Parks Caribbean

Conservation theory and practice has evolved from simply maintaining the flow of natural resources for human consumption to incorporating the concept of sustainable use, even as economic pressures have increased the degradation and loss of natural resources and natural areas to the point of reaching ecological thresholds.  In this context, establishment of a system of protected areas has become one of the pillars of sustainable development strategies.

Protected areas are established to meet a range of national development objectives, and as such, each site must be responsive to local needs and conditions, while the network of sites must be responsive to the national social, environmental, and economic development goals.  In that context, it has been accepted that a system approach to protected areas development improves the chance for integrating protected areas management issues with other conservation, social, and economic priorities and strategies.

However, simply adopting a system approach to protected areas planning does not remove the tensions between protected areas and other land uses.  In fact, some tensions have increased as economic hardships and social tensions increased in the wider society.  One of the impacts of economic hardship and increasing public debt is the reduction of funding from public sources to support conservation programmes, including management of protected areas.  As a result, financial sustainability of systems of protected areas is advocated within international conservation programmes, such as the Programme of Work on Protected Areas under the Convention on Biological Diversity.  This has been particularly problematic in smaller economies, such as the small island developing states of the Caribbean.

Many Caribbean countries have prepared national protected areas system plans, though implementation is usually constrained by several factors.  Such constraints typically include inadequate financial resources, non-integration of protected areas system strategies with other social and economic development strategies, existence of non-supportive enabling environments, and inadequate understanding of the financial demands.

Understanding the Demand for Financial Resources
The financial demands of a national system of protected areas depend not only on the number of sites, but also on factors such as size of the sites, the mix of management categories in the system (which influences the infrastructure, equipment, and staff requirements), the number and types of management and collaborating institutions, and the supporting policy and legislative framework.  Financial resources are required to meet a range of demands, such as the following:

• Capital Costs: (1) initial construction and refurbishing or replacement of infrastructure (example; buildings, trails, and signage); and (2) purchase of vehicles and other equipment (example; office equipment, safety gear, monitoring and surveillance equipment).
• Recurrent Expenditure (Operations): (1) salaries and related expenditures; (2) insurance; (3) maintenance (infrastructure, vehicles, equipment); (4) utilities; (5) supplies (example; stationery, fuel and tyres for vehicles); (6) uniforms; (7) waste disposal; (8) legal fees; (9) insurance (liability, asset replacement); (10) capacity development; (11) fundraising and fund development; and (12) system management, monitoring, and evaluation.
• Resource Restoration: (1) routine restoration of cultural/historical resources; and (2) recovery from human and natural disasters.
• Special Needs: Planning and management of pest/invasive species; pollution control; fire suppression and fire fighting; and disasters. Increased temperature and changing precipitation linked to climate change are expected to produce significant changes in ecological systems, and more intense rainfall and storm events are expected to result in greater levels of damage to natural and built systems.  Strategies for climate change adaptation and disaster risk reduction are often absent from protected areas system plans, hence the required financial resources are often not addressed by financial plans.
• Managing Interactions with the External Environment: (1) managing the demand from economic sectors, uses, impacts, and interactions with sector interests (e.g. tourism and extractive industries); (2) community engagement, including livelihood support and socio-political dynamics; (3) interactions with regulatory agencies; and (4) external threats (pollution, development impacts, attempts to reduce the size of sites or de-gazette sites). The demand by the external environment on protected areas management institutions, at both site and system levels, can be extremely high.  It is also an aspect of protected areas management that is often overlooked, and for which institutions are least prepared.
• Capacity Development: (1) staff and management institutions at site and system levels; and (2) supporting institutions at site and system levels. Protected areas system management institutions in the Caribbean typically do not have capabilities for long-range, system-wide planning, whether for dealing with critical resources or for managing interactions with their external environment.  This absence of system planning and management capabilities usually results in significant under-estimation of total financial needs.

Financial planning to address the demands across the system of protected areas requires knowledge of the financial needs of each site and for the whole system, development of appropriate funding and investment strategies, and ability to mobilize resources across the range of institutions involved directly or indirectly in protected areas development.

Institutional Framework
Financial resources for a national system of protected areas are required within three groups of institutions:

1. Site management institutions;
2. System management institution; and
3. Supporting institutions at site and system levels.

Supporting institutions are typically institutions that do not have management responsibilities, but which may affect management operations by having regulatory control over an activity (usually permitting or health) or may play a supplementary role (example; concessions management, volunteer management, fundraising).

A survey of protected areas institutions in 2014 by Parks Caribbean found that, of twenty (20) Caribbean countries from which responses were received, 8.1 percent of countries had a single institution responsible for protected areas development, while in 91.9 percent of the countries, responsibility was shared among several institutions.  The distribution of costs and allocation of resources across and within the institutional groups is therefore dependent on the legal and policy framework, the institutional framework, and the agreements between the relevant institutions.

