Business models of conservation

Introduction
Investing in ecosystems
Green certification
Equator Principles
Biodiversity Tradeoffs
Biodiversity Offsets
Conservation agreements
Conditions necessary for Business Models of Conservation

Introduction

The threat to the world's natural ecosystems is now well acknowledged. Numerous species are at danger of going extinct. The number of species and ecosystems that can provide humans with environmental services like food, fibre, water, etc. declines as a result of species extinction. Numerous approaches have been put forth to enhance the condition of ecosystems. Two of the most popular strategies are conservation through community initiatives and protection through legal measures. A new idea that is gaining traction calls for enterprises to be involved in the upkeep and provision of ecosystem services through the wise application of markets and market-based instruments. Such business models are supposed to encourage advancements and innovation while also assisting in the integration of environmental protection and economic growth.

The idea of ecosystem services is based on how we understand the worth of the environment economically, specifically the idea of "indirect use value" that comes from how natural ecosystems sustain and safeguard economic activity and property. The most well-known example of how a private business directly depends on the health of the local ecosystems is probably nature-based tourism. In these situations, convincing company owners and managers to contribute to the preservation and sustainable management of natural resources is not necessary.

More affluent consumers are becoming more concerned about the environment and placing a greater emphasis on goods and services that can be proven to be sustainable. Recent years have seen a rise in the demand for eco-branded or "environmentally friendly" or "green" products, such as organic food, sustainably obtained wood, and ecotourism. This demand has fueled the rapid growth of many of these enterprises.

Even in faraway areas where they have no intention of travelling, surveys indicate that people are prepared to pay for ecosystem protection; yet, the methods to turn this willingness to pay into actual financial flow are typically confined to charitable donations. The effort to raise money to save the tiger is a good illustration of this. Donor organisations in the USA and Europe raise money to protect the tiger, the rainforest, various primate species, etc. Charity is not the same as a financial plan for conservation, though.

Businesses are becoming more and more aware that maintaining ecosystem services can give them a competitive advantage and, in some situations, even generate profits. Typically, businesses support environmental concerns in a variety of ways in order to set themselves apart from rivals and win over customers. This could incorporate

The association of business product and services with “natural” environments in advertising campaigns,
Reporting of business impacts on ecosystems or contributions to conservation activities,
Subscribing to voluntary schemes that certify business compliance with certain environmental performance standards.

In order to supply environmental benefits, including several intangible but important ecosystem services that can no longer be taken for granted due to mounting demand on natural resources, new business models are being developed. Business executives with vision are increasingly investing as a result of the potential they see in ecosystem markets. Along with changing regulatory frameworks and tax incentives, as well as growing investor, shareholder, community, and/or non-governmental organisation (NGO) demands for environmentally responsible behaviour, rising consumer expectations are some other factors driving business investment in ecosystems.

Investing in ecosystems

One of the most potent institutions in human history, the market is largely responsible for the recent improvements in human well-being. At the same time, when natural resources are used up and trash is produced by human economies, market-based economic expansion is a significant contributor to ecosystem deterioration. The costs and benefits of ecosystem management are frequently distributed unfairly because the market views many ecosystem functions as undeserved freebies from nature.

Thus, there are a number of reasons to mobilise markets to maintain ecosystems, with the following being the most important:

To, in particular situations, take advantage of the strengths of business and the possibilities of markets to create value through conservation;
To overcome the market deficiencies that have led to widespread ecosystem service loss and underinvestment in the environment
To guarantee equitable distribution of the costs and advantages of ecosystem management.

A significant shift in how we view business and the environment is necessary if we are to take full advantage of these prospects. It necessitates a readiness to move away from many environmentalists' simplistic and idealistic views of commerce, markets, and economics. Making business and markets allies of ecosystem conservation is the challenge (and opportunity),

The need to safeguard the businesses themselves and their reputation in the community they operate in is often a strong argument in favour of investing in ecosystems, independent of business cost savings or sales growth. There are three key factors to take into account:

"The operating permit." This covers both the moral and legal facets. Prospective investors, insurers, and business partners may reward companies that can demonstrate strong environmental standards throughout their operations and provide preferential access to resources;
Stakeholder relations, Environmental investments can enhance employee morale, aid in hiring and retaining staff, and enhance links with neighbouring communities and governmental regulators;
"Sensitivity to new environmental laws." Businesses that invest in ecosystems rapidly pick up on how to incorporate conservation into their operations, and they are well-positioned to comply with new legal requirements or to advise governments on practical, affordable ways to conserve the environment.

Corporates can engage in environmental protection in many ways.

According to common wisdom, the private sector should refrain from or decrease its involvement in environmentally hazardous activities. This can be accomplished via techniques including environmental evaluations and reporting, mitigation requirements for significant investments, technological limitations, required emission regulations, or voluntarily made agreements to cut back on waste and prevent habitat destruction. According to this perspective, business is the cause of the issue, and the only way to fix it is to make it stop hurting people. For the majority of projects, environmental impact assessments and mitigation plans are required in India.
Businesses have a social responsibility to support environmental preservation. In addition to the steps necessary for reducing the effects of projects, the Indian government has mandated that businesses create and implement a Corporate Social Responsibility (CSR) policy that includes taking activities to improve the environment.
The third strategy involves using complementary, market-based strategies that make sustainability lucrative on its own to promote ecosystem conservation.

