Integrating Economic Values into Policy Assessment
                                  &
  Using Economics-based Policy Inst...
Presentation overview



      Part A: Integrating Economic Values into
         Policy Assessment and Decisions


      P...
Integrating Economic Values into
                      Policy Assessment


“I believe that the great part of miseries of m...
Ecosystem Services - multiple benefits from ecosystems
                Ecosystem Services


Provisioning services         ...
Ecosystem Services and awareness of values

Provisioning services
•   Food, fibre and fuel                 Market values –...
Taking account of public goods
       …can change what is the “right” decision on land/resource use

 US$      Based only ...
Different “best option” for different parties




                                   Local community
                     ...
Understand trade-offs in choices:
     Land-uses & trade-offs for ecosystem services
  1natural                     Climat...
Valuation and policy making:
         from valuing natural assets to decisions

   To underline the value of natural asset...
Create Political support for new (fiscal) instruments

e.g. UK landfill tax, building on valuation of damage of using land...
Valuation and policy making:
   from valuing natural assets to decisions

To communicate the need for and influence the si...
Importance of understanding the spatial relationship of
     ecosystem, services provision and beneficiaries

     Partial...
Valuation and policy making:
        from valuing natural assets to decisions
Inform impact assessment of Proposed legisla...
Valuation and policy making:
       from valuing natural assets to decisions
Inform land-use decision - Creating and impro...
Valuation and policy making:
     from valuing natural assets to decisions

Evaluate damage to natural resources to determ...
Values and valuation:
Answers needed at all levels
      Full range of ecosystem services from               Knowledge gap...
Seeing the whole picture – timescales for
                          benefits
To address short-term bias - important to und...
Part A Summary
   Integrating Economic Values into Policy Assessment


Under-valuing biodiversity and the ecosystem servic...
Policy ambitions and alternative
         pathway...a simplified schematic…

                                             ...
End of Part A: Integrating Economic Values
  into Policy Assessment


Q: Your practical experiences: (how) has
  the value...
Presentation overview
Part B: Using Economics-based Policy Instruments
   for Biodiversity and Ecosystem services

       ...
Ecosystem Services
                     Public Goods and Private Goods
Provisioning services
•   Food, fibre and fuel     ...
Rewarding Benefits through payments & markets


 Tools that reward the provision of ecosystem services and promote the
   ...
Payments for Ecosystem
                        Services (PES)

    Payments for Ecosystem Service (PES): PES can be define...
PES – Practice: Payments for
                Specific Ecosystem services

PES: payments to ensure the provision of a speci...
PES for provision of multiple services from a given area
• Costa Rica’s PSA (Pagos por Servicios Ambientales) supports a b...
Ecosystem services – at what level are the benefits felt ?


Action locally leads to local, to national & to global benefi...
Increasing rewards for ecosystem services provision through PES

           Intensive land use                       Biodi...
PES: payment levels and opportunity costs

Payment levels vary widely in practice
•   Costa Rica, PSA: for forest conserva...
Tax and compensation measures

Tax breaks and other compensation mechanisms offer an important
‘thanks’ and incentives for...
Access and Benefits sharing




Countries benefited little from genetic resources sourced from their territory.
A fairer a...
Ecological Fiscal Transfers in Brazil – ICMS Ecologico




Q: Where else could this be applied ? Post 2013 EU regional fun...
Greening Markets

Market (niches) for products & services demonstrating conservation benefits:
  products with reduced dir...
Green Public Procurement

Green Public Procurement (GPP) means that public purchasers take account of
environmental factor...
Subsidy reform


                    - increase share of the “good” subsidies
       still relevant, targeted, effective, ...
Examples of EHS

         Coal mining                                                            Fishing
         direct t...
Subsidies come in different shapes and forms:

•   Direct transfers of funds          (e.g. fossil fuels, roads, ship capa...
Aggregate subsidy estimates
for selected economic sectors
    Over $ 1 trillion per year in Subsidies




