LATIN AMERICA & CARIBBEAN REGION Expanding Financing for Environment & Water Resources Biodiversity Conservation OCCASIONAL PAPER SERIES EXPERIENCES FROM LATIN AMERICA AND THE CARIBBEAN THE WORLD BANK © 2012 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Acknowledgments This publication was prepared under the direction of Karin Kemper, Sector Manager for Environment and Water Resources in the Latin America and Caribbean Region of the World Bank. The document was written by Laura Tlaiye (World Bank) drawing from valuable sources provided by: Ana Beatriz Barona (Patrimonio Natural, Colombia); Manoel Serrão (Funbio, Brazil); José María Michel Fuentes, Paola Bauche Petersen (CONAFOR, Mexico); and Gabriela Arcos, Richard Damania, Graciela Reyes-Retana, Valerie Hickey, Adriana Moreira, Dinesh Aryal (World Bank). Special thanks are extended to the many other colleagues who have commented on earlier drafts. The publication was designed and produced by GRC Direct under the supervision of Rachel Pasternack and Emilia Battaglini (World Bank). Rights and Permissions The material in this work is subject to copyright. 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All images courtesy of Thinkstock/Getty Images and The World Bank Expanding Financing for Biodiversity Conservation EXPERIENCES FROM LATIN AMERICA AND THE CARIBBEAN ABBREVIATIONS AND ACRONYMS.................................................................................................VII FOREWORD...............................................................................................................................................IX EXECUTIVE SUMMARY Biodiversity Financing in Latin America and the Caribbean: What We’ve Learned in 20 Years............... 1 CHAPTER 1 CONTENTS 1.0 Expanding Financing for Biodiversity Conservation: Experiences from Latin America and the Caribbean.................................................................................................................................... 4 1.1 Setting the Stage............................................................................................................................... 4 1.2 Financing Biodiversity Conservation Efforts in Latin America and the Caribbean....................... 5 CHAPTER 2 2.0 Brazil: Atlantic Forest Fund and Mainstreaming Biodiversity Conservation in the State of Acre’s Development Programs.................................................................................................... 12 2.1 Atlantic Forest Fund, Brazil: A Flexible Financing Tool for Biodiversity Conservation in the State of Rio de Janeiro..................................................................................................................... 12 2.2 Acre State: Mainstreaming Biodiversity into Development Programs in the Amazon................. 13 CHAPTER 3 3.0 Colombia’s Conservation Mosaics: Communities at Work............................................................ 16 CHAPTER 4 4.0 Mexico: Payments for Environmental Services and Other Forest Programs Working for Biodiversity................................................................................................................... 20 CHAPTER 5 5.0 Peru: Enabling Private Cofinancing through Protected Area Administration Contracts........................................................................................................................................... 26 CHAPTER 6 6.0 Conclusions...................................................................................................................................... 30 REFERENCES.......................................................................................................................................... 32 OTHER PUBLICATIONS........................................................................................................................ 34 BOXES Box 1.1 2011-2020 Aichi Biodiversity Targets under the CBD: Examples............................................... 4 Box 1.2 Conservation Trust Funds............................................................................................................... 7 Box 2.1 Examples of Community Development Programs of the Government of Acre State............... 15 Box 4.1 CONAFOR Programs Working for Protection of Forest Ecosystems........................................... 21 CONTENTS Box 4.2 JIRA: A Unique Partner in Conservation...................................................................................... 24 FIGURES Mexico: Area under Federal Protected Areas............................................................................ 6 Figure 1.1 Percentage Increases Needed to Meet Basic and Optimal Funding Levels........................... 9 Figure 1.2 Protected Areas by Funding Source, 2008............................................................................... 9 Figure 1.3 Distribution of GEF-5 by Focal Area......................................................................................... 10 Figure 1.4 Figure 2.1 Acre Deforestation and Real GDP Growth............................................................................... 14 Figure 3.1 Locations of Conservation Mosaic Program........................................................................... 17 Figure 3.2 Farmers Sharing Experiences, Orquídeas-Encarnación Basin Mosaic................................. 18 Figure 4.1 Coastal and Pacific River Basin Region................................................................................... 22 Figure 4.2 CONAFOR Programs in the Jalisco Coastal Area..................................................................... 23 Figure 5.1 Signing of a Salinas y Aguada Blanca National Reserve Administration Contract............... 29 TABLES Table 1.1 Protected Area Management Costs and Financial Gaps in Selected Countries (millions of US$, 2010)................................................................................................................ 8 Table 5.1 Threats, Indicators, and Activities under DESCO’s Administration Contract......................... 28 AFR: Africa ARPA: Amazon Region Protected Areas CONAFOR: National Forest Commission (Comisión Nacional Forestal) CONANP: National Commission of Protected Areas of Mexico (Comisión Nacional de �reas Naturales Protegidas) CTF: Conservation Trust Fund DESCO: Center for Studies and Development Promotion (Centro de Estudios y Promoción del Desarrollo) ABBREVIATIONS AND ACRONYMS ECA: Europe and Central Asia EEZ: Ecological Economic Zoning FMA: Atlantic Forest Fund (Fundo da Mata Atlântica) FMCN: Mexican Fund for Conservation of Nature (Fondo Mexicano para la Conservación de la Naturaleza) Funbio: Brazilian Biodiversity Fund (Fundo Brasileiro para a Biodiversidade) GDP: Gross Domestic Product GEF: Global Environment Facility JIRA: Intermunicipal Board for Integrated Management of the Ayuquila River Basin (Junta Intermunicipal para la Gestión Integral de la Cuenca del Río Ayuquila) KfW: German Development Bank (Kreditanstalt für Wiederaufbau) LAC: Latin America and the Caribbean IUCN: International Union for Conservation of Nature PES: Payment for Environmental Services Profonanpe: Peruvian Trust Fund for National Parks and Protected Areas (Fondo de Promoción para las Areas Naturales Protegidas del Perú) PSA: Environmental Services Program (Programa de Servicios Ambientales) REDD: Reducing Emissions from Deforestation and Forest Degradation REDD-plus: Enhanced vEersion of the reducing emissions from deforestation and forest degradation program RedLAC: Network of Environmental Funds in Latin America and the Caribbean (Red de Fondos Ambientales de Latino- America y el Caribe) SINANPE: National Natural Protected Areas System (Sistema Nacional de �reas Naturales Protegidas por el Estado) SINAP: National System of Protected Areas (Sistema Nacional de �reas Naturales Protegidas) VII It is fair to say that the Latin America and Caribbean the Latin America and Caribbean region in building region leads the world in biodiversity conservation. partnerships to garner non-public finances for With 20 percent of its land set aside for conservation, conservation through all kinds of financing instruments the region by far surpasses the 13 percent average - from payment for environmental services to achieved by other developing regions of the world. This marketing of biodiversity-friendly products, incentive- is a major achievement and it is a great pleasure to based conservation contracts, co-management with honor the efforts made by so many people - decision communities and civil society - offers invaluable makers, practitioners, financiers, communities, individuals - since the Convention on Biological lessons for other countries in the region and worldwide. FOREWORD Diversity came to life 20 years ago. This publication focuses on illustrating approaches Evidence shows that biodiversity and ecosystem health used in four countries - Brazil, Colombia, Mexico and are decreasing worldwide. In a world of constrained Peru - to address the financing challenge they face in budgets and slow economic growth, the already limited managing well-established biodiversity conservation public financing for biodiversity could be difficult to areas. Learning from these and other promising sustain, let alone expand. Recognizing the potential experiences of successful financing schemes is an of ecosystems for economic and social growth and indispensable part of planning future conservation building on public private partnerships to invest efforts and a prerequisite for fulfilling the ambition to in natural wealth can help transform biodiversity increase protected areas globally. conservation into an engine of growth, a growth that is more inclusive and greener. As one of the major funders of biodiversity and sustainable natural resources management, the More and more stakeholders - including many in the World Bank is ready to provide its convening power, private sector - are coming to appreciate the value of global knowledge and financial support to build our ecosystems and the role they play in underpinning partnerships and mobilize long-term funding for growth and poverty reduction. Governments invest biodiversity conservation. We see this as a priority for in biodiversity conservation because it is part of the building healthy and resilient communities who rely national wealth and underpins natural processes on clean air, water, land and oceans. We hope that by supportive of livelihoods and economic activities. highlighting how sustainable management of natural The private sector invests in biodiversity conservation capital is possible, the cases presented here serve to create value, ensure supply chains and improve as an inspiration for others to pursue a greener, more business models. inclusive growth. Civil society, business leaders, conservation Ede Ijjasz-Vásquez organizations, and financial institutions all bring new Director ideas, innovation, partnerships and commitment Sustainable Development Department to sustainable conservation that can unlock public Latin America and Caribbean Region financing and overcome inaction. The experience of The World Bank IX Biodiversity Financing in Latin America and the Caribbean: What We’ve Learned in 20 Years The Latin America and