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Colección: INTERAMER
Número: 69
Año: 2000
Autor: Ramón López and Juan Carlos Jordán, Editors
Título: Sustainable Development in Latin America: Financing and Policies Working in Synergy

TABLE 2
ADVANTAGES AND DISADVATGES OF VARIUS FUNDING MECHANISMS

Funding Mechanisms
Advantages
Disadvantages

1. Charging for use the global commons.
2. Joint implementation, clean development mechanism.
3. International taxation.
4. Funds from trade in tropical timber
5. Taxes and charges
6. Tradable permits
7. Privatizatiob and property rights
8. Debt-related measures
9. Transfer of development rights and credits
10. Green investments
11. "Debt-for-nature" swaps
12. Targeted fubd-raising

I. International Cooperation

Potentially vasr amounts of funds.
User pays.

Potentially large amounts of funds.

Links biodiversity with climate change.
Potentially vast amounts of founds.
Caninfluence policies to be more supportive of biodiversity.

Could raise $1.5 billion per year, with no
significant effect on final product prices.
Provides incentives for improved forest
management.

II. Governments

Can generate significant funds with existing structures.
Can build in "polluter pays" and "deficiary pays" principles.
"Green" taxes can change consumer behavior in favor of biodiverwuty without increasing total tax burden.
Can generate funding in the billions of dollars.
Can change behavior-affecting biodiversity.
Specifies opportunity costs and provides
mechanism for beneficiaries to pay them.

Property rights give reposibility to people
living closet to the resources.
Assigning shares of privatized state corporations to conservation endowments helps retain public accountability

Can generate funds in national currencies and reduce (slightly) debt burdens.

III. The Private Sector

Involves private sector in joint implementation or clean development mechanism, which may benefit biodiversity.
Private sector invests in biodiversity as result of enlightened self-interest.
Funds generated regularly from sales.

IV. NGOs

Generates significant funds in national currency.
Can be used to endow trust funds for long-term investment.
Allows public willingness to pay to be tapped in supprort of biodiversity.
Can bbuid strong alliance among NGOs, public sector, and private sector.

Requires international agreement difficult to attain.
Needs new institution to manage funds.
Requites unprecedent levels of coordination.
Tactily accepts continued high consumption of fossil fuels in North.
Funds available only for direct forest
management.
May not be WTO compatible; requires
political will.
Funds may be diverted to purposes unrelated to biodiversity.
Needs internationally agreed monitoring and enforcement. Consumer countries forgo significant tax revenues.
Many goverments resist hypothecated
taxation.
Taxpayer resistance.
Biodiversity-rich areas often distant from
sources of funding.
Administratively demanding.
Behavioral changes may last only as long as the payments.
Difficult to translate to international level.
Difficulty of goverment monitorint of
resource management in remote areas.
Why use for biodiversity instead of other
needs?
Privatizing can destroy effective
community-based management systems.
Come resentment of "conditionality."

Biodiversity benefits a side issue.
Weak capacity in some countries to regulate private sector.
Requires appropriate incentives from
goverment.
Discounted debts now less available.
Can be inflationary.
Requires significant investment in
fund-raisind.
Needs sympathetic goverment regulations,
such as taz deductions.