Economics, Trade and Incentive Measures


Biodiversity generates and helps to maintain the supply of a myriad of goods and services that are essential for human well-being and economic development. Agriculture, for example, would simply not be possible without biological diversity and its contribution to the development of seed varieties and the breeding of domesticated livestock, as well as through the numerous species interacting with agriculture, such as pollinators or symbionts.

Biodiversity is under attack by a number of powerful external forces. From an economic viewpoint, perhaps the most dangerous force is simple neglect: an under-estimation of the value of biodiversity, an ignorance of its essential role in maintaining the foundations for human well-being and economic growth alike.

It is well known among economists that markets alone do not assign appropriate monetary value to biodiversity. Hence, without policy intervention, market prices do not properly reflect the losses to society as a whole arising from biodiversity degradation. This market failure leads individuals, companies and governments to use biodiversity in an unsustainable manner.

The Convention’s economic work focuses on two areas. First, it aims to elicit the value of biodiversity through appropriate valuation tools and to "internalize" this value into market prices through the use of appropriate incentive measures. Such measures can include, for instance, payments for private conservation efforts, fees on biodiversity-degrading activities or transferable quotas for biological resources. As an important milestone, a set of proposals was adopted under the Convention to provide guidance to governments on how to design and implement such incentive measures.

A related objective is addressing policies or practices that generate "perverse" incentives, that is, incentives that accelerate the loss of biodiversity. Examples include those public subsidies that support unsustainable farming, forestry or fishery activities. The Conference of the Parties to the Convention encouraged Parties and other governments to identify such perverse incentives and consider the removal or mitigation of the negative effects on biological diversity.

Many of the goods generated through biodiversity are the subject of international trade, either as commodities or in manufactured goods. In addition, biodiversity plays an important role in poverty alleviation and, hence, wealth creation. It is therefore evident that the maintenance of biodiversity and the promotion of trade are interdependent. To address this interdependence forms the second area of economic work under the Convention.

While the Convention does not require measures that are directly related to international trade, there is a close relationship between many of its provisions – as well as those of its Biosafety Protocol – and the provisions of the multilateral trade agreements of the World Trade Organization (WTO). For instance, the Parties to the Convention have emphasized the interrelationship between the Convention and the provisions of the WTO’s Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPs), and the need to further explore this interrelationship. Similarly, Parties have underlined the relationship between the Biosafety Protocol and the provisions of the WTO Agreements on Technical Barriers to Trade (TBT) and Application of Sanitary and Phytosanitary Measures (SPS).

The trade-related work of the Convention is part of a broader effort of the international community to ensure harmony and mutual supportiveness between trade rules and international environmental law, in order to both maintain biodiversity and promote international trade.

Biodiversity and International Trade
Biodiversity and Incentive Measures