International cooperation for biodiversity conservation : an economic analysis

Biodiversity decline poses significant threats to current and future generations. Although species extinction has been a natural process since the formation of Earth, recent rates of extinction are estimated to be from 100 to 1000 times larger when compared to fossil records. Almost all of the Earth’s ecosystems have been dramatically transformed and some of them are being pushed towards critical thresholds that could risk overall livelihoods and wellbeing of human population. Implications of severe biodiversity loss include irreversible alterations of ecosystem services, vulnerability to natural disasters, human health risks, threats to food and energy security, depletion of natural resources and damage to social relations. There is an urgent need to study and develop efficient conservation instruments that decision makers can implement to halt the ongoing rate of biodiversity loss. However, this is a complex task due to i) the multidimensional nature of biodiversity conservation in terms of the different levels of biological organisation, and also to ii) the diverse geographical scales of concern at stake (from local to global). The objective of this thesis is to examine the functioning and effectiveness of different economic instruments for biodiversity conservation at diverse scales. In order to achieve this objective, different methodological approaches such as market theory, contract theory, and game theory are implemented. In Chapter 2, I develop an assessment of economic characteristics for biodiversity markets to work efficiently. I first introduce a set of general conditions to guarantee market efficiency. These conditions are derived from market and contract theory. In the light of these conditions, I analyse the efficiency of five selected market schemes for biodiversity conservation that have been implemented in different countries. An assessment of the upscaling potential of the existing markets reveals that obstacles such as the lack of a standardised unit of measurement for biodiversity and the difficulty to ensure long-term conservation make it difficult to scale up any of the selected mechanisms as they are currently performing. I argue that the creation of a global credit registry for biodiversity would facilitate measurement, reporting and verification (MRV) of biodiversity credits to support market-based mechanisms. In Chapter 3, I present a game-theoretic model for an international environmental agreement (IEA) for biodiversity conservation. I first introduce three key characteristics that differentiate the case of biodiversity conservation from the conventional emission abatement model: the existence of a natural upper bound of conservation per country, the importance of local benefits, and the subadditivity of the global conservation function. Then, I consider asymmetries in benefits and costs of biodiversity conservation, and separately, in the natural upper bound of conservation per country. Results show that there is scope to achieve a higher degree of cooperation in a potential IEA for biodiversity conservation when subadditivity in the global conservation function is considered. Furthermore, the inclusion of an optimal transfer rule allows not only for larger stable coalitions and higher potential gains of cooperation and conservation, but also for a different composition of coalition structures (in term of country types). In Chapter 4, I analyse the inclusion of an explicit spatial structure in the modelling of an IEA for conservation. I assess the role of distance and location between countries on coalition formation and overall coalition stability. First, to explain cooperation among neighbouring countries I make use of a specific setting: a circular spatial structure. Furthermore, I employ a notion of distance between countries in terms of their ecosystem dissimilarity: two countries are closer the more species they have in common. I argue that, for the purpose of exploring the stability of conservation agreements, geographical distance may be less important than the dissimilarity of the sets of species that two countries host. Results show that the maximum size of a stable coalition in the model with a spatial structure is of two members. These results are robust with respect to the different spatial patterns assessed within the circular structure. I conclude that the stable coalition with the best global payoff is obtained when stable coalitions are composed of two countries with the smallest possible distance between them. Also, the study shows evidence of a ‘remoteness effect’. Highest payoffs in a stable biodiversity agreement are attained when member countries are the closest to each other, but also to the rest of the countries in the spatial structure. In Chapter 5, the model for an IEA for conservation with an embedded spatial structure is applied to a case study on regional conservation of the non-breeding habitat of the Golden-winged warbler (<em>Vermivora chrysoptera</em>). I study the incentives of countries to join an agreement for the protection of wintering habitats by calibrating the game theoretical model with empirical data. Also, I include a spatial setting that best describes specific aspects of the migratory behaviour of the species. Results show that when there is a positive willingness to pay of US households to improve the chance of survival of the population of the Golden-winged Warbler, and when allowing for the implementation of a transfer scheme, there is scope for a stable conservation agreement between the United States and the Latin American countries with wintering habitat of the bird species (i.e. full cooperation). For all scenarios of our study, the United States transfers part of its payoff to the Latin American countries to incentivise conservation and stabilise the coalition. This thesis has shown the importance of taking into account asymmetries between countries – both in their biodiversity endowments as well as in benefits and costs of conservation activities – in the design and application on economic instruments for biodiversity conservation. Furthermore, the implementation of transfer schemes as instruments to incentivise conservation have the potential to contribute to effective biodiversity management.