Caribbean Region has been n Capacity based on record of experience. EXECUTIVE SUMMARY at the forefront of global biodiversity conservation, dedicating 20 percent of its land to protected areas Institutional capacity in Latin America and the Caribbean involving innovative instruments has compared to 13 percent in the rest of the developing been developed over the past 10–15 years by world. This progress has stretched available budgets implementing and improving upon programs. The for conservation with estimates indicating that a creation of a formal civil service for protected twofold increase would be necessary to achieve area agencies (including national parks) and for optimal management of existing protected areas conservation aspects in associated forestry and based on 2008 data. Recognizing the importance planning agencies has been a key milestone in this of this financing challenge, this document presents progress. Similarly, conservation trust funds have examples of how the region is successfully exploring evolved into mature institutions capable of fund news ways and sources of finance for biodiversity raising, innovation, and sharing lessons. conservation. It is intended as an input to the global discussions on biodiversity financing drawing from n Building social capital. Conservation needs to be a selective review of concrete experiences where owned by the communities who know best about governments are tapping nonpublic finance sources nature. Successful conservation programs have in effective partnerships. The cases reviewed point to transformed them into the strongest allies. common features contributing to their success: n Clarity about conservation objectives. People can n Variety in arrangements. In reaching conservation mobilize when targets and results are clear and targets, governments in the region are raising can be tracked transparently and in the near term. resources from different members of society trying and adapting a variety of arrangements and n Strong government leadership in guiding innovative tools to local circumstances. biodiversity conservation policies and programs. Direct government support is needed for the n Enabling legal and institutional support. In foreseeable future because the true value that all cases, legislation passed over time provided biodiversity provides to humankind is yet to be government with the necessary regulatory power fully quantified, and ecological services are not and human resources to allow use of new tools (normally) traded in markets. Thus, government (for example, payment for environmental services, will retain a leading role in planning, executing, and administration contracts, conservation trust funds) financing in order to engage the rest of society in and the establishment of enforceable agreements effective partnerships for conservation. with communities, nongovernmental organizations, and the private sector. 1 Expanding Financing for Biodiversity Conservation n Financial resources as a necessary but not sufficient ingredient to deliver real biodiversity protection impacts. The effective management of protected areas and associated landscapes goes well beyond ensuring financial resources. Much effort is needed by the various stakeholders to deploy resources effectively in order to deliver the expected biodiversity protection results. What does this mean for the future? We hope this publication signals that we can build on the success of experienced institutions and programs to seek the public-private partnerships necessary to mobilize more funding and citizen action for biodiversity conservation. The experiences reviewed recognize the promising role of civil society and the private sector. More and more leaders see the benefits of investing in our natural wealth not just for community or social acceptance, but because healthy ecosystems provide valuable services and stability needed in business, such as supply of fresh water, genetic resources, climate regulation, and natural hazard protection. The case studies show that the solutions need to be tailored to the specific local circumstances, seeking to build long- term sustainability through processes and regulations that are locally accepted (for example biodiversity offsets, more locally sourced financing in payment for environmental services). While government will remain the steward of biodiversity conservation, the full potential of participation by nonpublic stakeholders (private companies, foundations, communities, nongovernmental organizations, and citizens) is yet to be tapped. The Latin America and the Caribbean Region has proven that clever programs can involve these stakeholders effectively, earning them valuable rewards in the form of more resilient biodiversity and better-functioning ecosystems. Expanding Financing for Biodiversity Conservation 2 3 Expanding Financing for Biodiversity Conservation 1 BOX 1.1 Expanding Financing for Biodiversity Conservation: 2011-2020 Aichi Biodiversity Targets under the CBD: Examples Experiences from Latin America and the Caribbean 1.1 Setting the Stage By 2020, the rate of loss of all natural habitats, including forests, is at least How can we use what we have learned in the last 20 years to increase financing for biodiversity halved and where feasible brought to conservation? World leaders and stakeholders from different corners of society regularly gather to zero, and degradation and fragmentation discuss the progress achieved and the great challenges we still face in reaching the agreed goals to is significantly reduced (target 5). safeguard global biodiversity. The past 20 years have shown the complexity of these challenges, as By 2020, at least 17 percent of terrestrial they involve political, institutional, and economic dimensions. It has proven difficult to deploy adequate and inland waters and 10 percent of financial resources to meet the Convention’s goals, nationally and globally. This document provides marine and coastal areas of particular examples of promising financing arrangements that are helping countries in the Latin America and the biodiversity importance are conserved Caribbean Region meet their conservation goals. (target 11). Global conservation goals embraced by most nations still demand huge efforts to be realized On financing matters (target 20), decision considering the scale of biodiversity loss, particularly in a world with unmet human needs. The X/3 requests Parties to: Convention on Biological Diversity set a global goal of reversing the loss of biodiversity resources • Report on funding needs, gaps, through in situ conservation of valuable habitats and biodiversity. This goal was broadly embraced and priorities related to national by almost all nations of the world, who have responded with programs, policies, and partnerships to implementation of the resource protect, on land and sea, those areas representative of their national biological diversity. These efforts mobilization strategy; have made great progress, however habitat loss continue their course, metrics of improvements in biodiversity’s various elements are still incomplete, and resources available are insufficient. This is why • Assess the values of biodiversity; from the tenth meeting of the Conference of the Parties to the Convention in Nagoya, Japan, October • Prepare national financial plans for 2010, to the eleventh meeting in Hyderabad, the emphasis is on updating and reinvigorating national biodiversity. biodiversity strategies and action plans to achieve tangible goals. Among the agreed goals of the Convention on Biological Diversity for the period 2011 to 2020 are the 20 ambitious Aichi Biodiversity Targets, including aspired protection goals and the financial means to achieve them (box 1.1). Source: http://www.cbd.int/sp/targets/ Of the conservation tools applied over the last two decades, a system of protected areas has been the most commonly adopted, yet many protected areas are not fully functional and may not guarantee Expanding Financing for Biodiversity Conservation 4 biodiversity functions. A system of well- applying innovative instruments that complement 1.2 Financing Biodiversity functioning protected areas1 of various categories protected area systems. As in other developing Conservation Efforts in Latin America has been one of the main conservation tools regions in the world, the pace of economic and the Caribbean applied around the world. In developing development and the high global demand for countries, the challenge of establishing and natural resources place heavy pressures on 1.2.1 Protected Areas managing these areas for effective biodiversity sustaining and expanding viable ecosystems, protection has seen tremendous progress hence the need to learn from what has worked over the last 20 years. However, from legally and deepen efforts for more effective and Latin America and the Caribbean leads other demarcating a protected area to effectively efficient conservation. developing regions of the world in safeguarding managing it, including its buffer zone, requires a biodiversity resources, with 20 percent of its land range of financial and institutional investments. area in protected areas compared to 13 percent This publication draws from existing reviews, These include resouces for hard investments of other developing regions of the world. literature, and expert opinion to highlight (Infrastructure access roads, trails visitors promising instruments and arrangements applied faciltiies) and enforcement, and the regulations in the region to increase financing for the system Over the past 20 years, Latin America and and human capacity to manage the area of protected areas and beyond. These sources the Caribbean has expanded the coverage working with communities and the affected also point to growing threats to biodiversity of protected areas, while setting financial economic interests (for example farmers, and a financing gap for existing and new areas. mechanisms to support them. In that period loggers, and miners). The needed financial and From World Bank-financed projects, the Global the region has doubled the terrestrial area human resources go beyond the capacity of Environment Facility (GEF), bilateral donors, and under protected areas, and the marine area many developing countries, notwithstanding other sources, the document presents four cases has increased from 3 percent to 14 percent of the significant support received from external where protected areas are combined with other territorial waters up to 12 nautical miles from sources and civil society. instruments of biodiversity conservation that help shore.2 In addition to establishing the regulatory leverage government budgets: (a) trust funds and and institutional infrastructure for protected The Latin America and the Caribbean Region mainstreaming in development programs (Brazil); areas with defined and stable rules, governments is at the forefront of developing systems of (b) tapping contributions from communities have worked on establishing sustainable protected areas, though many challenges still in conservation mosaics (Colombia); (c) local financing sources. This has included securing remain. This publication presents evidence of cofinancing and schemes involving payments formal approval of central government budget how the region has many reasons to be proud of for environmental services (Mexico); and (d) items and the establishment of conservation its conservation efforts, not just for the extent of administration contracts (Peru). trust funds (CTFs) as private institutions conservation areas and programs, but also for entrusted with long-term endowments for 1 According to the International Union for Conservation of Nature (IUCN), a protected area is “a clearly defined geographical space, recognized, dedicated and managed through legal or other effective means to achieve the long-term conservation of nature with associated ecosystem services and cultural values.