Of the many factors that determine operating costs, one that is often not fully understood is the legal status of the management institution.  Central government agencies typically have different requirements and technical support from those of statutory agencies, public corporations, civil society organizations, and private enterprises for addressing legal representation, insurance, and compensatory systems; all of which have implications for financing and asset replacement.

Financial Sustainability in Context
Within the Caribbean, financial sustainability for national systems of protected areas is pursued with the objective of reducing government budgetary contributions to a minimum.  It is questionable whether that objective can be attained, considering that some protected areas may have little potential for revenue generation, and that Caribbean economies are relatively small.  As such, sustainability has to be understood at both site and system levels.  More importantly, sustainability implies meeting all the costs of protected areas development, not only recurrent expenditures.

“Making a PA truly sustainable in economic terms implies covering all of these indirect and opportunity costs, and compensating those who bear them. Failing to consider these costs can translate into a serious under-estimation of PA financing needs. It also runs the risk of undermining PA sustainability and management effectiveness. As long as these broader costs are unmet (and often unacknowledged), the people who bear them are likely to remain unwilling – or economically unable – to support the existence of PAs” (Emerton et al 2006, page 20, para. 2).

Protected area management is one of many conservation strategies, and is usually employed when more intensive management is required to maintain the integrity of important natural or cultural heritage resources.  For natural systems, the need to maintain ecological integrity implies that it may be best to encourage minimum levels of use at some sites.  That means that some sites are unlikely to generate the amount of revenues required for site management.  Given the small resource base of Caribbean islands, it also means that restricting resource harvesting within protected areas will affect the livelihoods of adjacent communities.  This matter of distribution of livelihoods costs and benefits is one of the major issues facing protected areas management institutions in the Caribbean, and governments are increasingly incorporating community livelihood components in protected areas projects.

In the Caribbean, establishment of new protected areas is driven primarily by grants from external funding sources, though the main source of post-project funding for protected areas is the public sector budget.  There are instances of earned income (user fees, concessions, and merchandising), though even in the more successful cases, user fees have to be supplemented by funds from other sources.  Fundraising is more likely to take place at the site level, typically for sites that are used by residents or visitors for recreation, and is often undertaken by the management institution or by individuals and groups that are considered “friends of” the protected area.

Development of national protected areas funds normally takes place at the system level, and, in the past, were financed through debt swaps or special tourism taxes.  The Jamaica Protected Areas Trust and the Protected Areas Conservation Trust of Belize are the oldest known examples of national protected areas funds in the Caribbean.  However, since the establishment of the Caribbean Biodiversity Fund in 2012, approximately ten Caribbean countries have established national conservation trust funds in order to access the regional fund.  Countries are also developing sustainable financing plans, supported by business plans for individual protected areas.  Both national and site-specific financing plans tend to recommend multiple potential funding sources, usually without acknowledging that each potential source may require particular technical resources, institutional capacities, and supporting mechanisms.  For example, merchandising is a growing source of revenues for protected areas, but to be done successfully on a large scale requires investment in skills and systems dealing with such issues as copyright, brand management, purchasing, inventory management, marketing, and contract negotiation.

Emerton et al (2006) identified five elements of protected areas financial sustainability:

• Building a diverse, stable and secure funding portfolio;
• Improving financial administration and effectiveness;
• Taking a comprehensive view of costs and benefits;
• Creating an enabling financial and economic framework; and
• Mainstreaming and building capacity to use financial tools and mechanisms.

While this means building financial planning into protected areas development, it also implies moving protected areas financing more centrally into the macro-economic framework.  For example, although tourism revenues are tapped for a variety of taxes to support the general/consolidated fund, rarely are those funds identified specifically for protected areas development. Similarly, the millions of dollars spent for tourism marketing and product development do not include direct support to protected areas development.  Considering the tremendous contribution of ecosystem goods and services to Caribbean economies, revenue could also be obtained from a range of other development activities.  These would include:

1. Fees for all forms of resource extraction from protected areas and conservation areas;
2. Tax relief and other incentives for contributions to the national protected area fund and protected area projects;
3. Removing perverse incentives for development projects (incentives and subsidies that generate adverse social and environmental impacts);
4. Cost recovery mechanisms for pollution and other environmental damages, particularly within conservation zones and protected areas (Marine Protected Areas Federal Advisory Committee 2017);
5. Social impact fees for change in land use type and intensity (especially change from conservation or green space);
6. Social impact fees for loss of landscape features normally available to, and enjoyed by, the public; and
7. Development impact fees for new and expanding projects.

