Perverse Incentives and their Removal or Mitigation

Introduction

So-called 'perverse' incentives emanate from policies or practices that induce behavior that is harmful for 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) recognized that perverse incentives harmful for biodiversity are frequently not cost-efficient and/or not effective in meeting social objectives while in some cases use scarce public funds, and urged Parties and other Governments to prioritize and significantly increase their efforts in actively identifying, eliminating, phasing out, or reforming, with a view to minimizing or avoiding negative impacts from, existing harmful incentives for sectors that can potentially affect biodiversity.

Aichi target three of the Strategic Plan for Biodiversity for the 2011-2020 period relates to incentives that are harmful for biodiversity:

Target 3: By 2020, at the latest, incentives, including subsidies, harmful to biodiversity are eliminated, phased out or reformed in order to minimize or avoid negative impacts, and positive incentives for the conservation and sustainable use of biodiversity are developed and applied, consistent and in harmony with the Convention and other relevant international obligations, taking into account national socio-economic conditions.

The Conference of the Parties acknowledged that identifying, eliminating, phasing out, or reforming existing harmful incentives requires:

• the conduct of careful analyses of available data and
• enhanced transparency, through ongoing and transparent communication mechanisms on
• the amounts and the distribution of perverse incentives provided, as well as of
• the consequences of doing so, including for the livelihoods of indigenous and local communities.

CBD Technical Series no. 56 provides succinct lessons learned and good practices cases in identifying and removing or mitigating perverse incentive measures, based on the work of an international expert workshop which took place in Paris, France, in October 2009.