Nature and Human Society: The Quest for a Sustainable World (1997)
Chapter: Government Policy and Sustainability of Biodiversity in Costa Rica
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Government Policy and Sustainability of Biodiversity in Costa Rica
The year 1948 was a milestone in the consolidation of modern democracy in Costa Rica. A series of historical events took place that year: the breakdown of authoritarianism, the abolition of the army, the creation of mandatory and free education, and the acknowledgment of full citizenship of women and minority-group members and the restoration of all their rights, including the right to vote. Such outstanding events set the stage for the legitimization of equal opportunity as a permanent commitment of the state, and social investment continues to be the essential condition for development. Almost 50 years later and near the end of the millennium, Costa Rica shows significant success.
• In social terms, the average life expectancy is 76 years (3 years more than in the United States), and infant mortality is less than 12 per thousand; the literacy rate is 95%.
• In environmental terms, we have set aside more than 25% of our territory as national and other parks.
• In economic terms, we have achieved such indicators despite a per capita annual income of only $2,700 (although this is low, it is more than two times the regional average). Costa Rica ranks 33rd among nearly 150 nations, according to the human-development index of the United Nations, and ranks 52nd in terms of per capita income.
These outcomes indicate the high level of efficiency of social investment.
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Why then Does a Social-Democratic President Request Change?
The inauguration ceremony of the Figueres administration, a forum titled From Forest to Society, gathered together the government ministers and key persons from both Costa Rican society and friendly nations. The president's speech declared, “We have a relatively nice story in development at the end of a decade called the ‘lost decade’. But then the world changed, [and it was] decided to end the Cold War and begin the construction of a global economy, without the permission of small Costa Rica.” The new president continued, “Nowadays, as my country faces the challenge of entering and succeeding in the era of global economy, even with all the progress attained, Costa Rica stands no chance unless we shift our development paradigm to that of sustainable human development. Moving in that direction is not a high-tech decision; it is a policy decision.”
Costa Rica's approach to sustainable human development places equal importance on the simultaneous achievement of the following three objectives:
• To consolidate macroeconomic balances to allow an increase in internal savings and to attract investments.
• To increase possibilities for strategic social investment, which means building the capacity and empowering the people to understand and take advantage of global economic opportunities through good health and adequate education. The Ministry of Public Education has formally included issues of environment and sustainable human development in the school curriculum and has implemented a bioliteracy project: 100% of public high schools will have a computer laboratory facility, and in 1998, 50% of the citizens of the 21st century will be obtaining a bilingual education.
• To construct an alliance with nature: reevaluating existing natural resources; searching for innovative, nondestructive uses; and creating the setting for ground-breaking business opportunities that cause significantly fewer environmental disturbances, all of which can affect the access of future generations to natural resources.
Only at the correct and responsible intersection of those three objectives does development truly become sustainable, and allow us to generate a virtuous circle of increased well-being for our people instead of a vicious circle of endemic underdevelopment.
This paper focuses on the use of our biodiversity, as well as its economic aspects, because it is a reality that an economically poor country cannot give itself the privilege of preserving 25% of its territory without obtaining an economic contribution of at least roughly the average benefits provided by the other land that is used for traditional patterns of production.
In the case of a tropical country like Costa Rica, having set aside a significant portion of the national territory to conserve wildlands has ensured the representation of a high percentage of its biological diversity in the remaining forest. Because of the state's inability to acquire new lands, a new category of private wild
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reserves was created, thus involving the civil society in the management of natural resources. That action gave way to the development of a network of private reserves, which comprises more than 120 reserves and more than 100,000 hectares; the percentage of protected wildlands has increased to nearly 30% of the total area of Costa Rica.
Does a protectionist approach to conservation represent an opportunity cost for the rural communities and the country's development? Discussion about this question helped us see the urgent need to change the financial framework of our conservation areas, and we now intend to implement a process to develop their self-sufficiency. From an economic perspective, protected wildlands should be considered producers of both direct and indirect environmental benefits and services, and these should be appreciated and valued adequately. From this standpoint, we undertook a careful revision of visiting and admission fees.
In the 1980s, the World Wildlife Fund predicted that if the high rates of deforestation in Costa Rica during recent decades continued, its forests would disappear in less than 40 years. Fortunately, the trend that followed has been quite different.
What prevented the prediction from being realized? One reason is that we increased the value of timber and have encouraged cultivation of trees. We also increased the efficiency of deforestation controls and restricted changes in land use forcing landowners to preserve some areas with forest cover. The World Wildlife Fund's prediction provoked a national reaction that led to the development of a plan for reforestation in 1986, an increase in the professional forestry capacity, and the offering of tax incentives and financial support to those who were willing to plant trees. The original instruments of the policy to reduce deforestation were refocused to correct its near-sightedness by eliminating distortions in other sectors' policies that previously had encouraged inadequate uses of land. Those actions implemented the national decision to stop the irreversible damage to biodiversity. Larger and larger sectors of the population organized themselves so that, in the following years, the national reaction was translated into a substantial decrease in the rate of deforestation and an increase in reforested areas, forest regeneration, and secondary growth (500,000 hectares).
During the last decade, we have recognized the economic importance of natural forest environmental services and their contribution to local and global societies. That has changed dramatically the framework of an effective fight against deforestation. One particularly important aspect of the national strategy of sustainable development is the adequate recognition of the benefits and services provided by the forest. Only a few of them are acknowledged in the marketplace; others, equally important, undergo the “tragedy of the commons.” Table 1 summarizes the services provided by Costa Rican forests and identifies the level of beneficiaries.