Current Constraints to National Financing of Protected Areas
A major constraint to financing protected areas development solely from national revenue sources is that most sources of revenue are channeled through the general/consolidated fund, and allocated for national priorities.  Examples of national funds with a stated environmental focus, but which do not finance protected areas development include: (1) the Green Fund in Trinidad and Tobago (sales tax to be used for conservation and remediation initiatives); (2) the Environmental Levy in Barbados (tax on imported goods to be used for solid waste management); (3) the practice in a number of Eastern Caribbean countries of imposing environmental/visitor departure tax to finance solid waste management operations and other island “enhancements”; and (4) several funds in the U.S. Virgin Islands are based on fees from air emissions and water pollution, and from violations of the coastal zone act (revenues are used as matching funds for federal grants).  Considering that environmental quality is still a major aspect of tourism in the Caribbean, it seems reasonable to re-purpose a portion of those “environmental” fees for protected areas development.

Globally, the environment is still treated primarily as a source of resources for extraction or as a waste receptacle, and environmental management is often marginalized in order to support economic activities.  In the Caribbean, damage impact fees are rarely included in the design of environmental enforcement strategies, and less so in financing plans for protected areas, even when recommended.  With the exception of the United States territories in the region, there are very few known cases of recovery of damage costs in protected areas.

Progress in this area requires action on several fronts, including: (1) improved and consistent national environmental planning processes; (2) mainstreaming protected areas in social and economic development strategies, particularly in sectors dependent on good environmental quality; and (3) improvement in the public engagement practices of site and system management institutions.

Mainstreaming protected areas was mentioned above as a strategy for encouraging increased investment in protected areas development.  That recommendation underscores the fact that protected areas development is generally not approached as central to national development.  While multiple economic sectors depend heavily on a range of ecological goods and services, in most Caribbean countries there is almost no relationship between financing for protected areas development and the benefits provided to society.  Such benefits include the provision of potable water, support to the tourism sector, disaster impact reduction, enhancing the health and well-being of residents, and supporting community livelihoods.  The inadequate demonstration of a return on investment results in the situation where protected areas development is not perceived as a priority in the allocation of scarce financial resources.  This issue is relevant generally to conservation planning in the Caribbean, where there is insufficient articulation and estimation of the value of ecosystem services, even though tools exist for undertaking the analyses.

Globally, it is estimated that protected areas provide livelihoods for approximately 1 billion persons, provide drinking water to more than a third of the world’s largest cities, and play a major role in ensuring global food security.  In the Caribbean, making the economic argument for prioritizing protected areas financing is constrained because there is limited data available for economic assessment of natural resources utilization (Hinds Unlimited 2003).  Persons attempting such analysis often use contingent valuation tools, despite their inherent limitations (Bervoets 2010, World Resources Institute 2011).  Considering the limited use of economic valuation in environmental policy and decision making in the Caribbean, it is easy to understand why contingent valuation analyses may not play a central role in resource allocation decisions.  Another approach that could be used to make the case for success and prioritizing financial support would be to assess the direct economic contribution of protected areas to local and national economies.  Outside of the United States territories, such assessments are rare in the Caribbean, the implications of which are acknowledged in Jamaica’s financial sustainability plan 2010-2020 (Government of Jamaica 2010).

Actions to move protected areas financing higher up the policy agenda would include:

1. Demonstration of an economic return on investment by conducting periodic assessment of the direct economic contribution of protected areas;
2. Preparation of case studies demonstrating ecological and social benefits of protected areas, even in cases where economic assessment is difficult;
3. Conducting the necessary assessments to prove management effectiveness and success in achieving the objectives for which each site was designated; and
4. Improved public engagement by management institutions.

The factor that is the most impactful in protected areas development is the nature of the enabling environment, primarily the policies and laws that shape the management framework, and integrate that framework into the larger development planning and development control processes.  The inadequacy of the enabling environment for protected areas development in the Caribbean results in the situation where cost recovery and other financial mechanisms are largely absent or poorly designed and managed.  There are also instances where there is deliberate suppression of cost recovery initiatives, typically because of political arrangements (as in the case of concessions and resource extraction) or due to the efforts of lobby groups (particularly tourism, minerals, and oil and gas).  Resolution of this constraint starts with the development of a rational system management framework (policy, laws/regulations/procedures, institutional arrangements, development of individual capability and institutional capacities for system planning and management, and mechanisms for periodic reporting to government oversight institutions and the public).

Although the story on sustainable financing for protected areas appears gloomy at the national level, success cases exist at the site level (Geoghegan 1998).  The main issues seem to be mainstreaming protected areas within national development planning processes and building the capacity for system management.

