Incentive
Measures (Article 11)
The Conference of the
Parties,
Recognizing
the need to remove policies or practices that
create perverse incentives that lead to the degradation and loss of
biological diversity, or to mitigate these perverse incentives, as
a crucial element in national and global strategies to halt the
degradation and loss of biodiversity,
Stressing that these
incentives and mitigation measures should not adversely affect
biodiversity and livelihoods of other communities, and should be
applied in a manner consistent with international
law,
Noting
that the Addis Ababa Principles and Guidelines
for the Sustainable Use of Biodiversity also call for the removal
or mitigation of policies, laws and regulations that generate
perverse incentives,
Underlining
the need for further policy guidance on this
issue, in particular with regard to the application of ways and
means to remove or mitigate perverse incentives,
Recognizing
that new policies should also be examined with a
view to identifying, and avoiding, potential perverse
incentives,
Recalling the programme
of work on incentive measures established in decision V/15 of the
Conference of the Parties and the recognition by the Conference of
the Parties at its sixth meeting that further work needs to be
undertaken on the role of positive incentives and their performance
as well as on perverse incentives and ways and means for their
removal or mitigation, as reflected in decision VI/15,
Recalling
further its request to the Executive
Secretary, in paragraph 7 of decision VI/15, to elaborate, in
collaboration with relevant organizations, proposals for the
application of ways and means to remove or mitigate perverse
incentives, for consideration by the Subsidiary Body on Scientific,
Technical and Technological Advice, at a meeting prior to the
seventh meeting of the Conference of the Parties,
Acknowledging that the
proposals for the application of ways and means to remove or
mitigate perverse incentives as elaborated by the second workshop
on incentive measures, held in Montreal from 3 to 5 June 2003,
contain valuable and useful elements that provide a general
framework to address the removal or mitigation of perverse
incentives in different economic sectors and ecosystems, but need
further refinement and consideration before adoption by the
Conference of the Parties,
Recognizing
that the development and application of
practical methods of assessing trends in the economic and social
value of biodiversity and of demonstrating the economic and
ecological consequences of biodiversity loss are essential elements
in meeting the 2010 target,
Recognizing
the important work undertaken by the
organization for Economic Cooperation and Development and the
Millennium Ecosystem Assessment regarding the economic aspects of
biodiversity and the assessment of biodiversity values,
1.
Takes note with appreciation of the work of the second workshop on incentive
measures, held in Montreal from 3 to 5 June 2003, and of the
Subsidiary Body on Scientific, Technical and Technological Advice,
in elaborating the proposals for the application of ways and means
to remove or mitigate perverse incentives, annexed to the present
decision;
2.
Encourages Parties and Governments, as appropriate, to use the
proposals as voluntary interim guidance to Parties for the
application of ways and means to remove or mitigate policies and
practices that generate perverse incentives, and to extend their
efforts to an examination of new policies with a view to
identifying, and avoiding, potential perverse incentives, bearing
in mind that perverse incentives include those that negatively
affect biodiversity in other countries;
3.
Requests the
Subsidiary Body on Scientific, Technical and Technological Advice
at its tenth meeting, as a matter of priority, to further refine
and consider, with a view to recommending adoption by the
Conference of the Parties, the proposals for the application
of ways and means to remove or mitigate perverse incentives, giving
adequate time for a substantive and conclusive review of the
proposals;
4.
Encourages Parties and Governments to use, on a voluntary basis,
these proposals as further interim guidance in implementing the
Addis Ababa Principles and Guidelines for the Sustainable Use of
Biodiversity and, in particular, principles 2 and 3, which address
incentive measures;
5.
Invites competent international organizations and agencies to
provide technical and financial support to the efforts of Parties
and Governments to apply these proposals with a view to removing or
mitigating perverse incentives;
6.
Invites Parties, Governments and relevant organizations to
submit any information on the removal or mitigation of perverse
incentives, including case-studies and best-practices on the
application of ways and means as well as any experiences with the
application of the proposals, to the Executive Secretary; and
requests the Executive Secretary to provide a report thereon
to the tenth meeting of the Subsidiary Body on Scientific,
Technical and Technological Advice, to assist in the further
consideration of the proposals,
7.
Decides that
the progress made by Parties in removing or mitigating perverse
incentives should be included in their national reports prepared in
accordance with Article 26 of the Convention as
appropriate;
8.
