Biodiversity, water and natural resource management

Incentive Measures for Biodiversity


The OECD´s work on economic incentives for biological diversity began shortly after the UN Convention on Biological Diversity was negotiated in 1992.

The first important publication to come from that effort was Saving Biological Diversity: Economic Incentives. It brought together country studies, issues papers and responses to questionnaires regarding policy-relevant experiences in biodiversity incentives. It was noted there, that incentives can be defined broadly to include those measures that make use of the price system and market forces to achieve their objectives. Working through the price system, incentive measures improve decision-making on biological resources by reducing the differences between the value of biodiversity to individuals and to society as a whole. Incentive measures increase returns to activities that conserve or restore valuable biological ecosystems. They work to level the playing between the observable returns to destructive activities and the non-observable returns to conservation. For example, farmers who receive a return in the form of a government payment for maintaining biological diversity on their land will be more willing to use farm practices that sustain biodiversity values than they otherwise would.


Biodiversity provides a range of goods and services to human society, including those with privately-appropriable values and those with public ones. Because of the intrinsic complexity of biological diversity and the pressures that act upon it, designing incentive measures to realise both the public and private values associated with it presents policy makers with unique challenges. The OECD´s Handbook of Incentive Measures for Biodiversity: Design and Implementation is designed to assist policy makers and their advisors in the design and the implementation of incentive measures for encouraging the conservation and sustainable use of biological resources. Different policies are applicable depending on the ecosystems in need of protection and the sectors that are exerting pressure on the biological resources. In addition to providing guidance on how to implement incentive measures, the Handbook also describes which measures are most suitable for which ecosystems and sectors and what the drawbacks of each incentive measure are and how these can be overcome through utilising a combination of instruments. The recommendations are drawn from the practical experiences of OECD Member countries in implementing such incentive measures, presented in nineteen case studies. They highlight the experiences the countries have had with their application, and the best strategies for designing and implementing the most appropriate measures for the pressures faced by different ecosystems, and arising from different sectors.

Many biological resources can be used for economically productive purposes in a sustainable manner. Where this is possible, both the privately-appropriable values of the resources and the public benefits of their continued existence can be realised. In such cases, the most appropriate incentive measures to ensure that their use does not lead to biodiversity depletion are the creation of markets and the assignment of well-defined property rights to realise the full private benefits of the resources, in combination with regulations and standards to proscribe the allowable levels and types of use. In addition, this requires the removal or reform of adverse incentives which induce actors to use the resources at unsustainable levels.