OO. 5.5 Encourage the development of economic, fiscal and financial instruments for biodiversity (including instruments for the private sector)

Release date	16/06/2009

In addition to normative instruments and processes (regulations, access and market restrictions, management plans, etc.), market-based instruments can usefully be combined in order to achieve biodiversity objectives (for example frameworks for access agreements that facilitate market-based exchanges of biodiversity-related resources). Such instruments are core elements for the application of the ‘polluter pays' principle through the establishment of environmental liability regimes.

There is a need to make greater and more consistent use of domestic economic instruments with respect to biodiversity protection.

The adoption of socially and economically sound measures (like subsidies, state aid, grants-in-aid, and measures prescribed in the tax system) that act as incentives for biodiversity is of central importance to the realisation of the three objectives of the CBD.

Public authorities should promote companies that have a responsible investments policy that take biodiversity into account.

State aids should take a more holistic approach to promote environment. In particular, state aids to operators must be better used to promote and avoid any negative effects on biodiversity.

Internalisation (the incorporation of external costs and benefits) should be considered to be one of the guiding principles for selecting appropriate incentive measures to prevent, stop or reverse the loss of biodiversity.

Some Regional initiatives, co-financed by the EU, have already been taken in Belgium: subsidies are granted for activities which take biodiversity into account such as private sustainable management of nature reserves, environmental measures in farming (for example enlargement and maintenance of natural borders, and use of manual or mechanised systems instead of chemicals), sustainable forestry (forest owners receiving subsidies for the development and implementation of forest-management plans that are based on sustainable forest management, for example conservation of indigenous tree species, and use of endemic species in re-afforestation projects), exemption from succession rights for private forests and exemption from succession rights and a levy for real property for land in the Flemish Ecological Network, exemption from death duties and real-estate deductions for land property situated in Natura 2000 Walloon sites, exemption of succession rights for non profit associations that make natural area accessible for the public, etc.

Economic incentives measures must be further promoted to encourage the protection of biodiversity in Belgium. For example, imposing a higher cost on products using virgin resources, promoting products obtained from sustainable managed resources (like wood products certified as being harvested in sustainable conditions), creating positive financial incentive for biodiversity friendly products, or providing payment to farmers who maintain biodiversity on their land, could be used as incentives to make sustainable use of biodiversity more attractive than unsustainable activities.

Alongside the introduction of incentives to support conservation and sustainable use of biodiversity, consideration must be given to removing or redirecting perverse economic incentives that accelerate the loss of biodiversity (these range from public subsidies that support unsustainable farming and fisheries to projects that erode or destroy biodiversity).

As single measures will often not suffice to address the complexities involved in decisions on biodiversity protection or sustainable use, a mix of measures may be needed. It is also important that the different instruments (at the different levels) are linked, that they are efficiently used and that shortcomings are followed up.

Furthermore, the ‘value' of biodiversity needs to be addressed (link with Objective 7.5. ‘Improve our knowledge of the socio-economic benefits of biodiversity') in order to integrate market and non-market aspects of biodiversity into economic and social decisions. Indeed, the pressures to reduce biodiversity are so great that to demonstrate the value of biodiversity, we need to encourage the introduction of incentives.

*CBD instrument
CBD has made proposals for the design and implementation of incentive measures. The proposals (endorsed at COP-6) highlight the key elements to be taken into consideration when designing and implementing incentive measures and also provide guidelines for selecting appropriate complementary measures.