Invites Parties, Governments and international organizations
to submit case-studies, best practices and other information on the
use of non-monetary positive incentive measures for the
conservation and sustainable use of biodiversity as an initial step
in the ongoing examination of incentive measures, including
traditional laws and practices which generate positive incentives,
and on the application of methodologies for the assessment of
values of biodiversity and its functions, as well as other tools
for prioritization in decision-making, to the Executive
Secretary;
9.
Requests the
Executive Secretary to make this information available through the
clearing-house mechanism and other means, if appropriate, and to
prepare a synthesis report for consideration by the Subsidiary Body
on Scientific, Technical and Technological Advice at a meeting
prior to the eighth meeting of the Conference of the
Parties;
10.
Urges Parties,
Governments and relevant funding agencies to target and prioritize
funding to support the preparation and compilation of case-studies
and best practices contemplated in paragraph 8;
11.
Requests the Executive Secretary to
prepare, in cooperation with the organization for Economic
Cooperation and Development and other relevant international
organizations, an of existing and new instruments that provide
positive incentives, including traditional laws and practices which
generate positive incentives, their interaction with other
policy measures and their effectiveness, including their
requirements for successful application, possible limitations and
shortcomings, and to develop proposals on the application of such
positive incentive measures and their integration into relevant
policies, programmes or strategies, for consideration by the
Subsidiary Body for Scientific, Technical and Technological Advice
at a meeting prior to the eighth meeting of the Conference of the
Parties;
12.
Requests the
Executive Secretary to explore, in
cooperation with the Millennium Ecosystem Assessment, the
organization for Economic Co-operation and Development and relevant
international organizations, existing methodologies for
valuation of biodiversity and biodiversity resources and functions,
as well as other tools for prioritization in decision-making, by
preparing a compilation of existing valuation tools that provides
an overview of the discussion on their methodological status, if
appropriate, as well as an assessment of their applicability in
terms of effectiveness and capacity preconditions, and to prepare
proposals for the application of such tools. These proposals should
include the identification of options to strengthen international
collaborative partnerships for assessing biodiversity values,
especially for the refinement and advancement of valuation tools,
and shall be submitted to the Subsidiary Body on Scientific,
Technical and Technological Advice for its consideration at a
meeting prior to the eighth meeting of the Conference of the
Parties.
Annex
[Proposals for the
application of ways and means to remove or mitigate perverse incentives
A.
General considerations
1.
For the purpose of these indicative guidelines,
the term policy shall refer to a system of strategies, plans
and programmes that spell out, inter alia, operational
targets, and a related set of legal, administrative and/or economic
tools that are implemented by national, sub-national and local
Governments to attain a set of underlying objectives. The term
practice shall refer to any activity undertaken by
individuals, communities, companies and organizations that is based
on customary law, social norms or cultural traditions.
2.
A perverse incentive emanates from
policies or practices that encourage, either directly or
indirectly, resource uses leading to the degradation and loss of
biological diversity. The removal of such policies or practices or
the mitigation of their perverse effects is therefore an important
element in promoting the conservation and sustainable use of
biological diversity.
3.
Three phases are suggested in the process of
removing such policies or practices or in mitigating their perverse
effects on biological diversity, all of which should be implemented
with stakeholder participation:
(a)
The identification of policies or practices that
generate perverse incentives and their impacts;
(b)
The design and implementation of appropriate
reforms;
(c)
The monitoring, enforcement and evaluation of
these reforms.
4.
The following sections provide indicative
guidance, corresponding to these three phases on the application of
ways and means to remove policies or practices generating perverse
incentives.
B.
Identification of policies or practices that generate perverse
incentives
5.
Review of policies and practices.
Not every single policy measure and, in
particular, not every incentive measure, leads to adverse effects
for biodiversity. A thorough study, critical review and evaluation
of policies and practices potentially contributing to biodiversity
loss, including the assessment of their impact on biodiversity as
well as their effectiveness and efficiency, is therefore essential
to identify properly and comprehensively any specific policies or
practices and their interaction that are responsible for such
decline. Indicator systems are an important means to inform such an
analysis. Parties and Governments should engage in the further
development of such systems.
6.
Interaction between policies and practices,
and with other root causes. The study
should take fully into account that the loss of biodiversity may be
caused by a complex interaction of several root factors.
