teeb incentive measures by patrick ten brink of ieep stromstadt 7 september final

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  • 9/10/2009 1

    Incentives and Financing to integrate the value of biodiversity and ecosystems into our economies

    Working insights from TEEB

    Patrick ten BrinkTEEB for Policy Makers Co-ordinator

    Head of Brussels Office

    Institute for European Environmental Policy (IEEP)

    Session: 5.3 Financing and incentives

    Vision for Biodiversity Beyond 2010: People, Ecosystem Services & the Climate CrisisStrmstad, Sweden7th September 2009

    Building on and borrowing from the work & insights of the wider TEEB team

    and contributors of supporting studies, call for evidence and other contributions

  • TEEBs Genesis and progress

    Potsdam Initiative Biological Diversity 2010

    1) The economic significance of the global loss of biological diversity

    TEEB Interim Report @ CBD COP-9, Bonn, May 2008

    Strmstad 7-9 September

  • Presentation overview

    1. The (missing) values of biodiversity and ecosystems to the economy

    2. Instruments to integrate these values

    Instruments to reward benefits: PES, ABS et al

    Instruments to avoid damage/overuse

    Who benefits and who should pay - eg PAs

    Environmental Harmful Subsidies

    Policy Coherence and instrument mix

    3. (Realising) Potential

    Annex: Background: Aims and process of TEEB

    Supporting / Background slides

  • The (missing) values of biodiversity and ecosystems to the economy

    Market signals do not fully take into account the value of ecosystems & biodiversity

    Climate regulation: carbon stored in trees, soils, wetlands;

    Natural hazard management and adaptation to climate change

    They often do not reflect the damage to ecosystems/biodiversity, losses of services:

    Land conversion (tropical forests to palm oil based biofuels),

    Degradation costs (eg water pollution, soil degradation)

    They rarely offer appropriate incentives for the sustainable use of natural resources

    Forest products (timber et al), agricultural products

    Water use (re groundwater depletion), soil mining and erosion

    Without prices to reflect the true value (or damage) & without other mechanisms to take value (damage) into account, it is no surprise that we have a socially inequitable and economically inefficient use of ecosystems and their biological resources.

    There have been a range of successes to learn from, & many opportunities for action.

  • Why are these values missing from the market?

    Public goods or quasi public goods with no automatic, natural markets - eg fish and open seas.

    Property rights (ownership, use, access) limitations

    Policy gaps lack of policies to ensure appropriate pricing: full cost recovery, polluter pays, user pays

    Implementation failure - eg lack of full implementation of WFD & full cost recovery

    Governance failure eg lack of coherence, verifiability, enforceability and trust

    Information failure - lack of information on services (eg hydrological, carbon storage), and on their on value and links to ecosystem components; lack of product information (eg labelling/certification)

    Transaction costs eg for PES schemes, certification for products

    In some cases markets dont exist (yet), in others they can be difficult to access, in others they can have significant imperfections/flaws. These are generally solvable (in principle).

    but not in all cases are markets the answer, and fixing the market (eg via improved market signals) will take time and only get us so far

  • Fiber


    Spiritual & religious


    Genetic resources

    Climate regulation

    Water purification

    Disease regulation

    Flood/Fire regulation

    Recreation & tourism


    Economic Value ($)

    Economic Valuation

    Difficult or














    Ecosystem services public goods & difficulty of valuation

    Source: Jeffrey A. McNeely, Chief Scientist, IUCN-The World Conservation Union from presentaion: FUNDING MECHANISMS FOR BIODIVERSITY. 27

    July 2006 Inter-American Development Bank Workshop on Biodiversity Loss

  • Values historically overlooked by market signals...now available

    TEEB Climate Issues Update (TEEB, 2009)

  • Natural capital is a foundation of the economy and wellbeing often outside of

    the market

    Sectors of the economy

    Primary sectors (agriculture,

    forestry, fisheries, mining)