Most sensible us...
Yet reforming EHS > potential
                                      benefits

•   Reduce the use of resource intensive inp...
Addressing losses through pricing

           taxes/charges/fees and fines
            +liability and compensation

Instru...
Taxes & polluter pays principle

 Incentive effect & revenue raising effect
 Pesticides tax: 20 SEK/kg (in 2002) 65 % redu...
Charges / taxes for raising revenues
Mexico increased gasoline tax by 5.5% in October 2007. 12.5% of proceeds will go to
s...
Charges & full cost recovery

Water pricing:

e.g. Many EU Member States (e.g. Netherlands, UK) have moved towards full co...
Fines and penalties

Far too often not set at levels to be real economic incentives as profits
of illegal activity can be ...
Trading systems

Not just CO2 and Sulphur trading - also

ITQs (individual tradable quotas) and fisheries in New Zealand: ...
Offsets (no net loss+) to Habitat Banking
  When appropriately designed and effectively regulated, offsets and biodiversit...
What instrument portfolio do you see as helping promote
 the alternative natural capital development pathway ?

          ...
Thank you
                                    Patrick ten Brink
                             TEEB for Policy Makers Coordi...
Values & assesment and MBIs for biodiversity PtB of IEEP TEEB 2 feb 2010
Values & assesment and MBIs for biodiversity PtB of IEEP TEEB 2 feb 2010
Values & assesment and MBIs for biodiversity PtB of IEEP TEEB 2 feb 2010
Values & assesment and MBIs for biodiversity PtB of IEEP TEEB 2 feb 2010
Values & assesment and MBIs for biodiversity PtB of IEEP TEEB 2 feb 2010
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Values & assesment and MBIs for biodiversity PtB of IEEP TEEB 2 feb 2010

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Values & assesment and MBIs for biodiversity. Presentation by Patrick ten Brink of IEEP at Trondheim 2 feb 2010

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Values & assesment and MBIs for biodiversity PtB of IEEP TEEB 2 feb 2010

