Antecedentes

Overall Study
 
UNDP is undertaking an initiative to inform policymakers in Latin America and the Caribbean (LAC) of the need to invest in ecosystem services. In order to gain the political traction required to advance investment in biodiversity in the region, UNDP will work with key stakeholders to produce a Report highlighting how Biodiversity and Ecosystem Markets (BEMs) could contribute to the environmental and economic aims of local and national governments. The Report thus will be well-positioned to inform future planning and investment processes affecting biodiversity throughout Latin America and the Caribbean.
 
Regulatory Biodiversity and Ecosystem Service Based Markets
 
During the last 20 years, ecosystem- markets have demonstrated their ability to reduce natural resource degradation while stimulating economic growth. Emerging markets have also developed for biodiversity rehabilitation. These markets work on the concept of compensatory mitigation, such that habitat impacts that cannot be avoided must be offset by an equal amount of restoration and protection in an area of similar ecological value.  Mitigation banking is most developed in the United States, where the Clean Water Act and the Endangered Species Act effectively cap habitat loss at the federal level. In Australia, a state scheme in New South Wales entered into force in 2008. The European Commission is also formally investigating the use of a market-based program for biodiversity protection based on the offsets model.
 
Wetland banks have been operating in the U.S. since the early 1990s, and endangered species habitat banks officially began in California in 1995 when the State approved a policy for mitigation credits. There are roughly 120 species banks and 600 wetland banks in the US. Developers purchased wetlands credits worth an estimated $750 million in 2007. Estimates suggest an average of $370.3 million was committed annually to endangered species habitat mitigation between 2003 and 2006, suggesting the U.S. mitigation banking industry in its entirety is currently worth more than $1 billion per annum. [1] Credits go from $4,000 to $450,000 (usually in the form of an acre) and can be very profitable, one bank started selling credits for $1,500 and 10 years later they were going for $125,000, due to demand. Biobanking in Australia is just beginning, so market size is not yet known. In addition to these regulatory biodiversity markets, voluntary biodiversity offset projects are underway throughout the developing world. [2]
 
It is considered that such market benefits can also be experienced by countries in LAC. This study aims to identify where such markets can be developed, what it would take to develop them (including the regulatory and legal framework required to enable them) and indicate the economic benefits of such development.

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[1] Environmental Law Institute (2007) “Mitigation of Impacts to Fish and Wildlife Habitat: Estimating Costs and Identifying Opportunities”
[2] www.forest-trends.org/biodiversityoffsetprogram

Deberes y responsabilidades

This Report will assess if, where and how Biodiversity and Ecosystem Markets (BEMs) can be incorporated into development planning processes in Latin America and the Caribbean. Specifically, the study will:

• Identify areas where the biological, political and economic conditions might make the development of BEMs possible under either a regulatory or voluntary framework
• Evaluate the potential environmental and economic costs and benefits of developing specific BEMs
• Outline the necessary steps and considerations (political, legislative, socio-economic, cultural) associated with the development of BEMs in these areas
• The study should focus on habitat banking, including markets for wetland mitigation banking and biodiversity offsets. 

However, as these are limited to non-existent in LAC to-date the study should also look at the following emerging and possible markets:

• Water markets (quantity and quality usually in the form of PES)
• Carbon markets, specifically based on REDD

Within these markets the focus will be on the potential for increasing sustainable private investment into ecosystems in ways that maximize public benefits while providing attractive private returns (desirable risk adjusted return to be determined during consultancy). Other possible markets should also be identified (eg hunting licenses, timber concessions).

