Financial sustainability of Protected Areas, a conservation strategy

by Lic. María Marta Mokobodzki Ongaro

Protected areas constitute a fundamental strategy for the conservation of environmental goods and services provided by ecosystems. These environmental goods and services are indispensable for life, providing the necessary elements for the general well-being of the planet.

These environmental goods and services provided by protected areas are consumed by different economic agents, either in their consumption or production decisions. These consumption and production decisions are made without considering the total economic value of the environmental goods and services that protected areas provide, resulting in suboptimal conditions.

This situation arises because there is no market where these types of environmental or ecosystem goods and services are exchanged, but this does not imply that they do not have an economic value and that conserving them is not costly. If we were to consider the total economic value of these environmental goods and services, we would realize the high price we would have to pay for their consumption.

This situation where the consumption of environmental goods and services is not reflected in the market price, from the economic point of view, is called market failure. More precisely, it is a negative externality where consumers do not pay the true value of the goods and services consumed and it is the society that bears the costs of preserving them.

This situation, in which there is no payment for the consumption of environmental goods and services offered by protected areas, together with the scarcity of budget allocations for their effective management, results in the impossibility of effective management and, therefore, in the inability to fulfill the objectives for which they were created. Emerton et al. (2006) (1) defined the concept of financial sustainability of protected areas as “the capacity to ensure stable and sufficient long-term financial resources and to distribute them in a timely and appropriate manner to cover the total costs of PAs (both direct and indirect) and to ensure that PAs are effectively and efficiently managed according to their conservation and other relevant objectives”.

Parque Provincial Aconcagua, Provincia de Mendoza, Argentina. Imagen: María Cruz Berasategui // Aconcagua Provincial Park, Mendoza Province, Argentina. Image: María Cruz BerasateguiFinancial sustainability is a strategy that requires identifying which economic actors are the consumers of the environmental goods and services of protected areas and/or protected area systems, in order to achieve, through different financial mechanisms, a solution to the negative externality by getting them to pay for their consumption.

In this way and under the economic theory that understands the environmental problem as a negative externality where instruments must be built to be able to internalize it, other alternative and complementary sources of financing to the annual governmental allocation are incorporated into the available budget and can respond to solve the problem.

These different sources of financing – alternative or complementary to governmental allocations- have different characteristics in terms of origin, stability, time horizon, ease and speed of implementation, and also the financial mechanisms that allow their management and execution.

The financial sustainability strategy should ensure that these alternative and complementary sources of financing generate a stable and long-term budget to plan and fulfill the objectives for which the protected areas were created.

To carry out the financial sustainability strategy, it is necessary to define the budget for optimal management of the protected areas and to determine the gap between the budget for optimal management and the currently available budget.

A study on the Financial Sustainability of Protected Areas in Latin America and the Caribbean (2) shows a financing gap of US$314 million/year for basic management activities to be undertaken. This reflects the scarcity of economic resources throughout the region. 

Some countries in the region have been building their financial sustainability strategies. For example, Herencia Colombia contributes to achieving the international goals that Colombia has set to conserve and increase its protected areas and guarantee its integration into landscapes and sectors, through the design and subsequent implementation of a long-term financing model for the National System of Protected Areas (SINAP). 

Argentina does not currently have a financial sustainability strategy for protected areas at the national level, but, for example, Natura International has carried out its first sustainability strategy study for the National Protected Areas System (SINAP) in conjunction with the Province of Salta, with a first approximation of the financial gap and the identification of potential sources of funding according to the corresponding theoretical framework. 

This step taken by the Province of Salta will be a very important milestone for provincial protected area systems and a motivating element to understand that the financial sustainability of protected areas is one of the central elements in conservation strategies. Well-conserved ecosystems maximize their potential to provide environmental goods and services for present and future generations. Therefore, the financial sustainability of protected areas is sought to continue providing these environmental goods and services that generate so much well-being and satisfaction.

It is important to raise awareness that protected areas are not only an alternative for biodiversity conservation but also a way to preserve the environmental goods and services necessary for life. In this way, society will value the environmental, cultural, social, and economic benefits it receives from natural protected areas.

1. 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. x + 97p.
2. Bovarnick, A., J. Fernández-Baca, J. Galindo and H. Negret, Financial Sustainability of protected areas in Latin America and the Caribbean: guide for investment policy, United Nations Development Program (UNDP) and The Nature Conservancy (TNC), 2010