intends to reflect. Aylward (1991) stresses that equating biological resources and biodiversity may reduce welfare when applied to conservation project evaluation and land use decision-making. Take for instance the case of two competing land uses, A and B, which are found to be identical in terms of their output of biological resources. However, land use A is also found to have a higher level of biodiversity than B. Where biodiversity is thought to be valuable, option A is preferable to B. However, where biodiversity is valued in terms of the sum of the biological resources, decision-makers may not choose A over B. The importance of distinguishing between efforts to market biological resources and those that tackle the more difficult challenge of marketing the diversity of nature is clear. This review has focused on identifying examples of the latter. These cases point to a range of values associated with biodiversity, including its: • role in maintaining ecosystem functioning– valued by local and global
communities, with particular services (e.g. pest and disease control functions) valued by specific stakeholders;
• option value – biodiversity provides a valuable stock of genetic and chemical information that keep options open for future uses. Option value is captured by the public at large, and specifically by companies engaged in
bioprospecting;
• insurance value– this is derived from greater resilience of diverse environments to external shocks and is valued by national and global communities;
• choice value– the provision of greater choice for users, thereby offering a greater satisfaction; and
• existence value– values attributed to global biodiversity protection, but not associated with expected uses noted above.
To capture these values, a range of “commodities”, i.e. proxies, is used in emerging markets, from protected areas, to biodiversity credits and
bioprospecting rights. A list of commodities identified in this review, and the specific service they represent, is provided in Table 4 above. Box 1 defines these commodities. In what follows we examine in more detail some of the key features of these varied markets for biodiversity.
Box 1: Commodities used to market biodiversity protection services
Key commodities used to market forests’ biodiversity protection services are described below in alphabetical order:
Biodiversity business shares. Biodiversity-friendly companies may attempt to capture willingness to pay for biodiversity protection by issuing shares in their business. Share purchase becomes a vehicle for expressing demand for biodiversity protection.
Biodiversity credits/offsets. Biodiversity credits are being explored in Australia as a mechanism for generating finance for biodiversity protection. Biodiversity
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credits would be introduced as part of a broader regulatory programme that requires developers to achieve a minimum standard of biodiversity protection. Where development results in reduced biodiversity, developers would be required to offset this damage through biodiversity enhancement elsewhere. Defining what qualifies as a biodiversity offset or credit is subjective, but is likely to take account of diversity (range of taxa), abundance (biological productivity), uniqueness (taxonomic significance) and relative rarity (Shields, 2000).
Biodiversity-friendly products. Where biodiversity-friendly products attract a price premium, the price difference reflects consumers’ willingness to pay for biodiversity protection. As such biodiversity protection is sold through existing commodity markets.
Bioprospecting rights.Bioprospecting rights allow for the collection and testing of genetic material from a designated forest area. They are often purchased from responsible government authorities in return for an up-front payment. They also may set out details of rent sharing, especially where bioprospecting leads to the development of commercial products. Purchasers of these rights may include pharmaceutical companies, biotechnology companies and research institutes.
Conservation easements. These refer to contracts between landowners and those who wish to protect or expand certain natural ecosystems (e.g. native forests, wetlands or grasslands), whereby the landowner is paid to manage their land in ways that achieve the desired conservation objective. Easements are normally signed in perpetuity, and where the land is sold, the easement is transferred to the new owner. Conservation easements are similar to development rights in that the seller often gives up the right to develop an area of land, but they are normally tied to a particular piece of land and are not tradable.
Debt-for-nature swaps. This involves the purchase of discounted developing country debt, which is exchanged for domestic financial resources to invest in conservation. Payments are made in a number of ways, generally by the central bank. Funds may be channelled through trust funds, or local NGOs that act as intermediaries. These intermediaries will have detailed instructions on how funds are to be spent to achieve biodiversity conservation. Swaps have become less popular in the late 1990s as debt has become more expensive and redemption rates offered by debtors less attractive.
Development rights. Development rights have been used in several contexts – mainly in the USA for the conservation of historical buildings, archaeological sites and wetlands – and are increasingly being used to promote forest conservation. Governments typically introduce development rights to increase the flexibility of land development restrictions in a conservation area. The idea is to allocate development rights up to the selected limit, and to allow these to be purchased by landowners. Increasingly these rights are tradable so that once purchased they can be resold and the rights are not attached to a particular piece of land. Where trading is not constrained to certain locations, landowners who wish to develop more than they are permitted by their existing rights allocation must purchase additional rights from others who choose not to