Specific objectives

The study must consider, in detail, the design, operations and financial viability of BEMs in LAC. The final Report should:

• Provide evidence of potential for markets in LAC through a review existing voluntary markets in LAC and review of examples of regulatory BEMs outside of LAC and examples outside the ´´green ´´ sector (pollution cap and trade).
• Review the results of a country-by-country assessment of the feasibility and economic impact of select BEMs
• Identify potential target areas (at local or national level) and BEMs warranting more detailed investigation
• Outline the necessary steps and considerations (political, legislative, socio-economic, cultural) associated with the development of BEMs in these areas
• Generate policy recommendations concerning the replication of select market models in target areas

Methodology and Expected Outputs

The assessments need to analyze the following. They should be analyzed in a general manner for the initial regional assessment and then specifically for select countries and markets. 

At regional level:

• Identify and assess barriers to market development and investment in LAC

1. Identify and assess specific needs for banks and financiers to invest in BEMs
2. Determine legal and regulatory risks faced by potential investors, with specific regard to property rights
3. Review existing precedents and regulations in the region
4. Assess legal, regulatory and institutional needs for countries in LAC to develop BEMs and time horizons for addressing them
5. Conclude on the feasibility of establishment of BEMS in LAC

At national level:

• Provide route-to-market recommendations for establishment of BEMs across LAC

1. What rules and regulations will need to be in place to make the markets function
2. What existing regulations in countries could be used or evolved to stimulate and regulate biodiversity markets
3. What is the likelihood of countries strengthening their enforcement sufficiently to penalize non-compliance and what will this cost
4. Propose actions to attract private investment in the near to medium-term

• Identify and assess private financial and public economic benefits of market development in LAC

1. Analyze and estimate prices within BEMs and how risks might be priced in the market place
2. Estimate, where possible based on comparisons to existing markets, financial returns (IRR) on investment by investors investing in these new markets eg establishing wetland/habitat banks or forest reserves for sale of credits
3. Estimate potential resulting increase in investment flows into countries
4. Estimate increase in employment and types of employment to be generated (but consider the trade off of increased employment also meaning increased transaction costs for investors and hence reduced interest in such schemes)
5. Estimate increases in land values and at what scale
6. Project the overall scale and potential for revenue generation/annual costs of damage that can be captured by such compensatory schemes
7. Specify uncertainties and risk

• Identify and assess the economic costs of new regulatory markets on business and developers and impacts on sectoral (eg tourism) and country competitiveness

1. Who would be the prime buyers of services (eg offsets) and identify where they will be national or international
2. What would be the marginal cost to these buyers (developers) of having to comply with such market regulations
3. What would be aggregate costs to developers and sectors from such markets, in any given country
4. Determine if such costs would be acceptable (ie ability to pay) and be able to be borne by business or would substantially reduce competitiveness of country to attract developers and hence would deter such market development
5. How much goes for transaction costs (and what types of costs)

• Compare the costs and benefits of BEMs with BAU (no regulations and markets)
• Analyze the equity effects ie how the benefits of the market are distributed (winners and losers)
• For REDD in particular, focus assessment on existing information and studies, to estimate

1. Expected size of REDD market and how much to be captured by LAC and which countries in particular (both for project based REDD under a future CDM and national REDD programmes)
2. Who within the countries are likely to benefit and how much will be filtered out by intermediaries
3. What will be the cost of establishing the institutional arrangements in countries necessary for a REDD market to operate

• Specify methodological lessons learned
• Duration: April to September 2009.

Competencias

• Proven track record of excellence in the application of natural resource economics and market based approaches to natural resource management. 
• Demonstrated teamwork ability.

Habilidades y experiencia requeridas

Education:

• Advanced university degree  (Master’s degree or higher) in economics, natural resource economics, environmental economics, or business. 

Experience:

• Experience in legal and financial aspects of development of environmental markets is required.
• At least 5 years of work experience in natural resource management and market based instruments is required.

Language Requirements:

• Excellent command in written English is essential. Excellent drafting ability; ability to defend and explain difficult and complex issues with respect to key decisions and positions. Demonstrated teamwork ability.

Please post your CV and your Technical and Economical Offer based on this Terms of Reference.

NOTE: Teams are encouraged to apply.