Consequently, the identification of perverse incentives resulting
from specific policies and practices is often difficult, as their
extent may crucially depend on the design and degree of
implementation and enforcement of other policies, and on other
socio-economic root causes. The removal or mitigation of such
policies and practices, although necessary, may not be sufficient
to halt the loss of biodiversity if other macro-economic and
sectoral policies and key socio-economic reasons remain
unchanged.
7.
Identification of perverse
practices. Special analytical care is
needed if practices are to be held accountable for any adverse
impacts on biological diversity. Such practices are difficult to
change as they are rooted in cultural traditions or customary law,
which may have wider social values. Furthermore, perverse
incentives may be often be explained by an economically rational
response to ill-adapted policies. The analysis should determine
whether the promotion of cultural adaptation is appropriate or
whether the reform of policies, or a combination of both, provides
better opportunities for an effective policy
intervention.
8.
Scope of perverse incentives.
In some instances, policies and practices may
generate perverse incentives only under specific local conditions
and socio-economic circumstances, while they may prove to be
neutral or even favourable for biological diversity under other
conditions and circumstances. The study should therefore seek to
identify and quantify, whenever feasible and appropriate, the
scope and extent to which such policies and practices
adversely affect biodiversity, as this information is important for
prioritization and for choosing the appropriate policy
response.
9.
Differentiation of policy objectives,
operational targets, and tools. Policies that induce unsustainable behaviour are often
designed to attain legitimate objectives. Biodiversity decline
usually comes as an un-anticipated side-effect of such policies. In
particular, subsidies have often been introduced for good and sound
purposes. However, the operational targets of the policy and the
tools that are used to attain these targets are not always
appropriate to meet the proclaimed objectives. Furthermore, the
policy objectives, even while initially good and sound, may no
longer be valid. Once a specific policy is identified in generating
perverse incentives, further analytical work should therefore
differentiate the underlying objectives, operational targets and
the specific policy tools used, in order to identify the
appropriate entry point for policy reform.
10.
Identification of all relevant costs and
benefits and their distribution. The
identification of all relevant costs and benefits from removing or
mitigating policies or practices that generate perverse incentive
as well as their distribution within society and the economy is key
for a well-informed policy choice. Hence, the assessment should not
only include the direct, tangible costs and benefits, but also the
intangible costs and benefits for society as a whole. The use of
appropriate valuation tools should be considered if feasible.
Furthermore, when assessing the merits of mitigation policies, the
following cost components should also be taken into consideration:
compliance costs, monitoring and enforcement costs, administrative
costs and costs of change management.
11.
Identification of obstacles for policy
reform. The following elements should
also be identified, as they are crucial for the design of
implementable policy responses:
(a)
Relevant obstacles for the removal of policies
and practices generating perverse incentives, such as
distributional issues, property rights, entrenched interests,
cultural traditions, international considerations;
(b)
Relevant obstacles for the implementation of
policies that mitigate such perverse incentives, such as
international obligations, lack of funds or lack of administrative
and/or institutional capacity.
12.
Periodic policy evaluations. The lack of evaluation of policy efficacy and
efficiency contributes to the persistence of policies that create
perverse incentives and do not assist in achieving what may still
be legitimate policy objectives. Periodic quantitative policy
evaluation, which includes biodiversity impacts, is desirable for
various reasons: it provides criteria for the selection of the most
desirable policy reform interventions, it assists in the
identification of relevant stakeholders (winners and losers),
creates political and evidentiary support for change of ineffective
and perverse incentives, gives an indication of policy alternatives
and provides an indication of the cost of removal of the perverse
incentives. The establishment of periodic quantitative evaluation
of the effectiveness of policy instruments and an assessment of any
perverse incentives created by them would enable the development of
win-win policy reforms. International organizations are highly
requested to cooperate in this effort.
13.
Prioritization.
The analysis should enable prioritization of subsequent reforms to
remove or mitigate perverse incentives, that is, it should enable
to spell out which reforms to take up first, and which ones to take
up later. Such a prioritization exercise should be based on a set
of criteria, including the feasibility and ease of policy reform,
the importance and extent of biodiversity degradation, and
socio‑economic concerns.
14.
