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Market-based mechanisms for biodiversity conservation: a review of existing schemes and an outline for a global mechanism

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Abstract

Continuous decline of biodiversity over the past decades suggests that efforts to decrease biodiversity loss have been insufficient. One option to deal with this problem is the use of market-based mechanisms for biodiversity conservation. Several studies have analysed such mechanisms individually, but there is no comprehensive review with a comparative assessment of the performance of various mechanisms. This paper presents (i) an analysis of the economic conditions under which markets for biodiversity can be expected to function; (ii) an analysis of the efficiency of five selected biodiversity markets in the light of market and contract theory; and (iii) an assessment of the potential to scale up local or national payment mechanisms for biodiversity conservation. Our analysis shows the difficulties that market-based mechanisms face, among which are the need to ensure long-term conservation and the lack of a standardized unit of measurement for biodiversity. We provide a number of recommendations on how to overcome these difficulties. We argue that the set-up of a global registry embedded within the framework of the Convention on Biological Diversity would facilitate measurement, reporting and verification of biodiversity credits to support market-based mechanisms.

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Notes

  1. Quoted prices values for habitat hectare credits and large old tree credits reflect 80 % of agreements in the Victorian bioregions.

  2. Average price of data from 2005 to 2009 for different types of conservation credits. Six unit-based credit price points were not used to obtain the average price.

  3. Average price of data from 2005 to 2009 for different types of credits. Tidal wetland credits and vernal pool wetland credits are not included because their prices are considerably higher than regular wetland credit prices.

  4. This information only considers Conservation Banking and not species compensation through in-lieu fee funds or permittee-responsible mitigation.

  5. This information includes data from In Lieu Fee Programmes, Permittee-Responsible Mitigation and Mitigation Banking.

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Acknowledgments

The authors thank E.C. van Ierland and an anonymous reviewer for constructive comments.

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Authors and Affiliations

  1. Environmental Economics and Natural Resources Group, Wageningen University, P.O. Box 8130, 6700 EW, Wageningen, The Netherlands

    Irene Alvarado-Quesada & Hans-Peter Weikard

  2. Environmental Systems Analysis Group, Wageningen University, P.O. Box 47, 6700 AA, Wageningen, The Netherlands

    Lars Hein

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  1. Irene Alvarado-Quesada
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  2. Lars Hein
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Correspondence to Irene Alvarado-Quesada.

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Alvarado-Quesada, I., Hein, L. & Weikard, HP. Market-based mechanisms for biodiversity conservation: a review of existing schemes and an outline for a global mechanism. Biodivers Conserv 23, 1–21 (2014). https://doi.org/10.1007/s10531-013-0598-x

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