Conservation Finance

 

Benefits for Protected Areas/Conservancies

How do PAs set prices that optimize revenue? Protected Area Traceable Visiting Quotas, PATVIQs could help solve this problem.

How do they work?

The carrying capacity for visitors is established for a PA.

PATVIQs are issued for no more than the carrying capacity. Some of these PATVIQs are kept for local use, and the rest are listed on the exchange.

A PATVIQ is a percentage of the carrying capacity. Before a quota can be traded it will be translated into a number of permits, which can then be traded electronically, and be available worldwide to visitors or donors.

Permits are sold to

  • Tour operators, lodge owners, individual visitors etc.
  • Donors and others who want to support conservation or buy biodiversity offsets.

Let us say a really small PA has a visitor carrying capacity of 50 visitors per day, and permits are issued for this number. Let’s say the permits sell for an average of $20 per person per day; the annual revenue is then $365.000. A relatively small amount of money like this could go quite a long way in a developing country. Part of this revenue will come from people who will never visit and who will therefore not cost the PA anything.

What are the costs?

  • The PA must keep track of and provide audited reports of the number of visitors per day. If too many visitors are admitted, there will be no scarcity, and prices will collapse.
  • There must be monitoring of the populations of endangered and other important species to assure non-visiting donors that the PA works and is not a phantom PA.

Benefits for People Living near PAs

As more indigenous people get more land rights, it is neither just nor feasible in the long to exclude them from the benefits of PAs. By allocating a share of the PATVIQs to them, we have a mechanism for paying them directly for conservation and for aligning their objectives with those of PA managers and conservationists.

Benefits for Donors

By creating a clearly defined and tradable commodity tied directly to conservation, the current high transaction costs in conservation can be brought down.

Some schemes, e.g. ecotourism, provide at best indirect payments for conservation. Other schemes don’t pay for the conservation of existing biodiversity stocks (e.g. GEF’s incremental approach). The PATVIQ approach is one of direct payments for conservation.

PATVIQs can be used as an indicator of good corporate governance and as voluntary offsets for companies. Companies can announce offsets, possibly linked to their ecological footprints. PATVIQs make it possible to target and support specific species or ecosystems, including “charismatic megafauna” such as great apes, Asian and African rhinos, elephants, cheetah, etc. A company can announce that it has bought certain number of permits in order to provide support for specific species or areas.

Since it is possible to buy permits without visiting a PA, funding can be provided for PAs that otherwise would depend on entrance fees and concession fees from hotels and camps. It will be possible to break the cycle of increasing revenue by increasing the number of visitors, and avoid the damage caused by a large number of visitors. It can also provide funding for PAs that are important for conservation, but not popular with visitors, for example PAs with gorillas and bonobos in Congo.

An important benefit of this scheme is the establishment of standards. We will over time develop standards based on best current practices for estimating visitor carrying capacities and for counting and tracking endangered and other species in participating PAs.

Biodiversity Offsets

Biodiversity offsets may become important. Legal support for biodiversity offsets already exist in a number of countries, e.g. wetland mitigation banking in the U.S., forestry in Brazil, fisheries in Canada, as well as in Australia and Switzerland. The European Environmental Liability Directive entered into force in 2004, and is supposed to be transposed into law in EU member countries in April 2007. It may lead to legal support for biodiversity offsets.

Since permits are tradable and in limited supply, they create a trading regime for biodiversity in PAs. By buying and voluntarily retiring (not using) permits, they can be used as voluntary offsets.

Partners

We will explore collaboration with potential buyers, such as conservation organizations, companies, and tour operators; potential sellers such as conservancies and other PAs; and service providers such as conservation biologists and environmental economists.

Implementation

  • We will start with small, private conservancies because they can take decisions fast.
  • We will systematically collect evidence to find out what works and what doesn’t.
  • Once we have proof of concept, we can show other PAs and their surrounding populations how they can make more money by participating.