Strategic environmental
assessment. Elements of strategic
environmental assessment (SEA) procedures could be used, if
appropriate, as a means to identify policies and practices that
generate perverse incentives. In this regard, the Guidelines for
Incorporating biodiversity related Issues into Environmental Impact
Assessment Legislation and/or Processes and in Strategic
Environmental Assessment (decision VI/7, annex) could be taken into
consideration. While mainly used for proposed policies, SEA
procedures provide useful guidance on how to design and conduct
research to identify perverse incentives for biodiversity
conservation and sustainable use that emanate from existing
policies. In particular, the following steps emerge as possible
means of assessing policies and practices with regard to potential
perverse incentives:
(a)
Screening to determine which policies or
practices require full or partial study with regard to possible
perverse incentives;
(b)
Scoping to identify which potential impacts on
biological diversity are relevant to address, and to derive terms
of reference for the actual study;
(c)
The actual study to identify the perverse
incentives for biodiversity conservation and sustainable use
emanating from policies and practices, taking into account those
impacts that result from the interaction of different policies and
practices;
(d)
The identification of possible action to remove
or mitigate perverse incentives;
(e)
The identification of possible reform
obstacles;
(f)
Pursuant to the design and implementation of
reform policies, monitoring and evaluating the implementation of
such reform policies, to ensure that unpredicted outcomes and
failed mitigation measures are identified and addressed in a timely
fashion.
15.
Stakeholder involvement.
The involvement of all stakeholders is an
important element in identifying policies or practices that
generate perverse incentives. The direct benefits of policies often
go to well organized societal actors, while the costs of these
policies, e.g., the loss of ecosystem services due to biodiversity
decline, are borne by the wider public or by diffuse and/or
powerless groups. Such groups, however, may be able to
forward additional important information and to point to possible
shortcomings in the conclusions of the assessment. It should
therefore be ensured, through appropriate mechanisms of levelling
the playing field for all stakeholders, that all groups are fully
involved throughout the process. A balanced representation of
stakeholders in the consultation will contribute to identifying
properly and comprehensively both the benefits of individual
policies and their possible shortcomings.
16.
Transparency. Perverse incentives are often difficult to detect,
because the negative impacts on biodiversity are usually an
indirect by-product of policies aiming at other goals, and because
they may result from an intricate interaction between different
policies or practices. Ensuring that the process of assessing
policies and practices is conducted in a transparent manner will
contribute to ensure that all relevant stakeholders are
well-informed about the process and its outcomes. This is an
important pre‑condition for effective stakeholder
involvement.
17.
Capacity-building In developing countries and countries with
economies in transition, lack of institutional and administrative
capacity to design and conduct appropriate assessment studies is
often a serious impediment to identifying policies and practices
that generate perverse incentives. Capacity‑building,
supported by relevant national, regional and international
organizations, is therefore an important prerequisite in
successfully removing or mitigating policies and practices that
generate perverse incentives. Funding should be ensured for
capacity-building.
C.
Design and implementation of appropriate
reforms
18.
Possible political action. The following is an indicative list of possible
political action once specific policies and practices are
identified as generating perverse incentives for the conservation
and sustainable use of biological diversity, bearing in mind that,
in some instances, several such activities need to be undertaken
simultaneously, and also recalling that reforms of other
macro-economic and sectoral policies may often be necessary to
capture the full benefits of removing or mitigating perverse
incentives and to halt the loss of biodiversity:
(a)
Removal of the policy or practice;
(b)
Removal of the policy and its replacement with
another policy that attains the same objectives, but without or
with fewer perverse impacts on biological diversity
(re-instrumentation);
(c)
In those cases where a policy or practice has
overall negative impacts but some positive impacts, removal of that
policy or practice and introduction of an additional policy that
seeks to maintain the positive impacts;
(d)
Removal or the policy or practice, combined with
measures to overcome obstacles for policy reform;
(e)
Introduction of policies that mitigate the
perverse impacts on biodiversity of policies or practices, possibly
including policies that address relevant obstacles.
19.
The following paragraphs provide an indicative
list of conditions for the selection of political action further to
the identification of policies or practices that generate perverse
incentives. Some conditions make reference to costs and/or
benefits. It is important to note that the policy choice should be
based not only on the direct, tangible costs and benefits, but also
on an assessment of the intangible costs and benefits, including,
for instance, benefits emanating from ecosystems services.
Furthermore, the assessment should also include components such as
compliance costs, monitoring and enforcement costs, administrative
costs and the costs of change management, if appropriate.
Maximizing the net social benefit, taking into account
distributional objectives and effects at national and global
levels, is the criterion for the choice of reform
policies.
20.
