euros (mean)

CV-Study



WTP vs. GEF contributions Discussion II

• Overall benefit depends on size of basic population– Individuals (9 €) (66.4 million) Euros 7

billion– or households (9 €) (34,8 million) Euros 3.8

billion

CV-Study



WTP – Annual Benefit

MC

MB [LDC]

MB [global]

Xldc

MB [MDC]

X Quantity of protected biodiversity

25.000 species

3.8 – 7 billion Euros

(annual)



Results of Related Studies

• Hanley, Spash & Walker (1995): WTP Britain contribute to (GEF)*~ 47-62 £ annual

• Kramer & Mercer (1997): WTP for additional 5% of tropical rain forest 21-35 US-$ (one-time)

• Horton, Colarullo, Bateman & Peres (2002): – Subjects: people from Italy and UK– Good: additional rain forest in Brasil 5% (20%)– WTP: 30 £ (39 £ ) annual WTP = 600 million in Italy and in UK



Overall Discussion I

• German actual expenditures for Global Environmental Facility US$ 60 million < 1 Euro per year per capita

• WTP >> 1 Euro per year per capita

• Study result: undersupply thesis: approved



Summary & Overall Discussion II

• Developed countries emphasise need of orientation at global benefit

• Developed countries interested in cost-sharing (incremental costs)

• No comparable instrument on MDC side• CV study: GEF contributions global

benefit of protection• Efficiency considerations higher

contributions to GEF





Methode stößt mit der fragestellung an seine grenze

Aber ich weiss keine bessere

Verleich der Zahlen mit Kosten!! Geht in gleiche Rtg.



Subject of protection

Annual costs

(US$ million)

Author

Traditional protection of tropical rain forests


2000 species (500 individuals per species)


Comprehensive global conservation programme

300,000 James et al. (1999)

Rep. global network of protected areas

27,500 James et al. (1999)

1.4% of the land surface of the earth

500 Myers et al. (2000)



Explanatory Variables & Validity• self-efficacy (= belief in effect of payment) (+)• bid level (personal financial costs of contribution) (-)• responsibility (of the respondent for the protection of

species) (+) • age (-)• threat appraisal (perceived threat as consequence of loss of

biodiversity) (+)• Opinion: right of md countries to interfere in biodiversity

protection affairs of ld countries (+)• Pseudo-r2= .34 (Nagelkerkes)• Sample not representative: e.g. “education bias”



Case study – results II

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Documents

Financial support for biodiversity protection in developing countries -