  1. 1. Integrating Economic Values into Policy Assessment & Using Economics-based Policy Instruments for Biodiversity and Ecosystem services Patrick ten Brink TEEB for Policy Makers Co-ordinator Head of Brussels Office Institute for European Environmental Policy (IEEP) Trondheim Conferences on Biodiversity Getting the biodiversity targets rights – working for sustainable development Trondheim, Norway, 1-5 February 2010
  2. 2. Presentation overview Part A: Integrating Economic Values into Policy Assessment and Decisions Part B: Using Economics-based Policy Instruments for Biodiversity and Ecosystem services
  3. 3. Integrating Economic Values into Policy Assessment “I believe that the great part of miseries of mankind are brought upon them by false estimates they have made of the value of things.” Benjamin Franklin, 1706-1790 “There is a renaissance underway, in which people are waking up to the tremendous values of natural capital and devising ingenious ways of incorporating these values into major resource decisions.” Gretchen Daily, Stanford University
  4. 4. Ecosystem Services - multiple benefits from ecosystems Ecosystem Services Provisioning services Many services from the same resource • Food, fibre and fuel • Water provision • Genetic resources Regulating Services • Climate /climate change regulation • Water and waste purification • Air purification • Erosion control • Natural hazards mitigation • Pollination • Biological control Cultural Services • Aesthetics, Landscape value, recreation and tourism • Cultural values and inspirational services Supporting Services • Soil formation Important to appreciate the whole set of eco-system services + Resilience - eg to climate change
  5. 5. Ecosystem Services and awareness of values Provisioning services • Food, fibre and fuel Market values – known and generally taken into account in decision making on land use decisions • Water provision • Genetic resources Value historically oft overlooked; priv. sector exceptions Regulating Services • Climate /climate change regulation Value long ignored, now being understood • Water and waste purification • Air purification Value often overlooked • Erosion control • Natural hazards mitigation • Pollination Value oft appreciated only after service gone • Biological control Cultural Services • Aesthetics, Landscape value, recreation and Sometimes value implicit in markets tourism • Cultural values and inspirational services Rarely values calculated Supporting Services • Soil formation Decision making is biased towards short term economic benefits as the (long-term) + Resilience - eg to climate change value of ecosystem services is poorly understood.
  6. 6. Taking account of public goods …can change what is the “right” decision on land/resource use US$ Based only on private gain, the “trade- Shrimp Farm /ha/yr off” choice favours conversion….. Mangroves $12,392/ha 10000 $9632/ha After Adding Storm Public protection 5000 Benefits From mangroves $1220/ha Fishery $584/ha nursery $584/ha private profits private private 0 profits profits Net of public less costs of subsidies restoration needed after 5 years If public wealth is included, the “trade-off” choice changes completely….. -ve $11,172/ha Source: Barbier et al, 2007
  7. 7. Different “best option” for different parties Local community “best option” Logging industry “best option” Valuation can clarify the best option; local/public policy/action needed to secure community best option
  8. 8. Understand trade-offs in choices: Land-uses & trade-offs for ecosystem services 1natural Climate regulation 2 extensive Climate regulation Food Energy Food Energy Soil Soil protection protection Freshwater Freshwater Climate regulation Food Energy Upon closer analysis - Net value may be less Energy Soil protection Freshwater 3 intensive Source: Ben ten Brink (MNP) presentation at the Workshop: The Economics of the Global Loss of Biological Diversity 5-6 March 2008, Brussels, Belgium.
  9. 9. Valuation and policy making: from valuing natural assets to decisions To underline the value of natural assets & help determine where ecosystem services can be provided at lower cost than man-made technological alternatives e.g. water purification and provision, carbon storage, flood control Conservation / restoration Investment decision e.g. New Zealand – Te Papanui Park - water e.g. USA-NY – Catskills-Delaware watershed e.g. Saltillo City, Mexico – Zapaliname mountains e.g. Venezuela and PAs to avoid sedimentation e.g. Vietnam and restoring/investing in Mangroves - cheaper than dyke maintenance