Removal of policies that generate perverse
incentives. The removal of
policies that generate perverse incentives could be considered when
the following conditions are met:
(a)
The analysis may reveal that a policy generating
perverse incentives was introduced under circumstances that no
longer prevail. As a consequence, the policy objectives may
no longer be valid. For instance, the objective of providing
support to companies whose sector undergoes a period of economic
crisis would no longer be valid after the recovery or the
successful restructuring of this sector;
(b)
In other cases, the policy objective may still
be valid. The analysis may show, however, that perverse
incentives would be generated under any policy to attain this
objective, that is, under any operational target and policy tool
chosen. In such cases, the removal of the policy should be
considered if the costs for society of effective mitigation
policies would be higher than the net societal benefits foregone
when the policy is removed.
21. Removal of perverse
practices. The removal of
practices that generate perverse incentives should be considered if
a careful analysis of their interplay with formal policies reveals
that such practices are indeed the appropriate target for reform
policies. Such practices are difficult and costly to remove,
because of the very fact that they are rooted in cultural
traditions or customary law. Their removal should be
considered if the cost of promoting cultural adaptation, through
for instance appropriate awareness‑raising and education
programmes, is lower than the cost of effective mitigation
policies. Furthermore, it has to be recalled that perverse
incentives, apparently caused by specific practices, may often be
explained by an economically rational response to ill-adapted
policies. In those cases, the reform of these policies may often
provide better opportunities for an effective policy
intervention.
22. Re-instrumentation. In many cases, the underlying policy objective
may still be valid and legitimate, and the perverse incentives
emanating from the policy could be substantially lowered or avoided
if other operational targets and tools would be used. In such
instances, the removal of the policy and its replacement by a
policy with fewer or no perverse impacts should be
considered. Special care should be paid to identifying and
implementing those operational targets and related tools that
generate the least or no adverse impact on biological
diversity.
23. Removal and introduction of policies that
maintain any positive impacts. In some cases, policies and practices may generate
perverse incentives under specific local conditions and
socio-economic circumstances, while they may even be favourable for
biological diversity under other conditions and circumstances. In
these cases, the removal of these policies and practices should
still be envisaged if the overall effect on biological diversity is
mainly negative. Additional, well-targeted policies could be
introduced to maintain the positive impacts.
24. Removal and overcoming of obstacles.
Substantial obstacles may sometimes hinder the removal of policies and
practices. Additional policies to overcome such obstacles could be
introduced if the associated costs are lower than the costs of
effective mitigation. The choice of the appropriate policy would
clearly depend on the relevant obstacle identified:
(a)
Distributional concerns.
In some cases, the removal of policies or
practices may have adverse distributional consequences. The
impact of reforms on food security and poverty should be of
particular concern. A step-by-step approach to the reforms could be
considered. Additional well-targeted income policies could
also be implemented to compensate these adverse effects;
(b)
Legal issues.
In some cases, the removal of policies may
impinge on the property rights of some stakeholders. Compensation
of associated losses might be required;
(c)
Entrenched Interests.
In most cases, some groups or individuals will
lose as a result of the removal of policies or practices. Such
groups or individuals will resist such reform. Additional
policy measures may be warranted to overcome their
resistance. Such measures may include awareness-raising and
education programmes as well as measures to increase transparency
for the wider public with regard to the adverse impact of policies
and practices, thereby shifting the burden of proof to those groups
opposing political reform. Compensatory policies for such
stakeholders should only be considered as a last resort;
(d)
Lack of capacity.
In developing countries and countries with economies
in transition, lack of institutional and administrative capacity is
often a serious impediment to removing or mitigating perverse
incentives. Capacity-building will be needed in these
cases;
(e)
Cultural traditions.
The removal of practices generating perverse
incentives is particularly difficult if they are deeply rooted in
cultural beliefs, customs and traditions.
Awareness‑raising and education programmes can be appropriate
means to overcome such obstacles;
(f)
International competitiveness.
Unilateral removal of policies that generate
perverse incentives may create a risk that domestic industries lose
competitiveness. Such risks become more important in a
globalized world of increased international trade and capital
flows. When evidence for such cases is compelling,
international cooperation to remove such policies in a coordinated,
synchronized way may be warranted;
(g)
Global benefits of removing perverse incentives.
