Getting What You Paid For

Paul J. Ferraro

Department of Economics

Andrew Young School of Policy Studies

Georgia State University

The Economics of Conservation Investments

15 July 2002

Society for Conservation Biology Meetings

Canterbury, England

• Conservation by Distraction

– Redirect capital and labor away from activities that degrade ecosystems

• agricultural intensification

• alternative employment

• Valorization of Intact Ecosystems

– Encourage commercial activities that produce ecosystem services as joint output

• eco-tourism• biodiversity

prospecting• NTFP extraction

Indirect Conservation

Pay for conservation performance directly– Host-country and

international actors make periodic, conditional payments to individuals or groups that supply services of ecological value (intact ecosystem, targeted wildlife).

Direct Conservation

Conservation Contracting in US and EU

-Conservation Reserve Program

-Wetlands Reserve Program

- Leasing of American Somoa National Park

NGO Habitat Incentive Programs

Costa Rica

Guatemala

El Salvador

Pakistan

Madagascar

Evaluative Criteria

1. Effectiveness

2. Efficiency

3. Equity

4. Flexibility

Indirect Conservation

Direct Conservation

Efficiency

Conservation payments generally

achieve a given level of ecosystem protection

at the least cost to the conservation donor

(and society).

Conrad and Ferraro 2002; Ferraro and Simpson

2002

Efficiency Example

Madagascar Rain Forest

1991-1996

• Forest Management

• Aquatic Species

Management

• Bee-keeping

(Apiculture)

Bee-keeping

ForestNectarHoney

Apiculture Profits

Protection of Forest

ICO Budget = $3.724 million for payments (+$196,000

for administration)

• Protect 80% of forest using direct payment versus 12% using indirect support of capital acquisition.

Ranomafana National Park

• Increase rural resident income 100% under direct payment versus 44% increase under indirect subsidy.

Ranomafana National Park

• < 2% of budget Rural residents

• 55% to outside overhead and Tech Asst

Adminstrative Costs

U.S. CREP < 10% administrative

Canada PCP ~25% administrative

Costa Rica ESP < 20% administrative

Final Points• Conservation payments create clear incentives and allow

practitioners to focus their efforts and achieve their objectives at the correct temporal and spatial scales. Under plausible circumstances, payments are more efficient.

• Problems associated with conservation payments are significant but no more so than the problems associated with indirect interventions.

Conclusion

Conservation payment initiatives are neither a magic bullet nor an appropriate intervention for every site.

They do, however, deserve the attention of scholars, practitioners and donors working to protect biodiversity globally.