When the provision of ecosystem services is linked to the export of goods and services made in developing nations to consumers in wealthy countries, the potential for eco-enterprises to increase social justice may be even larger. The relative social and environmental costs and advantages of goods made locally or imported from outside continue to baffle many customers, which is unfortunate.

Green certification

The use of ecolabeling and certification programmes to separate products and services based on their social and environmental performance is one of the best-established market-based strategies for ecosystem management. These schemes operate under the assumption that consumers will favour certified goods and services and may even be willing to pay more for them. While this isn't always the case, a number of certification programmes have attracted a large following of consumers and a rising sales share in some areas. Here is a brief description of a few of them.

FairWild Certification: The FairWild Foundation oversees the FairWild Standard and Certification programme. Natural ingredients gathered from the wild are verified as being legally and responsibly sourced according to the FairWild accreditation. These ingredients must meet the FairWild Standard in order to be considered "fair traded," which means that everyone who participates in the harvesting process, including local populations that collect the wild plants, shares in the rewards.
Organic certification: In response to pressure from advocacy groups as well as more fundamentally to protect their supply chains and consumer markets, major food and agriculture firms are becoming more and more interested in promoting more sustainable agricultural practises. Farms that implement environmentally preferable production strategies are distinguished from those that practise conventional agriculture using a variety of labels and certification requirements, such as "bird friendly" and "organic." The market for organic goods reached 25.5 billion euros in 2005, with Europe and North America accounting for the majority of global sales.

(NP) to organic starting in 2007. In the future, this will also be associated with the preservation of elephants, allowing for the marketing of organic tea that is favourable to elephants. Similar to in agriculture, assertions concerning the sustainability of resource management are examined and verified through certification by unaffiliated groups in the forestry industry. Tourism is expanding quickly in forests and other environments. A number of tourism standards, certification, and accreditation programmes have been developed in an effort to manage the growing stresses on ecosystems brought on by an increase in tourists as well as to maximise the value generated from nature-based tourism. Awards are awarded to promote environmentally friendly travel. India's tourism ministry has established regulations for ethical ecotourism. Award-giving organisation Tour Operators for Tiger (TOFT) recognises eco-friendly hotels and wildlife tourist businesses that support wildlife preservation.

NGOs, government organisations, and for-profit businesses have collaborated to increase investor understanding of ecosystem risks and possibilities, to find and share best practises, and to create uniform standards for corporate environmental management and reporting.

Equator Principles

For instance, the introduction of the Equator Principles in 2003 increased awareness of environmental issues inside the finance industry. The Equator Principles is a framework for risk management that financial institutions have adopted for identifying, evaluating, and controlling environmental and social risk in projects. While several major financial institutions have identified biodiversity and ecosystem services as developing challenges that could severely damage the value of their (and their customers') investments, several multinational banks have adopted strategies to limit environmental risks. Foreign direct investment projects in India routinely conduct their own analyses of environmental hazards posed by the project and social or environmental variables that could imperil their investments over time. Legal complications or negative publicity that delays the project's operations could result in significant financial losses.

Off-sets and Trade-offs:

Making new rights (or liabilities) impacting the usage of natural resources and then allowing companies to trade these rights or liabilities are two effective market-based approaches to ecosystem management. According to experience, such a strategy can greatly lower the cost of environmental protection and/or increase the value of resource utilisation.

Carbon Credit

The development of the carbon credit system coincided with the public's growing awareness that industrial activity may be to blame for environmental deterioration and global warming. The amount of carbon dioxide emitted by a firm can be controlled by the government by using carbon credits. Therefore, a carbon credit is simply a permission that authorises the holder to burn a certain volume of hydrocarbon fuel for a certain amount of time. Companies or other organisations that take measures to demonstrably reduce carbon emissions are given credits.

An effective carbon management programme involves internal cuts to waste, business travel, and energy consumption. However, there comes a point where the emission reductions become prohibitively expensive or will have a negative effect on performance for many businesses. Now is the time when a carbon offset scheme can yield larger profits. There are some projects that include lowering carbon emissions. Examples of such initiatives include wind farms, afforestation programmes, and forest preservation plans, among others. In order to offset carbon emissions, carbon credits produced by projects that reduce carbon emissions must be purchased. To prevent any duplication, a company registers when it acquires carbon credits to offset its emissions.

An Example of how Carbon Credits work

An environmentalist organisation called Trees of the Future receives credit for planting enough trees to offset one tonne of emissions and seeks to eliminate the megatons of greenhouse gases from the atmosphere. A steel producer can buy the carbon credit from the environmental organisation if it expects to produce 11 tonnes of steel but only has a 10 tonne emission quota. By guaranteeing that all nations maintain their total carbon emissions under control, the carbon credit system seeks to minimise emissions.

