Assessing the role of economic instruments in a policy mix for biodiversity conservation and ecosystem services provision: a review of some methodological challenges

Barton, D.N. and Rusch, G. and May, P. and Ring, I. and Unnerstall, H. and Santos, R. and Antunes, P. and Brouwer, R. and Grieg-Gran, M. and Similä, J. and Primmer, E. and Romeiro, A. and DeClerck, F. and Ibrahim, M. (2009): Assessing the role of economic instruments in a policy mix for biodiversity conservation and ecosystem services provision: a review of some methodological challenges.

Abstract

In this paper we review a number of methodological challenges of evaluating and designing economic instruments aimed at biodiversity conservation and ecosystem services provision in the context of an existing policy mix. In the context of the EU 2010 goal of halting biodiversity loss, researchers have been called upon to evaluate the role of economic instruments for cost-effective decision-making, as well as non-market methods to assess their benefits. We argue that cost-effectiveness analysis (CEA) and non-market valuation (NMV) methods are necessary, but not sufficient, approaches to assessing the role of economic instruments in a policy mix. We review the principles of “social-ecological-systems”(SES) (Ostrom et al. 2007) and discuss how SES can complement economic cost and benefit assessment methods, in particular in policy design research. To illustrate our conceptual comparison of assessment methodologies, we look at two examples of economic instruments at different government levels – payments for ecosystem services (PES) at farm level and ecological fiscal transfers to municipal /county government. What conceptual problems are introduced when evaluating policies in an instrument mix? How can the SES framework complement CEA and NMV in policy assessment and design? We draw on experiences from Brazil and Costa Rica to exemplify these questions. We conclude with some research questions.

• Item Type: MPRA Paper
• Language: English
• Keywords: biodiversity, ecosystem services, policy mix, social ecological systems, payments for environmental services, ecological fiscal transfers
• Subjects: Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q2 - Renewable Resources and Conservation > Q23 - Forestry; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q57 - Ecological Economics: Ecosystem Services ; Biodiversity Conservation ; Bioeconomics ; Industrial Ecology; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q58 - Government Policy

References

Angelsen, A. (2007) Forest cover in space and time: combining von Thünen and the forest transition. World Bank Policy Research Working Paper 4117. World Bank, Washington D.C.

Anonymous. 2005. Joint management plan for Trillemarka – Rollag Østfjell. Management plan draft 11.03.2005 (in Norwegian). Austin M.P. (1991). Vegetation theory in relation to cost-efficient surveys. Nature Conservation: Cost effective biological surveys and data analysis. Margules C.R. & Austin M.P., CSIRO, Australia, pp. 17-22. Austin M.P. & Margules C.R. (1986). Assessing representativeness. . Wildlife Conservation Evaluation. Usher M.B., Chapman & Hall, London, pp. 47-52.

Arriagada, R.A. (2008) Private provision of public goods: applying matching methods to evaluate payments for ecosystem services in Costa Rica. Ph.D. Dissertation. Graduate Faculty of North Carolina State University.

Balmford, A., Rodrigues, A.S.L., Walpole, M., ten Brink, P., Kettunen, M., Braat, L. & de Groot, R. (2008). The Economics of Biodiversity and Ecosystems: Scoping the Science. Cambridge, UK: European Commission (contract: ENV/070307/2007/486089/ETU/B2)

Barbier, E.B., J.C. Burgess, A. Grainger (2009) ‘The forest transition: Towards a more comprehensive theoretical framework’. Land Use Policy. doi:10.1016/j.landusepol.2009.02.001

Barton D.N., T. Saloranta, S.J. Moe, H.O. Eggestad, and S. Kuikka, (2008) Bayesian belief networks as a meta-modelling tool in integrated river basin management — Pros and cons in evaluating nutrient abatement decisions under uncertainty in a Norwegian river basin. Ecological Economics 66, 91–104.

Baynes, J., J. Herbohn, I. Russell and C. Smith (2008) Bringing agroforestry technology to farmers in the Philippines: identifying constraints to success using systems modelling. School of Natural and Rural Systems Management, The University of Queensland, Gatton, 4343 Australia.

Belton V. & Stewart T.J. (2002). Multiple criteria decision analysis. An integrated approach. Kluwer Academic Publishers, Dordrecht.

Bernardes, A.T., 1999. Some mechanisms for biodiversity protection in Brazil, with emphasis on their application in the State of Minas Gerais. World Bank, Washington, D.C.

