Some of our planet's greatest wealth is contained in natural forests, plains, mountains, wetlands and marine habitats. These biological resources are the physical manifestation of the globe's biological diversity, which simply stated is the variety and variability among living organisms and the ecological complexes in which they occur. Effective systems of managenlent can ensure that biological resources not only survive, but in fact increase while they are being used, thus providing the foundation for sustainable development and for stable national economies.

But instead of conserving the rich resources of forest, wetland, and sea, current processes of development are depleting many biological resources at such a rate that they are rendered essentially non renewable. Experience has shown that too little biological diversity will be conserved by market forces alone, and that effective government intervention is required to meet the needs of society. Economic inducements are likely to prove the most effective measures for converting over-exploitation to sustainable use of biological resources.

ECONOMIC OBSTACLES TO CONSERVATION

The fundamental constraint is that some people earn immedi- ate benefits from exploiting biological resources without paying the full social and economic costs of resource depletion; instead, these costs (to be paid either now or in the future) are transferred to society as a whole. Further, the nations with the greatest biological diversity are frequently those with the fewest economic means to Jr implement conservation programs. They need to use their biological resources to generate income for their growing populations, but problems arise when these resources are abused through mismanagement rather than nurtured through effective management.

Other major economic obstacles to conservation include:

• biological resources are often not given appropriate prices in the marketplace;
• because the social benefits of conserving biological resources are often intangible, widely spread, and not fully reflected in market prices, the benefits of protecting natural areas are in practice seldom fully represented in cost benefit analysis;
• the species, ecosystems, and ecosystem services which are most over exploited tend to be the ones with the weakest ownership;
• the discount rates applied by current economic planning tend to encourage depletion of biological resources rather than conservation; and
• conventional measures of national income do not recognize the drawing down of the stock of natural capital, and instead consider the depletion of resources, i.e., the loss of wealth, as net income.

ASSESSING THE VALUE OF BIOLOGICAL DIVERSITY

In order to compete for the attention of government decisionmakers, conservation policies first need to demonstrate in economic terms the value of biological diversity to the country's social and economic development. Approaches for determining the value of biological resources include:

• assessing the value of nature's products&emdash;such as firewood, fodder, and game meat&emdash;that are consumed directly, with out passing through a market;
• assessing the value of products which are commercially harvested, such as timber, fish, ivory, and medicinal plants;
• and assessing indirect values of ecosystem functions, such as watershed protection, photosynthesis, regulation of climate, and production of soil.

Some biological resources can be easily transformed into revenue through harvesting, while others provide flows of services which do not carry an obvious price-tag. However, an ecosystem whicl has been depleted of its economically important species or a habitat which has been altered to another use cannot be re-built out of income. The costs of re establishing forests or reversing the processes of desertification can far exceed any economic benefits from over harvesting or otherwise abusing biological resources, so the environmental costs of depletion need to be estimated in terms of the time and effort required to restore resources to their former productivity.

Assessing values and costs of protecting biological resources provides a basis for determining the total value of any protected area or other system of biological resources. Since the value of conserving biological resources can be considerable, conservation should be seen as a form of economic development. And since biological resources have economic values, investments in conservation should be judged in economic terms, requiring reliable and credible means of measuring the benefits of conservation.

USING ECONOMIC INCENTIVES TO PROMOTE CONSERVATION

To the extent that resource exploitation is governed by the per ceived self.interest of various individuals or groups, behavior af fecting maintenance of biological diversity can best be changed by providing new approaches to conservation which alter people's perceptions of what behavior is in their self-interest. Since self-interest today is defined primarily in economic terms, conservation needs to be promoted through the means of economic incentives.

An incentive for conservation is any inducement which is specifically intended to incite or motivate governments, local people, and international organizations to conserve biological diversity. A perverse incentive is one which induces behavior which depletes biological diversity. A disincentive is any inducement or mechanism designed to discourage depleting of biological diversity. Together, incentives and disincentives provide the carrot and the stick for motivating behavior that will conserve biological resources.

Direct incentives&emdash;either in cash or in kind&emdash;are applied to achieve specific objectives, such as improving management of a protected area. Indirect incentives do not require any direct budgetary appropriation for biological resource conservation, but apply fiscal, service, social, and natural resources policies to specific conservation problems.

