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

PoWPA Activity 3.4.1

Conduct a national-level study of the effectiveness in using existing financial resources and of financial needs related to the national system of protected areas and identify options for meeting these needs through a mixture of national and international resources and taking into account the whole range of possible funding instruments, such as public funding, debt for nature swaps, elimination of perverse incentives and subsidies, private funding, taxes and fees for ecological services.

PoWPA emphasized the need for both national and international sources of funding. A range of innovative national sources are starting to play an increasingly important role in meeting funding needs. Examples include fees on tourism and other resource uses, raising funds from new markets (such as carbon offsets, water, or other payments for ecosystem services), finding new donors (such as large corporations, private philanthropists, other government agencies or tax revenue-sharing), sharing costs and benefits with local stakeholders (e.g. private landholders and local communities), employing new financial tools (such as business planning), improving wider policy and market conditions (such as reforming environmentally-harmful subsidies and creating positive incentives), and devolving funding and management responsibilities (for example to NGOs, local communities, individuals or businesses).

To date, most financial analyses and plans have been conducted at the level of individual protected areas, and there is no widely accepted methodology for national-level financial analysis and planning. In general, however, Parties will need to answer three questions:

1. What is the current level of protected areas financing, what are its sources, what is it being spent on and how efficiently are funds being used?
2. Taking existing and planned protected areas into account, what are the unmet financial needs over the next decade or so?
3. What is the range of options for filling the funding gap and what is the potential of each option to generate revenue for the protected area system?

The answers, taken together, will form the basis of country-level “sustainable financing plans”, which will likely include necessary regulatory, legislative, policy, institutional and other measures. These financial plans will form part of the business plans developed for protected areas. Actions ideally focus on both revenue and expenditure and can consider innovative funding mechanisms including payment for environmental services. Specific steps could include:

• Analysis of current income and expenditures, overall financial needs, gaps and opportunity costs;
• Definition and quantification of protected area goods and services, potential sources of demand for such goods and services, and contributions to achievement of poverty reduction and MDGs;
• Screening and feasibility analysis of potential financial mechanisms; and
• Elaboration of a comprehensive plan for ensuring long-term financial support for the system of protected areas.

Implementation of the plan will require actions at the national level. Business plans covering the protected area system need to take into account the broader enabling environment, planning activities and implementation of finance mechanisms. Specific actions can include, for example:

• Creation, capital expansion and strengthening of existing environmental funds, such as national protected area trust funds;
• Adoption of new laws/policies that allow for creation of well-tested site-based finance mechanisms (e.g. tourism-based user fees) and for local income to be retained for funding of local protected area needs;
• Laws, policies and other measures that put in place innovative types of finance mechanisms, such as resource extraction fees, water use payments, etc.;
• Identification of perverse subsidies (particularly in sectors most directly related to protected areas) and redirection of such subsidies to protected areas financing; and
• Development of external funding programmes, with short-term and sustainable financing elements.

The example of Namibia may be drawn upon (based on http://www.conservationfinance.org/About_CFA_pages/CF_related_projects.htm). Studies to determine the economic value of, and sustainable financing for Namibia’s system of protected areas (parks) are being undertaken as part of the Namibian Ministry of Environment and Tourism’s “Strengthening the Protected Areas Network” (SPAN) project being supported by UNDP/GEF. It was found that the protected areas underpin a large portion of Namibia’s national tourism industry, which is one of the four biggest contributors to national income. Although tourism attributable to the presence of parks generates considerable tax revenue for the Gvernment, and contributes significantly to poverty reduction, the parks themselves generate relatively little direct revenue from park use and accommodation fees. These direct revenues amount to less than half of the parks' operating costs. The park system is characterized by severe under-financing, particularly with regard to the capital budget.

A vision for the effective development of the parks' system was formulated and cost-benefit analysis showed that investment in this development would yield very positive results. Current funding for parks would need new financing and several potential ways in which increased and new funding could be secured were investigated. One strategy was to lobby for large increases in government and donor finance for park development and management demonstrating that increased investment in parks would generate very significant economic returns. In the past, parks have been seen by decision-makers as contributing little to income and employment.

A second, important strategy was to harness the significant capacity of the private sector and local communities to invest in and manage parks and adjacent linked areas. Essentially this would involve removing the policy and institutional barriers preventing such investments. Thirdly, a need to create savings on current expenditures was identified, by improvements in planning and allocation as well as restructuring. The aim here was to improve the economic efficiency of government’s expenditures and to make such expenditure more responsive to biodiversity conservation needs and long-term market demands. Fourthly, accessing finance for the parks through increasing direct revenues was voiced as an important element. Here, capturing more of tourists’ willingness to pay for park use and conservation through innovative pricing and payment systems was found to be important. Pricing structures differentiated according to tourist market segments and payment systems which reward loyalty were further investigated.