Development Economics and Conservation

In this last post of this series about Economics and Conservation, I will look at how another branch of Economics – Development Economics – can contribute to conservation.

Development Economics in a nutshell

Development economics is a branch of economics that focuses on improving the economics and social conditions of developing countries. That is, it looks at the specific economic challenges of the Global South. It focuses on development, rather than merely growth and, from that perspective, it considers a broader array of factors like education, inequality, health, and other social aspects and policies. In a sense, development economics is quite broad and embraces insights from political science, sociology, or economics.

Development economists might take both macroeconomic and microeconomic perspectives. From a macroeconomic perspective, development economists might look, for example at structural transformations or international trade dependencies to explain underdevelopment. Development economists tend to look at transformations over time, that is, at changes in economic structures. For example, how countries have moved from economies based on agriculture to economies dominated by services. But also how particular structures are difficult to change due to larger dependency issues – for example, specialization in particular crops.

From a microeconomic perspective, economists trained in development economics might look at the role of particular agents, for example, elites or multinationals in addressing development challenges. Since, in general, developing countries have a high dependency on resources that come from abroad, another common theme in development economics has been the role of transnational organizations, often related to their social and economic impact in the host country.

Applications of development Economics to Conservation

1. Addressing poverty

The most obvious application of development economics to conservation is related to poverty alleviation. Poverty is one of the most important threats to conservation, as it is related to habitat destruction and poaching, particularly (but not exclusively) in developing countries. Unfortunately, it is all too common for protected areas in developing countries to be surrounded by poverty rings. Why is that?

Historical roots to the nexus “poverty – protected areas-conservation” 

Unfortunately in the past, the creation of nature protected areas usually meant the forced eviction of those living in the new protected territory,  where more often than not, human presence and economic activities had been banned or at least severely limited.  In the best-case scenario, those evicted had been compensated by allocating them new territories or through a direct (and often insufficient) financial compensation. The well-known result is to have protected areas surrounded by poverty rings. And poverty often means poaching and other illegal activities, thus threatening the very same goal for which the protected area was created.

The following graph illustrates very well the challenge at hand, even in a country that has a clear commitment to conservation and development like Costa Rica. The graph shows the relationship between the social development index (1) and nature protected areas in Costa Rica, at the level of the district.  I have marked with an arrow the Osa Peninsula, which embraces 17 protected areas covering more than 1/3 of the territory.

The social development indexes of the two districts at the Osa Peninsula close to the protected areas are either low or very low. This is, in simple terms, a recipe for a disaster and a high threat for conservation, as the latest months have shown when the economic conditions in the area worsened.

Graph. The relation between the social development index and protected areas in Costa Rica.

The current problem and how development economics might help

This “old” road to protecting nature has been highly criticized and it is rare now to read any report on protected areas that do not include a discussion on how to make sure that the communities surrounding a particular protected area benefit from its creation and thus engage in the long term conservation goals of that area. Community-engagement and community-based conservation are the new keywords. This is excellent! …however…

When reading reports on the socio-economic benefits of protected areas for the local communities I cannot help but feel that they are often rather generic. Some international organizations talk, for example, about eco-tourism as one of the key economic activities that can be developed in connection with the creation of a protected area. But very seldom there is a discussion about the extent to which the local communities, the region in which the protected area is located has the capacity to develop the type of ecotourism that will be attractive to visitors of the protected area. This includes the financial capacity but also the skills necessary to successfully launch an eco-tourism venture which is sustainable in the long term.

This, as I discussed in an earlier post, is an area in which economists with a background in innovation and/or development could come very handy. Poverty is a multidimensional phenomenon that is not only related to income level and its distribution but that, as indicated earlier, includes aspects such as education, health, politics, and policy (governance) or culture, to name a few. Understanding these aspects is crucial when developing a plan to make sure that the conservation goals – in this case, the creation of a protected area – does benefit the communities surrounding the areas as a whole.

2. Engaging international actors & addressing global value chains

Conservation organizations have also been looking at the behavior of multinationals, in the past often in relation to the environmental and social impact of their operations in developing countries (i.e. as one of the problems), and more recently as an important actor in conservation (as part of the solution).

Two examples come to mind, the WWF work with the transnational business as strategic partners for conservation (positive) and the National Geographic report on the impact of Chinese multinationals on increased poaching in the Peruvian Amazon (negative).

All in all, it seems that conservation efforts require a deeper understanding of the motivations, behavior, and impact of multinational companies. That is something that someone with a development economics background will be equipped to do.

Global value chains and international certification projects

Another area in which I have seen an active engagement of conservation organizations which is fully related to development economics is global value chains. One of the instruments to increase the income of the communities in developing countries dependent on natural resources is to make sure that they have a decent price for their products. Looking at the governance of the value chains and/or mechanisms to increase transparency and traceability are typical research areas for development economists.

This is what international certification programs have been trying to do. Fairtrade, Rainforest Alliance, and many others are mechanisms to provide incentives to producers in developing countries to produce sustainably by ensuring them a stable and decent price for their products.

This is also one of the projects in which I have been involved during my volunteer time at Osa Conservation. The aim of the project is to implement a system that will allow the traceability of artisanal fishing products. More specifically, that will allow us to trace back fish that has been caught through artisanal fishing and, through a process of certification, get a price premium for using such sustainable forms of fishing.

From an economist’s perspective, the project is an analysis of value chains and upgrading in value chains, something that most economists will be familiar with and comfortable doing. And something that is definitively a commonplace for development economics and economics of innovation.

In conclusion: how can economics contribute to conservation

This series of blogs have tried to illustrate the many different ways in which economics can contribute to conservation. I started by asking if economics can contribute to conservation. I guess that by now, the answer is quite obvious. YES!

There are many branches of economics that are extremely relevant for conservation. Some of them refer to the content of the specialization (valuation, path dependency, development paths, transformation capacity, value chains, traceability) and others to the method (quantitative and qualitative analysis of economic drivers and impacts).

They are by no means exhaustive but the result of my own background in Economics and my (limited) experience volunteering in a conservation organization and reading about conservation.

I would be more than happy to learn about other ideas in which economists can contribute to conservation.

And how can they pursue a career in conservation, should they wish to do so. Please add your contributions in the comment section!

(1) The Social Development Index published by the Ministry of Planning and Economic Policy is a composite index covering 5 development dimensions: economic, security, health, education, and social participation. The index is a relative index calculated in relation to the municipality with the highest index. It ranges from1 to 100.