In many cases, the benefits arising from a removal of policies that generate perverse
incentives for the conservation and sustainable use of biodiversity
are of a global nature, while the costs of removing such policies
accrue at the national level. In such cases, international
cooperation, including the extension of the activities of
international financial compensatory mechanisms such as the Global
Environment Facility (GEF), is warranted to cover the possible
incremental national costs of generating global
benefits.
25. Mitigation.
If the removal of policies or practices is not
feasible or too costly, the mitigation of their perverse effects on
biodiversity, through appropriate means, may be warranted.
More specifically, the introduction of such mitigation policies
should be considered if:
(a)
The cost for society of removing policies and
practices, including forgone benefits, would be higher than the
cost of effective mitigation policies;
(b)
The cost for society of replacing the policy by
a policy serving the same objective with less of no perverse
impacts would be higher than the cost of effective mitigation
policies;
(c)
The cost for society of overcoming obstacles to
the removal of policies and practices are higher than the cost of
effective mitigation policies.
(a) Important tools for removal and mitigation
26. National guidelines
Guidelines that are adopted by competent
national authorities will be an important indirect means to
effectively remove or mitigate perverse incentives.
Guidelines that are well adapted to national needs and
circumstances may serve to structure and inform the national
process of identifying as well as removing or mitigating policies
and practices that generate perverse incentives. If made
publicly available, they may serve as a benchmark against which the
general public can gauge the effectiveness of the reform
process.
27. Stakeholder involvement.
The removal of policies or practices that
generate perverse incentives is often opposed by influential groups
or individuals that profit from these policies or practices. Even
when it is not the stated objective of a policy to support such
groups or individuals, its removal may be at risk because of their
influence. In contrast, the costs of these policies, e.g., the loss
of ecosystem services due to biodiversity decline, are borne by the
wider public or by diffuse and/or powerless groups. The
empowerment and involvement of such groups during the design and
implementation phase, through appropriate mechanisms of levelling
the playing field for all stakeholders, is therefore another
important means to ensure that appropriate policy responses are
implemented.
28. Awareness-raising and education programmes.
The very fact that practices that generate perverse incentives are rooted in customary
law, social norms or cultural traditions implies that considerable
obstacles exist to their removal, obstacles that are beyond the
immediate reach of formal policy-making. The more indirect
approach of awareness-raising and education may therefore be a
particularly important means in removing such practices.
However, awareness-raising and education programmes will also be an
important element in successfully removing policies or introducing
mitigation policies, to overcome the resistance of powerful groups
opposing their removal.
29. Transparency.
Creating transparency with regard to the
intermediate and final outcomes of the assessment study, that is,
with regard the objectives, costs, and possible negative impacts of
policies and practices will contribute to clarifying the implicit
choices and priorities and will expose irresponsible policies and
practices to the wider public. Transparency will therefore be
an important element of a successful programme to raise awareness
of these issues. As a consequence, it will also increase the
political costs of irresponsible policies and generate political
rewards for appropriate action.
30. Capacity-building.
In developing countries and countries with
economies in transition, lack of institutional and administrative
capacity is often a serious impediment to removing or mitigating
perverse incentives. While some policies that generate
perverse incentives can, in principle, be easily removed, the
removal of practices or the implementation of successful mitigation
policies may require substantial institutional and administrative
capacity. Capacity-building, supported by relevant national,
regional and international organizations, is therefore a key
precondition in successfully removing or mitigating policies and
practices that generate perverse incentives for the conservation
and sustainable use of biological diversity. Funding should
be ensured for capacity-building.
31. International cooperation.
International cooperation is a very important
element in removing or mitigating perverse incentives as set out in
paragraph 24 (f) and (g) above.
(b) Ways and means for removal
32. Re-instrumentation.
In the case of legitimate and valid policy objectives,
re-instrumentation, that is, the application of operational targets
and related tools that attain the same objective with less or no
adverse impacts on biological diversity, may often be a
particularly effective way of removing policies that generate
perverse incentives for the conservation and sustainable use of
biodiversity.
33. Compensatory policies.
The introduction of additional measures could
be considered to compensate stakeholders that are negatively
affected by the removal of policies that generate perverse
incentives. Provided that funding is ensured, the use of
compensatory policies could be considered in following
cases:
(a)
If the removal of policies will have an adverse
effect on distributional objectives, a step‑by-step approach
to removing such policies could be taken, and additional, well
targeted income policies could be implemented;
(b)
If the removal of policies negatively affects
the property rights of some stakeholders, the compensation of
associated losses could also be envisaged;
(c)
If the conditions spelled out under (a) and (b)
above do not prevail, compensatory policies should only be used as
a last resort.
