incorporate environmental costs and benefits, the economic value does not
simply equal profits from exploitation. Financial valuations may be adjusted
for benefits preserved by the concession, such as traditional uses and water-
shed protection, as well as the risk-free nature of payments. Consequently, the
level of compensation emerges as an output of a negotiation process that
includes these considerations.
The payment structure of conservation concession agreements may be
extremely attractive relative to other land uses. Potential economic benefits
from logging, agriculture, and agroforestry include employment, income,
export earnings in foreign currency, and public tax revenues. However, for a
broad range of resource-based products, economic prospects look less than
promising. In recent years, prices for coffee and cocoa have reached all-time
lows, although in 2002–2003 cocoa prices rebounded largely because of civil
conflict in the world’s largest supplier, the Côte d’Ivoire. Periods of low com-
modity prices can lead to desperate actions; for example, in 2000 major West
African cocoa producers announced their intention to destroy 250,000 tons of
cocoa, or about 8 percent of global supply, in an effort to raise prices (West
African Market Report 2001). In some cases, agroforestry may reduce depend-
ence on a single crop and thus provide a hedge against adverse price trends.
Nevertheless, income will remain sensitive to international market conditions
and capricious weather patterns. Government revenue streams will remain
vulnerable to limited capacity to capture all taxes and fees. A conservation
concession offers regularly scheduled, risk-free payments, denominated in sta-
ble foreign currency, for as long as the terms of the agreement are met. Ideally,
the payments are guaranteed through the use of an endowed fund that covers
the duration of the agreement.
Conservation concession benefits must outweigh returns from alternative
uses of the target area. Where appropriate, this is accomplished by investing pay-
ments in economic activities that will provide alternative jobs and improve
human welfare. Negotiated terms of a conservation concession can include a
description of the portfolio of activities to which annual payments will be
directed. Although the role of the biodiversity investor is not to strictly delineate
host government public investment decisions, economic benefits from conces-
sion payments should accrue to those who might forgo jobs or other economic
benefits because of conservation. The conservation investor can voluntarily sup-
plement concession payments with health or education investments to benefit
local stakeholders, particularly in remote communities that lie beyond the effec-
tive reach of government services. For instance, salary supplements may per-
suade teachers to serve in local schools in communities that face difficulties
attracting qualified educators. Similarly, payments can take the form of subsidies
for medical supplies that otherwise would be inordinately expensive. Such
investments help structure appropriate compensation at the community level
and generate trust and support for the concession among local stakeholders.
138 II. The Ecological Economics of Agroforestry