Impasse in Biodiversity Conservation Policy: An Institutional Analysis

1. Impasse in Biodiversity Conservation Policy: An Institutional Analysis by Arild Vatn Department of Environment and Development, Norwegian University of Life Sciences Lecture at the international workshop: “Making Sense of Ecosystem Services: Ecosocial and Institutional Perspectives” Koli, Finland, August 25-27

2. The structure of the presentation • What is an institutional analysis • Why is protecting biodiversity so hard? • From traditional conservation to payments for ecological services – the new trend • The Nordic experience

3. 1. What is an institutional analysis? • An institutional analysis contains an evaluation of how (alternative) institutions: • influence distribution of access to resources (power and interest configurations) • influence the form of and capacity to communicate, coordinate and transact – specifically the level of transaction costs • influence motivational structures and behavior In the relation to these issues: Which values and interests are protected and which interests are formed plays a crucial role

5. What is an institutional analysis? (cont.)Forms of institutions Structural and functional aspects • Conventions • S: Categories of objects or situations • F: Coordinating behavior (small ’c’ coordination) • Norms • S: Behavioral prescriptions (should/should not etc.) • F: Creating common values/negotiating or avoiding conflict (large ‘C’ coordination) • Formal rules • S: Legal structures, formal controls and punishments • F: Regulating conflicts (large ‘C’ coordination) • Institutions influence • Access to resources (rights) • Levels of coordination/transaction costs • Perception • Rationality and preferences

6. What is an institutional analysis? (cont.)Institutions as rationality contexts • Following from the above: The institutional structure influences the logic (or meaning) of contexts or situations • Plural rationality • Individual rationality – ‘I’ rationality • What is best for the individual – egoism • Fostered by structures like markets and firms • Social rationality – ’We’ rationality • What is best for the group – may imply personal sacrifice. Solidarity vs. altruism • How the group is defined is crucial here. Solidarity turning into ‘us and them’

7. 2. Why is biodiversity protection so hard? • The international society has produced a series of conventions and treaties concerning biodiversity conservation, e.g., • The Ramsar Convention (1975) • Bonn Convention (1979) • Bern Convention (1979) • The Convention on Biodiversity (1992) • The Cartagena protocol (2000) • Losses of species in the order of 100 – 1000 times the ‘normal’ • The EU (and Norway) has decided to halt biodiversity loss by 2010. That is by no way going to happen

8. 2. Why is biodiversity protection so hard? (cont.)What is causing the losses? • A difficult problem • Institutions  the interest structures vs. • the characteristics of the natural system dynamics • Interest structure: • Institutional separation: Individualized rights  atomizing • Free rider problems • The characteristics of the problem • Interrelated resources/interconnected processes • Complexity: The resilience – irreversibility – threshold nexus • Demands integrative institutions

9. 2. Why is biodiversity protection so hard? (cont.)What is causing the losses? (cont.) • No single explanation. Complementary and competing explanations: • A difficult problem! • Undefined or unclear property rights • Population growth • Economic growth • High alternative value • Pollution • Weak protection policies • Lacking capacity/willingness to pay • Weak ability to find solutions that make it possible to combine use and protection better

10. 2. Why is biodiversity protection so hard? (cont.)From state regulations to market solutions? • The dominant solution has been state regulations – mainly in the form of reserves and national parks. Some counter forces • General reduced legitimacy for state action - neo-liberalism • Increased conflicts over ‘set aside’ protection • Reduced funding • Many of the ‘easy’ objects are already protected • We observe a move towards Payments for Environmental Services (PES). From state to market? ‘The present ideology: Subsidies’ are bad while ‘payments’ are good…. • The tendency to shift from one ‘Solution’ to another ‘Solution’ – the ideology of ‘the time’ – and lack of ability to adapt to local conditions

11. 3. Payments for ecological services (PES) • Some – e.g., Engel et al. (2008) – see PES as a Coasean solution – i.e., as a transaction between individual parties. It is a market solution to the problem of externalities • As such it is opposed to the standard Pigovian solution where the state secures internalization through taxes (negative) or subsidies (positive) external effects • Wide variety of applications: Local biological and water resources to global climate change (e.g., the CDM) • It is said to be more efficient as • Buyers and sellers directly decide the price (defines the ‘value) • One avoids state bureaucracies • Attracts more resources

12. 3. Payments for ecological services (PES) (cont.)Criteria for PES • Along the above Wunder (2005) sets up the following criteria for a PES system • a voluntary transaction • a well-defined environmental service (ES) • is being bought by a (minimum one) ES buyer • from a (minimum one) ES provider • if and only if the ES provider secures ES provision (conditionality) • What we observe is that • the state is the dominant buyer on behalf of e.g., tax payers. Hence, voluntariliness is not a distinct feature • The role of an intermediary between the buyer and provider (state, NGOs). Not well-defined goods and actors involved • So it seems not to be Coase vs. Pigou • The distinction between MES (markets for environmental services) and PES, with PES as the broader concept including MES