� 2 IUCN World Commission on Protected Areas and UNEP World Conservation Monitoring Centre. World Database on Protected Areas. http://www.unep-wcmc.org/world-database-on-protected-areas-wdpa_76.html. 5 Expanding Financing for Biodiversity Conservation conservation programs. These entities have delivered on protecting the has increased the coverage of its protected area system, so have the capital entrusted in them and have grown to become incubators of a associated expenditures risen. Using Mexico again as an example, the variety of conservation programs beyond the boundaries of protected fivefold increase in the area under federal protected areas shown in figure areas (box 1.2). 1.1 (to reach about 21 million hectares by 2010) also meant a sevenfold increase in associated expenditures from 2000 to 2010 (CONANP 2010). CTFs in Latin America and the Caribbean have helped supplement government funding for protected areas. The type of expenditures Despite this progress, current budgets are not keeping pace with the supported by CTFs has varied among countries and has included needs and international cooperation is unlikely to fill the gap. On average, covering part of recurrent costs and cost sharing of the necessary capital Latin America and the Caribbean governments allocate to protected areas investments that are often needed to meet individual or systemwide just 1 percent of national environmental budgets, which amounts to $1.18 protected area objectives. Many CTFs have evolved to support special per hectare of protected area (based on 2008 expenditures). According projects that are more difficult for the government to fund. For example, to a self-assessment of 18 countries for the year 2008, about $382 the Mexican Fund for Conservation of Nature (Fondo Mexicano para la million were allocated to existing protected areas, with Brazil and Mexico Conservación de la Naturaleza, FMCN), created in 1998, applied 75 accounting for about $214 million of the total, in proportion to the size of percent of the interest obtained from the protected areas fund it managed their protected area systems (table 1.1). When compared to management to new staff salaries for the federal protected area system. But in 2008, costs, this figure covers only 54 percent of the basic needs, defined as the government absorbed this expenditure into its budget, allowing the funding required to operate key conservation programs while meeting the FMCN to apply these resources to innovative and strategic projects basic program requirements to sustain the functions of ecosystems in the implemented by local groups and civil society organizations. As the region protected areas. For an optimal management scenario, defined as the funding required for all programs to reach and sustain optimal functions Figure 1.1 Mexico: Area under Federal Protected Areas of ecosystems in the protected areas, the resources required would be $1,083 million. This means that the optimal level of management would Millions of Hectares require about $700 million more, or about a twofold increase from what 25 was reported to be the level of funding in 2008 (Flores 2010; Bovarnick et al. 2010). Brazil and Mexico account for more than half of this funding 20 shortfall in absolute terms. To appreciate the level of effort that would be needed to close these financing gaps (to meet basic and optimal funding 15 levels with respect to current funding), figure 1.2 shows the percentage increases necessary for all countries in the region. 10 The international sources – notably GEF and bilateral donors – have 5 been instrumental in reaching the current level of support. Estimates of the share of funding sources are depicted in figure 1.3. Government is 0 the principal source with 60 percent of the total, followed by 15 percent 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 from international cooperation as donor funds. These include support for Sources: CONABIO et al. 2007 and CONANP 2010. Expanding Financing for Biodiversity Conservation 6 BOX 1.2 Conservation Trust Funds The Latin America and the Caribbean Region capital in perpetuity and only utilize interest or returns for all funds averaged 5.43 percent and is home to 22 conservation trust funds (CTFs) return earned; sinking funds (14.9 percent), five-year returns were at 7.82 percent for the in 15 countries and one transboundary area which allow the utilization of capital over a long period ending December 31, 2010 (the five-year (Mesoamerican Barrier Reef System). period of time; revolving funds (0.5 percent), return of the S&P 500 index was 2.29 percent). designed to recover utilized resources; and The annual dollar-adjusted return in 2010 was What do CTFs support? Revenues from CTFs other mechanisms (29.3 percent). In 2008, all 9.47 percent. Their assets invested more than support 660 protected areas, of which 455 of the RedLAC funds together disbursed $31.5 40 percent in bonds and around 30 percent in are public, 150 are private, 45 correspond to million for protected areas. Regarding the origin equities, with the remainder divided between traditional population areas, and 10 are of other of these trust fund resources, multiple sources cash and alternative investments. classification. Most of these CTFs (17) support are possible although international donations protected area consolidation projects, including How are CTFs set up and what other roles can still represent the most important source (11 investment in equipment and infrastructure; they play? CTFs are generally set up as private funds receive international donor resources for establishment of councils and training and legal entities independent from government, protected areas). Private national donations or community participation programs; and scientific although government officials sit on and often government budget resources are also important, research and biodiversity monitoring. Most chair their governing boards. Often, members as reported by seven and six funds, respectively. trust funds include fund management plan of civil society and the private sector also serve Among other sources cited by half of the funds, formulation and institutional strengthening on the governing boards and help shape the United States and Germany debt-for-nature activities for organizations responsible for investment policy. This independent status swaps stand out. Only one fund reported market protected area system management. The costs has provided CTFs with flexibility and agility in mechanisms as an important source. of signalization, vigilance and control, and park performing core functions and enables them guard training are often covered by these funds. How do CTFs perform financially? CTFs were to play a role in other national conservation able to preserve value and generate returns programs. For example, CTFs have been How are CTFs funded? The resources managed comparable to peers through the 2009–2010 active agents for capacity building within and by environmental trust funds are mobilized financial crisis. In an analysis of responses outside their countries (including the peer-to- through different types of financial mechanisms. from 28 funds worldwide (Preston and Victurine peer learning facilitated by RedLAC), working For example, RedLAC3 funds administer a 2010), which included 15 CTFs in Latin America on clean energy and projects concerned with total of $328.7 million dedicated to protected and the Caribbean (on average these CTFs reducing emissions from deforestation and forest areas. This total is divided into endowment had been in existence for 12 years), three-year degradation (REDD), among other initiatives. funds (55.4 percent), intended to preserve Source: Based on Bovarnick et al. 2010 and KfW 2010 3 The Network of Environmental Funds in Latin America and the Caribbean (Red de Fondos Ambientales de Latinoamérica y el Caribe, RedLAC) is a network of environmental funds formally established in 1999. Its mis- sion is to create a system for learning, institutional strengthening, capacity building, and cooperation across its 26 members in 16 countries (http://www.redlac.org). 7 Expanding Financing for Biodiversity Conservation Table 1.1 Protected Area Management Costs and Financial Gaps in Selected Countries (millions of US$, 2010) Financial gaps Financial needs (costs) (costs – current funding) Current Basic Basic Optimal Optimal Country funding needs needs Argentina 31.3 39.5 60.4 8.2 29.1 Bolivia 5.1 5.4 9.0 0.3 3.9 Brazil 133.4 302.6 471.7 169.2 338.3 Chile 9.2 18.0 26.8 8.8 17.6 Colombia 18.0 25.2 42.8 7.1 24.7 Costa Rica 29.6 31.9 44.0 2.3 14.4 Cuba 14.6 21.6 36.8 7.1 22.2 Dominican Rep. 10.4 22.6 28.0 12.2 17.6 Ecuador 4.0 6.7 14.0 2.8 10.1 El Salvador 3.8 4.4 7.6 0.6 3.8 Guatemala 8.3 16.1 27.4 7.8 19.1 Honduras 4.1 6.6 11.3 2.5 7.1 Mexico 80.2 120.3 160.4 40.1 80.2 Nicaragua 5.3 19.6 43.3 14.2 38.0 Panama 9.5 19.9 33.8 10.4 24.3 Paraguay 1.2 9.7 19.5 8.5 18.3 Peru 13.1 25.1 41.8 12.1 28.8 Uruguay 0.8 3.4 4.4 2.6 3.5 Total 381.9 698.6 1,083.0 316.8 701.0 Source: Flores 2010. Figures rounded to the nearest million. Expanding Financing for Biodiversity Conservation 8 Figure 1.2 Percentage Increases Needed to Meet Basic and Optimal Funding directly benefit protected areas (as opposed to areas beyond the demarcated protected areas), licenses, and fines. “Other� includes a variety of sources, such as dedicated taxes and Optimal Basic compensations for protected areas and special funds that Uruguay 434% benefit protected areas. 318% Peru 220% 93% Paraguay 1472% 682% The fifth replenishment of the GEF (GEF-5) for the period Panama 109% 255% 2011 to 2014 will continue to benefit the Latin America and Nicaragua 268% 715% the Caribbean Region’s biodiversity programs, although Mexico 50% 100% significant cofinancing sources will be needed. As shown in Honduras 61% 173% figure 1.4, GEF-5 funding for the entire biodiversity program Guatemala 229% area for Latin America and the Caribbean is $369 million for 93% 99% El Salvador 17% the 2011–2014 period, or on average $92.3 million per year. 253% Ecuador 69% This amount is intended to support five strategic objectives 170% Dom. Rep. 117% under GEF-5, of which one is to improve the sustainability of 152% Cuba 48% protected area systems.4 Assuming the historic proportion Costa Rica 48% 8% Colombia 137% 40% Chile 191% 95% Brazil 127% 254% Figure 1.3 Protected Areas by Funding Source, 2008 Bolivia 76% 5% 93% Other Argentina 26% Site-based 11% 0% 50% 100% 150% 200% 250% 300% revenues 14% International Government Cooperation budget Source: Based on Flores 2010. 