Birner, R., Wittmer, H. (2004): On the 'efficient boundaries of the state': the contribution of transaction-costs economics to the analysis of decentralization and devolution in natural resource management Environment & Planning C 22 (5), 667-685.

Braat, L., ten Brink, P. (eds.) (2008) The Cost of Policy Inaction: The case of not meeting the 2010 biodiversity target. Final report. Wageningen, Brussels, May 2008: European Commission, (contract: ENV.G.1/ETU/2007/0044)

Bräuer, I. R. Müssner, K. Marsden, F. Oosterhuis, M. Rayment, C. Miller, A. Dokova (2006) The Use of Market Incentives to Preserve Biodiversity. Final Report. Ecologic. A project under framework contract for economic analysis. ENV.G.1/FRA/2004/0081

Brooks, J.S. M.A. Franzen, C, M. Holmes, M.N. Grote and M. Borgerhoff Mulder (2006). Testing Hypotheses for the Success of Different Conservation Strategies. Conservation Biology vol. 20, No.5, 1528-1538.

Calvo-Alvarado, J. B. McLennan, A. Sánchez-Azofeifa, T. Garvin (2008) Deforestation and forest restoration in Guanacaste, Costa Rica: putting conservation policies in context. Forest Ecology and Management. Doi:10.1016/j.foreco.2008.10.035.

Clark, J.A. (2005) Why environmental scientists are becoming Bayesians. Ecology Letters, (2005) 8: 2–14

Crawford, S.E.S. and E. Ostrom ( 1995). The grammar of institutions. American Political Science Review 89(3): 582-600

Cumming GS, Cumming DHM, Redman CL (2006) Scale Mismatches in Social-Ecological Systems: Causes,Consequences, and Solutions. Ecology and Society 11(1): 14.

Endres A (1985) Umwelt- und Ressourcenökonomie. Wissenschaftliche Buchgesellschaft, Darmstadt.

Engel S. S. Pagiola and S. Wunder ( 2008) Designing payments for environmental services in theory and practice: an overview of the issues. Ecological Economics 65 (2008) , 668-674

EC and BMU (European Commission and German Ministry for the Environment) (2008) TEEB – The Economics of Ecosystems and Biodiversity: An interim report. European Communities, Brussels. Available online at: http://ec.europa.eu/environment/nature/biodiversity/economics/pdf/teeb_report.pdf

Farmani R., H. J. Henriksen, D. Savic (2009) An evolutionary Bayesian belief network methodology for optimum management of groundwater contamination. Environmental Modelling & Software 24 (2009) 303–310.

Field, B.C. ((1994) Environmental economics. McGraw-Hill, New York.

Fisher, B., R.K. Turner, P. Morling (2009) Defining and classifying ecosystem services for decision-making. Ecological Economics 68 (2009): 643-653.

GanitXL . http://centres.exeter.ac.uk/cws/technology/20-genetic-algorithms/76-ganetxl.

C. García-Fernández, M. Ruíz-Pérez, S. Wunder (2008) ‘Is multiple-use forest management widely implementable in the tropics? ‘ Forest Ecology and Management 256: 1468-1476

Grieg-Gran, M., 2000. Fiscal Incentives for Biodiversity Conservation: The ICMS Ecológico in Brazil. Discussion Paper 00-01, International Institute for Environment and Development, London.

Harvey, C.A., O. Komar, R. Chazdon, B.G. Ferguson, B. Finegan, D.M. Griffith, M. Martínez-Ramos, H. Morales, R. Nigh, L- Soto-Pinto, M. van Breugel and M. Wishnie (2008). Integrating agricultural landscapes with biodiversity conservation in the Mesoamerican Hotspot. Conservation Biology, Vol. 22 (1):8-15.

Horton, B., Colarullo, G., Bateman, I.J., Peres, C.A., 2003. Evaluating non-user willingness to pay for a large-scale conservation programme in Amazonia: a UK/Italian contingent valuation study. Environmental Conservation 30 (2), 139–146.

Hugin Expert software: http://www.hugin.com/

Janssen, R. van Herwjinen and E.Beinat (2003) DEFINITE case studies and user manual. IVM. Vrije Universiteit

Joshi, L., G.Wibawa, F.L. Sinclair (2001) Local ecological knowledge and socio-economic factors influencing farmers’ management decisions in jungle rubber agroforestry systems in Jambi, Indonesia. DFID Project R7264 Forestry Research Programme. October 2001

Kjærulff, U. B. and Madsen, A. L. (2008). Bayesian networks and influence diagrams: A Guide to Construction and Analysis. Series: Information Science and Statistics. Springer-Verlag.

