The natural diversity of the living world, with its myriad species, complex ecosystems and constantly evolving genetic structure, is a priceless inheritance. At the same time, this biodiversity is commonly under-valued by modern economies, resulting in its rapid and accelerating disappearance. Some experts liken the current rate of biodiversity loss to the great extinctions of prehistoric eras, with the important difference that today’s loss is entirely due to human activity. Ironically, while the biological foundation of our lives is eroding beneath our feet, human economies continue to thrive, generating ever-greater quantities and qualities of material goods and consumer services. Poverty and conflict continue to afflict the lives of billions, but at the same time overall economic growth means that increasing numbers of people around the world enjoy unprecedented levels of prosperity.On the one hand, diminishing biodiversity, and on the other, expanding economies. The two phenomena are not unrelated. Modern economies are very good at producing what people will pay for. They are not so good at preserving what is priceless.
Much of the ongoing loss of biodiversity can be attributed, directly or indirectly, to the production and consumption of goods and services to meet human needs. The growing problem of climate change will further exacerbate biodiversity loss.Action is urgently required to halt the loss of biodiversity, but governments and non-governmental organisations (NGOs) cannot do it alone. Policies and regulations that require business and consumers to reduce their environmental footprint are important, but not sufficient. Much existing biodiversity policy is essentially ‘swimming against the tide’ of economic growth, and constantly falling short. Taxing businesses and consumers or seeking charity from them could raise significant sums for biodiversity conservation, but does little to alter day-to-day decision-making in the market place. The question is how to enlist both the purchasing power of consumers and the productive capacity of business to help meet the global biodiversity challenge. This in turn requires that we find ways to make a stronger business case for biodiversity conservation. With a little ingenuity (and political will), a compelling business case can be constructed for environmental protection and improvement. Twenty years ago, few people imagined that an entire industry could be created around mitigating climate change.
Today it is a reality – the international carbon trade, for example, topped US$30 billion in 2006 and is expected to exceed US$50 billion by 2008. Why not the same for biodiversity? Can we create or expand markets for genetic diversity, species conservation and ecosystem resilience in the same way that markets have been created at a global level for carbon, and in some countries for sulphur dioxide (SO2), nitrogen oxide (NOX) and groundwater salinity? The power of market-based environmental policy is no longer in doubt. But biodiversity is still largely neglected by private finance. The challenge of building biodiversity business is not trivial. There is a need to develop new business models and market mechanisms for biodiversity conservation, while also raising awareness and persuading the public and policy-makers that biodiversity (or component ecosystem services) can be conserved on a commercial basis. Recent experience with market-based approaches to controlling carbon dioxide (CO2) and other pollutants provides practical cautions as well as encouragement.
This report is the fruit of collaboration between IUCN and Shell International Limited, which aim to identify potential market-based mechanisms and new business opportunities to conserve biodiversity. It represents the results of consultation with more than 60 organisations, including commercial banks and insurance companies, private foundations, multilateral and bilateral aid agencies, NGOs, think-tanks, academics and investment fund managers. Based on in-depth interviews and a detailed literature review, this report provides a snapshot of the biodiversity business landscape. It reviews a range of biodiversity business sectors, assesses what has worked (or not) and why, describes the main constraints and identifies opportunities to expand market-based biodiversity conservation within each sector.
The report also reviews the policy frameworks, technical resources and financing mechanisms needed to enable biodiversity businesses to grow, in each case highlighting lessons learned from experience and future opportunities. The authors conclude that there are numerous pro-biodiversity business opportunities that can generate positive financial returns as well as real biodiversity benefits. Many initiatives have been established with impressive results – however, have achieved significant scale or leveraged substantial private investment. There is a need to build on existing initiatives, recruit additional investors and entrepreneurs, and ‘raise the bar’ in terms of both the scale and conservation benefit of private investment. To this end, three separate but related institutional functions must be fulfilled: namely the development of appropriate enabling policy; the provision of technical and managerial support tailored to biodiversity business; and access to appropriate finance from investors who understand the particular constraints and opportunities of creating new businesses and markets.