15% 60% programs and projects or through capitalization of CTFs (for example, grants from the GEF – the largest biodiversity donor in Latin America and the Caribbean – and debt-for-nature swaps). Site-based revenues include entrance fees, fees for tourism and recreational activities, payment for environmental services (PES) programs that Source: Based on Flores 2010. 3 4 The total allocation for the biodiversity focal area under GEF is $1.2 billion. The other four strategic objectives are: mainstream biodiversity conservation and sustainable use into production landscapes, seascapes and sectors; build capacity to implement the Cartagena Protocol on Biosafety; build capacity on access to genetic resources and benefit-sharing; and integrate CBD obligations into national planning processes through enabling activities. 9 Expanding Financing for Biodiversity Conservation Figure 1.4 Distribution of GEF-5 by Focal Area LD = land degradation; BD = biodiversity; CC = climate change. Source: Funding Available under GEF-5. http://www.cbd.int/doc/meetings/pa/wscbpa-la-01/other/ wscbpa-la-01-presentation-gef-en.pdf. of funding allocated to protected areas of about These findings point to the urgent need for other 60 percent of the total GEF biodiversity funding instruments and financing sources if existing since its creation (GEF 2012), about $56 million protected area systems are to be operated per year would be available for Latin America and adequately, let alone increase their coverage. The the Caribbean. If the basic management needs Latin America and the Caribbean Region has rich of $700 million per year were to be attained, GEF experience in innovating ways to expand support resources were to be attained by other sources to protected areas and adjacent areas. The on a 12.5:1 ratio. So far, GEF has been able to following subsection briefly summarizes some leverage its support for protected area programs other types of instruments used. Chapters 2, 3, on a 2.5:1 ratio globally (GEF 2012). 4, and 5 provide examples of their application in Brazil, Colombia, Mexico, and Peru. Expanding Financing for Biodiversity Conservation 10 1.2.2 Other Financing Instruments and Approaches in the Latin American Conservation Landscape In addition to protected areas, other tools for resource mobilization and management are in use to complement government funding. The main features of these tools are as follows: n Payment for environmental services (PES) schemes, also known as payment for ecological services, are cash transfers to providers of environmental services conditional on continued provisions. PES programs target a variety of ecosystem services, including carbon sequestration, watershed protection, landscape beauty, and protection of biodiversity habitat. The scaling-up of REDD is an example of a PES scheme based on payments for conservation of forest carbon. n Creation of marketable products, differentiated products, or services compatible with biodiversity protection (for example certified timber and nonforest products, ecotourism, licenses for photographing, hunting, and other recreational activities). n Incentive-based conservation arrangements, such as administration contracts (also known as management concessions), services concessions, comanagement with community and civil society organizations, and private reserves. This includes a variety of models and participation schemes where the government shares the responsibility of operating a protected area under defined conditions. n Mainstreaming biodiversity conservation in policies and sector programs by incorporating special measures and programs. The policies include biodiversity-sensitive land use regulations and territorial planning; infrastructure planning; project siting, impact assessment and mitigation; compensation for large infrastructure and extractive industries; and forestry and agricultural policies, notably subsidies. 11 Expanding Financing for Biodiversity Conservation 2 Brazil: Atlantic Forest Fund and Mainstreaming Biodiversity Conservation in the State of Acre’s Development Programs 2.1 Atlantic Forest Fund, Brazil: A Flexible Financing Tool for Biodiversity Conservation in the State of Rio de Janeiro Brazil’s Rio de Janeiro state hosts 20 percent of the remaining Atlantic Rainforest (Mata Atlântica) – a unique biome historically degraded due to its location along a densely populated belt comprising five states of Brazil’s South and Southeast Regions. Rio de Janeiro state has established 46 protected areas known as conservation units (unidades de conservacão), which cover 365,475 hectares, or about 8 percent of its territory (data as of June 2008) (Freitas and Camphora 2009). The Atlantic Forest Fund (Fundo da Mata Atlântica, FMA) is a financial and operational mechanism developed by the Brazilian Biodiversity Fund (Fundo Brasileiro para a Biodiversidade, Funbio) at the request of the State Secretary of Environment. It is modeled after the Amazon Region Protected Areas (ARPA) program, the successful federal program for protected areas in the Amazon region. The FMA was designed to provide greater agility, efficiency, and transparency to a portfolio aimed at strengthening state and municipal protected areas, including projects focused on conservation and restoration of the state’s biodiversity.5 The FMA is a flexible tool because it enables the state to capture funding from different sources, such as contributions from environmental compensations, voluntary donations, domestic and international grants, and carbon credits. Through Funbio, the terms and conditions can be agreed with each source to meet the needs of the projects. The largest funding source so far is compensations for environmental impacts paid by industrial and 5 http://www.funbio.org.br/o-que-fazemos/projetos/fma-fundo-mata-atlantica-do-rio-de-janeiro. Expanding Financing for Biodiversity Conservation 12 infrastructure projects, as regulated by law.6 In costs, that is, for salaries, administration, percent of national gross domestic product (GDP). addition, the FMA hosts an endowment fund maintenance, and management programs) intended to support recurrent costs of protected (Freitas and Camphora 2009). This means that Acre’s history is marked by a highly income- areas on a long-term basis. in 2008 the financing gap was R$34 million concentrating economy dependent on rubber (R$55.5 million in minimum annual needs minus tapping, unsuitable colonization projects, The FMA was initiated with 3.1 million reais (R$) the available budget of R$21.5 million). difficulty of access both within the state and to (1 Brazilian Real = 0.4931 US Dollars) from the state from outside (particularly in the rainy compensation funds from a steel manufacturing By 2010, the FMA had already invested R$14.5 season), lack of adequate infrastructure for basic company and a grant from Germany’s Ministry of million in the state’s protected areas (Funbio social services and productive activities, and Environment through the German Development 2012), indicating that the fund had been able long distances and challenging terrain between Bank (Kreditanstalt für Wiederaufbau, KfW) to fill about 43 percent of the financial gap, rural and urban centers. This combination of of R$508,000. These resources were used assuming needs and budget remained about challenges has contributed to making Acre one to purchase equipment and vehicles and to the same as in 2008. The state is therefore on of the poorest states in Brazil. With a population contract works and consultancies for state track to improve the financial sustainability of its of about 687,000 people, 66 percent living in protected areas. Currently, the compensation existing protected areas system. Furthermore, cities that concentrate over 65 percent of the portfolio for the FMA is close to R$50 million if projections prove correct, financing might economic activity, Acre’s per capita income is the already deposited, and this sum is expected to no longer be a main constraint to fulfilling the eighth lowest in the country. Despite significant grow to R$200 million with signed participation ambitious goal of doubling the size of the system improvements in recent years, the state’s social agreements from 46 projects benefitting 20 agreed by the five Mata Atlântica states under and economic indicators are, in many areas, protected areas (Funbio 2012).7 the Environmental Pact for the Southeast signed worse than the average in the Amazon region, by the ministers of environment in October 2007. which in turn are already far below the Brazilian This level of funding is quite considerable when average. Thus, Acre’s main development compared to recent state budgets for protected challenges are to bring public services to the 2.2 Acre State: Mainstreaming areas. For example, in 2008 the state of Rio dispersed rural population and to continue Biodiversity into Development de Janeiro allocated a R$21.5 million budget moving away from growth based on extraction Programs in the Amazon8 to its protected areas system (this includes of forests products and expansive agriculture government and other sources). The minimum toward a more value-added economy. Located in the extreme southwest corner of annual needs were estimated at R$55.5 million the Brazilian Amazon region, bordering Bolivia, (comprising R$33.4 million for investments, As shown in figure 2.1, Acre has been able to Peru, and the Brazilian states of Amazonas and that is, for infrastructure, equipment, and decouple deforestation from economic growth. Rondônia, the state of Acre has a number of contracts for management plans, signs, and legal Up to the early 2000s, about 90 percent of the development challenges. It has the third smallest demarcation; and R$22.1 million for recurrent timber exploitation in Acre was illegal, mostly economy of all 26 Brazilian states, representing 0.2 6 Financial compensation for environmental impacts of investment projects in Brazil was enabled by article 33 of Federal Law No. 9.985 of 2000, establishing the National System of Conservation Units. Subsequent regulations at federal and state levels have defined the operational modalities of environmental compensations. For example, in the state of Rio de Janeiro a public-private Chamber of Environmental Compensation assesses the level of compensation within a range of 0.5 percent to 1.1 percent of total project value as established by state regulation. 7 Article 33 above also establishes how environmental compensations can be spent, describing type and order of priority for expenditures in public and private protected areas. 8 Except where noted the prime source of this section is World Bank 2008. 