  10. 10. Create Political support for new (fiscal) instruments e.g. UK landfill tax, building on valuation of damage of using landfills for waste disposal. Political and public support for action Inform Instrument design To set entrance fees for national parks (via insights on WTP) e.g. Biebrza National Park, Poland e.g. diving fees in marine reserves in the Philippines, Antilles..
  11. 11. Valuation and policy making: from valuing natural assets to decisions To communicate the need for and influence the size of payments for ecosystem services (PES). Valuation can be useful for municipalities setting up PES for activities leading to clean water provision & at international/national level in discussions on design and future implementation of REDD (reducing Emissions from Deforestation and Degradation) and REDD+ Instrument Choice Instrument design
  12. 12. Importance of understanding the spatial relationship of ecosystem, services provision and beneficiaries Partially forested watershed: different relations for population areas in the vicinity Forest in wider watershed Populated areas benefiting from services, but also directly impacting the ecosystem and its services (positively or negatively) Populated areas in watershed not benefitting from river related flow of services Flow of ecosystem services via river – from source Populated areas benefiting from fuller ecosystem to beneficiaries flow of services from Forest A Source: Adapted from Balmford, A., Rodrigues, A. (University of Cambridge), Matt Walpole (WCMC), ten Brink, P., Kettunen, M. (IEEP) & Braat, L. and de Groot, R. (Alterra) REVIEW ON THE ECONOMICS OF BIODIVERSITY LOSS: SCOPING THE SCIENCE. May 2008
  13. 13. Valuation and policy making: from valuing natural assets to decisions Inform impact assessment of Proposed legislation & policies Creating and improved evidence base Valuable for new marine legislation in UK: establishment of Marine Conservation Zones on the basis of ecosystem service benefits Impact assessment within European Commission - change around 2/3rds of policies for the better & often low-cost investment (Evaluation Partnership 2007; Jacobs 2006) Valuable for EU Water Framework Directive Improve legislative design and implementation
  14. 14. Valuation and policy making: from valuing natural assets to decisions Inform land-use decision - Creating and improved evidence base – eg India: Floodplain between Yamuna River and Delhi. Choice: convert floodplain / embankment plan or not Evidence showed that ecosystem benefits exceeded opportunity costs of conversion. >> Delhi government halted embankment plan of Yamuna until further order - e.g. Opuntia scrubland in Peru Choice: maintain scrubland or move to agriculture? Analysis of value of provisioning services (e.g. fruit and cochineal), regulating services (nursery and refugium services), erosion control and supporting services (soil formation) >> even if only some of the intangible benefits considered, the value of the scrubland higher than direct revenues from agriculture. Avoid socially less good investment decisions
  15. 15. Valuation and policy making: from valuing natural assets to decisions Evaluate damage to natural resources to determine appropriate compensation, e.g. under liability regimes in the US and the EU – Exxon Valdez, Erika e.g. Indian Supreme court: compensation payments for forested land conversion Court rules Court rulings Expect increasing attention in future?
  16. 16. Values and valuation: Answers needed at all levels Full range of ecosystem services from Knowledge gaps biodiversity Qualitative Review Type of benefits; health, social, income, wellbeing Quantitative Review Quantitative: e.g. number of Effects people benefiting from wood from forests Monetary Value Monetary: e.g. avoided water purification costs, tourist value Source: P. ten Brink, March 2008, revised
  17. 17. Seeing the whole picture – timescales for benefits To address short-term bias - important to understand the timescale of benefits • A review of 112 studies in 80 MPAs (marine protected areas) : fish populations, size & biomass all dramatically increased inside reserves, allowing spill-over to nearby fishing grounds (Halpern 2003). • Eight years after designation of Kenya’s Mombasa Marine National Park, fish catches around the park had reached three times the level of those further away (McClanahan and Mangi 2000) • For other MPAs, benefits after 5, even after 3 years. Help demonstrate the sense of the measures • to those facing potential impacts on activities • to wider benefits to society Identifying and Implementing transition measures to address short-term needs critical for stock recovery phase.
