Over the past decade, one popular tropical conservation effort has been to encourage consumers to pay more for products that are cultivated or harvested in ecologically sensitive ways. Myriad international development projects have promoted these so-called sustainable practices in forests and farms around the world. Ordinary citizens participate by choosing to buy timber, coffee and other agricultural goods that are certified as having met such special standards during production. One of the best known of these certified, or “green”, products is shade-grown coffee beans, which are cultivated in the shady forest understory rather than in sunny fields where all the trees have been cut down.
Efforts to develop green products deserve support and praise. But in the context of the global economy, sustainable agriculture and consumer actions alone will not be enough to conserve the plants and animals that are most threatened by deforestation. We believe that a bold new approach, which we call conservation concessions, provides a potentially powerful way to expand the green market from its present dependence on products to the broader notion of green services – the opportunity to purchase biodiversity preservation directly.
The feasibility of this strategy relies on economics. Huge tracts of public forest in the developing world are being leased for less than $1 per hectare a year. At those prices, conservation organisations, which have long demonstrated a willingness to pay for the preservation of biodiversity, can afford to outbid competitors for land leases and to compensate local people to manage the intact ecosystems. These agreements are legally and economically no different from logging contracts or any other business deal that grants control over natural resources to a particular group. Indeed, the income that developing countries can generate in this way is equivalent to, and often more stable than, what they could earn through the volatile international markets for timber and agricultural goods.
No other choices
One of the greatest advantages of conservation concessions is that they dispel the notion that habitat destruction is inevitable if ecosystems are to generate financial benefits. During a study of cocoa economics in Ghana in the spring of 2000, an official in that country’s department of forestry explained to one of our research partners, Eduard Niesten, that Ghana’s government cannot be expected to set aside more than the 20% of its prized high-canopy forest zone that is already protected by national law. The rest must be used for economic progress, the official said.
This pessimistic sentiment is widespread among governments and residents of many developing countries, where economic planning often includes rapid growth of the production of agricultural commodities, especially after logging operations have cleared the land. These activities represent an attractive – and perhaps the only – development option in tropical countries, which tend to have an abundance of land and unskilled labour but insufficient capital to finance more costly endeavours, such as industry.
To examine this issue more closely, we formed a research team with six other investigators at Conservation International’s centre for applied biodiversity science in Washington, DC. Our aim was to study agricultural commodities that are produced in areas designated by ecologists as the world’s richest and most threatened in terms of biodiversity. These 25 so-called biodiversity hot spots, which encompass only 1,4% of the Earth’s land surface, have lost at least 70% of their primary vegetation. They are also prime habitats for 44% of all vascular plant species and 35% of all land-dwelling vertebrate species.
Based on this three-year study, our team determined that, in addition to logging for timber, natural-habitat destruction is rapid and extensive to accommodate the production of five agricultural commodities: beef, soybeans, palm oil, coffee and cocoa.
In the 1980s the expansion of cattle ranches in South America was widely publicised. This activity accounted for 44% of deforestation on the continent during that decade. Today one of the greatest threats to South America’s tropical biodiversity is the expanding production of soybeans, most of which goes to feed livestock.
Since the 1970s soybean cultivation has grown by 13-million hectares in Brazil alone – the fastest expansion of any agricultural product in the tropics known to date. Government subsidies have allowed this activity to move into areas never before touched by agriculture. In neighbouring Bolivia, the area devoted to this crop has grown by an average of nearly 35% a year since the mid-1960s and is fast approaching one million hectares.
Elsewhere natural forests are being converted at an alarming rate to cultivation of the other three crops in our study. Spread ubiquitously around the world’s biodiversity hot spots are coffee and cocoa, occupying 11 and eight million hectares, respectively. Their cultivation has replaced as much as 80% of Ivory Coast’s original forests.
Malaysia leads the production of palm oil, cultivating three million hectares out of the total six million devoted to this commodity globally. Indonesia, which currently grows oil palm on 2,5-million hectares, has vowed to overtake its neighbour as the world’s leading producer by planting the 15-million additional hectares that the government has already slated for oil palm plantations.