13 Expanding Financing for Biodiversity Conservation Figure 2.1 Acre Deforestation and Real GDP Growth resources. Acre’s economy has always been directly based on the forest and on the social km2 GDP (million reals) factors related to its exploration and exploitation. Acre places the forest at the center of social and economic development, considering humans as an integral part of the natural system but not necessarily its dominant participant. From 1999 to 2006 the government of Acre was known as the “government of the forest� due to its strong R$1 = US$ 0.4931 commitment to preserving the forest, and a clear recognition that the state had an eminently forest-linked economy. The harmonization between economic development and sustainable use of the forests is known as “florestania,� Source: Environmental Defense Fund www.edf.org/content/ready-redd. which is a combination of the words forest (floresta) and citizenship (cidadania). This new term, created to describe the various lifestyles in because of the failure of the state to monitor as much of Acre’s land remains protected. Acre the Amazon region, represents a shift in cultural, timber licenses. Currently, after state and has an area of approximately 164,221 square social, and economic paradigms, and epitomizes federal efforts to regulate the timber sector, kilometers, representing 4.26 percent of the the government’s decision to focus on human including stronger legislation, monitoring Brazilian Amazon region and 1.92 percent of development through the use of the state’s and law enforcement systems, and other Brazil’s territory. Primary tropical forest still natural resources but with strong environmental economic incentives, some 85 percent of timber covers 88 percent of the state territory. About 46 consciousness. commercialization in Acre comes from approved percent of Acre state is designated as protected, forest management plans. At the same time, 31 percent as protected areas (9.5 percent of Acre’s real GDP increased over 44 percent strict protection and 21.6 percent of sustainable The means to translate “florestania� into (over one and a half times more than the robust use), and 14.6 percent as indigenous lands. development programs include use of planning national average), while deforestation declined Additionally, the forest code (since 1996) and participatory tools to target social and about 70 percent. The net result is that since establishes that between 50 percent to 80 productive programs to communities in most 1998, only about 3.7 percent of the state has percent of the area of all rural properties with need while preserving and enhancing areas been deforested, while over the same period forests in the Amazon region should be kept as a under protection. The planning tools used by 11.8 percent of neighboring Rondônia state legal reserve. Acre include ecological economic zoning (EEZ) has been deforested, and 4.75 percent of the and socioeconomic indicators through a broad- Amazon region overall. based consultation and participation process The state’s leadership, good governance, and resulting in maps that help regulate land use and innovative policies are enabling Acre to improve classify regions for targeted support programs. Past deforestation was fortunately moderate, well-being through sustainable use of its forest For example, in the 12 percent of the state Expanding Financing for Biodiversity Conservation 14 that is already deforested along major roads, and where farming, cattle ranching, and BOX 2.1 smallholder logging take place, the state is aiming to bring these economic activities EXAMPLES OF COMMUNITY into compliance with environmental regulations (requiring 50 percent of the land DEVELOPMENT PROGRAMS OF THE to be kept as forests) and promote intensification of production and transition from GOVERNMENT OF ACRE STATE unsustainable to sustainable practices, while increasing incomes and agriculture and forestry production. Community forest management. This program consists in the dissemination of community forest Forty-nine percent of the state’s territory covers managed and intact forest areas, management, social organization, management including indigenous territories, sustainable use reserves and settlement projects, state of the potential for the multiple use of the forest, and national production forests, and strictly protected natural areas. Most regions in social services, market prospection, environmental this zone are sparsely populated by indigenous peoples, rubber tappers, and riverine management, and food consumption. Presently, communities. Landholders must maintain forest cover on 80 percent of their lands. there are 220 families involved with forest Development programs here aim to ensure long-term conservation of protected areas, management and another 102 registered for participation. guarantee the sustainability of inhabited reserves, and improve incomes and social services in the isolated indigenous and rubber tapper communities. Modernization of latex extraction. This project is integrated into the Xapuri preservatives factory, For other areas of the state identified by EEZ to include unclear land tenure and offering opportunities for the rubber tappers titling or involving overlapping or conflicting claims, the first goal is to define and living at the Chico Mendes Extractive Reserve regularize land tenure as a precondition to incentivizing sustainable land use practices. and surrounding areas. It aims at modernizing and industrializing production, and consequently Identifying clearly the exact location of areas with land tenure issues is in itself a great incrementing incomes. By 2006, 1,000 rubber achievement in the Amazon context. tappers had been trained in standardizing techniques to supply latex to the factory. The programs that are proving successful to safeguard Acre’s natural wealth are helping communities extract forest and nonforest products more productively and Brazil nut extraction. The project aims at linking brazil nut extractors to nut-processing industries with better commercial terms. To prevent degradation of the remaining forests in Acre, through cooperatives. There are approximately state programs help farmers, cattle ranchers, and logging operators with technology, 4,000 families involved in brazil nut management know-how, and access to higher-value markets. These programs include facilitating and its industrialization. In 2004–2005, 10 certification of community forest management, training in intensification of cattle community warehouses were built, benefiting ranching, improving production technologies in extractive reserves through community 700 families, and 100 families have been trained forest management, and improved extraction and processing of forest products other in brazil nut management good practices. The than timber (better-quality brazil nuts, new products from rubber, and nontraditional cooperatives are offering the best prices in the products such as açai fruit, murumuru seeds, and andiroba seeds). Box 2.1 presents a market, driving other buyers to follow suit, or risk sample of these programs. running out of raw materials. Acre is therefore demonstrating how to address human development needs while carefully managing its natural wealth. The commitment to addressing poverty reduction is being fulfilled with good policies and well-targeted programs that identify and protect Acre’s unique Amazonian ecosystems. Biodiversity conservation is an integral part of these efforts. 15 Expanding Financing for Biodiversity Conservation 3 Colombia’s Conservation Mosaics: Communities at Work Colombia is among the 17 “megadiverse� countries in the world (six of them, including Colombia, in Latin America), defined as countries hosting the largest numbers of endemic species (UNEP 2010). With only 0.1 percent of the earth’s surface, the country hosts 15 percent of all known terrestrial species. Colombia contains 12 percent of the humid and dry hotspots in the continent and three of the world’s most biodiversity-rich areas: the Chocó biogeographic region, the Amazon basin, and the tropical Andes. Protected areas of various categories (including 51 national protected areas, known as national natural parks) account for 21 percent of Colombia’s territory and 16 percent of its territorial waters below 12 nautical miles.9 However, Colombia’s conservation efforts are being challenged by land use change pressures from expanding agriculture, mineral and fossil fuel exploitation, and forest degradation for local consumption. The government is applying different approaches to respond to these challenges, including expanding areas with improved natural resource management through conservation mosaics. Conservation mosaics, as applied in Colombia, is a territorial management approach that relies on social participation and community decision making to build land use planning and management that complements the system of national natural parks and surrounding areas. The approach recognizes that protected areas are vital for conserving the world’s biodiversity, but that dealing with land use pressures outside the protected areas is critical for the long-term existence of endangered species and the connectivity that enhances genetic diversity and ecosystem functions. Under a program supported by the GEF and the World Bank, Colombia is working with rural communities to effectively transform them into stewards of their land and forests, thus contributing to biodiversity conservation. 9 IUCN World Commission on Protected Areas and UNEP World Conservation Monitoring Centre. World Database on Protected Areas. http://www.unep-wcmc.org/world-database-on-protected-areas-wdpa_76.html. Expanding Financing for Biodiversity Conservation 16 Figure 3.1 Locations of Conservation Mosaic while generating local development benefits. other in improving waste management, fodder Program Facilitated by Patrimonio Natural – ­ Colombia’s production, intensive cattle management, and biodiversity and protected areas fund – these greenhouse orchard production. The program agreements are built though extensive dialogue also works to build community cohesion, and learning. For example, communities learn organizational capacity, and decision-making, why restoring corridors is beneficial to farming with female teachers and women playing a and water quality, and how to introduce more prominent role. sustainable and productive ways to produce crops and raise cattle. In return, they agree Another example is the Consacá-Yancuanquer Mosaics for Environmental to preserve forested areas in the farms and mosaic linked to the Galeras National Park, Goods and Services participate in reforestation and restoration located in Nariño department. In addition projects (Patrimonio Natural 2012). to a variety of flora and fauna, the Galeras National Park is notable for its páramo Mosaics for Territories For example, the Orquídeas-Encarnación basin biome – an extensive hydrological “sponge� owned by Ethnic Communities mosaic has introduced sustainable farming estimated to source 120 rivers and gorges practices, forest conservation, and active serving approximately 300,000 people and restoration of degraded lands in the buffer numerous farms and cattle ranches (Patrimonio zone of the National Orchids Park (Parque Natural 2011). The system is experiencing The program is working in nine areas of the Nacional Natural Las Orquídeas), located in similar pressures to the Orquídeas system country, five of them coinciding with territories Antioquia department. In addition, the program is described above, and the program has helped owned by ethnic communities (indigenous targeting restoration of the Encarnación River’s local communities reintroduce native species, and Afro-descendant) and four dealing with upper basin, which is also part of the park’s establish biodiversity corridors, and develop environmental goods and services (figure 3.1). A restoration zone. Primarily due to extensive cattle water supply and distribution schemes. main focus of the conservation mosaic approach ranching, the park’s buffer zone exhibited highly The Galeras National Park and the program is to allow for collective learning about the fragmented vegetation, compacted and eroded also support groups of property owners in relationship between nature and communities. soil, and large presence of invasive species. preservation and restoration activities, leading Through an agreement with approximately 500 to the establishment of 114 private natural The program works in the following manner. farming families,10 the program is aiming to reserves each with a management plan coherent The mosaic is constructed through agreements recover the structure, composition, and functions with the conservation objectives of the Galeras between local communities and the national park of the Andean and sub-Andean forest. Assisted National Park. These reserves cover 504 administration within and around the protected by a respected technical institution (Fundación hectares, of which 40 percent are designated for areas to meet specific conservation objectives Cipav), farmers are prepared to help each conservation. 