Report of the Western Ghats Ecology Expert Panel - Part II : Actionable points for the WGEA : Annexure-I: Western Ghats Expert Group: Work Plan : Australian Soil Carbon Accreditation Scheme (ASCAS) : Biodiversity Procurement Schemes : Professor Peter Bardsley : Background - Some Australian Experience :-

Opinion
      05/01/2019
               1647.

Ref : Biodiversity Procurement Schemes : Professor Peter Bardsley
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(http://www.findanexpert.unimelb.edu.au/researcher/person666.html)

 *Professor Peter Bardsley


Background - Some Australian Experience :-
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Awareness of environmental issues and the value placed on environmental :-
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Goods and services has risen steadily over some decades in Australia, becoming increasingly important as a political issue. This is understandable, and consistent with worldwide patterns. These appear to be goods for which demand systematically increases as income, wealth, education and the communication intensity associated with globalisation increase. As the supply of these goods diminishes, while demand increases, the value placed on them naturally rises. These trends can, I think, be predicted to continue, and will become more and more evident in India, as in Australia and the rest of the world, in the future. I think that it is clear that future generations will wish that we had done more.

Since these are public goods, and their provision is also subject to various forms of market failure, there is a very sound economic efficiency case for public intervention, either by governments or by non-government agencies.

Australia has seen the growth of a very significant public willingness to pay for such goods, particularly for actions to protect biodiversity. This has taken the form of political pressure such that environmental policy is now a mainstream political issue, and private action. With this rise in willingness to pay, there is increasing dissatisfaction with the mechanisms available to meet the demand. Standard government regulatory responses are rarely incentive compatible, and can create perverse incentives that are actually counter-productive. Voluntarism, while admirable, often lacks scientific depth or the capacity for long term commitment. People are increasingly dissatisfied with policies that are merely symbolic, or are inefficient and do not give value for money, and that often lead to no scientifically valid verifiable outcomes.

The design of good policy instruments for the provision of environmental services is a fruitful area for the application of modern economic theory, particularly the economics of information and incentives, but this is an area that has been rather neglected. Over the past decade, a group of economists and scientists have worked on this issue in Australia. The main elements of the approach have been the objective is a practical framework for achieving desired outcomes, which means changing people's behaviour; this means aligning their incentives with ours start from first principles, and work analytically towards a solution (rather than beginning with a preconception of, or ideological predisposition to, any particular type of policy instrument) close partnership from the beginning between science and economics recognise the fundamental importance of information and incentives, and engage with scientists on these issues, start small (pilot projects, demonstration projects, experimental economics lab work), refine the approach, build confidence, build expertise, demonstrate results, take the long view.

Over the last decade, beginning with an initial pilot project for managing biodiversity on private land in Victoria, Australia, we have developed a program of biodiversity procurement auctions, and related programs, that have now been adopted state-wide as the preferred policy approach. Imitation programs have been initiated in the majority of Australian states, and there is interest from agencies in the US, Canada, France and Scotland.

The project has involved partnership between the following groups: economists. ecologists (development of metrics, contract design, on ground implementation), hydrologists and biophysical modelers (connecting local interventions to large scale landscape effects), computer scientists and environmental engineers (remote sensing, micro sensor network arrays, for contract monitoring).

A lot of material, including field manuals and some evaluations, are available on the web at -:
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http://www.dse.vic.gov.au/DSE/nrence.nsf/LinkView/DED128E11A362A51CA256FFF001CAB6C544ABC860B2506F7CA257004002550CC

EcoTender :-
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What are eco Markets? | How ecoMarkets work | The science behind ecoMarkets | EcoTender | BushTender | BushBroker

What is Eco Tender?
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EcoTender is an auction-based approach that expands BushTender to include multiple environmental outcomes. It introduced a more detailed way to evaluate tenders, based on potential improvements in salinity, biodiversity, carbon sequestration and water quality.

Under EcoTender, landholders are invited to tender contracts to deliver these multiple environmental benefits, primarily by means of improved native vegetation management and revegetation works on their properties.

Successful bids include activities offering the best value for money to the community, based on ecosystem outcomes, the significance of the environmental assets affected by these changes and the cost. Successful landholders receive periodic payments as they deliver the management actions under contractual agreements with the DSE.

 Current EcoTender
 Past Eco Tenders

Eco Tender process :-
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Landholders start by registering their interest to participate in EcoTender. A DSE Field Officer will then come and visit their property to advise on the environmental significance of the site. They will work with the landholder to identify on-ground actions that could be included in a five-year EcoTender Management Plan.

The Field Officer will write up the management plan based on actions agreed with the landholder. The plan could include planting new native vegetation, weed control or protection of existing native vegetation along waterways, around wetlands, in gullies and paddocks.

The landholder uses this Management Plan as the basis for their Eco Tender bid along with details on how much they expect to be paid to do the environmental work over five years.

Successful Eco Tender bids are those showing best environmental value for money, with successful landholders receiving periodic payments for management activities conducted under agreements entered into with the DSE.

Potential For Cooperation With India :-
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First of all, it is not the case that we have a model that can simply be transferred to another environment. What we do have is a group of people with considerable experience in thinking about problems of this nature; I think that they would be delighted to be involved in exploring these ideas in an Indian context.

From an economist's viewpoint, there are two main aspects to the biodiversity procurement problem. One is identifying which projects are worth investing in, given the fact that people do not necessarily have an incentive to be truthful (would YOU tell the government that you have something rare and valuable on your land?). Developing this idea leads naturally in the direction of designing certain kinds of auctions. The second is designing the incentive structure for the groups who participate in your program (rewards, penalties, risk sharing, monitoring, transactions cost). This leads naturally to what economists understand by contract design. Both issues clearly need to be addressed to some degree. In Australia, most attention has been given to the auction theory, and less to the contract design issue. This is now being rectified, and we are looking intensively, both from the economic design and the science/engineering points of view, at contract design and practical contract implementation issues.

Given the Indian context, I think that it is in the latter area, of contract design and implementation, where the most interesting work might be done. We have in fact been looking for a project of this type. So I think that there would be considerable interest from the Australian end in some kind of cooperation in this area.


*E Somanathan, Professor, Planning Unit, Indian Statistical Institute, New Delhi
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I would add the following to Peter's note [see Peter Bardsley above]. A valuable pilot project in India would : -

1. Protect a habitat not already protected by regulation and with no plausible alternative means of funding protection (such as tourism).
2. Be of high value from the perspective of the conservation organisations funding the project, and from that of the public at large.
3. Make a clearly measurable difference to what would have occurred in the project's absence. We'll have to think carefully about this one. One possibility is to locate a set of comparable candidate locations.

Then select one (or some) of them for the project, either by auction, randomly or some suitable means. Then monitor both the selected and non-selected areas and compare them.

4. Be potentially replicable.
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To be continued ..

NEXT : Annexure-II: Western Ghats Expert Group: Organizing a process of comprehensive consultation

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