Towards a CDM-Specific Fiscal Regime for Safeguarding Biodiversity: Discussing Conceptualizations for Biodiversity-Specialized Carbon Management in a Fiscal Context 5th of November Panel 17 – The Clean Development Mechanism, GCET 2010 Conference Marko Heiskanen University of Eastern Finland

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 ?

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.

Biodiversity-specialized carbon management based on three dual assessments

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).

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

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.

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

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.

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?

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.

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?