Internalizing Global Externalities from Biodiversity: Protected Areas and Multilateral Mechanisms of Transfer

Biodiversity can sometimes only be preserved if natural habitats are excluded from human uses. Such protection measures generate positive externalities at the global scale. This holds especially for protection in developing countries that host great parts of global biodiversity. For internalization, financial resources are raised on a multilateral basis and transferred to the host countries. This paper reviews the rationale for protected areas and transfer payments and summarizes empirical data. The resources provided through multilateral mechanisms - even together with official bilateral aid and private spending - fall short of estimated needs for effective protected area systems in developing countries.