Available online at www.notulaebotanicae.ro Not. Bot. Hort. Agrobot. Cluj 38 (1) 2010, 252-256 Print ISSN 0255-965X; Electronic 1842-4309 Notulae Botanicae Horti Agrobotanici Cluj-Napoca Funding Biodiversity Protection in Central and Eastern Europe ? A Case Study of Bosnia Herzegovina Mirza DAUTBASIC1), Florin IORAS2), Ioan Vasile ABRUDAN3), Jega RATNASINGAM4) 1)University of Sarajevo, 20 Zagrebacka St., 71 000 Sarajevo, Bosnia-Herzegoina; mirzad@bih.net.ba 2)Buckinghamshire New University, Queen Alexandra Road, Bucks HP11 2JZ - High Wycombe, United Kingdom; Florin.Ioras@bucks.ac.uk 3)Transilania University, 1 Sirul Beethoen St., 500123 Braso, Romania; abrudan@unitbv.ro 4) University Putra Malaysia, Faculty of Forestry, 43400 Serdang, Selangor, Malaysia; jegaratnasingam@yahoo.com Abstract Biodiversity conservation has drawn considerable attention as to where the funding is available in order for governments concerned with the conservation of biodiversity to full their obligations. is paper examines if nancing resources provided through Global Environmental Facility (GEF) in Bosnia Herzegovina could be supplemented with locally voluntary provided funding to lead to an appropriate protection level of threatened species. A study was conducted on a 1189 persons sample to establish the local population willingness to contribute to GEF sponsored biodiversity conservation projects. It was found that the local people are willing to contribute positively higher than the actual spending of the GEF and ndings can be used to argue for more attention to preferences of the public in decision making on biodiversity protection activity and spending in Bosnia Herzegovina. Keywords: Contingent Valuation Method, Global Environmental Facility, willingness to pay Introduction Biodiversity conservation, or the protection of variety among species, is of a signicant concern to many govern- ments. While certain parties may derive benets from the species and their diversity, the public good aspects of these resources make it dicult to nance the costs of conserva- tion. e Rio Convention of the 1992 United Nations Con- ference on Environment and Development nonetheless provides that nations have sovereignty over their genetic resources, but also have the responsibility for conserving their biological resources and for using them in a sustain- able manner. ?In situ? conservation of ecosystems and natural habitats is expensive in terms of both preservation costs and the lost alternative use of land and if biodiversity prospecting were a substantial and continual revenue gen- erator for governments, the pressures against the conser- vation in developing countries could be lessened through nancial mechanisms. With Article 21 and one of the Conferences of the Par- ties respectively, the Global Environmental Facility (GEF) was appointed to operate the nancial mechanism under the CBD. e overall question now is, whether or not the regulations concerning nancing biodiversity protection lead to an ecient provision of biodiversity protection in developing countries. As the perspective is global, the ques- tion of a global ecient level of biodiversity protection in developing countries of Central and Eastern Europe is central in this article. e article endeavours to explore the following question: could the new and additional nan- cial resources provided through GEF be voluntary supple- mented by local population in order to get an appropriate level of biodiversity protection? ere are several economic methods to estimate the benets of items or issues. Some are based on revealed preferences (they reect consumer behaviour) and are called indirect methods (like the travel cost method or the replacement cost method). Others are based on stated preferences collected through direct questioning on will- ingness to pay for described goods or through observed choices of goods with slightly dierent attributes or pa- rameter values, respectively. Many endemic species important for European biodi- versity are found in Bosnia Herzegovina (Ioras et al., 2009; Visnjic et al., 2009), a country which had, in 2009, 55 spe- cies listed on IUCN red list (Guardian, 2009). is study was conducted with the view of identifying local people willingness to pay for biodiversity conservation as a way to top up GEF contribution. CBD Mechanisms for Proision Of Biodiversity Protection With articles 20 and 21 of CBD a multinational reg- ulation was agreed upon to contribute to the solution of undersupply of biodiversity protection in developing countries. More developed countries compelled them- selves to provide new and additional nancial resources Dautbasic, M. et al. / Not. Bot. Hort. Agrobot. Cluj 38 (1) 2010, 252-256 253 lion planned for biodiversity protection in developing countries (GEF 2002b). According to GEF (www.gefonline.org) Bosnia Her- zegovina has received since 1990 around US$14.3 million, for national projects and also had a share in regional/glob- al projects from the total