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

PoWPA Activity 3.1.6

Identify and establish positive incentives that support the integrity and maintenance of protected areas and the involvement of indigenous and local communities and stakeholders in conservation.

The CBD Decision VI/15 (http://www.biodiv.org/decisions/default.aspx?m=COP-06&id=7189&lg=0) which underlines “the special importance of designing and implementing incentive measures in reaching the objectives of the Convention, especially in regard to the sustainable use of biological diversity…” is also reflected in the PoWPA. Once the threats to protected areas and the policies and practices giving rise to perverse incentives are identified, positive incentive measures can be chosen to change people’s economic behaviour in ways that benefit protected areas. Positive incentives may be: direct mechanisms that reward specific changes in behaviour; indirect mechanisms that encourage conservation and sustainable use by establishing more general enabling conditions; or disincentive mechanisms that penalize activities that degrade protected areas and thus discourage such activities.

Incentives can take many forms. Among others, these can be:

• Endowment, debt-for-nature, biodiversity enterprise or simple pool funds;
• Biodiversity and carbon offsets;
• Fiscal instruments (environmental subsidies, taxes, levees, extraction fees); and
• Flexible land and resource use mechanism (transferable land use rights, transferable fish catch quotas).

Working through fiscal incentives to better the protected area system is one of the most difficult, yet the most tangible way to induce positive change. From the perspective of protected area managers (an important subset of the larger community of biodiversity conservationists as discussed above), fiscal instruments can not only generate revenue, but – which is not less important – change the behaviour and awareness of local residents and government decision-makers. Revenue-generating instruments can be designed at various levels of the political system. Instruments can be intended for the protected area system or even for a specific protected area. They can be approved at the local and provincial/state levels of government, but they can also be designed to be approved at the national/federal level of government.

Depending on the fiscal policies and practices of the government, managers of protected area systems or specific protected areas may have some autonomy to design specific fiscal instruments for the protected area. Entrance fees to parks provide one obvious example. User fees for the sustainable use of biological resources – such as backpacking, fishing or hunting fees – are also common. Licensing fees for tourist operations and filming rights are also possible. Such fiscal instruments are based on the benefit principle and generate earmarked revenues for the protected area authorities.

Protected area managers may also be able to benefit from the design of fiscal instruments at the local or provincial/state level. For example, a portion of a local or provincial sales tax – generated in part from the spending of park visitors in the local economy – may be earmarked to the protected area. Landowners who benefit from being adjacent to or near a protected area may pay a portion of their property tax to the protected area. Innovative fiscal instruments, such as a state lottery, may earmark earnings to a protected area.

At the national/federal level, fiscal instruments which earmark revenue may also be possible, though these are likely to be for systems of protected areas rather than specific parks. Examples include setting aside a portion of a national sales tax or revenues from a national lottery. One innovative instrument is to earmark a portion of revenues earned from an entry visa into the country or an airport departure tax.

Tax incentives can also be designed to encourage workers and businesses to contribute part of their income to a protected area. Income tax deductions for biodiversity-related contributions can be included in the tax code.

Of particular interest to many protected areas is the impact of economic activities in the buffer areas of a park on the integrity of the park and the conservation of biodiversity within the greater bio-region. Local, provincial and/or national fiscal instruments can be designed to encourage biodiversity-benefiting economic activities – such as organic farming and ecotourism – around protected areas. Tax breaks – on income taxes, property taxes, employment taxes, etc. – can be given to such biodiversity businesses.

Tourism companies who bring visitors to the park and maintain biodiversity-benefiting standards in the operations could also be given tax breaks. The same holds for other economic activities – such as farming, fishing, hunting, sustainable wild harvesting, and research – which take place within a protected area.

In addition to influencing economic activities in and around protected areas, fiscal activities can also be used to influence household behaviour. For example, if there are sizable settlements within the bio-region in which the park is located, tax incentives may be used to encourage biodiversity-friendly practices in local homes and gardens, including removal of exotic species and the establishment of wildlife corridors within the settlements.

Creating new fiscal instruments or reforming existing ones is information intensive. Indeed, information on the costs and benefits of alternative tax systems and, further, the identification of potential impacts on biodiversity of various reforms, are needed. Hence, a solid information base will ensure a better use of fiscal instruments. Further, the effective use of fiscal instruments relies on a minimum administrative apparatus, to set, administer, collect and allocate revenues. Tax legislation has to assign clear responsibilities and confer tax collecting powers accordingly. Proper enforcement will require the existence of a legal structure. Implementation, monitoring and enforcement all require appropriate staff and funding.

It is obvious that political feasibility is an absolutely critical feature. It is no good designing an ideal instrument for biodiversity conservation which has not had the chance of securing the needed political support.

A practical example of what can be done is the introduction of taxes for watershed protection services in Costa Rica. In 1998 Inversiones La Manguera Sociedad Anonima (INMAN), a Costa Rican hydro-electric company, signed a contract with the Monteverde Conservation League (MCL) to pay for ecological services provided by the protected area managed by MCL. The Bosque Eterno de los Nios (Children's Eternal Rain Forest) is a 22,000 ha private reserve managed by MCL. Approximately 3,000 ha of the protected forest is part of a watershed that is used by INMAN for generating electric power. Recognizing the benefits they receive from protection of this watershed, INMAN entered into an agreement with MCL to pay for the protection of the ecological services provided by Bosque Eterno de los Nios.

The contract recognized services such as “stabilization of land, soil protection, humidity and nutrient retention, water protection, protection of species biodiversity” and more. INMAN paid MCL US$ 10 per hectare (a negotiated price) x (a factor that accounted for the amount of energy generated and sold by the hydro-electric plant) x 3000 (for the hectares in the watershed). The money from this tax has been used directly to pay for reserve protection programmes. Although this is an excellent example of a private organization recognizing and paying for environmental services, the process of developing a binding legal agreement took much effort on the part of both parties. (Source: Janzen, Daniel. Gardenification of tropical conserved wildlands: multitasking, multicropping, and multiusers. Proceedings of the National Academy of Sciences of the United States of America 96(11):5987- 5994 in IUCN, 2000, Financing Protected Areas. For more details see Phillips, A. 2000. Financing Protected Areas: Guidelines for Protected Area Managers. IUCN. Switzerland.)