Findings of a study have revealed that by financing the restoration or protection of natural areas companies can offset the negative impacts of their operations, and generate significant economic benefits. The study has been conducted by IUCN (International Union for Conservation of Nature).
“Companies are increasingly interested in how to minimize and compensate for the negative impacts of their development projects,” says Nathalie Olsen of IUCN’s Economics Programme and lead author of the report.
It is however essential to know the distribution of costs and benefits of conservation action, as to who gains and who loses, in order to know who should be compensated, by how much, and by whom.
Rio Tinto, a global leader in mineral exploration and processing, commissioned IUCN to estimate the monetary value of the biodiversity benefits of conserving the Tsitongambarika forest in Madagascar and examine the costs of such conservation.
The Tsitongambarika forest is the largest expanse of lowland humid forest in southern Madagascar and contains high levels of biodiversity, with more than 80% of species found nowhere else on earth.
The Tsitongambarika forest is also an important source of local livelihoods. The forest is being lost at a rate of 1-2 % per year, mainly due to slash and burn cultivation by local communities.
The company, in collaboration with some of its biodiversity partners, is exploring conservation opportunities to compensate for the unavoidable residual impacts of its mining operations in the Tsitongambarika region.
The company supports local non-governmental organizations and communities in conserving parts of the Tsitongambarika forest, to produce the conservation gains needed to achieve a net positive impact on biodiversity.
“There are many types of values associated with biodiversity and the services provided by tropical forests, such as food, wildlife habitat and carbon storage,” says Dennis Hosack of IUCN’s Business and Biodiversity Programme.
“Some of these values can be quantified and expressed in monetary terms, which allows them to be better integrated into decision-making by both companies and governments”, according to Dannis Hosack.
The global economic benefits of conserving the Tsitongambarika forest are worth at least US$17.3 million over 30 years, mainly due to climate regulating functions, says Olsen. “When deciding whether to restore or protect land, demonstrating the positive economic values of nature and the benefits to people, makes conservation a more competitive option,” says Olsen.
To assess the benefits of conserving the forest, IUCN took into account the value of wildlife habitat, hydrological regulation and carbon storage. It also examined the costs of conservation, such as up-front investment, the maintenance of protected areas, as well as the opportunity costs that local people bear if they lose access to natural resources that have sustained them traditionally with food and income.
The study found that while substantial economic benefits associated with the conservation of tropical forests accrue to global populations, it is often local people who bear most of the costs of conservation action and need to be compensated for the losses they incur.
Compensation of losses incurred to local people can be achieved through ‘Payments for Ecosystem Services’, which provide incentives for local communities to protect or sustainably manage land. Another opportunity to recognize this value is through the UN programme Reducing Emissions from Deforestation and Forest Degradation (REDD+), considering local needs and the objectives of national strategies.
“Although the study focuses on southern Madagascar, its findings can be applied to conservation actions globally and are relevant for many companies as they increasingly aim to compensate for their negative impacts on biodiversity,” adds Hosack.
The case is a good example how the damages of development can be mitigated or minimized. This case about correction of damages need to be emulated in similar other situations globally where mining has threatened biodiversity!