Financing Biodiversity - A Private Sector Approach

Certain developing countries, host of most of the remaining biodiversity on earth, are in their pursuit to spur economic development faced with a trade-off between growth in national income and a decline in biodiversity and ecosystems. In this thesis, first the market failures will be explored that lead to the continuing decline of biodiversity and the related provision of ecosystem goods and services. Secondly, two types of markets will be analyzed that have started to emerge recently bringing certain sustainably produced ecosystem goods and services to market, leading to the partial absorption of market failures and the inclusion of certain social costs that would be neglected otherwise. These markets are considered to be interesting for the private sector to invest in in terms of financial performance, but also in terms of environmental and social sustainability. Thirdly, it will be explained why development banks are suited to reduce certain market failures and to further develop the markets for ecosystem goods and services. Fourthly, based on a conceptual framework, two real case studies will be presented, each a private sector undertaking, which will be analyzed in terms of their financial, environmental and social performance. Finally, conclusions and recommendations for new policy and further research will be given.