Supporting country action on the CBD programme of work on protected areas

PoWPA Activity 3.1.5

Identify and remove perverse incentives and inconsistencies in sectoral policies that increase pressure on protected areas, or take action to mitigate their perverse effects. Whenever feasible, redirect these to positive incentives for conservation.

A perverse incentive is a policy or practice that encourages, either directly or indirectly, resource uses leading to the degradation of biological diversity. Hence, such policies or practices induce unsustainable behavior that reduces biodiversity, often as unanticipated side-effects as they were initially designed to attain other objectives. The CBD has recognized the need to remove policies or practices that create perverse incentives that lead to the degradation and loss of biological diversity, or to mitigate these perverse incentives, as a crucial element in national and global strategies to halt the degradation and loss of biodiversity (http://www.biodiv.org/decisions/default.aspx?m=COP-07&id=7755&lg=0). This theme is continued in the PoWPA. Addressing perverse incentives at governmental level requires interacting with non-environmental ministries (e.g. agriculture, finance), which may not regard the incentives as perverse at all. It may be worth therefore first targeting those policies that are already being reviewed and where quick changes are possible.

A three-stage process that (1) identifies perverse incentives; (2) designs and implements appropriate reforms, including redirecting some perverse incentives to protected areas financing; and then (3) monitors, enforces and evaluates these reforms would provide the basis for removing these problems. As a practical way to get started, finance ministry officials could assign task forces to document all existing perverse subsidies, identify those which hold the greatest promise for reform, and develop preliminary action plans to address these.

This three-stage process would best achieve its target if the government chooses to concentrate on major economic sectors, which are both – key to national income generation, and threats to biodiversity. These may be fisheries, agriculture, mining, sea transport, forestry.

Taking the example of fisheries, several fisheries subsidies can be identified that have an expansive effect on the fishing-fleet capacity. Such subsidies, through the expansive effect on the catch capacity, generate incentives to over-exploit the resource. This pressure of the resource base results under both private property and unregulated open access.

Two mechanisms played a major role in the discussion on how to mitigate the perverse impacts of fisheries subsidies:

First, additional regulation could be introduced, that is, a fishery management system based on total allowable catch (TAC) could be implemented. This requires careful consideration of:

• Indicators and measurement techniques;
• Monitoring and enforcement mechanisms (these are especially serious in the case of fisheries given the number of fishing vessels in a typical fishery and the nature of the resource); and
• Adaptive behaviour of fishermen.

Second, subsidies could be granted to remove the adverse impacts of some subsidies on catch capacity and subsequent resource overuse (decommissioning schemes). Here:

• The role of the overall subsidy framework is crucial. Unless perverse subsidies are simultaneously removed, the effectiveness of decommissioning schemes will be impaired;
• Careful design of the decommissioning scheme, including the proper specification of eligibility conditions, is also important to avoid the generation of further adverse incentives; and
• The strategic behavior of rational fishermen seriously impedes the long-term effectiveness of decommissioning schemes. Their use should therefore be restricted to a transitional period of time.

In the case of agriculture, the most significant part of the relationship between agricultural subsidies and biodiversity passes indirectly through effects and patterns of production. Specifically, the promotion of domestic agricultural production, export subsidies and tariffs that shield the domestic market translates into the following effects, which in turn, will affect biological diversity:

• An intensification of agricultural production on given acreage, through changes in cropping or livestock regimes, pest management practices and mechanization;
• A change in land use patterns, that is, an expansion land used for agricultural purposes.

In those countries that heavily rely on such support policies, the subsequent further intensification of agricultural production is said to have negative effects on biological diversity especially if based on heavy mechanization, inappropriate reliance on monoculture and the excessive dependence on agro-chemicals as well as external energy and water inputs. Conversely, positive effects resulting from a removal of such policies include:

• A reduced level eutrophication of water ecosystems through agricultural run-off from fertilizer use, with a positive impact on inland waters biodiversity;
• A positive impact on soil biodiversity through, among other things, reduced soil compression by heavy machinery;
• Reduced intoxication or killing of pollinators and other non-target wildlife species through pesticide use; and
• The use of more crop varieties as a means to reduce risk of pests.

The removal of such measures may also lead to a contraction of agricultural land in those countries. Such conversion of specific areas is often said to have positive biodiversity impacts especially when previous agricultural production on these areas was highly technified and specialized, and when effective environmental and conservation policies are in place to restore the initial, non-agricultural habitats (e.g. wetlands). A crucial precondition of a successful long-term restoration is that the conversion has to be irreversible, which may warrant the use of specific legal or economic tools within such conservation policies.