10 An average farm is 64.4 hectares, 50 percent of which is cultivated or grassland and 50 percent remains as forest. Preserving the forested land was also a key objective of the program. 17 Expanding Financing for Biodiversity Conservation Figure 3.2 Farmers Sharing Experiences, Orquídeas-Encarnación Basin Mosaic In both cases, the mosaic approach is helping to mobilize resources of local communities to preserve and restore territories adjacent to protected areas, thus helping to increase the viability of valuable ecosystems. Another tangible result is the creation of social capital among local communities and of a more legitimate and productive relationship with the national park authority. In addition to these and other local benefits (for example water and soil preservation), the nine mosaics have contributed to the voluntary establishment of about 35,000 hectares in private and collective reserves and 191,000 hectares within the buffer zones of the Galeras, Orquídeas, Farallones, and Old Providence National Parks, to be included in management plans with community participation. As recognized by the GEF in choosing Colombia’s conservation mosaics among the 17 most innovative and important conservation initiatives for the 2010 Year of Biodiversity celebration, this experience holds great potential for the rest of the world. Expanding Financing for Biodiversity Conservation 18 19 Expanding Financing for Biodiversity Conservation 4 Mexico: Payments for Environmental Services and Other Forest Programs Working for Biodiversity Mexico is one of the world’s 17 megadiverse countries owing to its location and the wide variety of climates and geographies present in its territory.11 The country has several programs in place to protect biodiversity, including a National System of Protected Areas (Sistema Nacional de �reas Naturales Protegidas, SINAP) comprising 174 federal areas that, together with state and municipal areas, accounts for 25.3 million hectares or 13 percent of the national territory. Yet conservation in protected areas is insufficient to slow the pace of biodiversity loss, because the economic drivers of habitat degradation are strong and because there are still important biomes not fully covered by SINAP. Deforestation and degradation of forests and coastal areas in Mexico are being driven by weak enforcement of land use planning, urban sprawl, infrastructure construction, and extractive activities, and, to lesser extent, by conversion to pasture and agriculture. In addition, land abandonment has facilitated illegal logging and uncontrolled fires and pests. The consequences include not just loss of biodiversity but also a host of other problems, including deterioration of water resources, higher impacts from natural disasters, soil erosion, and climatic disruptions. Loss of forest resources also affects the livelihoods of the 12 million people who depend on or complement their income from timber or nontimber forest products. The government of Mexico has therefore designed conservation policies and programs to complement SINAP, including territorial planning at regional and local level, voluntary conservation areas, certified forest areas, wildlife management reserves (unidades de 11 Except where referenced otherwise, the prime source of information for this section is CONAFOR 2012. Expanding Financing for Biodiversity Conservation 20 BOX 4.1 CONAFOR Programs Working for manejo de la vida silvestre), and Protection of Forest Ecosystems mainstreaming conservation goals in public policies and programs. Of particular interest The national Environmental Services Program the conservation of forest ecosystems. CONAFOR are forest management policies (PSA) operates in two modalities: hydrological encourages ecosystem service users (including and programs, as they have ecosystem services and biodiversity conservation. cities, water utilities, and businesses) to become incorporated conservation and Both modalities are based on financial involved in these local programs by making financial ecological functions performed by compensation to forest landowners aiming to contributions matched by CONAFOR. The contracts forests and tropical landscapes into maintain ecosystem conditions that favor the are adapted to local conditions and can last for the broader agenda of increasing provision of ecosystem services. A contract is periods between five and 15 years. Established in production and productivity of the signed between landowners and CONAFOR in which 2008, matching funds have enabled collaboration forest sector. Mexico’s National the landowners agree to maintain forest cover or with civil society organizations, water utilities, the Forest Commission (Comisión implement practices to conserve ecosystems and National Water Commission, state governments, Nacional Forestal, CONAFOR) CONAFOR agrees to pay a fixed compensation municipalities, and an intermunicipal decentralized has developed payment for per hectare over a period of five years. The level public entity. environmental services (PES) of payment per hectare of enrolled forest varies programs that are among the The Biodiversity Endowment Fund (Fondo depending on the type of forest ecosystem and most mature in the developing Patrimonial de Biodiversidad), established with the risk of deforestation, with higher payments for world (box 4.1). These programs seed funding from GEF and the government forests under greater threat. Landowners agree have evolved to leverage central ($10 million each), aims to provide payments in to avoid or prevent others from changing land use government funding by bringing perpetuity, under a regional and biological corridor in exchange for payments. They are encouraged together providers and users of approach, for areas of high conservation priority to conduct surveillance activities to prevent environmental services. that are not suitable for PES or other programs illegal logging, unregulated hunting, and other because service users are not readily identifiable. harmful activities. CONAFOR finances performance The national Environmental The selection of the target regions is conducted monitoring, which enables the continuation of Services Program (Programa by an expert technical committee comprising payments. The average size of PSA contracts in de Servicios Ambientales, PSA) government and civil society organizations based 2010 was about 1,000 hectares. currently covers 2.3 million on several criteria, including high endemism, hectares or a little under 5 percent Local PES mechanisms through matching funds opportunity to expand corridors, and relative degree of Mexico’s forest area.12 An (fondos concurrentes) were developed to transfer of threat. The program uses interest earned on resources from users of ecosystem services to the $10 million investment packages to compensate owners of forest land where services are generated communities for conserving these areas through 12 Seventy percent of forest land in Mexico is owned by communities and ejidos (rural lands aiming to promote sustainable management renewable five-year contracts subject to annual titled to a collective of individuals, a land practices and the conservation of land that performance evaluation. The fund seeks to tenure model unique to Mexico); 3,000 of these communities are engaged in some form will maintain or improve the provision of these leverage private, state, or local cofinancing for each of forest use, with 600 of them organized as services. This strategy takes into account water investment package. community forest enterprises. basins, biological corridors, and priority areas for 21 Expanding Financing for Biodiversity Conservation Figure 4.1 Coastal and Pacific River Basin Region additional 212,000 hectares have been financed with new sources using local PES mechanisms through the Matching Funds Program (2008– 2011), and 6,440 hectares through the Biodiversity Endowment Fund launched in 2011. Of the 2.3 million hectares under environmental service contracts, 353,340 hectares are located in the buffer zones of protected areas and the corridors that connect them, including the Mexican portion of the Mesoamerican Biological Corridor (World Bank 2011a, 2011b). The application of CONAFOR programs in Mexico’s coastal Pacific river basins illustrates how the government is leveraging resources from several partners. As shown in figure 4.1, this region hosts a priority conservation region spanning 4.2 million hectares identified in the biodiversity gap and omissions analysis conducted by the institution in charge of advising Total area 4,210,324 ha the government on its biodiversity policy and programs (CONABIO et al. 2007). Although there is still a large area of intact forest, deforestation The region includes three states: Colima, Jalisco, As shown in figure 4.2, four CONAFOR programs has caused a 30 percent loss in forest cover and Nayarit, with Jalisco being the largest. in the region target protection of river basins in the past two decades. The remaining Eleven of the 18 protected areas in Jalisco serving several towns and the tourist corridor of forest is composed of tropical deciduous and state, covering 550,000 hectares, overlap with Puerto Vallarta, and also increase connectivity semideciduous forests at the low- and mid-level the coastal and Pacific river basins, which host between the protected areas. The national PSA elevations, as well as pine and oak forests at a wide variety of ecosystems with a sizable helps protect areas with important regional the higher elevations. These are biomes of high proportion of Mexico’s endangered species.13 watersheds and high-priority biodiversity14. In global conservation value and are considered to order to target specific problems, local PES be the most threatened in the country. 13 Jalisco state hosts 192 mammal species (35 percent of all reported in Mexico), including the six felines found in Mexico. Reported bird species total 565, accounting for 53 percent of all birds found in Mexico, of which 37 percent are migratory. 