Welcome to the Conservation Finance Guide. The overall goal is to provide practical tools to support the rapid expansion of sustainable finance mechanisms that generate long-term funding for biodiversity conservation.
Welcome to the Conservation Finance Guide. The overall goal is to provide practical tools to support the rapid expansion of sustainable finance mechanisms that generate long-term funding for biodiversity conservation.
While businesses produce goods and services in order to raise revenues, governments raise revenues in order to provide goods and services. Governments primarily raise revenues through taxes – involuntary levies on wealth or income-generating activities.
Some fiscal instruments, such as general income or sales taxes, are based fundamentally on the ability-to-pay principle: taxes are levied on individuals, households or businesses with adequate wealth or income or the ability to generate wealth or income. Other fiscal instruments, such as user fees and access charges for government goods and services, are based on the benefit principle: those who benefit from the provision of government-supplied goods or services are charged for their provision.
In the case of ability-to-pay taxes, revenues are redistributed to specific activities including biodiversity conservation through the government’s budget-making process. In the case of benefit taxes, collected revenues can be allocated through the government budget, but they can also be directly earmarked to provide the specific goods or services. For example, revenues earned from entrance fees at a national park can either be sent to the finance ministry for inclusion in the general government budget, earmarked to the national park authority or even earmarked to the park from which they were generated.
With respect to increasing support for biodiversity conservation, existing fiscal instruments can be reformed or new ones can be designed. In either case, it is important to understand both the nature of the instrument – is it an ability-to-pay instrument or a benefit instrument? – and the intended use of the revenue – will it go into the general budget or will it be earmarked for specific biodiversity-related activities? Regarding fiscal instruments based on the ability-to-pay, conservationists will probably need to focus their efforts on capturing some of these revenues through the budget-making process. Regarding fiscal instruments based on the benefit principle which can earmark revenues to specific activities, there is a greater chance of securing direct revenues for conservation.
In addition to raising revenues, fiscal instruments can also be used to directly influence the behavior of economic actors – individuals, households and businesses. The fiscal instrument itself can provide an incentive for economic actors to conserve biodiversity. Of course, fiscal instruments can also create, unintentionally, incentives to destroy biodiversity. For example, a high tax on city property may encourage a higher concentration of dwellings – more flats than homes within the city. On the other hand, it may encourage more urban sprawl. Either response will have an impact on biodiversity conservation within the urban area.
The main idea behind using fiscal instruments to influence behavior is to provide incentives for biodiversity conservation by directly or indirectly modifying the prices of biodiversity-related goods and services. In this sense, fiscal instruments are part of a wider class of policy instruments called market-based instruments or economic instruments. These instruments use the logic of the market to encourage more sustainable behavior on the part of producers, consumers and resource managers.
This approach contrasts with traditional regulatory approaches to biodiversity conservation. Regulatory approaches – also called direct control or command and control approaches – impose direct quantity or quality restrictions and include such instruments as overt bans, quotas and standards. In contrast, market-based instruments aim at creating incentives by altering prices so that they better reflect true biodiversity benefits and costs.
Hence, fiscal instruments cannot just raise revenues for biodiversity efforts. They can also provide incentives for economic actors to conserve biodiversity. Thus, there is a complex array of options and impacts for using fiscal instruments to support biodiversity conservation. How can one begin to approach the use of fiscal instruments? This chapter provides some introductory guidance.
Overview
1. Understanding Fiscal Instruments for Conservation
1.1 Overview
1.2 Key Actors and Motivations
1.3 Types of Fiscal Instruments
1.5 Success Factors
2. A Selection of Case Studies
2.1 Instruments for Raising Revenue
2.2 Instruments for Changing Behavior
3. Resources