(c) Ways and means for mitigation
34. Regulation.
In some instances, the introduction of
additional regulation may be an effective means to mitigate the
perverse impacts on biodiversity, provided that a number of
preconditions are met. Such preconditions include:
(a)
The existence of well defined, comprehensive and
measurable performance indicators;
(b)
Manageable monitoring and enforcement
costs;
(c)
Regulations that can be designed in a
comprehensive way so as to avoid adaptive behaviour of target
groups, leading to secondary adverse effects on biological
diversity.
35. Overcoming obstacles to mitigation through regulation.
It should be borne in mind that the very obstacles that prevent the removal of
policies may also impede the effective mitigation of their perverse
effects. For instance, the incentive of target groups not to comply
with the regulation may be especially high if the policy generating
the perverse incentive remains in place unchanged. Therefore,
awareness‑raising, transparency and stakeholder involvement
are important elements of effective regulatory policies to mitigate
perverse incentives.
36. Positive inventive measure.
The introduction of additional positive
incentive measures is another possible means to mitigate the
perverse impacts of some policies and practices. In addition
to the preconditions enumerated in paragraph 34, a number of other
caveats should be taken into consideration when using positive
incentive measures:
(a)
If policies having perverse impacts on
biodiversity remain unchanged, the cost of using positive
incentives for mitigating these impacts will be especially high,
which, in turn, will impair the efficiency of using this
instrument. Prior to using positive incentives, such policies
should therefore be removed to the extent possible, through the
means enumerated above;
(b)
As explained in paragraph 23, policies and practices
that generate perverse incentives in most circumstances may have a
favourable impact on biological diversity in others. In such cases,
the use of positive incentive measures could be considered to
mitigate the negative effect of removing these policies and
practices;
(c)
The careful design of the incentive measure,
including the proper specification of eligibility conditions, is
especially important in the case of positive incentive measures to
avoid the generation of secondary adverse effects on biological
diversity;
(d)
In some cases, the strategic behaviour of
rational recipients will impede the long-term effectiveness of
positive incentive measures. In such cases, their use should be
restricted to a transitional period of time through appropriate
legal means such as sunset legislation;
(e)
Lack of funds may limit the use of positive
incentive measures;
(f)
The use of positive incentive measures may have
both negative and positive distributional consequences. These
consequences need to be taken into consideration when using
positive incentive measures.
37. Negative incentives measures.
The use of negative incentive measures could
also be considered to mitigate the perverse impacts of some
policies and practices. In addition to the preconditions enumerated
in paragraph above, political resistance will often be especially
severe if negative incentive measures are to be introduced.
Therefore, awareness-raising, transparency and stakeholder
involvement are key elements of a successful introduction of
negative incentive measures to mitigate perverse
incentives.
38. Guidance on the use of incentive measures.
Further guidance with
regard to the design and implementation of incentive measures in
given in the proposals for the design and implementation of
incentive measures, endorsed by the Conference of the Parties to
the Convention on Biological Diversity at its sixth meeting
(decision VI/15, annex I).
D.
Monitoring, enforcement and evaluation of
reforms
39. Stakeholder involvement.
Even after the design and implementation of
reforms, relevant stakeholders should be involved in evaluation to
ensure their feedback on unanticipated side-effects, failed
mitigation measures and other shortcomings, and to ensure that such
shortcomings are addressed in a timely fashion.
40. Indicators and information systems.
It should be considered to introduce appropriate information systems in order to
facilitate the process of monitoring and enforcing reforms.
Furthermore, the development and application of sound indicators is
a crucial precondition to the useful evaluation of reform
policies.
41. Success criteria for evaluation.
The evaluation of
reforms should be based on a set of sound success
criteria.
42. Transparency.
Further dissemination of information can play a
key role in building and maintaining public support for the
reforms, and can thereby contribute to lower monitoring and
enforcement costs for public authorities. Again, transparency
may be a crucial precondition to ensuring effective stakeholder
involvement in evaluating reforms.
43. Capacity-building.
The ultimate success of the chosen reform is
contingent upon successful monitoring, enforcement and evaluation
of its impact, including unanticipated side-effects, failed
mitigation measures and other shortcomings. It therefore
depends on sufficient institutional and administrative capacity.
Funding should be available for capacity-building.]