Knight, A.T., R.M. Cowling, and B.M. Campbell (2006) An Operational Model for Implementating Connservation Action. Conservation Biology Volume 20, No.2, 408-419.

Landell-Mills, N., Porras, I., 2002. Silver bullet or fools' gold? A global review of markets for forest environmental services and their impact on the poor. IIED, London.

Langpap C., J. Wu (2004). Voluntary conservation of endangered species: when does no regulatory assurance mean no conservation? Journal of Environmental Economics and Management. 47: 435–45.

Loureiro, W., 1998. Incentivos Econômicos para Conservação da Biodiversidade no Brasil: ICMS Ecológico. IAP, Curitiba.

Loureiro, W., 2002. Contribuição do ICMS Ecológico à conservação da biodiversidade no Estado do Paraná. Tese Doutorado, Universidade Federal do Paraná, Curitiba.

Köllner, T., Schelske, O., Seidl, I., 2002. Integrating biodiversity into intergovernmental fiscal transfers based on cantonal benchmarking: a Swiss case study. Basic and Applied Ecology 3, 381–391.

Loreau, M., J. A. Downing, M. Emmerson, A. Gonzalez, J. Hughes, P. Inchausti, J. Joshi, J. Norberg, and O. Sala. 2002. A new look at the relationship between diversity and stability. Pages 294 in M. Loreau, S. Naeem, and P. Inchausti, editors. Biodiversity and Ecosystem Functioning: Synthesis and Perspectives. Oxford University Press, Oxford.

Mather, A.S., 1990. Global Forest Resources. Bellhaven Press, London.

May, P.H., Veiga Neto, F., Denardin, V., Loureiro, W., 2002. Using fiscal instruments to encourage conservation: Municipal responses to the ‘ecological’ value-added tax in Paraná and Minas Gerais, Brazil. In: Pagiola, S., Bishop, J., Landell-Mills, N. (Eds.), Selling Forest Environmental Services: Market-based Mechanisms for Conservation and Development. Earthscan, London, pp. 173–199.

Mertens, B. and E Lambin (1997) Spatial modelling of deforestation in southern Cameroon: spatial disaggregation of diverse deforestation processes. Applied Geography 17(2): 143-162.

MEA (2005) Ecosystems and Human Well‐Being: Policy Responses Findings of the Responses Working Group. Millennium Ecosystem Assessment Vol.3, Island Press.

Miranda, M. , C. Diepering, P Glasbergen (2006) Costa Rican environmental services payments: the use of a financial instrument in participatory forest management. Environmental Management 38: 562-571.

Moffett A. & Sarkar S. (2005). Incorporating multiple criteria into the design of conservation area networks: a minireview with recommendations. Diversity and Distributions 12: 125-137.

Mullan, K. and Kontoleon, A. (2008). Benefits and costs of forest biodiversity: Economic theory and case study evidence. Final report, July 2008.

Munda, G. (2008). Social multi-criteria evaluation for a sustainable economy. Springer. pp.210 Ostrom , E. (1990). Governing the Commons. The Evolutin of Institutions for Collective Action. Political Economy of Institutions and Decisions. Cambridge University Press.

OECD (1997) Evaluating economic instruments for environmental policy. OECD, Paris.

OECD (2007) Instrument Mixes for Environmental Policy. OECD, Paris.

Ostrom, E. (2007) A diagnostic approach for going beyond panaceas. PNAS, September 25 2007, vol.104, no.39, pp. 15181-15187.

Padgee A. K. Yeon-Su, P.J. Daugherty ( 2006) What makes community forest management successful: a meta-study from community forests throughout the World. Society and Natural Resource, 19:33-52.

Pagiola, S. , P. Agostini, J. Gobbi, C. de Haan, M. Ibrahim, E. Murgeitio, E. Ramírez, M. Rosales, J.P. Ruíz(2004) Paying for biodiversity conservation services in agricultural landscapes. Environment Department Paper No. 96. World Bank.

Pagiola, S. (2008) Payments for environmental services in Costa Rica. Ecological Economics 65 (2008): 712-724.

Pagiola, S. and B. Bosquet (2009) Estimating the costs of REDD at the country level. MPRA Paper No. 13726, posted 02. March 2009.

Pagiola, S. A. Arcenas, G. Platais (2005) Can payments for environmental services help reduce poverty? An exploration of the issues and the evidence to date from Latin America. World Development Vol. 33, No.2: 237-253.