Businesses can use carbon offsetting to make up for their emissions, achieve their carbon reduction targets, and aid in the transition to a low-carbon economy. Carbon offsetting provides funding for crucial forestry, renewable energy, and resource conservation initiatives that result in a decrease in greenhouse gas emissions.

The Kyoto Protocol

A carbon trade is a credit exchange between governments intended to lower carbon dioxide emissions. Through the carbon market, nations with higher carbon emissions can buy the right from those with lower carbon emissions to increase their carbon dioxide emissions. Between 2008 and 2012, the ultimate goal of the carbon trade, which was first introduced with the 1997 Kyoto Protocol, was to lower carbon dioxide emissions by 5% compared to 1990 levels.

The International Panel on Climate Change (IPCC) has been at the forefront of ideas for carbon credits as a market-based approach to reduce carbon emissions. Countries are divided as industrialised and developing economies according to the Kyoto Protocol. Industrialized nations, sometimes known as "Annex I countries," participate in an emissions trading market where each nation is required to adhere to its own emissions criteria. A nation that surpasses its goal may sell the surplus to those who fell short of their targets. Carbon credits known as Certified Emission Reductions are distributed under the distinct Clean Development Mechanism for developing nations (CER). These credits, which can be exchanged on a different market, are given out in support of projects promoting sustainable development in underdeveloped nations.

Biodiversity Tradeoffs

In the US, where federal and a few state laws mandate "no net loss" of wetlands and the preservation of habitat for endangered species, one of the oldest systems of tradeable rights for habitat may be found. When detrimental impacts are deemed unavoidable, regulations created under the Clean Water Act and the Endangered Species Act require both public and private developers to compensate for or "mitigate" the loss of natural habitat by funding the creation, restoration, and/or protection of comparable habitat.

Biodiversity Offsets

The term "biodiversity offsets" refers to conservation efforts intended to make up for unabated lingering effects on biodiversity brought on by mining and processing. Averted disturbance or ecological restoration typically constitute an offset that occurs away from the impact location. It is more compensatory and less mitigating. Due to its operations, Rio Tinto, a sizable mining firm, is to blame for biodiversity losses in numerous locations. The business, however, employs a biodiversity offset method and makes significant financial contributions to the protection of biodiversity. This provides funding for the preservation of land outside of mining zones for the conservation of biodiversity, resulting in a Net Positive Impact (NPI) and no net loss of biodiversity. Biodiversity offsets are now being considered as a viable commercial possibility by some mainstream investors.

The biodiversity offset strategy has come under heavy fire since it encourages the continuance of destructive activities while obstructing legitimate uses of biodiversity in other regions by locals for protective purposes. In the instance of Rio Tinto, the firm collaborates with well-known groups like the Royal Botanical Gardens, Kew, and Birdlife International, which have come under fire for demonising local populations that are utilising the woods while ignoring damage caused by mining. This is known as "green grasping." Agreements on conservation Subsidies and tax breaks have been implemented by governments worldwide to promote resource conservation. For instance, in the US, tax breaks on philanthropic contributions have encouraged land gifts or "conservation easements" to be made to private environmental trusts around the nation, safeguarding millions of acres. Similar tax incentives are employed in some developing nations and Europe.

A landowner and a conservation group, such as the Nature Conservancy of Canada, enter into a conservation agreement (NCC). To preserve a parcel of land's natural qualities and the species that call it home, the landowner consents to limiting some of its uses. The landowner receives compensation or a receipt in exchange for posting the agreement on the property. To make sure the deal is being followed, NCC keeps watch over the disputed land. The Applied Environmental Research Foundation in India has used conservation agreements to safeguard private forest tracts in Maharashtra. Small farmers from roughly 20 villages in the districts of Sindhudurg, Ratnagiri, and Pune have now signed a contract with the NGO to protect their farms. Thus far, 600 acres of forest land have been preserved. The agreement provides farmers with financial and technical assistance so they can use and protect the forest area. This is the first initiative of its sort in India, according to the AERF, to permanently secure untamed forests. The landowners can continue to own and utilise their property, sell it, or leave it to heirs while still receiving financial rewards for protecting it.

Conditions necessary for Business Models of Conservation

All companies function within a set of property and use rights, legal obligations, and societal expectations. Along with voluntary commitments, government taxes, subsidies, and restrictions also have an impact on how profitable a business is. Public expectations on the privileges, obligations, and social obligations of business are reflected in these favourable conditions. Even while markets for ecosystem services seem to function well in some situations, many nations lack the legislation and structures that would support such markets. Property rights are not clearly defined, environmental harm culpability is not acknowledged, and rewards for good work on maintaining ecosystem health are not given. Whatever the potential for market-based methods, it is obvious that governments and non-governmental organisations will continue to be crucial players in safeguarding ecosystem services. Without effective environmental legislation and fair governance at the local, national, and international levels, market-based systems will fail. Likewise, care will still be required to make sure that governments and businesses honour their promises.