of US$67.7 million. e national contribution was US$18,2 million for the national proj- ects and a share for the regional/global projects out of the total contribution of US$525.8 million. e total number of projects has been 19 and the funding was mainly for projects on mountain protected areas and management of projects centred on Mediterranean Sea Large Marine Eco- system project. Study Design In this study the Contingent Valuation Method (CVM) was used as it is very popular in environmental econom- ics to estimate values of non-market goods (Hanley et al., 1997). In Contingent Valuation (CV) studies respondents are asked to answer how much they are willing to pay (wtp) for a non-market good or whether or not they are willing to pay a specic amount for a good. From these answers the median and mean of payments can be estimated. Also, the economic benet of providing the valued good can be estimated with respect to the basic population. Many studies evaluate the benet of the conservation of single species or specic conservation projects like national parks (Loomis, 1996; Hanley et al., 1998). Focus group discussions were conducted to determine people?s awareness and opinions concerning biodiver- sity. is avenue was also used to determine what people thought of contributing towards biodiversity conserva- tion, what would be an acceptable payment mechanism and the quantum of their willingness to pay. e verbal protocol technique, as applied in CV stud- ies by Schkade and Payne (1994), Kramer and Mercer (1997) and Manoka (2001), was undertaken as part of the preparatory steps before nalizing the survey question- naire. It is a ?think aloud? technique where the respon- dent thinks out loud by literally letting his thoughts speak for themselves on a particular question (Manoka, 2001). ere is no interaction between the interviewer and the respondent, except for occasional interventions by the in- terviewer when the respondent stops verbalizing for a few seconds. Pre-testing of the questionnaire was undertaken be- fore nalizing it. e rst pre-tests were conducted on 45 personal interview respondents. For the rst self-adminis- tered pre-test questionnaire, another 45 respondents were solicited from the same sites as the personal interview pre- test. All these pre-tests utilized the open-ended wtp ques- tion format. A third personal interview pre-test was also undertaken using the dichotomous choice format of the wtp question. e basic population of the survey consists of residents aged 18 and older. Because of the large basic population of for biodiversity conservation. e incremental cost ap- proach, which should lead to sharing of expenses provided for biodiversity protection projects, was also agreed. More developed countries only have to pay for global environ- mental benet of measures or projects to protect biodiver- sity in developing countries. e national or local benet that occurs from these projects in developing countries has to be nanced by national governments or co-nancers. At the same time Article 20(2) states, that ?implementation of these commitments shall take into account the need for adequacy?. From an economic point of view this ?need for ade- quacy? can be interpreted in several ways. In most of the cases the discussion about adequacy concerns sharing of burden between developing and developed countries. Developing countries interpret ?adequacy? as following: ey estimate that the contributions shall be as high as the individual costs which occur in developing countries when protection measures are implemented. e viewpoint of the developed countries is that the contributions shall be adequate to nance only social costs of these measures. Beyond the discussion of cost sharing between developed and developing country parties the need for adequacy can be alternatively interpreted as a level of contributions of donor countries that allows for a global ecient level of protection of biodiversity in developing countries. An optimal global level of biodiversity conservation in developing countries can be achieved when the global social marginal costs of protection are as high as the social marginal benet of the protection. e question is then: Are the commitments of donor countries adequate in sense of global eciency? With Article 21 and the Conference of the Parties (COP I), the Global Environmental Facility (GEF) was appointed to operate the nancial mechanism under the CBD. us, the GEF is the institution that organises the governmental provision of nancial resources for biodiver- sity protection in developing countries. Does the regula- tion dened to the CBD and achieved by the GEF lead to a level of biodiversity protection in developing countries where global social costs and benet are equal? If we consider the payments of the GEF, it must be dis- tinguished between payments to and from the GEF. Be- sides biodiversity protection projects, the GEF-fund also nances climate change, international waters, ozone, land degradation, and