5th of November Panel 17 – The Clean Development Mechanism , GCET 2010 Conference

1. Towards a CDM-SpecificFiscalRegime for SafeguardingBiodiversity: DiscussingConceptualizations for Biodiversity-SpecializedCarbon Management in a FiscalContext 5th of November Panel 17 – The CleanDevelopmentMechanism, GCET 2010 Conference Marko HeiskanenUniversity of Eastern Finland

2. Presentation Outline • Clean Development Mechanism (CDM) • Reforestation of Third World grasslands • Grassland biodiversity • Biodiversity-specialized carbon management • Three dual assessments based on the biodiversity benchmarks (Figure 1): • carbon permanence & biodiversity permanence (1st priority) • carbon additionality & biodiversity additionality (2nd priority) • carbon leakage & biodiversity leakage (3rd priority) • A sketch for integrating the Noss framework and the new biodiversity benchmarks (Figure 2) • Six standardized project types (Table 1) • Is it possible to design a CDM-specific domestic fiscal regime for safeguarding biodiversity in a developing country ?

3. Biodiversity benchmark framework • Biodiversity permanence • This benchmark requires that safeguarding biodiversity should be permanent and monitored on a regular basis, at least in decadal time scales. Avoiding biodiversity loss is a salient point here. • Biodiversity additionality • This benchmark refers to the enhancement of the biodiversity values at a project site. Using this benchmark means that the difference in the biodiversity level before and after a project must be measured. • Biodiversity leakage • This benchmark concentrates on examining the biodiversity impacts outside the boundary of a CDM carbon sink project.

4. Biodiversity-specialized carbon management based on three dual assessments

5. A sketch for integrating the Noss framework and the new biodiversity benchmarks 1/2 • Figure 2 shows biodiversity benchmarks in relationship to three sets of biodiversity attributes based on the Noss framework (Noss 1990). • The Noss framework includes the three sets of biodiversity attributes: • compositional (i.e. landscape types, communities, species, populations, genes). • structural (i.e. landscape patterns, habitat structure, population structure, genetic structure). • functional (i.e. landscape processes, interspecific interactions, ecosystem processes, geographic processes, genetic processes).

6. A sketch for integrating the Noss framework and the new biodiversity benchmarks 2/2

7. Standardized CDM project types based on biodiversity benchmark analysis in the case of assured optimal carbon sequestration 1/2 • Here we identify six standardized CDM project types based on biodiversity benchmark analysis in the case of assured optimal carbon sequestration (Table 1): • Primus, Secundus, Tertius, Quartus, Quintus and Sextus. • These standardized project types highlight the biodiversity status of an individual carbon sink project. • These project types could play an instrumental role in linking the criteria of the new biodiversity benchmarks with the carbon sequestration function of a CDM carbon sink project. • This decision making table (Table 1) could facilitate both supervision and enforcement.

8. Standardized CDM project types based on biodiversity benchmark analysis in the case of assured optimal carbon sequestration 2/2

9. In quest of arguments for and against using fiscal policy for safeguarding biodiversity 1/3 • There have emerged research results that suggest that fiscal approaches open up a flexible and cost-effective means for protecting biodiversity (Ring et al. 2010, Köllner et al. 2002). • Many studies argue that economic instruments should be seen as complements to rather than substitutes for each others (Ring et al. 2010, UNEP 2003) • Is it possible to design a CDM-specific domestic fiscal regime for a developing country? • Achieving the biodiversity part of the dual aim of the CDM could be assured by strengthening this particular Kyoto mechanism with the biodiversity-specific fiscal instrument applied by a Third World government.

10. In quest of arguments for and against using fiscal policy for safeguarding biodiversity 2/3 • Question 1: Are there reasonable fiscal approaches for the CDM to protect biodiversity? • The loss and decline of biodiversity because of a CDM project should not be allowed. • Intergovernmental fiscal transfers (Köllner et al. 2002) • Saving endangered species? • Despite this limitation for the use of this fiscal instrument, we still became interested in fiscal transfers because they are based on a performance measure. • So, we tentatively note that the biodiversity benchmark framework explained here could be the alternative performance measure basis for the fiscal transfer instrument for safeguarding biodiversity in a developing country?

11. In quest of arguments for and against using fiscal policy for safeguarding biodiversity 3/3 • Question 2: Are there reasonable fiscal approaches for the CDM to enhance biodiversity? • In order to enhance biodiversity, the project-oriented support is needed in terms of long-term financing. • Biodiversity-friendly subsidies or tax exemptions could be interesting solutions for incentivizing biodiversity enhancement at/outside a CDM project site.

12. Conclusive and quizzical remarks • A CDM-specific fiscal regime for safeguarding biodiversity would be an interesting regulatory option at a domestic level for a developing country to assure that biodiversity conservation and enhancement is taken into account during project implementation. • What about the conceptualizations for biodiversity-specialized carbon management explained here? Could they be helpful and instrumental for drafting such a CDM-specific fiscal regime in a developing country? • At least, these concepts may open up differently the regular theoretic way of discussing about biodiversity impacts of an anthropogenic environmental activity. • Co-authoring possibilities?