14 Five state natural protected areas are in the Río Ayuquila region: the Sierra de Manantlán Biosphere Reserve, Nevado de Colima National Park, the flora and fauna protection areas of El Jabalí and Sierra de Quila, and the state park Bosques Mesófilos del Nevado. Expanding Financing for Biodiversity Conservation 22 Figure 4.2 CONAFOR Programs in the Jalisco Coastal Area 105°0'W 104°0'W 103°0'W sustainable forest management practices. The program also involves the municipality of 21°0'N 21°0'N Puerto Vallarta, academic institutions, and civil society. Areas elegible for CONAFOR programs Payment for Environmental Services n City of Colima. CONAFOR is seeking to Coastal River Basin Programs catalyze local markets for environmental JALISCO Biodiversity Endowment Fund services by bringing together providers and users of environmental services in the Cerro Grande area located in the southeastern corner of Jalisco and the state of Colima. This area is part of the Manantlán Biosphere 20°0'N Reserve, a highly biodiverse area that is 20°0'N home to seven poor communities of about P A 3,000 people. The watershed supplies water C IF to the metropolitan area of Colima-Villa de IC Alvarez. The PSA started here in 2003 and O C supports sustainable forest management E A practices by these communities, for example N through construction of 109 kilometers of fire roads and maintenance of reforested COLIMA areas, among other activities. Much of the 19°0'N work also goes to improve communication 19°0'N and learning among the communities (ejidos 105°0'W 104°0'W 103°0'W and indigenous communities), private landowners, nongovernmental organizations, mechanisms have been developed for: as a priority conservation site because of and academic and government institutions. the extraordinary abundance of wildlife and The program established the Cerro Grande n Puerto Vallarta mountain region. In the because it provides residents and tourists Trust Fund in 2011 and is currently working westernmost part of Jalisco state lies the with scenic beauty, climate regulation, and to establish a long-term payment scheme municipality of Puerto Vallarta, a major water provision, among other environmental whereby the cities of Colima-Villa de Alvarez coastal tourist destination with one of the services. The local PES scheme was recently pay into the trust fund for the protection of the largest bays in the world (Bahía de Banderas). launched, bringing together resources from watershed. The terrain is highly uneven, with elevations the state of Jalisco and CONAFOR. The from 100 to 1,900 meters above sea level. scheme will transfer resources from tourists In the lower Ayuquila basin, CONAFOR has joined Sierra El Cuale is the mountainous part and residents of Puerto Vallarta to residents forest conservation efforts being undertaken of the municipality and has been targeted of the mountain region for the adoption of by the Intermunicipal Board for Integrated 23 Expanding Financing for Biodiversity Conservation Management of the Ayuquila River Basin (Junta Intermunicipal para la Gestión Integral BOX 4.2 de la Cuenca del Río Ayuquila, JIRA), an intermunicipal entity considered a model of JIRA: A Unique Partner in Conservation local government cooperation (box 4.2). A local PES matching funds scheme involved both institutions pledging a total of about $500,000 to be used over a period of five JIRA is an intermunicipal decentralized years to improve management of 2,670 hectares. The funds support fuel management, public agency created in 2007 comprising development of firebreaks, forest fire fighting, seed collection, demarcation of managed 4,210 hectares and 10 municipalities along areas, signage, monitoring, and other activities. the Ayuquila River. JIRA’s goal is to promote integrative territorial planning and natural Finally, for areas shown in green in figure 4.2 containing biodiversity of very high priority, resource conservation while fostering CONAFOR is applying its Biodiversity Endowment Fund. Launched at the end of 2011 socioeconomic development for the 135,000 with a contribution from GEF, the program has targeted Jalisco because ecosystems in its inhabitants in the municipalities’ jurisdiction. protected areas could significantly benefit from greater connectivity. JIRA supports technical and managerial assistance on environmental policies and In sum, the coastal Pacific watershed programs show it is possible to catalyze cooperation programs, including environmental education, and financing from local service users and stakeholders. CONAFOR’s PES and associated social participation, and waste management. programs have seen over a threefold increase in recent years (from $30 million to $100 It serves as a local governance model, million by 2010), reaching almost one fifth of CONAFOR’s overall budget. Considering that with the interaction of federal, state, and Mexico has 64 million hectares of forests providing important environmental services, this municipal governments, as well as research level of commitment is encouraging as it signals the potential to scale up CONAFOR efforts institutions and civil society organizations. to address degradation of forest ecosystems with local participation. JIRA is unique because it allows for a legally independent body to act on behalf of local governments. For its various attributes, it is being considered as one of the pilot areas for early action under the enhanced version of the reducing emissions from deforestation and forest degradation program (REDD-plus). Expanding Financing for Biodiversity Conservation 24 25 Expanding Financing for Biodiversity Conservation 5 Peru: Enabling Private Cofinancing through Protected Area Administration Contracts Peru is considered a megadiverse country, with nearly 10 percent of the world’s species of flora, 2,000 species of fish, 1,736 species of birds (ranking second in the world in diversity), 332 species of amphibians (ranked third in the world), 460 species of mammals (ranked third), and 365 species of reptiles (ranked fifth). It is also one of the most important countries in terms of the number of endemic species (at least 6,288, of which 5,528 are flora and 760 are fauna species). Peru’s institutions and laws for biodiversity conservation have matured in the recent past. The country’s National Natural Protected Areas System (Sistema Nacional de �reas Naturales Protegidas por el Estado, SINANPE), created in 1990, covers over 18 million hectares (14 percent of the national territory) in 63 protected areas at the national level. In addition, the Protected Areas Law and the Biodiversity Law, both approved in 1997, enabled regional protected areas to be established by departmental governments. Three such areas already exist. These laws also allowed for private protected areas and stipulated the requirements for them, for example with regard to management plans and monitoring. They also provide the government with other administrative mechanisms to involve civil society and the private sector in protected area management, including administration contracts and service concessions (the latter for ecotourism and private conservation areas). So far 10 administration contracts have been signed15 between the National Service for Protected Areas (Servicio Nacional de Areas Protegidas) and nongovernmental 15 The protected areas with administration contracts are: (i) Coto de Caza El Angolo Sector Sauce Grande; (ii) Santuario Nacional los Manglares de Tumbes; (iii) Parque Nacional Cordillera Azul; (iv) Reserva Nacional Tambopata – Parque Nacional Bahuaja Sonene; (v) Parque Nacional Yanachaga Chemillén; (vi) Bosque de Protección San Matías-San Carlos; (vii) Parque Nacional Cerros de Amotape; (viii) Bosque de Protección Pui-Pui; (ix) Santuario Nacional Pampa Hermosa; and (x) Reserva Nacional Salinas y Aguada Blanca. Expanding Financing for Biodiversity Conservation 26 organizations, or an association of a 1992 with support from GEF, debt-for-nature The administration contract was signed in 2006 nongovernmental organization with a local swaps, government of Germany grants, and other with the nongovernmental organization Center academic institution. Administration contracts donors. Profonanpe is a private organization for Studies and Development Promotion (Centro can cover partial or full implementation of the with a governance structure that allows the de Estudios y Promoción del Desarrollo, DESCO), management plan of a particular protected government to guide its activities while benefiting with a commitment to implement the Natural area and are agreed in periods of 10 to 20 from the administrative agility and flexibility Resources Management Program stipulated in years, renewable to meet the management of a private entity. To date, Profonanpe has the reserve’s management plan. Officials from plan duration. Contractors are selected on a built a portfolio of $116 million, composed of the National Service for Protected Areas retain competitive basis and performance is assessed an endowment fund and sinking funds. The the regular functions of surveillance and other annually upon quarterly reports presented by the endowment fund has increased from $5.2 million aspects of the reserve’s management plan. contractor. (from the initial GEF grant in 1995) to $29 DESCO’s tasks include recovery of pastures million, thus ensuring a steady and predictable for camelids (domesticated and wild), forest Administration contracts enable private flow of funds and financial sustainability. GEF restoration, and helping recovery of the vicuña cofinancing. Contractors commit to securing and financing (endowment and sinking funds) population, as shown in table 5.1. These contributing at least the same level of resources currently represents about 28 percent of the activities are implemented working with the allocated by the government toward managing total funds channeled through Profonanpe population and civil society, as stipulated in the a particular protected area or implementing and has become a catalyst for generating management plan. determined aspects of the management plan, additional resources and for devising alternative as specified in the contract. While a 1:1 ratio is management models for protected areas. As can be seen in table 5.1, the results have the basic requirement, some contractors have been highly satisfactory. For example, targets brought in as much as 4:1 cofinancing. It is The Salinas y Aguada Blanca National Reserve is for recovery of the wild and semicaptive vicuñas expected that for the current year, administration a good example of how administration contracts have been substantially surpassed and illegal contracts will bring in as much as an additional have helped achieve conservation goals. This hunting has been eradicated. $20 million for management of the 10 protected reserve has a surface area of 366,936 hectares areas for which they have been signed, and will and is located in southern Peru between the Administration contracts with nongovernmental continue to do so annually, compared to the departments of Arequipa and Moquegua. The organizations in Peru involving active community government’s annual contribution of about $5 landscape is characterized by lakes, volcanoes, participation and a strong partnership with million. high mountains, and forests of native queñua the National Service for Protected Areas are and other species. The reserve hosts habitats demonstrating to be an effective tool to leverage Three administration contracts have been for vicuñas, wolves, flamingos, and many other government resources and meet the country’s facilitated by the Peruvian Trust Fund for National species. The forests and soils of the reserve were conservation objectives. Parks and Protected Areas (Fondo de Promoción being degraded and the vicuña population was para las Areas Naturales Protegidas del Perú, suffering severe reductions due to illegal hunting Profonanpe), established by the government in and weak control and surveillance. 