Financing Biodiversity Conservation And Sustainable

The expansion of biodiversity and, in particular, crop genetic diversity conservation efforts, requires well-designed mechanisms for financial support. One feature of many conservation programs is that they require farmers and land-users in developing countries to forego certain production activities of benefit to them, in order to generate benefits to individuals outside their region. The beneficiaries in many cases are corporations, environmental groups, and citizens of developed nations, who generally come from much higher income groups, and are more likely to be willing to pay for conservation benefits, particularly the option and existence value aspects. Conservation programs may have a negative impact on equity, without proper attention to the distribution of the costs and benefits of programs and the appropriate design of financing mechanisms. In many cases conservation efforts require the establishment of financial schemes where the gainers from conservation pay those who bear the costs.

A second important issue to consider in the design of financing mechanisms is that many of the benefits of biodiversity conservation have the properties of a public good. For example, genetic or biological knowledge can be utilized simultaneously by many and, until recently, there were few barriers to access to some aspects or manifestations of this knowledge. Without some kind of intervention, public goods will be underprovided, as no incentives exist to provide a good where no profits can be captured. In the past, the solution was to mobilize the public sector to generate such knowledge, through publicly funded research and development programs. More recently, technological and institutional changes have resulted in the ability to assign property rights to biological and genetic knowledge in the form of intellectual property rights. This has created more incentives for the private sector to generate such forms of knowledge, as they stand to reap significant benefits. However, concerns have been raised about the impacts of assigning intellectual property rights on the accessibility of knowledge, particularly as an input to the development of new varieties and breeds. Several mechanisms for overcoming these types of barriers are being designed or set up, and are discussed in other chapters of this book (see Chapters 10 and 19 in this volume). Another concern about the privatization of biological and genetic knowledge is the impact on agricultural research and development programs and new variety development aimed at poor populations (see Chapters 3 and 20 in this volume; also Smale et al., 2001). Such groups do not represent lucrative markets, and thus their needs will not be targeted under private research programs. As discussed in Chapter 3, this implies a greater need for the public sector to focus on such issues.

Even when biodiversity conservation results in outcomes that exclusively benefit a specific and identifiable agent, the magnitude and timing of these benefits may be uncertain. In many of these cases, there may be a significant lag between conservation efforts and the realization of benefits. For example, the decision not to cultivate a land parcel may preserve species that only years later will become essential for the development of a desired and valuable medical product. When outcomes of conservation activities are highly uncertain, it may be easier to raise funds for their support, if at least part of the payment is dependent on the actual outcomes. For example, a payment scheme for providing a company access for a reserve for bioprospecting may include both a fixed fee as well as a royalty tied to actual benefits derived.

In Table 19-1 below, we present a categorization of selected benefits from crop genetic diversity conservation, the likely suppliers and consumers of such benefits, and the implications for payment mechanisms. The analysis is quite general, with only four broad categories of benefits included. These include genetic diversity as a base for improving agricultural productivity and sustainable production systems, particularly in marginal areas, genetic diversity as a source of inputs to commercialized breeding systems, genetic diversity as the basis for producing differentiated consumer products, and genetic diversity in the provision of options and existence values. Although the first two categories of benefits both involve genetic diversity as an input to current breeding systems, we have differentiated them because of likely differences in the ability (and willingness) of the consuming population to meet the costs of research and development associated with breeding. In the first category, we focus on farmers as the consumers of the benefits from diversity, while in the second we look at another point in the seed system where the consumers are breeders and commercial seed enterprises that use diverse genetic resources in developing products, although eventually these products would be sold to farmers as well. This analysis indicates a wide range of potential payment mechanisms between supplier and consumers of genetic resources, and some indication of their implications for stimulating conservation.

Table 19-1. Selected benefits from crop genetic diversity, likely suppliers and consumers at various points in the seed system, and implications for possible incentive mechanisms to stimulate conservation

Benefit of diversity



Payment mechanism


Increase in agricultural productivity and sustain-

ability of productions systems;

particularly in marginal environments

Farm communities

Farmers, particularly in marginal environments

Seed prices in cash transactions

Diversity is a sourct of new varieties through both informal and formal systems of breedin; In both cases breeding generates value-added to the germplasm which farmers may pay through seed price; of exchange value.

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