Progress Towards Sustainable Financing
In countries small and large, developing and developed, the constant tensions between protected areas development and business activities provide two important lessons. First, if conservation programmes, particularly protected areas development, are treated as constraints to economic growth, economic activities will always be prioritized over protected areas development.  Second, the public sector budget process is not necessarily the best mechanism for financing protected areas development.  This latter constraint is due partly to the fact that budgets are the results of compromises in allocation of resources for short-term activities, and partly because public sector budgets are often responsive to private sector advocacy, sometimes to the detriment of long-term national development objectives.  Any serious approach to development of a sustainable financing strategy for protected areas development should include the following components:

1.  Establishment of an Appropriate Enabling Environment: Treating protected areas development as an important part of national development, by; (i) development of a rational system management framework (policy, laws/regulations/procedures, institutional mechanisms, financing strategy and plan); and (ii) integrating financing mechanisms throughout the development planning and development control processes, including the tax system.
2.  Ongoing Capacity Development: To provide the skills, resources, data, and capacities for system-wide planning and management; particularly fund development, financial planning, provision of financial advisory services to site management institutions, and systems monitoring and evaluation.
3.  Establishment of a National Protected Areas Perpetual Fund: A permanent, reliable source of funds is necessary to ensure effective protected areas system development. Policies and operating conditions for national funds imposed by institutions and governments outside the country should be resisted.  More insidiously, it is very unlikely that countries will develop adequate capacity for financial planning if fund development, financial planning, and fund management services are all provided by external institutions, with minimal, if any, direct input by national institutions. However, it is taken as understood that financial planning, fund development, and financial management should reflect internationally accepted standards of practice.

Shifting Perspectives
If the information given above is difficult to process, consider the following perspective.  Protected areas include the most valuable, yet most fragile and vulnerable, natural and immovable cultural heritage assets of a country.  These assets are so important to national and international development that they are subject to national laws and international agreements.  The current targets for natural protected areas under the Convention on Biological Diversity are 17 percent of terrestrial and 10 percent of marine habitat protected by 2020. Yet the threats to protected areas are significant and growing.  Consider the capacity and capabilities required to manage such assets in a way that sustains their contributions to national development while protecting the integrity of the assets.  Now imagine how that management system could be financed.

Some of the earliest protected areas in the Caribbean were declared for the purpose of maintaining natural resource flows to national economies, yet somewhere along the way, and despite the overwhelming evidence of the continued dependence on ecosystem services, protected areas development has not been brought into the mainstream of development planning.  Caribbean peoples are proud of their heritage, their strengths, and the potential of their cultures, yet somehow that sense of pride has not translated to effective management of their most significant cultural heritage assets.  It is possible that the desire to emulate the successes of other places and people has resulted in some devaluation by Caribbean peoples of their natural and cultural heritage.  Maybe the answer is more complex.  Hopefully the current attempts at national financial sustainability planning will result in more effective national protected areas system development.

References Cited
Bervoets, Tadzio (2010). Report on the Economic Valuation of St. Eustatius’ Coral Reef Resources. National Parks Office, St Eustatius National Parks Foundation, St Eustatius, Netherlands Antilles.

Emerton, L., Bishop, J. and Thomas, L. (2006). Sustainable Financing of Protected Areas: A global review of challenges and options. IUCN, Gland, Switzerland and Cambridge, UK.

Geoghegan, Tighe (1998). Financing Protected Area Management: Experiences from the Caribbean. Caribbean Natural Resources Institute. St. Croix, U.S. Virgin Islands and Vieux Fort, St. Lucia.

Government of Jamaica (2010). Sustainable Financing Plan for Jamaica’s System of Protected Areas (JPAS) 2010–2020. Kingston, Jamaica.

Hinds Unlimited (2003). Socio-Economic Assessment of Marine Resources Utilization in the U.S. Virgin Islands. University of the Virgin Islands and the Virgin Islands Department of Planning and Natural Resources. St. Thomas, United States Virgin Islands.

Marine Protected Areas Federal Advisory Committee (2017). Protecting Our Marine Treasures: Sustainable Finance Options for U.S. Marine Protected Areas. National Oceanic and Atmospheric Administration, U.S. Department of Commerce, Washington, DC, USA.

World Resources Institute (2011). Coastal Capital Literature Review: Economic Valuation of Coastal and Marine Resources in Jamaica. Washington, DC, USA.

Note from the Editor
Lloyd Gardner is an environmental planning consultant whose practice includes a special focus on protected areas development.

Parks Caribbean welcomes reports on business plans, economic studies, and financial plans for individual protected areas, as well as sustainable financing plans and evaluation reports for national systems of protected areas.