  18. 18. Part A Summary Integrating Economic Values into Policy Assessment Under-valuing biodiversity and the ecosystem services it supports has contributed to the loss of natural capital Historically, many values have been invisible Increasingly values are understood and available Increasing use in policy assessment and policy choices. Real world effects – on policies, instruments, investments, results. More steps are needed to appreciate and respond to the value of nature The whole picture of benefits and costs need to be appreciated – the here and now, the over there and over time, the private and public http://hattoriforth.typepad.com/.a/6a00d83549e5d069e20120a6ebb5b0970b-800wi …is this enough to work out what to do? …always better to look at the whole board
  19. 19. Policy ambitions and alternative pathway...a simplified schematic… Opportunities/benefits of ESS No net loss from 2010 level Past loss/ Restoration / Investment in degradation Halting biodiversity loss natural capital +ve change ` What measures can Alternative natural capital contribute to progress? Development path Predicted future loss of natural capital (schematic) – with no additional policy action 2010 2050
  20. 20. End of Part A: Integrating Economic Values into Policy Assessment Q: Your practical experiences: (how) has the value of nature helped you choose implement which measures ? Q: Where do you see valuation as offering the greatest potential for policies?
  21. 21. Presentation overview Part B: Using Economics-based Policy Instruments for Biodiversity and Ecosystem services The Global Biodiversity Crisis Measuring what we manage Available Solutions • Rewarding benefits: PES, REDD+, ABS, tax relief & fiscal transfers, Markets, GPP • Subsidy reform • Addressing losses : Regulation legislation, liability, taxes & charges, offsets, banking • Protected Areas • Investment in natural capital et al Responding to the value of nature http://www.teebweb.org/
  22. 22. Ecosystem Services Public Goods and Private Goods Provisioning services • Food, fibre and fuel Market values • Water provision Potential Market values • Genetic resources – eg water supply PES; -eg ABS Regulating Services Potential Market values • Climate /climate change regulation – eg REDD & water purification PES • Water and waste purification - Avoided cost of purification • Air purification • Erosion control Social value – health, wellbeing • Pollination • Biological control Opportunity cost: Lost output or cost of alternative service provider Cultural Services • Aesthetics, Landscape value, recreation and Market values : eco-tourism tourism • Cultural values and inspirational services Social value – identity et al Supporting Services • Soil formation Creation of markets, development of pricing mechanisms one set of solutions + Resilience - eg to climate change to level the economic playing field
  23. 23. Rewarding Benefits through payments & markets Tools that reward the provision of ecosystem services and promote the greening of supply chains, include: • Payments for Ecosystem services (local, national, international) PES • Access and benefits sharing (ABS) • Tax based mechanism and public compensation mechanisms • Green markets and fiscal incentives (Certification, premia markets, GPP) + investment in natural capital (conservation/restoration/new green infrastructure)
  24. 24. Payments for Ecosystem Services (PES) Payments for Ecosystem Service (PES): PES can be defined as a voluntary transaction where a well-defined ecosystem service (ES) (or land-use likely to secure that service) is « bought » by at least on ES buyer from at least one ES provider, if and only if the ES provider secures ES provision (conditionality) (adapted from Wunder 2005) • PES offer considerable potential to raise new funds for biodiversity or to use existing funding more efficiently. • Both the public and private sectors can play a role in establishing PES in different contexts. • PES have proven to be a highly flexible tool, providing both direct and indirect rewards for various ecosystem services and biodiversity conservation at a range of different scales (496 hectares in an upper watershed in northern Ecuador) to much larger scales (e.g. 4.9 million hectares of sloping farmland reforested in China.
  25. 25. PES – Practice: Payments for Specific Ecosystem services PES: payments to ensure the provision of a specific service • Managing forest & agricultural land to ensure water quality - New York (Catskills-Delaware watershed); Saltillo city, Mexico (Zapalinamé mountains), • To cleanse coastal waters in Sweden • to protect groundwaters in many European countries and parts of Japan • Carbon storage/sequestration via farm management is rewarded in New Zealand and via forest management in Costa Rica and Uganda & REDD+ • PES are also used to tackle external threats that could undermine service provision e.g. for removal of invasive alien species through South Africa’s Working for Water Programme