27 Expanding Financing for Biodiversity Conservation Table 5.1 Threats, Indicators, and Activities under DESCO’s Administration Contract IDENTIFIED THREATS INDICATORS PROGRESS MADE ON INDICATORS Soil and vegetation 1,000 hectares of pastures Intervention in 1,056 hectares (106 percent of target). This has included degradation due for domestic camelids coordination with organizations and authorities, studies, management plan, to overgrazing and improved from very poor to installation of fences on 171 hectares, fertilization of 675 hectares, construction of introduction of exotic good condition 23 pools of water, 11 micro-dams, 92 km of rustic irrigation canals, and 21 km of grasses water filtration ditches. Additional achievements have included the formation and assistance of conservation committees, the support and formalization of irrigation committees, training in pasture management with communities, a program for genetic improvement, and progress in control and surveillance. Deforestation, soil and Improve the condition Fifteen hectares reforested, supported by completion of studies, development of vegetation degradation of Chachani’s queñua propagation technologies, construction of six fences to exclude herbivores, the patches, reflected in an proposal for the management plan, direct seeding and densification of 30 hectares, increase in the biological and progress in control and surveillance. diversity and wealth of species Heavy loss of vicuña Increase the population Increase in population of wild vicuñas by 22.7 percent (2,874 to 3,387) and of those populations due to illegal density of wild vicuñas in semicaptivity by 34 percent (from 1,550 to 2,077); increase in fiber production hunting and weak control by 17 percent and of the of 35.1 percent (from 176.51 kg to 238.5 kg). This has included coordination with and surveillance population in semicaptivity organizations and authorities, studies, management plan, population censuses, by 40 percent, and the implementation of genetic improvement models, strengthening of vicuña volume of fiber production management committees, and progress in control and surveillance. Illegal hunting by 60 percent of vicuñas has been eradicated. Source: World Bank 2011c. Expanding Financing for Biodiversity Conservation 28 Figure 5.1 Signing of a Salinas y Aguada Blanca National Reserve Administration Contract 29 Expanding Financing for Biodiversity Conservation 6 Conclusion The Latin America and the Caribbean Region is at the forefront of conservation efforts, leading other developing regions in the size of areas under protection and in deploying various instruments and policies to mainstream biodiversity into overall economic development strategies. Sustaining and increasing these efforts represents a significant financing challenge. The experiences described in this document illustrate how countries in Latin America are finding ways to increase financing for biodiversity conservation. The examples point to common characteristics that help explain the underlying conditions that facilitated their success, which can be categorized as follows: n Legal and institutional backing. In all cases, the legal framework empowered the government to use new tools or mechanisms (for example PES, administration contracts, trust funds) to engage other actors in mobilizing new resources for conservation. In addition, agencies had trained human resources and provided the necessary support to engage communities, nongovernmental organizations, and the private sector, enabling them to reach enforceable agreements. n Capacity based on record of experience. Institutional capacity in almost all cases in Latin America and the Caribbean involving innovative instruments, as in the four cases reviewed above, has been developed over the past 10–15 years by implementing and improving upon programs. Key in this institutional evolution has been the creation of a formal civil service structure (with career opportunities) for the agencies in charge of protected areas (including national parks) and for conservation aspects in associated forestry and planning agencies. Similarly, conservation trust funds have evolved into capable institutions with capacity to innovate, share lessons, and provide oversight over global public goods. Expanding Financing for Biodiversity Conservation 30 n Key role of building social capital. Conservation needs to be owned by the communities who know best about nature. Successful programs have transformed them into the strongest allies of conservation programs. The Acre (Brazil) and Colombia stories show that meaningful engagements with communities can lead to a common understanding of how livelihoods can be improved while preserving valuable services provided by ecosystems. n Clarity about conservation objectives. People can mobilize when targets and results are clear and can be tracked transparently and in the near term. The Peru example shows that with clear targets for administration contracts regarding restoration of vegetative cover and traceable species, good performance can be checked and celebrated. At a broader level, efforts to expand areas under protection should establish such metrics and the means to monitor results. n The role of strong government leadership in guiding biodiversity conservation policies and programs. Biodiversity conservation requires direct government support for the foreseeable future because the true value that biodiversity provides to humankind is yet to be fully quantified, and ecological services are not (normally) traded in markets. Governments should therefore pursue proper valuation and inclusion of natural wealth in national economic accounts. In addition, governments need to develop and enhance planning and execution capacity in order to engage the rest of society in effective partnerships for conservation. This means that governments need to continue expanding their financial support to these core functions. n Financial resources as a necessary but not sufficient ingredient to deliver real biodiversity protection impacts. The effective management of protected areas and associated landscapes goes well beyond ensuring financial sources. The challenges begin from the complex process of legal demarcation in view of the poor socioeconomic conditions prevailing in these areas and often unclear land tenure. Once established, management plans need to define uses of the area compatible with conservation objectives and be mindful of the need to improve the livelihoods of communities living within or outside these areas. Furthermore, conservation objectives need to be clear and indicators monitorable. In sum, in addition to mobilizing additional resources, governments have an equally important duty to use them effectively to deliver the expected biodiversity protection results. 31 Expanding Financing for Biodiversity Conservation Bovarnick, A., J. Fernandez-Baca, J. Galindo, and H. KfW (Kreditanstalt für Wiederaufbau). 2010. Negret. 2010. Financial Sustainability of Protected Areas “Conservation Endowment Funds� in German Financial in Latin America and the Caribbean: Investment Policy Cooperation. Discussion Note. Guidance. United Nations Development Programme and The Nature Conservancy. CONABIO, CONANP, TNC, Pronatura, FCF, and UANL Patrimonio Natural. 2011. Espacio de Aprendizaje: Iniciativas Comunitarias Conservación – Conectividad de Servicios Ambientales. Based on: Informes de REFERENCES (Comisión Nacional para el Conocimiento de la Seguimiento, Subproyecto Mosaico de Conservación, Biodiversidad, Comisión Nacional de �reas Protegidas, Programa Mosaicos de Conservación. Proyecto GEF. The Nature Conservancy–Programa México, Pronatura, Facultad de Ciencias Forestales, and Universidad Patrimonio Natural. 2012. Comunidades e Instituciones Autónoma de Nuevo León, México). 2007. Análisis de los Decidiendo sobre la Conservación y Uso Sostenible de la Vacíos y Omisiones en Conservación de la Biodiversidad Biodiversidad de su Territorio. Project Brief. Terrestre en México: Espacios y Especies. Preston, M., and R. Victurine. 2010. Conservation Trust CONAFOR 2012 (Comisión Nacional Forestal). 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Freitas, A., and A.L. Camphora. 2009. Contribuição dos Estados Brasileiros para a Conservação da World Bank. 2011b. Mexico Forests and Climate Change Biodiversidade: Diagnóstico Financeiro das Unidades de Project. Staff Appraisal Report, Annex 2, December 21, Conservação Estaduais. The Nature Conservancy. 2011. Washington, DC: World Bank. Funbio (Fundo Brasileiro para a Biodiversidade). 2012. World Bank. 2011c. Peru: Participatory Management “Fundo da Mata Atlântica.� One-page brochure; and of Protected Areas Project. Implementation Completion personal communication, April 20, 2012. Report, Annex 2b, June 21, 2011. Washington, DC: World Bank. GEF (Global Environment Facility). 2012. Financing the Achievement of the Aichi Targets. Expanding Financing for Biodiversity Conservation 32 33 Expanding Financing for Biodiversity Conservation Other Publications from the LAC Occasional Paper Series: Environment & Water Resources OTHER PUBLICATIONS Future, Robust Decisions; The Case of Climate Change Adaptation in n Uncertain Campeche, Mexico Aspects of Land Use Decisions Related to Areas Formerly Managed by the n Environmental Panama Canal Authority: A Strategy for the Enhancement of Reverted Sites n EnvironmentalHealth in Nicaragua: Addressing Key Environmental Challenges (Available in Spanish and English) n OvercomingInstitutional and Governance Challenges in Environmental Management. Case Studies from Latin America and the Caribbean Region and Investment Priorities to Reduce Environmental Degradation of the Lake n Policy Nicaragua Watershed (Cocibolca) (Available in English and Spanish) n Empowering Women in Irrigation Management: The Sierra in Peru n Estado Plurinacional de Bolivia: Construyendo Herramientas para Evaluar Vulnerabilidades y Estrategias de Adaptación al Cambio Climático en el Sector de Recursos Hídricos de Bolivia. Volumen I: Resultados y Recomendaciones and Volumen II: Aplicación de las Herramientas (Available in Spanish Only) To find copies of these publications, please visit our website: www.worldbank.org/lac Expanding Financing for Biodiversity Conservation 34 LATIN AMERICA & CARIBBEAN REGION Environment & Water Resources OCCASIONAL PAPER SERIES THE WORLD BANK 1818 H Street, NW Washington, DC 20043 USA Telephone: 202 477-1234 Facsimile: 202 477-6391 Internet: www.worldbank.org E-mail: feedback@worldbank.org