'The idea of profiting from biodiversity conservation may seem
strange, but this is in fact an essential condition for mobilizing
private investment in conservation. Without profit, business dies
and markets stagnate,' notes a major new study, Building
Biodiversity Business, which has been underwritten by the
International Union for Conservation of Nature and Natural
Resources (IUCN) and Shell International.
From forestry and fisheries to bioprospecting and ecotourism,
biodiversity conservation can be profitable, the 164-page study
suggests. It identifies business opportunities and proposals of
concern to exporters, with particular emphasis on upcoming
markets.
Forestry
A growing opportunity for many companies is to manage forest
resources in ways that optimise a range of benefits, e.g. selling
certified wood products, tapping into emerging markets for
environmental services, non-timber forest products (NTFP),
ecotourism and other 'green' products and services.
Non-Timber Forest Products (NTFP)
NTFP, including 'bushmeat', are major sources of subsistence and
cash income and are especially important to the rural poor.
Examples include edible nuts, mushrooms, fruits, herbs, spices,
honey, gums and resins, rattan, bamboo, thatch, cork, ornamental
plants and flowers, and an array of plant and animal products used
for medicinal, cosmetic, culinary, cultural or other
purposes.
In addition to local uses, many NTFP are traded internationally.
For example, the world trade in bamboo and rattan is currently
estimated at US$5 billion per year according to the International
Network for Bamboo and Rattan (www.inbar.int). Exports of bamboo
shoots from Taiwan alone are worth approximately US$50 million
while Indonesia exports US$700 million (70% of the global trade) in
rattan.
Specific business opportunities linked to NTFP include:
- Investment in a portfolio of NTFP enterprises, either in a
small number of high potential product markets, or a broader
'market basket' of products that promote practises including
sustainable harvesting and support for local communities.
- Invest in existing SME funds that support NTFP businesses, with
equity and/or debt financing; alternatively, create new funds that
can focus on NTFP enterprises, particularly in regions with market
and conservation potential not covered by existing funds, such as
parts of Africa and Asia.
- Support the broader adoption of NTFP certification, the
development of lower-cost systems, and research to measure the
impacts of NTFP harvesting at the individual product/species and
habitat/landscape level.
Fisheries and aquaculture
Aquaculture is growing very rapidly, particularly in Asia, and is
increasingly viewed as a potential solution to the over-fishing of
wild stocks, albeit one that comes with its own set of
environmental issues. Several certification schemes are being
developed to promote sustainable capture fishery and aquaculture,
but only a fraction of the world's capture fisheries and
aquaculture operations currently use environmentally friendly
practices. There is a need to extend sustainable fisheries
certification to address problems such as 'bycatch' (species caught
unintentionally) and also to expand coverage to developing
countries, where certification is currently very limited.
Bio-carbon offsets
According to the World Bank, 'The carbon market grew in value to an
estimated $30 billion in 2006, three times greater than the
previous year.' But while forestry and agricultural projects can
sell carbon credits through the Clean Development Mechanism of the
Kyoto Protocol, few transactions have been approved to date. Most
activity linking carbon to biodiversity has taken place within the
growing voluntary market, as corporations and individuals seek to
offset emissions to meet their own reduction targets.
There is a need for further experimentation within the voluntary
carbon market, including support for avoided deforestation and
related initiatives that bundle payments for a range of
environmental goods and services, including carbon as well as
biodiversity benefits.
Payments for watershed protection
Payments for watershed protection are increasingly used, and range
from private users paying environmental agencies and NGOs to direct
payments by central government to private landowners.
Finding a willing buyer for watershed protection services is
often the main barrier to introducing such schemes or maintaining
them over the long term. The key is to identify downstream users
for whom payments are a more cost-effective option than investing
in costly water treatment or developing new water supplies.