  26. 26. PES for provision of multiple services from a given area • Costa Rica’s PSA (Pagos por Servicios Ambientales) supports a bundle of four services - carbon sequestration, hydrological services preserving biodiversity and landscape beauty. • PES schemes to combine improved groundwater quality with increased biodiversity are found in e.g. Germany and Bolivia (Los Negros watershed) • PES schemes primarily for biodiversity conservation include the Bushtender programme (Victoria, Australia) and the US Conservation Reserve Programme.
  27. 27. Ecosystem services – at what level are the benefits felt ? Action locally leads to local, to national & to global benefits. Mainly local benefit Mainly global benefit Biochemicals & pharmaceuticals 5 Climate / climate change Pollination / seed dispersal 4 regulation Water and air purification & 3 Genetic / species diversity waste management maintenance 2 Natural hazards control (fire, 1 Biodiversity flood) 0 Erosion control Ecotourism & recreation Food/Fibre/Fuel Education, art & research Water (quantity) Cultural & amenity values Additional national benefit What are the policy implications > Funding? PES?
  28. 28. Increasing rewards for ecosystem services provision through PES Intensive land use Biodiversity ‘friendly’ land use Eg Private optimum Eg social optimum Cultural Potential new Services income from (eg tourism) different To date ‘unpaid’ CS Regulating payments for RS ecosystem services (eg ecosystem PS services water quality) BENEFITS services Additional PS (other products, pollination) Income (Paid) Benefit to from provisioning Income from land user - Services (PS) Opportunity cost - provision original Income foregone to landowner products in services (eg farm or forest products) (in absence of PES) existing markets Cost to population COSTS of pollution Social Benefit = Private benefit + public good (ESS) – pollution costs
  29. 29. PES: payment levels and opportunity costs Payment levels vary widely in practice • Costa Rica, PSA: for forest conservation US$ 64 per ha/yr in 2006. Portela & Rodriguez 2008; Pagiola 2008 in Wunder & Wertz-Kanounnikoff 2009; • Mexico’s PSA-H: for preservation of cloud forest US$ 40 per ha/year; for other tree-covered land US$ 30 per hectare/year Muñoz-Piña et al. 2007. • Vittel mineral water, France Perrot-Maître 2006; Wunder and Wertz-Kanounnikoff 2009 – Ave. payments are EUR 200 ha/year over a five year transition period and – up to 150,000 EUR per farm to cover costs of new equipment. – Contracts are long-term (18-30 years), – with payments adjusted to opportunity costs on a farm-by-farm basis. PES will be able to address the opportunity costs in some cases – but often not in the ones where opportunity costs are very high Other or complementary measures needed.
  30. 30. Tax and compensation measures Tax breaks and other compensation mechanisms offer an important ‘thanks’ and incentives for efforts. Considerable potential to integrate and reward ecological concerns in land, property and income taxes They are only rarely used for this purpose. Tax incentives for conservation easements and ecological gifts in North America By 2005, land trusts held conservation easements on over 2.5 million hectares (6.2 million acres) Canada: The Ecogift Programme (introduced in 2001). Tax benefits to owners of ecologically sensitive land if they donate it (fully or partially) to specified recipients to manage sustainably / conserve the natural habitat. The Netherlands, savers and investors can obtain exemption from a capital gains tax if they invest in specified green projects or capital funds.
  31. 31. Access and Benefits sharing Countries benefited little from genetic resources sourced from their territory. A fairer and more efficient regime is needed that can establish clear rights for local people, encourage the conservation of genetic resources in situ and facilitate discoveries and their application across a range of sectors.
  32. 32. Ecological Fiscal Transfers in Brazil – ICMS Ecologico Q: Where else could this be applied ? Post 2013 EU regional funding / Cohesion policy ?
  33. 33. Greening Markets Market (niches) for products & services demonstrating conservation benefits: products with reduced direct impacts on biodiversity, due to adoption of more efficient or low-impact production and processing methods e.g. for reduced impact forestry - FSC, PESC certified timber e.g. for fisheries, MSC certification; products with reduced indirect impacts on biodiversity as a result of decreased pollution load e.g. biodegradable detergents – eco-labelled products products and services based on the sustainable use of ecosystem services and biodiversity e.g. ecotourism or biotrade. These are less and less “niches”; and more and more “mainstreamed”
