1. Getting What You Paid For Paul J. Ferraro Department of Economics Andrew Young School of Policy Studies Georgia State University The Economics of Conservation Investments 15 July 2002 Society for Conservation Biology Meetings Canterbury, England

2. Conservation by Distraction –Redirect capital and labor away from activities that degrade ecosystems agricultural intensification alternative employment Valorization of Intact Ecosystems –Encourage commercial activities that produce ecosystem services as joint output eco-tourism biodiversity prospecting NTFP extraction Indirect Conservation

3. Pay for conservation performance directly –Host-country and international actors make periodic, conditional payments to individuals or groups that supply services of ecological value (intact ecosystem, targeted wildlife). Direct Conservation Conservation Contracting in US and EU -Conservation Reserve Program -Wetlands Reserve Program - Leasing of American Somoa National Park NGO Habitat Incentive Programs Costa Rica Guatemala El Salvador Pakistan Madagascar

4. Evaluative Criteria 1.Effectiveness 2.Efficiency 3.Equity 4.Flexibility Indirect Conservation Direct Conservation

5. Efficiency Conservation payments generally achieve a given level of ecosystem protection at the least cost to the conservation donor (and society). Conrad and Ferraro 2002; Ferraro and Simpson 2002

6. Efficiency Example Madagascar Rain Forest 1991-1996 Forest Management Aquatic Species Management Bee-keeping (Apiculture) Bee-keeping Forest  Nectar  Honey  Apiculture Profits   Protection of Forest

7. ICO Budget = $3.724 million for payments (+$196,000 for administration) Protect 80% of forest using direct payment versus 12% using indirect support of capital acquisition. Ranomafana National Park Increase rural resident income 100% under direct payment versus 44% increase under indirect subsidy.

8. Ranomafana National Park < 2% of budget  Rural residents 55% to outside overhead and Tech Asst Adminstrative Costs U.S. CREP  < 10% administrative Canada PCP  ~25% administrative Costa Rica ESP  < 20% administrative

9. Final Points Conservation payments create clear incentives and allow practitioners to focus their efforts and achieve their objectives at the correct temporal and spatial scales. Under plausible circumstances, payments are more efficient. Problems associated with conservation payments are significant but no more so than the problems associated with indirect interventions.

10. Conclusion Conservation payment initiatives are neither a magic bullet nor an appropriate intervention for every site. They do, however, deserve the attention of scholars, practitioners and donors working to protect biodiversity globally.