Incentives are used to divert land, capital, and labor towards conserving biological resources, and to promote broader participation in work which will benefit these resources. They can smooth the uneven distribution of the costs and benefits of conserving biological resources, mitigate anticipated negative impacts on local people by regulations controlling exploitation, compensate people for any extraordinary losses suffered through such controls, and reward the local people who assume externalities through which the larger public benefits. Incentives are clearly worthwhile when they stimulate activities which conserve biological resources, at a lower economic cost than that of the economic benefits received. To function effectively, incentives require some degree of regulation, enforcement, and monitoring. They must be used with considerable sensitivity if they are to attain their objectives, and must be able to adapt to changing conditions.

THE PROBLEM OF PERVERSE INCENTIVES

Economic incentives have been far more pervasive in overexploiting biological resources than conserving them. In most parts of the tropics, the opening of forest areas is supported by powerful economic incentives such as state-sponsored road-building programs which facilitate access to markets. Further, resettlement of poor people in the remote forested areas made accessible by new roads is often politically preferable to genuine land reform which involves the redistribution of existing agricultural lands. Governments have often instituted these perverse incentives for important political or social reasons, and the impact on the environment is often an external factor.

While incentives to convert forests and other wilderness to agricultural uses may have been appropriate when biological resources were plentiful, the process is reaching its productive limits (and indeed has exceeded them in many places). A major step in moving from exploitation to sustainable use is for governments to review the impacts of all relevant policies on the status and trends of biological resources. Based on the policy review, governments should eliminate or at least reduce policy distortions that favor en vironmentally unsound practices, discriminate against the rural poor, reduce economic efficiency, and waste budgetary resources. Overcoming the damage caused by perverse incentives will requile new incentives to promote conservation, applied at a series of levels and in a number of sectors.

APPLYING INCENTIVES AT THE COMMUNITY LEVEL

The specific package of available biological resources varies considerably from place to place, depending on such factors as soil, rainfall, and history of human use. For the people living in or near the forests, plants and animals provide food, medicine, hides, building materials, income, and the source of inspiration; rivers provi(le transportation, fish, water, and soils; and coral reefs and coastal mangroves provide a permanent source of sustenance and building materials.

Depending on these resources, rural people have often developed their own means of managing a sustainable yield of benefits. Biological resources are often under threat because the responsibility for their management has been removed from the people who live closest to them, and instead has been transferred to government agencies located in distant capitals. But the costs of conservation still typically fall on the relatively few rural people who otherwise might have benefitted most directly from exploiting these resources. Worse, the rural people who live closest to the areas with greatest biological diversity are often among the most economically disadvantaged&emdash;the poorest of the poor.

Under such conditions, the villager is often forced to become a poacher, or to clear national park land to grow a crop. Changing this behavior requires first examining govemment resource management policies to determine how they may stimulate a villager's poaching and encroachment. Economic incentives designed to reverse the effects of these policies may provide the best means of transforming an exploiter into a conservationist.

Appropriate measures may include assigning at least some management responsibility to local institutions, strengthening community-based resource management systems, designing pricing policies and tax benefits which will promote conservation of biological resources, and introducing a variety of property rights and land tenure arrangements. These measures may serve to rekindle traditional ways and means of managing biological resources which have been weakened in recent years.

Which members of a population have their access to biological resources enhanced and which members have it restricted by government policies is of profound importance in determining whether the resources will make a sustainable contribution to society. People living in and around the forests, wetlands, and coastal zones, rather than governments, often exercise the real power over the use of the biological resources, so they should be given incentives to manage these resources sustainably at their own cost and for their own benefit.

SUPPORT FROM THE NATIONAL LEVEL FOR COMMUNITY-BASED INCENTIVES

The biological resources which support the community are also of considerable interest to the nation and the world. Further, incentives at the local community level are likely to require considerable support from compatible policies at the national level.

Biological resources do not occur only in wilderness, and economic incentives may also be used more generally throughout the country to encourage settlement patterns and production systems that are directed at the sustainable use of the resources of forest, savanna, wetland, and sea. The specific policies required at the national level will derive from what is required at the community level to conserve biological resources.

Sustainable development requires coordination among a number of policies and levels. This is not as easy as it sounds. Many conservation problems are due to divided responsibility among sectoral units, leading to fragmentation, poor coordination, conflicting directives, and waste of human and financial resources. This can only be overcome by examining the impact of decisions in one sector on the ability of another sector to depend on the same resources. In most cases, the optimal balance point where the benefit of considering secondary impacts is overtaken by the cost of doing so lies well beyond the current practice of taking decisions based on a very narrow range of sectoral considerations.

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