  34. 34. Green Public Procurement Green Public Procurement (GPP) means that public purchasers take account of environmental factors when buying products, services or works. A product or service can only qualify as ‘green’ if it goes beyond what is required by law and beyond the performance of products commonly sold in the market. GPP rapidly developing since the early 2000s; Now being mainstreamed by environmentally ambitious governments. EU: government purchases alone exceeds 1,500 bn EUR/year,16% of EU GNP. European Commission proposed to MS - by 2010, 50% of purchasing should be GPP. The Netherlands: nat. government intends to purchase 100% green by 2010, with levels of 50 to 75% for local and regional governments. Many other large economies – including Japan, China, New Zealand, Korea and the US – also have formal policies in place that stimulate GPP Major tool for greening the supply chain; direct link (demand side pull) to certification of products and services (supply side)
  35. 35. Subsidy reform - increase share of the “good” subsidies still relevant, targeted, effective, positive impacts, few negative effects - remove/reform the “bad" subsidies no longer relevant, waste of money, important negative effects - reform the “ugly” subsidies badly designed – eg inefficient, badly targeted, potential for negative effects Source: building on Sumaiia and Pauly 2007
  36. 36. Examples of EHS Coal mining Fishing direct transfers, Grants, guarantees, tax Water use little liability for damage Non resource pricing exemptions + no liability for damage to sea bed et al Source: www.treehugger.com Source: Guardian Source: www.wisebread.com Source: http://srforums.prosoundweb.com/ Deforestation Energy: oil spills Agriculture Only partial liability / No resource costs, no Direct payments + no liability compensation for damage or loss compensation for damage for eutrophication damage et al of ESS / public goods Source: www.oilism.com
  37. 37. Subsidies come in different shapes and forms: • Direct transfers of funds (e.g. fossil fuels, roads, ship capacity) or potential direct transfers (e.g. nuclear energy and liability) • Income or price support (e.g. agricultural goods and water) • Tax credits (e.g. land donation/use restrictions) • Exemptions and rebates (e.g. fuels) • Low interest loans and guarantees (e.g. fish fleet expansion/modernisation) • Preferential treatment and use of regulatory support mechanisms (e.g. demand quotas; feed in tariffs) • Implicit income transfers by not pricing goods or services at full provisioning cost (e.g. water, energy) or value (e.g. access to fisheries) • Arguably also, implicit income transfer by not paying for pollution damage (e.g. oil spills) and other impacts (e.g. IAS, damage to ecosystems) • Some are “on-budget” (visible in government budgets) others “off-budget” (not accounted in national budgets) – transparency varies People may mean different things when talking of subsidies; what are formally considered subsidies also depends on context (e.g. state aid, WTO)
  38. 38. Aggregate subsidy estimates for selected economic sectors Over $ 1 trillion per year in Subsidies Most sensible use of funds? Or potential for reform?
  39. 39. Yet reforming EHS > potential benefits • Reduce the use of resource intensive inputs, thus saving resources (for society/the economy now and for future generations) & causing less pollution >> Lesser pressure on the nature capital stock • Increase competitiveness by exposing subsidised sectors to competition and supporting future competitiveness by resource availability • Level the playing fields / fix market distortions by making resource prices reflect resource value, and making polluters pay for their pollution. • Overcome technological ‘lock-in’ whereby alternative, less established, and possibly more environmentally-friendly, technologies and practices are unable to compete on an equal basis with the subsidised sector >> Move to a more resource efficient economy • Enable governments to divert budget to other areas (e.g. education, poverty, PES, energy saving) >> Good governance in a time of crisis
  40. 40. Addressing losses through pricing taxes/charges/fees and fines +liability and compensation Instruments to make the full costs of loss visible and payable
  41. 41. Taxes & polluter pays principle Incentive effect & revenue raising effect Pesticides tax: 20 SEK/kg (in 2002) 65 % reduction in use (Sjöberg, 2007) Fertiliser taxes or taxes on excess nutrients: Decrease in product use 20-30% in the Netherlands, 11-22% in Finland, 15-20% in Sweden & 15% in Austria. (Ecotec 2001) Plastic bag tax: Ireland (2002). 33 cents per bag at checkout. Plastic bag consumption dropped by 80% from 1.2 billion to 230 million bags in the first year, generating tax revenues (US$ 9.6 million) earmarked for a green fund. Landfill tax: UK £1 billion of contributions paid from landfill operators to env. projects …also energy taxes, carbon taxes, NOx, SOx taxes, range of product taxes etc Effect comes from both price signal and choice of revenue use Big or small – successes generate confidence to copy the instrument
