NCPA - National Center for Policy Analysis


September 22, 2004

Paying for conservation outright is more efficient than trying to preserve ecosystems through subsidized, profit-driven enterprises, says Professor R. David Simpson.

Over the last 20 years, conservationists have sought to preserve fragile ecosystems and biological resources by putting them to economically profitable, but ecologically sustainable use.

But Simpson says that investments in activities that are believed to be compatible with conservation -- such as bio-prospecting and ecotourism -- tend not be the most cost-effective way of conserving imperiled habitats:

  • There is uncertainty figuring out what incentives an investment in an eco-friendly business will generate; for example, eco-tourist areas may end up over-used by visitors.
  • Eco-friendly enterprises tend to be unprofitable, often requiring subsidies to continue operating.
  • Paying for conservation directly, which Simpson calls the "true market" approach to conservation, would generate greater incentives for the private sector to preserve habitats.

While realizing some income through eco-friendly enterprises can defray some of the costs of conservation, Simpson says attempts to address the many problems of conservation, development and social equity, all in one step, usually result in the failure to resolve any of them.

Ultimately, conservation is a costly endeavor, but alternatives to a true market approach make it more, rather than less, expensive.

Source: R. David Simpson, "Conserving Biodiversity through Markets: A Better Approach," Property and Environment Research Center Policy Series No.32, July 2004.


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