Perrings C, Gadgil M (2003) Conserving Biodiversity: Reconciling Local and Global Public Benefits. In Kaul I, Conceição P, Le Goulven K, Mendoza RU (eds): Providing Global Public Goods: Managing Globalization,Oxford University Press, Oxford, pp. 532-555.

Polasky S., Nelson E., Lonsdorf E., Fackler P. & Starfield A. (2005). Conserving species in a working landscape: land use with biological and economic-objectives (vol 15, pg 1387, 2005). Ecological Applications 15: 2209-2209.

Porras, I, M. Grieg-Gran, N. Neves (forthcoming). All that glitters… A review of payments for watershed services in developing countries. IIED

Prates, J. C. A. (2008). As Finanças Locais e a promoção da Conservação da Natureza, Dissertação apresentada na Faculdade de Ciências e Tecnologia da Universidade Nova de Lisboa para obtenção do grau de Mestre em Engenharia do Ambiente, perfil Gestão e Sistemas Ambientais, Lisbon.

Renn. O. (2008) Risk Governance. Earthscan. Pp 445.

Ring, I. (2002): Ecological public functions and fiscal equalisation at the local level in Germany. Ecological Economics 42, 415-427

Ring, I. (2008a): Biodiversity governance: Adjusting local costs and global benefits. In: Sikor, T. (Ed.): Public and Private in Natural Resource Governance: A False Dichotomy? Earthscan, London, 107-126

Ring, I. (2008b): Integrating local ecological services into intergovernmental fiscal transfers: the case of the ecological ICMS in Brazil. Land use policy 25(4), 485-497

Ring, I. (2008c): Compensating municipalities for protected areas. Fiscal transfers for biodiversity conservation in Saxony, Germany. GAIA 17/S1, 143-151

Robalino J. , A Pfaff, G.A. Sanchez-Azofeifa, F. Alpizar, C. León, C.M. Rodríguez (2008) Deforestation Impacts of Environmental Services Payments. Costa Rica’s PSA Program 2000-2005. Environment for Development Discussion Paper Series. August 2008 EfD DP 08-24.

Sanchez-Azofeifa, A. , A. Pfaff, J. Robalino and J. Boomhower (2007) Costa Rican payment for environmental services programme: intention, implementation and impact. Conservation Biology 21(5): 1165-73

Sierra, R. and E. Russman (2006) On the efficiency of the environmental service payments: a forest conservation assessment in the Osa Peninsula, Costa Rica. Ecological Economics 59: 131-41

Similä J., Thum R., Varjopuro R. Ring I. (2006) Protected species in conflict with fisheries: the interplay between European and national regulation. Journal of European Environmental Planning and Law 5: 432-455.

Spash, C.( 2008) How much is that ecosystem in the window? The one with the bio-diverse trail. Environmental Values 17(2008):259-284.

Sterner, T. (2003) Policy Instruments for Environmental and Natural Resource Management. Resources for the Future.

Vatn , A. (2005) Institutions and the Environment. Edward Elgar.

Vatn, A. (2008) Payments for Environmental Services: An Institutional Analysis. Paper presented at the 10th biennial conference of ISEE ’Applying Ecological Economics for Social and Environmental Sustainability’, Nairobi, 7-11 August. 2008.

Wätzold, F., Schwerdtner, K. (2005): Why be wasteful when preserving a valuable resource? A review article on the cost-effectiveness of European biodiversity conservation policy. Biological Conservation 123(3): 327-338

WinBUGS (Bayesian inference Using Gibbs Sampling) http://www.mrc-bsu.cam.ac.uk/bugs/

Wolf, S.A. and E. Primmer (2006) Between incentives and action: A Pilot Study of Biodiversity Conservation Competencies for Multifunctional Forest Management in Finland. Society and Natural Resources. 19(9): 845-861.

Wunder (2003) Oil wealth and the fate of the forest. A comparative study of eight tropical developing countries. Routledge, London.

Wunder , S. (2007) Efficiency of payments for environmental services. Conservation Biology Volume 21, No.1 February 2007.

Wunder, S. (2008) Necessary conditions for ecosystem service payments. Conference Paper. Economics and Conservation in the Tropics: A Strategic Dialogue, January 31- February 1, 2008.

Wunder, S., Engel, S., and Pagiola, S. (2008). Taking stock: A comparative analysis of payments for environmental services programs in developed and developing countries. Ecological Economics, 65: 834-852.