To preserve the forests and their environmental services and to generate economic benefits to private owners and the whole country, we must make a practical and innovative effort to internalize the costs and benefits, which are recognized in theory but are ignored in practice by the marketplace. Costa Rica has decided to act in a pioneering and creative way, identifying products that can be
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generated and developing markets that can help to reduce the external effects of deforestation and loss of habitats while compensatingdirectly and tangiblythose who, through adequate land use, maintain the vital life-support functions of the ecosystem and generate benefits to both our society and the world.
Inbio-Merck Contract.
In 1992, the first INBio-Merck contract was approved and carried out successfully. In 1997, a group of major European pharmaceutical companies approached us with interest in creating similar agreements. They expressed surprise that the INBio-Merck contract already had undergone three additional rounds and that the original terms were no longer available. Biodiversity-prospecting agreements have since extended to other applied industries, such as perfume and natural pesticides. Our learning process over the last 5 years has shown us the usefulness of internalizing the benefits derived from our biodiversity resources to our society, which generates additional value to them, each time under improving conditions and benefits of the negotiations.
Watershed Protection and Electric Power
Recently, a hydroelectric-power company based in Costa Rica and a group of rural landowners, supported by local nongovernmental organizations, entered a voluntary private agreement. It guarantees that the company will pay the landowners US$10 per hectare per year for providing protection to the watershed that the hydroelectric company depends on. Similar agreements are under way for other projects because the results have been a substantially improved water level and significantly reduced sedimentation and siltification in the dams. The benefits generated have resulted in minimal effect on consumers and constitute a step toward a win-win situation.
Carbon-Fixation Services
In 1995, we conducted a national inventory of the emission of greenhouse gases to comply with the mandates of the Climatic Change Convention. Article 30 of
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that convention anticipated the possibility of conducting joint activities between countries that are forced to meet reduced levels and countries that are not. We discovered in that article a way to internalize and create markets that repay those forest environmental services that are of global benefit.
A combination of energy-conserving activities (such as the increased use of renewable energy resources, the increased use of public transportation instead of private vehicles, the use of more efficient vehicles and other fuel options, and the planting of trees and protection of natural forests) can contribute to reduce pollution, particularly by carbon dioxide, and reduce the effects of climatic change. The Climatic Change Convention recognizes them as such, and Costa Rica has developed numerous pilot projects in each of those activities.
At the domestic level, the introduction of taxes on fuels and pollution generates more than $20 million a year, which is paid to owners of natural forests for the environmental services they provide to the country, including carbon fixation and watershed protection.
Domestic efforts should be followed by global efforts. In this sense, Costa Rica is taking the first steps in developing the global market. We have implemented activities jointly with several countries and businesses, and eight of 39 projects submitted to the convention's office take place in Costa Rica.
During the implementation stage of the eight projects, we have realized the advantage of having a portfolio of projects to reduce potential risks; lower the costs of designing, monitoring, and certification; and develop a unit capable of combining all these possible projects in the fields of energy and forestry. Thus, in 1996, the first “certified tradable offsets” (CTOs) and the first 200,000 tons of carbon dioxide were sold to the Norwegian government and private sector for $10 per ton. The resulting funds went to 238 landowners to finance reforestation projects.
One alternative use of land is raising cattle, and it is from this alternative use that the cost of the first CTOs was calculated. We needed to provide at least the same $50 per hectare per year that the landowner would have obtained from raising cattle. If the same activity were to take place in the United States (or if it were transformed into energy), the cost per ton would be 5–10 times higher than ours.
The estimated cost of fulfilling the Climatic Change Convention is $400 billion in 20 years to reduce emissions by 20%. The cost for the same effort could decrease to $150 billion if countries that have comparable advantages, such as fast-growth tropical forests, develop joint implementation activities. We suggest that the effort be global and that the savings of more than $250 billion be distributed fairly among all participating countries.
Taking into consideration the different domestic and global efforts, the United Nations State of the Nation Report shows that since 1996 the regeneration of forests, in addition to forest plantations and the increase in private natural forests, helped to meet the national demand for timber. That is, the net level of deforestation is zero. Furthermore, a net increase in rapid-growth forest in urban areas, such as Costa Rica's central valley, means a continued net increase in for-
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est in the last decade from 178,000 to 206,000 hectares, verified through systematic field trips and geographic information systems.
Future Challenges
Is the recovery of our forests sustainable? Is it replicable in other countries? We believe so, but the effort will require both domestic and international actions. For example, domestically, we are developing water tariffs to include the economic and ecological costs associated with the future availability of water and with watershed protection. That will increase prices by 25–40%. We intend to allocate the difference as payments to owners of forest for the costs of environmental services that they incur in watershed-protection activities. In developing a global system of trade for carbon offsets, Costa Rica, in association with the Earth Council, has placed the first 4 million CTOs in the Chicago Stock Exchange, and we are ready to develop the global market.
By adopting similar means, the United States and other developed countries could reduce the costs of complying with the Climatic Change Convention, encourage environmentally sustainable world trade, support rural populations in tropical nations, and save millions of hectares of forest from becoming pasture or other agricultural lands, thus protecting biological diversity and the life-support functions that the forest provides.
Finally, the Climate Change Convention is undergoing negotiations for change. It is time for domestic and global action to save the rain forests. Costa Rica has implemented such projects and policies, and we have proof that success is possible; globally, however, we need to walk the walk as well as talk the talk.