Certainly the intention of people who convert biologically diverse ecosystems to agriculture or logged forests is to improve their economic lot in life. The sad irony is that these prospects are often unreliable.
When countries choose logging and agriculture for lack of better economic options, they often are not competitive in global markets. Indeed, the very nature of export commodity markets is such that many producers are not profitable for years at a time because of chronic oversupply.
The annual harvest of cocoa and accumulated stocks, for example, exceeded consumption by between 30% and 70% each year from 1971 to 1999. Cultivators in West Africa recently resorted to burning their crops in a desperate protest at the situation.
Another striking example played out in Bolivia, where in 1996 the imposition of a new tax of $1 per hectare on the country’s 22-million hectares of timber concessions resulted in nearly 17-million hectares being abandoned by loggers. In other words, the potential net returns for logging these forests were so low that an additional cost of $1 per hectare per year was enough to make most companies avoid these investments.
No matter the level of economic pay-off, all these situations can portend widespread, irreversible loss of biodiversity. The concept of sustainable forestry and farming practices was born of this dilemma – the need to promote economic development while mitigating its probable course of ecological destruction.
But our recent studies have convinced us that attempting to give green consumers broader access to agricultural markets is not necessarily a winning option for economic development or conservation in many settings. The share of the global agricultural market that is occupied by green goods is largely limited to those consumers who have the money for, and an interest in, purchasing such products. This reality effectively eliminates the potential for curtailing deforestation related to many agricultural products – for example, soybeans from Brazil that are eaten by livestock, oil palm in Indonesia that is cultivated for domestic consumption, and trees in Madagascar that are burned locally as fuel.
Even when certified goods – such as coffee, timber and beef – do reach wealthy consumers, the effect is not as significant as some may think. Less than one percent of the coffee imported into the US is certified for social or ecological reasons. What is more, most of the land newly devoted to growing coffee beans is for Robusta, usually sold in developing countries as instant coffee, rather than Arabica, the product sold most commonly in cafés of the industrial world.
Green timber fares no better. Even if every board metre of wood imported into the US and Europe from tropical countries were certified, it would make up only 6,5% of total production from the tropics. The rest is being sold in regions where consumers have little or no interest in certified timber.
Similarly, organically produced beef is growing in popularity in industrial countries. But international trade in beef represents only between 1% and 3% of global production; in the developing world, beef production is growing at more than 3% a year, primarily to serve domestic markets.
Marketing green services
The more we studied the conservation impacts of timber and agricultural commodity markets, the more convinced we became that attempting to support these markets through price premiums for green products is not the only way to encourage conservation. This situation seemed especially tragic when we considered the high demand for biodiversity protection among the international community.
A common misperception is that conservation cannot compete directly with most other economic uses of natural resources; in reality, the conservation economy is quite large. The international community – including governments, multilateral development banks and conservation groups – spends at least half a billion dollars annually on biodiversity conservation in the tropics.
This figure is only a small fraction of the global budget that could be directed to biodiversity-rich countries if better investment mechanisms existed. In 1999 an example from Bolivia showed us just how far these financial resources can go. That year Conservation International paid a logging company $100 000 to retire its 45 000ha timber concession. As part of the deal, the Bolivian government agreed to integrate the area into adjacent Madidi National Park. Bottom line: an area three times the size of Washington, DC, received permanent protection for less than the average price of a house in that city.
Working with timber concessions or other lease arrangements enables conservationists to avoid the problems associated with purchasing land outright. Some governments baulk at the idea of foreign investors taking permanent control of parts of their territories, especially if they are trying to ensure a renewable stream of revenue from their natural resources. For the same reasons, incorporating land into national parks – as conservationists were able to convince the Bolivian government to do – is also a rare opportunity. That is why the Bolivia experience, and others like it, inspired us to take advantage of the low prices for which millions of hectares of forest could be leased in the tropics.
We developed the conservation concession approach to leasing land with several major goals in mind. Most important, perhaps, was that a portion of the concession payments would be directed to local communities to support employment and social services. In the same way that a logging company would pay local residents wages and benefits to work in the mills, the financier of the conservation concession would hire them to preserve the forest.
