How economic instruments can help in environmental protection?
Every year, ten million hectares of forest are destroyed. Since 1990, live coral has fallen at a rate of around 4% per decade. One million plant and animal species, or one-quarter of all species, are today endangered. The 2011-2020 Strategic Plan for Biodiversity, adopted under the auspices of the Convention on Biological Diversity, has not produced the biodiversity outcomes that many hoped for. As a result, biodiversity loss continues to accelerate, posing serious threats to our economy and future generations' well-being.
The CBD's 15th Conference of the Parties (CBD COP15), where a post-2020 Global Biodiversity Framework is expected to be agreed upon, is crucial. It's our chance to reflect on what we've learned so far and create a stronger, more successful framework for the coming decade. A framework that incorporates concrete activities that governments can take to address biodiversity pressures, such as land and sea-use change, over-exploitation, pollution, climate change, and invasive alien species, among others.
In the post-2020 Global Biodiversity Framework, what role do economic instruments play?
In the run-up to CBD COP15, many issues are being debated and negotiated.
The importance of economic instruments—or positive incentives—in driving the changes required to prevent and reverse biodiversity loss is one subject that does not receive the attention it deserves.
What exactly are these financial instruments?
Taxes, fees, and charges related to biodiversity, tradable permits, ecologically motivated subsidies, payments for ecosystem services, and biodiversity offsets are among them. These are preferred by environmental economists over more classic command-and-control instruments because they can, in theory, achieve a given environmental goal at a lower total economic cost. They are, in other words, more cost-effective. You're getting more bang for your cash.
These tools can be used in almost any industry to assist combat the primary stresses that are causing biodiversity and ecosystem service loss. Pesticide taxes in agriculture, fishing and hunting licence fees, tradable permits to control groundwater extraction, payments for blue carbon in the ocean, and biodiversity offsets are all examples of ways to mitigate the negative effects of development.
Economic tools raise the cost of activities that harm biodiversity and lower the cost of activities that benefit biodiversity. Economic instruments are a significant tool for mainstreaming biodiversity across sectors because they help to reflect the genuine value of nature or biodiversity in economic operations.
Are governments addressing the biodiversity crisis with economic instruments?
Yes, yet there is a lot of room to expand their use and ambition. Since roughly 2010, OECD data on these instruments, to which more than 120 countries currently contribute, show a stagnation in their acceptance (Figure).
This is despite the CBD's 2011-2020 Aichi Target 3 on positive incentives, which called for their implementation but was not completely implemented, as the Global Biodiversity Outlook 5 highlighted.
According to the data, the ambition of the existing tools has not increased over time. The money collected from biodiversity-related taxes in OECD countries, for example, is USD 7.7 billion per year and has been consistent for several years. While this is not a small sum, it represents less than 1% of the revenue earned by other environmentally-related taxes. Environmentally related taxes account for only 5% of total tax receipts.
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