Direct payments most effective way to preserve world’s plant and animal diversity
at the Andrew Young School of Policy Studies

December 2, 2002

CONTACT:
Dr. Paul Ferraro, Andrew Young School of Policy Studies, 404-651-1372
Beth Flannigan, Georgia State University, 404-651-3574

ATLANTA — The diversity of plant and animal species in developing nations is an essential resource that we may be using ineffective methods to preserve, according to Paul Ferraro, an assistant professor of economics at Georgia State University.

His paper, “Direct Payments to Conserve Biodiversity,” appears in the Nov. 28 issue of Science. In it, Ferraro critiques the currently popular approach to protecting developing nations’ vast assortment of plant and animal species: investing in commercial activities, such as ecotourism, which indirectly encourage people to protect endangered habitats and species. Instead, he argues that direct performance payments to citizens in these countries would be a more cost-efficient and effective policy.

“If we want to get what we pay for in terms of environmental conservation, we must start tying our investments directly to our goals,” said Ferraro.

Low-income countries house a disproportionate number of the world’s plant and animal species, and international organizations and donors have contributed billions of dollars in attempts to provide citizens of these nations with incentives to conserve biodiversity.

In their article, Ferraro and co-author Agnes Kiss of The World Bank say that direct payments to citizens require a smaller investment to achieve the goal of habitat conservation and allow for lower administrative costs.

As an example, Ferraro and Kiss cite an analysis of an intervention in southeastern Madagascar to conserve a forest. According to Ferraro, if the nearly $4 million of available conservation funds were invested in annual payments to residents on the condition that they protect the forest, about 80 percent of the original forest could have been protected, whereas only 12 percent could have been protected through support of indirect incentives. Additionally, the residents receiving conservation payments would earn twice the income they would have earned through indirect intervention.

Direct payments are also superior in helping achieve development objectives – something that has traditionally drawn stakeholders to the indirect approach. Ferraro and Kiss maintain that the direct payment approach empowers a nation’s individuals and communities to decide how to meet their own goals, rather than being subsidized to carry out pre-determined activities as they are through an indirect approach.

“It’s essential that we meet the pressing needs of the poor in these nations,” says Ferraro. “The loss of biodiversity in developing nations is largely driven by the profitability of converting wildlife habitat to other uses. To stop this loss, we must make protecting biodiversity as profitable as destroying it.”

For more information contact Ferraro at (404) 651-1372, or visit Paul Ferraro's website (http://epp.gsu.edu/pferraro/).

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