There is significant potential to leverage co-funding from
government and development agencies and, in certain locations, to
transfer the scheme to local water users. Contributions to poverty
reduction can be substantial, due to the relatively low incomes of
most upland farmers compared to downstream water users.
Bioprospecting
Bioprospecting is the systematic search for genes, compounds,
designs and organisms that have a potential economic use and might
lead to a product development.
There are few hard numbers regarding the size of the
bioprospecting industry, but growth to date has disappointed many
advocates. For example, Costa Rica has received US$4.5 million from
bioprospecting accords, a small sum compared to the annual income
of approximately US$400 million derived from ecotourism.
One source suggests that the current market is worth US$17.5-$30
million, although by 2050 this could grow to more than US$500
million. Potential investors in bioprospecting must demonstrate
that both biodiversity and local communities are benefiting from
their activities.
There are substantial business risks associated with
bioprospecting, not least of which is the potential damage to
reputation arising from claims of biopiracy (the appropriation of
rights over indigenous knowledge without compensation to the
indigenous groups who originally developed such knowledge).
The most appropriate opportunities will tend to be in countries
with clear access, benefit-sharing policies and a solid
institutional framework. On this basis it may be possible to reduce
risk by investing in companies that actively support the
communities that provide the raw materials.
Developing countries could improve their healthcare systems by
asking major pharmaceutical companies to help them improve their
ability to research and develop their own drugs in return for
access to natural resources, rather than making unrealistic
assumptions regarding the level of financial gains that are
possible from bioprospecting.
Biodiversity offsets
The use of legally mandated biodiversity offsets (providing for
protection measures to compensate for possible reductions in
biodiversity) is growing, and examples can be found in Australia,
Brazil, Canada, Switzerland and the United States. The
Environmental Liability Directive passed by the European Commission
in 2004 could lead to similar arrangements throughout Europe.
Analogous policies are under development in Mexico, New Zealand and
Uganda, among other countries.
In addition to mandatory offsets, there is growing interest in
the potential of voluntary offsets. Some companies have made public
commitments to implement biodiversity offsets linked to their
'footprint', while several mainstream investors are looking at
biodiversity offsets as a new business opportunity, as well as an
indicator of good corporate governance. Biodiversity offset
opportunities include:
- Creating a local ecosystem 'bank' whereby you buy or lease
land, restore it and sell habitat 'credits' to public agencies and
private companies that need offsets for regulatory compliance or to
meet voluntary 'no net loss' commitments.
- Becoming an ecosystem service 'broker' by purchasing
biodiversity credits from landowners (secured by development
rights) rather than the land itself and sell credits to mitigation
buyers, as above.
- Offering 'offsets for imports'. Identify global conservation
priorities, define standards for credible offsets and set up a
verification system for companies that could purchase voluntary
offsets for all imports not already certified as 'sustainable'.
Offsets would be supplied by accredited providers and subject to
independent verification and regular renewal.
Biodiversity management services
This specialized market is expected to increase significantly as
the private and public sectors see the inherent opportunity and
risk of business in biodiversity.
There are several non-profit opportunities that could be
supported by a think-tank and ultimately lead to the development of
additional (for-profit) investment opportunities through civil
society, research, partnership brokering and public sector capacity
building initiatives.
More direct, for-profit, opportunities might include:
integration of biodiversity with environmental impact assessment
(EIA) processes; providing ecosystem restoration/rehabilitation
services; benchmarking biodiversity performance; conducting and
certifying Biodiversity Action Plans; or creating and certifying
biodiversity offsets.
Recreational hunting and sport fishing
Opportunities exist to work with recreational hunting and fishing
organizations with good records in supporting biodiversity
conservation in developed countries, to open more chapters, or
enter into mentoring relationships with similar organizations in
developing countries to implement conservation programmes.
Selected ecosystem markets and their potential for
growth
Source: Adapted from information supplied by Michael Jenkins
(Forest Trends; Personal Communication,
2006)Biodiversity management services offered by
different providers
