Introduction

Perverse incentives emanate from policies or practices that induce unsustainable behavior that destroys biodiversity, often as unanticipated side effects of policies designed to attain other objectives. Such “policy failures” can include government subsidies or other measures which fail to take into account the existence of environmental externalities, as well as laws or customary practice governing resource use. In order to ensure the conservation of biodiversity and the sustainable use of its components, it is therefore important to identify policies and practices that generate perverse incentives and to consider their removal or the mitigation of their negative impacts through appropriate means.

Overview of CBD Activities

The Conference of the Parties (COP) stressed the importance of taking appropriate action against those incentive measures that threaten biological diversity. At its fourth meeting, it encouraged Parties, Governments and international organizations to identify perverse incentives and consider the removal or mitigation of their negative effects on biological diversity . Work on perverse incentive measures, and on ways and means to remove or mitigate their negative impacts on biological diversity, is also included in the programme of work on incentive measures, adopted at COP 5.

The guidelines for selecting appropriate and complementary measures, contained in the proposals for the design and implementation of incentive measures, were endorsed by the COP 6 as far as they are consistent with Parties' national policies and legislation as well as their international obligations. The guidelines recognize that

1. the removal of perverse incentive eases pressure on the environment,
2. that the identification of both internal and external perverse incentive and other threats to biodiversity conservation and to the promotion of sustainable use, is essential to the selection and design of incentive measures, and
3. that the removal of perverse incentives may improve economic efficiency and reduce fiscal expenditures.

Further to a request by COP 6, proposals for the application of ways and means to remove or mitigate perverse incentives were developed by an expert workshop and further considered by SBSTTA and by the COP 7.

COP 7 encouraged Parties and governments, as appropriate, to use the proposals, annexed to decision VII/18, as voluntary interim guidance to Parties for the application of ways and means to remove or mitigate policies and practices that generate perverse incentives, and to extend their efforts to an examination of new policies with a view to identifying, and avoiding, potential perverse incentives, bearing in mind that perverse incentives include those that negatively affect biodiversity in other countries. Furthermore, Parties and Governments are also encouraged to use, on a voluntary basis, these proposals as further interim guidance in implementing the Addis Ababa Principles and Guidelines for the Sustainable Use of Biodiversity to these principles and guidelines) and, in particular, principles 2 and 3, which address incentive measures.

COP 9 requested the Executive Secretary to convene an international workshop on the removal and mitigation of perverse, and the promotion of positive, incentive measures, consisting of government-nominated practitioners with balanced regional representation, as well as experts from relevant organizations and stakeholders. The workshop convend in October 2009 and collected, exchanged and analysed information, including case-studies on, good practices for, and lessons learned from, concrete and practical experiences in identifying and removing or mitigating perverse incentive measures, and to identify a limited number of good practice cases from different regions. These report of the workshop will be further considered by the Subsidiary Body on Scientific, Technical and Technological Advice and reviewed by the COP 10.