Step 3.4C: Analysing biodiversity-related revenues
Besides direct and economic benefits, biodiversity generates financial revenues for countries through fees and taxes. The PIR identifies sources and types of revenues generated from biodiversity and ecosystem services. The review should cover both tax and non-tax revenue. Box 3.8 outlines some of most common public revenues that can be captured from biodiversity and ecosystem services. It is important to identify whether if biodiversity-related revenues are retained for the management or conservation of biodiversity, or used for other purposes. Biodiversity revenues can be very substantive and exceed expenditures. For example, the BIOFIN team in Belize found biodiversity generated $25 million BZD in revenue in 2016, while only $1.5 million BZD was invested in the country’s protected area system of the country.
The purpose of identifying biodiversity revenues in the PIR is to identify important institutions and policies related to biodiversity revenues, and revenue sources to investigate in the BER in more detail. It also helps identify potential finance solutions related to revenue generation or earmarking.
Box 3.8: Types of Public Revenue from Biodiversity and Ecosystem Services
Tax revenues from biodiversity
Tax revenue from biodiversity is income gained by taxing activities related to biodiversity. Taxes can be imposed at any level, national to local. Biodiversity-related taxes consist of direct or indirect taxes. Environmental taxes have the additional benefit of impacting companies’ and consumers’ behaviour. For example, a tax on harmful and chemical pesticides may help to grow the market for organic pesticides.
Examples of direct taxes:
- Green taxes such as pollution taxes (when related to biodiversity)
- Income taxes paid by companies for biodiversity goods and services
- Import/export taxes by companies for biodiversity goods and services
- Income taxes paid by employees working in a biodiversity-related sector
- Land taxes for the occupation of natural areas/protected areas.
Example of indirect taxes:
- Value-added tax collected on biodiversity goods and services
- Sales tax collected on biodiversity goods and services
Non-tax revenues from biodiversity
Non-tax revenue from biodiversity includes government, NGO, and private biodiversity-related revenue generated from user fees, licenses, permits, etc. Non-tax revenues are more likely to stay within the collecting administration, including protected areas. Biodiversity related non-tax revenue can be divided into several overlapping categories, including:
- Payments for accessing biodiversity resources and areas (extractive uses)
Fees, licenses, or permits for accessing natural resources, e.g. hunting permits, fishing licenses and permits for collecting medicinal plants.
- Payments for accessing biodiversity areas (non-extractive uses)
User fees are collected for accessing parks and protected areas and for conducting leisure activities. They are a good example of the user-pays principle in that they affect only those individuals or groups that directly benefit from biodiversity. Non-extractive uses means that biodiversity resources are not depleted or sold in the process. Examples include entrance fees to protected areas, biosecurity services fees, camping fees, diving fees, and island environmental impact fees.
- Volume-based resource user fees (water, wood)
Volume- or scale-based fees include rents, concessions, dividends and royalties collected in exchange for the right to extract renewable natural resources. Examples include royalties for resource extraction for timber, water tariffs or water extraction fees, royalties from bioprospecting contracts and transportation licenses, export permits, and other fees and charges for transporting biodiversity products.
- Land-based or infrastructure fees (tourism concessions)
Payments made for business access to natural land, the establishment of infrastructure on natural land, and the creation of marketable services on public lands. Examples include concession agreements, payments made to government from directly outsourcing PA management and rights of way or use for telephone, electricity or water infrastructure.
- Revenue from environmental funds
A biodiversity endowment fund is a fund in which the capital is invested in perpetuity, and only the resulting investment income is used to finance grants and activities. It is a common vehicle to mobilize resources from donors, national governments, the private sector as well as private citizens.
- Environmental fines and penalties related to biodiversity
Environmental fines and penalties are collected because of an illegal act such as illegal logging, poaching, illegal dumping, and unplanned pollution, that directly harms the environment. Fines and penalties may be set as a flat rate for specific illegal acts or as fixed amounts. Fines can either be paid to the treasury or local government or placed in special accounts to cover environmental remediation and compensation to affected people and communities. Environmental fines can be set firstly to form a threat that is sufficient to discourage the illegal behaviours. Secondly, the collected revenues can be used to recover the costs associated with rectifying the environmental impact. Fines, similarly to environmental taxes, should not be seen only as a source of revenue generation. This can have the perverse effect of allowing transgressions to happen, simply to collect a fine.
Certain revenues from biodiversity and ecosystem services are explicitly linked to natural resources extraction, e.g. logging fees and fishing licenses. In these cases, it would be useful to note if this practice is sustainable, or if there might be unsustainable practices linked to the revenue generation. Alternatively, revenues may be generated from more sustainable use of natural resources, such as protected area entrance and concession fees, and play an important role in funding protected area management (see Box 3.9 for an example from Latin America). Revenues from biodiversity should be recorded in a table, using the headings shown in Table 3.2
Box 3.9: Protected Area Funding Sources in Latin America
| Table 3.2: Table for Recording Sources of Biodiversity Revenues | |
|---|---|
| Heading | Description |
| Organization/agency | Stakeholders as identified and described in the PIR |
| Solution name | Actual name of the solution. Example: Mexico Environmental Services Programme |
| Solution type | BIOFIN catalogue solution name. Example: Penalties and other compensation for unplanned environmental damage |
| Source of revenue | Example: private foundations |
| Description | Brief description of the solution and how it functions |
| Use | What are the current known uses of the revenue? Is the use of the revenue earmarked for a specific purpose? |