persistent organic pollutants projects. Every four years the donor countries decide on the pay- ments for the following four years. Aer the pilot phase of the GEF (1991-1993) the GEF-fund was replenished three times in 1993 (GEF-1), 1997 (GEF-2) and 2002 (GEF-3) (Streck, 2001; Horta et al., 2002; GEF 2002a; GEF 2002b). e intended ratio for the focal area biodi- versity was 32 to 41 percent of the whole GEF-fund (GEF 2002b). For the GEF-1 approximately $834 million were planned to nance the biodiversity conservation (GEF 2002a). For the years 2003 to 2007 there were $960 mil- Dautbasic, M. et al. / Not. Bot. Hort. Agrobot. Cluj 38 (1) 2010, 252-256 254 over 4 million people within Bosnia Herzegovina, a mini- mum sample of 1,000 people had to be interviewed to en- sure a representative result. Because of the gure of 1,000 interviewed persons and restricted nancial resources to conduct the study a telephone survey was chosen as inter- view technique. To get a sample from the basic population telephone numbers were generated with the ?random digit dialling method?. Within the household the ?last-birthday- method? was adopted. e object of valuation was the protection of the en- dangered species which will become extinct in the next ten years if nothing further is done. It was decided to use a tax increase as payment vehicle. It was considered that this form of payment lead the respondents to take the pay- ment seriously (in comparison with a donor to a nature conservation organisation). A nature tax (comparable to a visitor?s tax) was considered as implausible for the re- spondents, particularly because of the non-excludability from the benets of biodiversity conservation (Bateman et al., 2002). e dichotomous choice format was chosen as question format. is question format is favoured because it is similar to purchase decisions (Spash, 1999) and is also particularly suitable when the respondents are unfamiliar with the good they shall value. A logistic regression with variables from the protec- tion motivation theory and socio-demographic variables (self-ecacy, bidlevel, responsibility, age, threat appraisal, the opinion about the question whether the industrialised countries have the right to interfere in biodiversity protec- tion aairs of developing countries) was performed to test the validity of the wtp-answers and to calculate the mean and median of wtp that resulted from the model. e wtp question for the protection of half of the en- dangered species in Bosnia Herzegovina was evaluated as an unfamiliar question that demands a lot of attention and thought from the respondents. e dichotomous choice format WTP question in the survey questionnaire was as follows: ?Please keep in mind your personal income constraints when answering the following questions. Remember this is only one of many enironmental issues, which may cost you money. Also remember that the following is only a hypotheti- cal situation (that means suppose it happens as such), and that there are no correct or wrong answers and you should answer for yourself. Considering the aboe information let us suppose that citizens will be asked to contribute to help protect the threat- ened red listed species. Would you be willing to pay _____ Euro as your monthly contribution for the next ve years, in order to conserve and protect biodiversity in your country and world heritage site? Please keep in mind your present income and nancial com- mitments.? It is assumed, that if the answers to the wtp question can be forecasted with the answers to the questions de- duced form the psychological theory, the responses to the wtp-question are valid. Results and discussions In May-July 2007 a total of 9,903 numbers were di- alled, 1,870 persons were contacted and read the screening text of which 19.1% refused to participate in an interview, 5.3% dropped out and a total of 1,189 people were inter- viewed. 52.6 percent of the respondents were female and 47.4 percent male. e age group ranging from 25 to 45 years is over represented in the sample and the group of people older than 65 are under represented (see Tab. 2). e samples were more or less evenly distributed over the income categories. e representativeness cannot be easily evaluated but the distribution of the respondents over the categories seemed comparable to the basic popula- tion. It can be noticed that the study had some limitations as some people refused participation because the expres- Tab. 1. Sample report for Bosnia Herzegovina Cases Percentage Sample size 5,154 100 Neutral outfalls 3,321 64.4 No connection 1,537 29.8 Wrong number 63 1.2 Business number 233 4.6 Revised sample 1 2879 100 Other outfalls 2148 74.6 No connection 201 7.0 Busy 36 1.2 Answering machine 201 7.0 Fax 124 4.3 Communication problem 169 5.9 Revised sample 2 1870 100 Not neutral outfalls 358 19.1 Cancelled arrangements 65 3.5 Person not available at agreed time (5 attempts) 156 8.4 Declined call 100 5.3 Cancellations 2 0.1 Realised interviews 