Once we had developed a clear set of criteria for this newfangled green services market, we set off to create a series of pilot conservation concessions. Among the first countries we visited, early in 2000, was Peru. There we planned to compete for part of the 800 000ha of Amazon forest that the government was putting up for lease in an international auction.
What transpired during our negotiations confirmed our theory that the economic value of forest resources in Peru – and many other regions of the world – is poor at best. The auction began with a proposed minimum bid of between $1 and $4 per hectare a year and involved forestry companies from Europe and North and South America in addition to us. In a matter of months, however, the auction was called off because the other potential bidders lost interest in these concessions, presumably because the base price was too high. The fate of that particular forest remains to be determined, but we had planted a seed that took root in the fertile ground prepared by the Peruvian conservation community.
Peru had been undergoing the final revisions of its forest and wildlife law, a process in which several conservation groups were seeking alternatives to logging leases for Peru’s forests. In April 2001 the government chose to include conservation concessions as a legal use of its 67-million hectares of public forest. We had entered the original bidding arena without knowing for certain that we would be allowed to compete, so this was good news.
At around that time, a Peruvian conservation group, the Amazon Conservation Association, approached us. The group’s members wanted to use a conservation concession to secure critical natural habitat where they were setting up an ecological research station. Under the new Peruvian law, concessions could be acquired by applying for specific areas of interest to the bidder. We leapt at the chance to help launch Peru’s first conservation concession.
Thanks to the scientific and community work of the Amazon Conservation Association, legal advice from the Peruvian Environmental Law Society, assistance from independent environmental consultant Enrique Toledo, and the enthusiastic support of Peru’s Minister of Agriculture, Carlos Amat y Leon, Peru established the Lost Amigos conservation concession in July 2001. The agreement centred on the renewable 40-year lease for the conservation management and study of 130 000ha of tropical forest. This land forms part of an ecological corridor that links Manu and Bahuaja-Sonene national parks in Peru and protects many of the country’s 25 000 species of flora and 1 700 species of birds.
Catching on
Over the course of our Los Amigos negotiations, we also conducted discussions for pilot projects in Guyana and Guatemala. In September 2000 the government of Guyana issued to Conservation International an exploratory permit for a conservation concession of approximately 80 000ha in the southern part of the country. During the subsequent months, we worked with forest commission officials to negotiate the terms of a renewable 25-year contract. We hope to conclude the deal for this uninhabited area of forest soon.
In Guatemala, the national government had already issued timber concessions within the country’s two-million-hectare Maya Biosphere Reserve to local communities. These people, who live within the reserve’s multiple-use zone, where logging and other economic activities are permitted, are currently producing certified green timber from their forests.
Two communities, however, proposed to forgo logging and instead lease standing trees – and the obligation to protect the ecosystem in which they reside – to conservationists. The communities, together representing about 110 households, could use their new revenue stream from the concession deal to pay salaries for conservation managers, to invest in projects such as guiding tourists to nearby archaeological sites and to provide community social services such as education and health care.
The proposed concessions, which would preserve both pristine forest and a wealth of Mayan ruins, span approximately 75000ha bordering a national park.
At many turns in our negotiations over the past two years, we have faced scrutiny and scepticism about conservation concessions, from governments and conservationists alike. But the bold actions that some governments, together with significant financial supporters, have taken to adopt this approach indicate it is viable both as an economic alternative and as a conservation tool.
The idea is catching on. Last year we received a phone call from a man in Ecuador who had travelled six hours to the nearest international phone line so he could ask about establishing a conservation concession in his coastal forest community. Halfway around the world we struck up a partnership with a small NGO in Indonesia that is keen to experiment with this concept as a way to protect that nation’s fragile marine ecosystems.
Now we are looking at the feasibility of conservation concessions across Africa, Asia and Latin America, and we predict that this approach will transfer readily to many areas. If we are right, conservation concessions may indeed be able to bring to life a global market for green services.
Jared Hardner and Richard Rice have collaborated on economic studies of biodiversity conservation in South America, Africa and Asia for the past 10 years. Rice is chief economist of Conservation International’s centre for applied biodiversity science in Washington, DC, where Hardner serves as a research fellow. This feature first appeared in the May 2002 edition of Scientific American magazine