  42. 42. Charges / taxes for raising revenues Mexico increased gasoline tax by 5.5% in October 2007. 12.5% of proceeds will go to support investments in the env. sector, including PA management (Gutman & Davidson 2007); Bonaire National Marine Park (BNMP), Antilles: BNMP dive tags US $ 25 in 2005: + entrance fees. (Slootweg and van Beukering et al. 2008; Stinapa Bonaire 2009) USA, duck hunters - required to purchase Federal Duck Stamps. 98% of revenue ($50 mn/yr) goes directly to the purchase/lease of wetlands. (www.fws.gov/duckstamps). Entrance fees for the Galapagos Islands 100$ for international tourists; Revenues (> US$3 mn/yr) to improve the management of the National Park (Vanasselt, 2000) Water abstraction charge: Australia - for the Murray River basin; revenues earmarked for wetland restoration and salt interception schemes (Ashiabor 2004); Water abstraction charge: Germany - some revenues to farmers to help change farming practice – for lesser nitrogen in water/cleaner drinking water + biodiversity gains in extensive farms. Link to PES Reforestation charge in Liberia: 5US$/m3 of logged wood, reinvested
  43. 43. Charges & full cost recovery Water pricing: e.g. Many EU Member States (e.g. Netherlands, UK) have moved towards full cost recovery for water; significant changes in water pricing for most newer Member States In the Czech Republic, water pricing gradually increased from €0.02/m3 before 1990 to €0.71/m3 in 2004. Between 1990 and 1999, water withdrawals decreased by 88% (agriculture), 47% (industry) and 34% public water mains). Waste: e.g. Korea: volume based waste fee: 1994 to 2004: 14% reduction in municipal waste Greater application of full cost recovery in many countries (water, waste, energy) Gradual transition important to address affordability/social concerns
  44. 44. Fines and penalties Far too often not set at levels to be real economic incentives as profits of illegal activity can be much higher. e.g. • Trade in wildlife species • Illegal timber • Poachers • Illegal fishing practices Need more than economic incentives…
  45. 45. Trading systems Not just CO2 and Sulphur trading - also ITQs (individual tradable quotas) and fisheries in New Zealand: rebuilt stock and some of very few to achieve conservation target of less than 10% stock collapse Tradable water use quotas in Zhangze City, China Minle County: irrigation districts allocated water rights certificates, reducing water used for irrigation Tradable development rights in Montgomery county - by 2008 50,000ha of prime land preserved. Habitat banking: USA, Australia.
  46. 46. Offsets (no net loss+) to Habitat Banking When appropriately designed and effectively regulated, offsets and biodiversity banks can be efficient market-based instruments that help businesses compensate for the residual unavoidable harm from development projects. Over 30 countries now require some form of compensation for damage to biodiversity or have established programmes requiring offsets. Legal requirements for offsets include Brazil, South Africa, Australia and the United States (Bean et al. 2008; Carroll et al 2007). United States: More than 400 wetland banks have been established, creating a market for wetland mitigation worth more than $3 billion/year. 70+ species banks; can trade between $100mn & $370mn in species credits/yr. (Bayon 2008; DECC 2009)
  47. 47. What instrument portfolio do you see as helping promote the alternative natural capital development pathway ? Opportunities/benefits of ESS No net loss from 2010 level Past loss/ Investment in natural capital +ve degradation Halting biodiversity loss change ` Regulation Better governance Economic signals : PES, REDD, ABS (to reward benefits) Charges, taxes, fines (to avoid degradation/damage: Alternative natural capital Subsidy reform (right signals for policy) Sustainable consumption (eg reduced meat) Development path Markets, certification/logos & GPP Agricultural innovation Investment in natural capital: green infrastructure Predicted future loss of natural capital Restoration (schematic) – with no additional policy action PAs 2010 2050
  48. 48. Thank you Patrick ten Brink TEEB for Policy Makers Coordinator ptenbrink@ieep.eu TEEB for Policy Makers report http://www.teebweb.org/ TEEB Contributors include: Major funders:

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