1189 63.6 Tab. 2. Percentages of people in age groups in the sample and in the basic population of Bosnia Herzegovina Age Percentage of sample Percentage of basic population 18-25 17 11 25-45 46 30 45-65 28 37 >65 9 22 Dautbasic, M. et al. / Not. Bot. Hort. Agrobot. Cluj 38 (1) 2010, 252-256 255 sion ?nature conservation? was used in the screening text or because their unwillingness to take part in a telephone interview or any other form of surveys. Also the fact that elderly people (older than 65) are under represented and people ranging from 25 to 45 ages are over represented, may have biased the result as older people seem to have lower and younger higher wtps. However, the wtp answers can be seen as valid, because the pseudo r2 (Nagelkerke) of the regression model was 0.339. is gure indicates a moderate to good model (Backhaus et al., 2000). In terms of a conservative calculation of the average wtp estimation (Arrow et al., 1993), a wtp of zero is assumed for people who refused to participate. e respondents were randomly asked whether or not they were willing to pay a specic amount ranging from 0 to 2 Euros per month for biodiversity conservation. e bidlevels were 0, 0.5, 0.7, 1, 1.5, 1.7, and 2 Euros. e ac- ceptance and rejection rate respectively ranged from 39% to 82% depending on the bidlevel. If a respondent had to decide about the 0 Euro amount, the probability of a ?yes?-answer was 82%. e median of wtp was 1.2 Euro. is could be calcu- lated from the model as an average monthly wtp of the respondents. In the sense of a conservative average wtp- estimation, we assumed, that persons who refused to par- ticipate in the survey or dropped out (59,6%), have a wtp of zero Euros. We also assumed that people who cancelled their appointments and who were not available at the time the survey was taken, have the same wtp as people who took part in the interviews (total=40,4%). e multipli- cation of the calculated wtp of 1.2 Euros with the sample population (40,4%) results in an average wtp of approxi- mately 0.5 Euros. is can be interpreted as an expression of benets for an ?average? local resulting from protection of 55 species in Bosnia Herzegovina in the next ten years. We assume a basic population of 3.2 million in Bosnia Herzegovina. A multiplication of the average wtp and the basic popula- tion results in gure of approximately 1.6 million Euros in Bosnia Herzegovina case. ese will total 15.36 million Euros annual wtp for beneciaries in Bosnia Herzegovina (~80% of the population). at can be taken as a potential benet for Bosnia Herzegovina, if the 55 threatened spe- cies in are prevented from extinction. With the acquired average value of 0.5 Euros we can attempt to roughly estimate the benets that occur in the ?main? donor countries (USA, UK, Japan, France, Ger- many, Australia, Belgium, Canada, Finland, Italy, Neth- erlands, Norway, Sweden and Switzerland) (Word Bank, 2009). Taking a comparable percentage of beneciaries in these countries (~80% of the population of a country), a similar average benet per capita, and the population of the main donor countries, we can estimate (through mul- tiplication) a benet resulting from protection of endan- gered species in developing countries to be up to 3 billion Euros. Conclusion Biodiversity is an important natural capital asset that provides society with several goods and services that play a critical role in the economic and social well being of hu- mans. Economic instruments are particularly attractive because they can generate nancial resources to support biodiversity conservation, and expand the participation of the private sector in environmental protection. e experi- ence from both developed and developing countries shows that if properly designed and implemented economic in- struments can signicantly increase the returns to activi- ties that conserve biological diversity and discourage be- haviours that are detrimental to species and ecosystems. At the moment Bosnia Herzegovina contributes annu- ally zero Euros into the GEF-fund for the protection of biodiversity, but the wtp of people living in Bosnia Herze- govina can be estimated to be as high as 15 million Euros annually. is value can be condemned as unrealistic, but it is in the dimension of the estimated costs for a repre- sentative network of protected areas and a comprehensive conservation programme, respectively. e results of the study show that commitments of donor countries could be supplemented by the recipi- ent countries. However for such an approach to happen there is a need for a new policy on funding biodiversity conservation at national level in Bosnia Herzegovina and a possible complicated way to amend the tax collection as a result. Furthermore, the ndings can be used to argue for more attention to preferences of the public in decision making on biodiversity protection activity and spending. References Arrow, K. S. R., P. Portney, E. Leamer, R. 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