    Food & drink


    Wood & Paper

    Petro Chemicals


    Services (eg water supply,

    waste, insurance)


    etcNatural capital

    biodiversity and ecosystems

    other natural resources

    Outputs from one sector

    = intermediate inputs to another

    Impacts investment



    Man made capital

    Fixed capital stock: factories,

    transport infrastructure,

    The Foundations

    Human capital

    Learning, health, happiness

    Social capital

    Social cohesion, trust, judiciary,

    civic society, education, health

    services, social services etc

    The Economy

    (intermediate demand)

    Final Demand






    Other demand



  • Biodiversity loss: Running down our natural capital... by not taking value of nature fully into account

    Poorer Ecosystems

    Richer Ecosystems

    Source: building on Ben ten Brink (MNP) presentation at the Workshop: The Economics of the Global Loss of Biological Diversity 5-6 March 2008, Brussels, Belgium.



  • 1. The (missing) values of biodiversity and ecosystems to the economy

    2. Instruments to integrate these values

    Instruments to reward benefits: PES, ABS et al

    Instruments to avoid damage/overuse

    Who benefits and who should pay - eg PAs

    Environmental Harmful Subsidies

    Policy Coherence and instrument mix

    3. (Realising) Potential

    Annex: Background: Aims and process of TEEB

    Supporting / Background slides

  • Economic Incentives and the Economy

    Sectors of the


    Natural capital

    biodiversity and ecosystems

    Forests; Agricultural lands; Seas,

    inland waters, wetlands; Coral

    reefs and mangroves; Protected

    Areas; Other green infrastructure;

    Soil; Ecosystems, species,

    habitats, genetic materials

    other natural resources

    Man made Capital

    Human Capital

    Social Capital





    Foundations: Capital stocks

    Pricing outputs and use:

    Product Pricing & User charges

    Eg fertiliser and pesticides tax

    Pricing for pollution, damage / liability:

    Fines, charges, fees, compensation requirements

    Pricing inputs

    Full cost recovery and resource pricing

    eg water pricing; land conversion fees



    Public sectorPrivate sector Households


    Payments for resource use & ecosystem services (PES)

    Eg fishing licence, PES for water, REDD for forests

    Market Creation

    Eg ITQs for fisheries

    Eg certification


    Markets for inputs: habitat banking

  • Incentive Schemes: Rewarding the (unrecognised) value of ecosystems and biodiversity

    Payments for Environmental Services (PES) potential to build on experiences of water purification, carbon storage et al. Economics underlines the potential.

    PES-REDD+ potentially high value new instrument offering synergies between biodiversity and climate change

    Access and Benefits Sharing (ABS) negotiations up to COP 10

    Other compensation measures (tax breaks, transfers) and direct payments to secure benefits

    Markets (organic, biotrade, natural cosmetics, FSC, MSC etc) being mainstreamed.

    Emerging? Markets: habitat banking, Future market? link REDD to ETS schemes ?

  • Market Signals to avoid degradation / loss of ecosystems and biodiversity

    Resource charges to reflect full cost recovery principle and also resource value eg water pricing under WFD, stumpage fees for trees.

    Pollution taxes and charges to make the polluter not the society pay eg NOx tax, COD charges.

    Product taxes / charges to incentivise users to use less eg pesticides, fertilisers, plastic bags, batteries, fish tackle

    Licenses to raise revenue and in some cases restrict access - eg fishing licences, tourism fees.

    Fees and fines to discourage non compliance eg pollution, damage.

    Liability and compensation - to encourage responsibility eg avoid oil spills.

    Habitat Banking to make meeting no-net-loss commitments more

    economically efficient.

    Green public procurement making use of market demand (PP 14% of EU GDP) to encourage lower impact (production/use/disposal) products.

  • Instruments to respond to ecosystem service benefits & create revenue for



    Funding Costs

    Appreciation of the ecosystem services benefits should lead to instruments

    that help raise revenues

    Funding Pays for the costs of protecting nature / restoration / new investments in natural capital

    Paying costs to protect nature / invest in natural capital should

    safeguard / create benefits

    But who should pay whom with which instruments ?

    Protected areas lead to a wide range of ec


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