13. 3. Payments for ecological services (PES) (cont.)Evaluating PES: Rights and transaction costs • Distribution of rights • PES seems to accept the right to present practices. Pays for investing in protection activities beyond that base line. A tendency to favor poor rural people. Still, not necessarily a way to reduce poverty. Moreover, the effect of PES could be shifted rights/access to land • Transaction costs (TCs) • TCs may consume all potential gains from trade; Wunder et al. (2008) document especially high set up costs • Therefore we observe intermediaries to be the dominant actor – not the buyers/providers • Therefore we often see that collectives (tax payers) pay collectives (communities) with the state as intermediary. Not standard markets. Less efficient? No (not neces-sarily): Often rather low precision, but also lowered TCs

14. 3. Payments for ecological services (PES) (cont.)Evaluating PES: Existing institutions • The role of existing institutional structures • Existing institutions and values are important. ‘Interferences’ may already be regulated by specific rules – e.g., the Andean water vision. Monetary payments may in some contexts not fit at all • The role of local power structures • Those already having interests in protection activities are (dominantly) the ones participating in PES schemes

15. 3. Payments for ecological services (PES) (cont.)Evaluating PES: Motivational aspects • Monetary payments may mean different things • Measures the value of an ES • Is an incentive to produce ES • Is a compensation for efforts to produce ES (reciprocity) Payments not necessarily commodification. The format of the payment influences how it is perceived. • The incentive problem  pay for one service, you must pay for all? • Introducing money may sometimes reduce effort  induces a move from social to individual rationality • Experience form experiments • The Greek Case of water management – the difference of within and between group payments • The potential payment impasse

16. 4. The Nordic experience • Results from a comparative study in Finland, Norway and Sweden trying to explain the variation in conflict level observed. Data mainly from 2004 • The study developed by a team at UMB (Ås/Norway) in cooperation with researchers from Joensuu and Umeå/Alnarp • Sample 345 forest owners that had been participating in protection processes where land was set aside for ‘full’ protection • Data collected by master students

17. 4. The Nordic experience (cont.) General attitudes towards protection A: Protection important to secure future economic values B: Unethical to make species go extinct C: All species have a right to exist D: Species extinction is not a serious environmental problem E: Protecting biodiversity is important for future generations I: Important to protect biological diversity in forests 1: Fully disagree ; 5: Fully agree

18. 4. The Nordic experience (cont.) Attitudes towards other values in the forest Here the picture is less clear • ’Traditional’ forest/use values (jobs, income, use of a renewable resource) has still a rather strong position • More important for Finnish and Norwegain than Swedish forest owners

19. 4. The Nordic experience (cont.) Attitudes towards protection of own forest O: Accept protection on own property if fully compensted P: Do not accept protection on own property because it will reduce the value for future generations Q: Do not accept protection because it is not a good way to utilize a renewable resource  

20. 1 2 3 4 5 Total (N) Finland 10 57 18 5 10 39 Norway 6 6 14 19 54 138 Sweden 15 32 28 15 11 178 4. The Nordic experience (cont.) Attitudes towards the protection process Differences in processes • Norway the process run by the environmental authorities, while in Finland and Sweden the forest administration dominantly made ’the front line’ • More flexible solutions in Finland and Sweden Distribution in percent 1=very satisfied 5=very dissatisfied

21. 4. The Nordic experience (cont.) What explains the different conflict levels • Data analyzed using multipple logit – with attitude to protection in own forest as dependent variable • Significant variables • Country Norwegian forest owners lower acceptance • Attitudes to protection  The more positive to protection in general, the more positive to protection on own property • Societal values related to use (job creation ++)  more positive to protection in own forest!!? • Future use  less positive to protection in own forest • Prosess  the more negative to the process the more negative to protection on own poperty • Insignificant variables: Characteristics of the owner (age, education, sex etc.); income from the forest; size of property; perception of who owns the biodiversity

22. 1 2 3 4 5 Total (N) Finland 8 42 34 5 11 38 Norway 5 8 27 23 36 135 Sweden 9 25 49 6 10 171 4. The Nordic experience (cont.) Process influences attitudes to protection 1=The process resulted in much increased understanding 5= The process resulted in much reduced understanding

23. 4. The Nordic experience (cont.) Challenges • The relationships between an acceptable process, a legitimate rights definition and the necessary capacity to protect biodiversity • Forced vs. voluntary solution: • Conflict level  voluntary • Costs  voluntary (??) • Who pays  ’The Degrader (”Polluter”) Pays’ or ’Provider gets’ • Quality and quantity of the protection: forced • Is there space for combining participation and state forced solutions?