Economics and biodiversity are in fact very closely linked. Perhaps most important is the fact that biodiversity forms the basis of much human consumption and production. As such it has an immense economic value, and the economic impacts of biodiversity degradation are potentially devastating. Take the case of Lao PDR for example, where recent work has found that biodiversity-based sectors contributes nearly three quarters of GDP, over 90% of national employment, 60% of exports and foreign exchange earnings, and one third of government revenues.

Yet, paradoxically, economic forces are the major cause of biodiversity loss - even though this destroys the very production base upon which they depend. A whole host of economic policies have for a long time actually made it more profitable for people to degrade biodiversity than to conserve it. Ample illustrations can be found in Asia - for example the history of subsidies to the agricultural sector, unrealistically low timber royalty rates, minimal penalties for illegal or unsustainable exploitation of biological resources, and little research and investment in sustainable biodiversity markets and products. Throughout the region, conservation agencies are fighting an uphill struggle to persuade people - and governments and donors - that it is in their economic interests to conserve biodiversity, to invest in it, or to allocate budgets to it.

The importance of economic measures for biodiversity conservation is well-recognised in the Convention on Biological Diversity (CBD), which provides a useful framework for integrating biodiversity and economics concerns. In particular, the CBD requires the use of three sets of economic measures for biodiversity conservation - valuation, incentives and finance. Article 7 calls on Parties to identify and monitor components of biodiversity that are economically valuable or important. Article 11 requires the adoption of economic measures that act as incentives for biodiversity conservation and sustainable use. Articles 20 and 21 reiterate the need to generate and allocate sufficient financial resources to biodiversity.

The CBD's triangle of valuation, incentives and finance is proving to be an extremely useful framework for identifying and using economic tools for biodiversity, and economic measures are increasingly being used in support of conservation in Asia. For many countries in the region National Biodiversity Strategies and Action Plans (NBSAPs), prepared in response to Article 6a of the CBD, have provided a first opportunity to systematically design and apply economic measures for biodiversity at a nation-wide or cross-sectoral level. For example in China a cost benefit analysis was used to justify the National Biodiversity Strategy and Action Plan in monetary terms. In Pakistan the costs of environmental degradation, calculated at more than $1 billion, have been used to make the case for increased investment and government budgets for biodiversity conservation. Indonesia has pioneered a system for incorporating biodiversity values in the national income accounting system, and presented a detailed valuation of biodiversity as part of the preparation for its NBSAP. Throughout the region, methodologies are being refined and new information is being generated which describe the economic value of key species, resources and ecosystems.

New finance is being raised for biodiversity conservation that goes beyond the traditional - and often unreliable - sources of central government budgets, donor funding and GEF. Many NBSAPs include a detailed biodiversity financing strategy, often drawing lessons learned from innovative funding mechanisms that have already been piloted in the country. For instance the Philippines was one of the earliest global pioneers in using Trust Funds and debt-for-nature swaps, and over the last decade has managed to raise millions of dollars for biodiversity conservation through these mechanisms. Vietnam is currently investigating a wide range of new financing systems for protected area biodiversity conservation, including levying fees as payment for ecosystem services. Indonesia is piloting novel arrangements for biodiversity investment which harness private, as well as government and donor, funding.

These experiences and innovations yield valuable insights and lessons as to how economic measures can be used to strengthen biodiversity conservation. But it is also clear that major challenges remain in maintaining this momentum and improving this dialogue in the future - especially as NBSAPs start to be implemented in the region. Despite the advances made in using economic measures within biodiversity planning, economic decision-makers remain largely unconcerned about the importance of biodiversity to their own policies, strategies and plans, and are frequently unaware of the existence of NBSAPs. Yet economic pressures on biodiversity are growing, not diminishing, and it is largely up to development and economic sectors to ensure that many of the broader economic threats to biodiversity are addressed. People are becoming increasingly unwilling (and in many cases economically unable) to support biodiversity conservation unless there is a clear economic rationale, and benefit, to their doing so. And unless economists, too, begin to realise the importance of factoring biodiversity concerns into their decisions and see the economic costs that will arise if they fail to do so, there is a serious risk that long-term prospects both for biodiversity conservation and for economic growth in Asia will suffer.

Over the last two years, IUCN has been carrying out a project dealing specifically with the use of economic measures for biodiversity planning. A number of documents, including an Annotated Bibliography of Biodiversity Economics, case studies on the Use of Economic Measures in NBSAPs in Pakistan and Vietnam, a Review of Experiences, Lessons Learned and Ways Forward in the Use of Economics in National Biodiversity Strategies and Action Plans, and a Biodiversity Economics Electronic Library are all available from IUCN's Regional Environmental Economics Programme for Asia.


For further details:

IUCN Regional Biodiversity
Programme, Asia

Key References

Financing NBSAPs : Options and Opportunities, (2002) IUCN- Regional Biodiversity Programme, Asia, Colombo, Sri Lanka.

Hartwick, J.M. and Olewiler, N.D. (1998) The Economics of Natural Resource Use, Addison-Wesley.
Kaiser, J. and Lambert, A. (1996) Debt Swaps for Sustainable Development: A Practical Guide for NGOs, IUCN/SCDO/EURODAD, Gland and Cambridge, 72 pp
McNeely, J.A. (1999) Achieving Financial Sustainability in Biodiversty Conservation Programmes, IUCN - The world Conservation Union, Gland.
Panayotou, T. (1998) Instruments of Change: Motivating & Financing Sustainable Development, Earthscan: London