Financing environmental conservation: private or public investment. A RUPES discussion paper based a session of the Asia Europe Environment Forum (Jakarta, 23-25 November 2005)

Private or public sources may provide funding opportunities. Views differ substantially on how private (market-based) and public investment can support payments for environmental services. Public investment approaches usually entail national or supranational governments such as the European Union spending to improve the efficiency of national or regional programs. On the other hand, voluntary and regulatory mechanisms generally characterise private sector investment. Voluntary private investment depends heavily on motivations ranging from philanthropy, enhanced corporate identity, ethical investment and risk management, to maximizing returns from natural assets. 'Cap-and-trade' systems generally require government regulation, enforcement and limits on the resources available for exploitation. The opportunities can be exhaustively debated with regard to financial institutions using public-private schemes to handle environmental issues in the framework of poverty alleviation and sustainable development. Relating investment approaches to poverty and sustainable development is challenging, involving various stakeholders and complex processes. This session therefore attempted to generate initial discussions and new ideas on: (1)What types of public and private investment schemes are possible. (2) How various scales of public and private investments can be utilised. (3) The scope for the private sector (especially financial institutions) to increase investment in conservation and/or sustainable use of ecosystems. (4) What lessons can be drawn from the RUPES ('Rewarding Upland Poor for the Environmental Services they provide) project in Asia.

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