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We Introduce: Green Economy in Action Prepared by: PhD. Milica Begović Radojević, Economy and Environment Team Leader, UNDP in Montenegro

Protected Areas in an Ecological State- A Design that Looks Good, Feels Right and Works In June 2012 the governments of the world will meet in Rio de Jeneiro to agree on the steps that should be taken to make a global transition towards a green economy- a system that generates growth and reduces poverty through investment, and through the sustainable use and preservation of natural resources and ecosystem services that support life on earth as we know it. Exactly 20 years ago, in the same city, the UN Convention on Biodiversity and the UN Framework Convention on Climate Change were designed in an effort to provide a global framework for collective action towards sustainable development. The summit in Rio is likely to focus less on missed opportunities since 1992 and more on future challenges, the most troubling one being that as most of the world’s countries have seen sustained economic growth, they have correspondingly increased their GHG emissions and eco-footprint. Steve Jobs once said that design is not just about what something looks like and feels like; design is about how something works. The Ecological State Designation, which celebrates its 20th birthday this year, both looks and feels right- represents each country’s commitment to enforce the level of responsibility held by today’s generation to rationally use resources that all future generations are entitled to, and is also testament to political, economic and moral sophistication. We will not analyze how well this design has actually worked over the past 20 years; instead we will discuss how it could work in the future. We will do this by looking at the economic value of protected areas (i.e. national parks) in Montenegro. Definition of a Protected Area: A clearly defined geographical space, recognized, dedicated and managed, through legal or other effective means, to achieve the longterm conservation of nature with associated ecosystem services and cultural values. There are six categories of protected areas, all of which are dependent on a level of protection and allowed activities within protected area boundaries: Category Ia and Ib: Strict nature reserve: protected area managed mainly for science; wilderness area: protected area managed mainly for wilderness protection Category II: National park: protected area managed mainly for ecosystem conservation and recreation Category III: Natural monument or

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feature: protected area managed for the conservation of specific natural features Category IV: Habitat/species management area: protected area managed mainly for conservation through management intervention Category V: Protected landscape/ seascape: protected area managed mainly for landscape/seascape conservation and recreation Category VI: Protected area with sustainable use of natural resources: protected area managed mainly for the sustainable use of natural ecosystems. In 2010 the economic contribution of PAs in Montenegro was estimated at €68 million, 2.2% of GDP or €106 per capita. This cut across various economic sectors including agriculture, infrastructure, water, energy, tourism, recreational activities, and disaster risk reduction. If divided across a broad range of target groups, the general public earned approximately €32 million from PAs: businesses and industry earned €25 million and the government about €11 million. Services from PAs had a significant multiplier effect across the economy, in that they protected sources of existing and planned hydropower plants, worth around €80 million per year in public revenue. Similarly, PAs generated the following income, through investment and spending: in the tourism sector €172 million (5.7% of DP), in gross visitor spending in excess of €220 million, in capital investment €60 million. PAs also provided support for 7,700 full time jobs. The untapped potential for green business opportunities, along with additional public income from PAs, under a more business-oriented style of management is substantial. Tourists and recreational visitors would be willing to contribute almost €19 million a year more than they are currently being charged in entry fees alone, and a further €3 million for hiking and guided tours that could be provided by the PA authorities. Due to the unavailability and/or the poor quality of some data, these estimates are extremely conservative. Despite this, however, they demonstrate that PAs can generate employment and fiscal revenue for the government, as well as sustaining income, output and consumer services across the entire economy. This is all the more striking considering that public investment in PAs in Montenegro is presently just €1800/km2. Other middle

income countries such as Hungary (€4,170/ km2) and Czech Republic (€2,890/km2) record considerably higher figures. With the current rate of investment in PAs, the quality and value of services ranging from tourism and water supply to flood protection, and from energy to agriculture are likely to decrease. Additionally, the system’s ability to provide these services will erode, and Montenegro’s economy and population will pay a price of some €30 million over the next 25 years. Alternatively, by doubling the present public investment rate of €1800 to €3,000€3,600/km2, it is likely that incremental benefits worth over €1.5 billion would be generated over the next 25 years. The total return on this, considerably higher public investment, is estimated at a ratio of almost €29 for every €1 that is invested. The message is clear, if managed in a sustainable way, protected areas will continue to yield a high return on investments, creating opportunities for new jobs and income for Montenegrin citizens. The ecological state, as a design, both feels and looks right, and if treated properly as an economic asset, the design could also work well. The system of protected areas is not an environmental issue, but rather a major economic driver, that enables small businesses and large industries to function. It also generates goods and services that can be sold on (inter) national markets, it protects critical infrastructures, helps to sustain a high quality of life, and enhances growth in the Montenegrin economy. PAs are not a luxury but an economic imperative that will enable the population of Montenegro to function, prosper and grow. If the future management of PAs continues to imply underinvestment and unsustainable management practices, this will undermine economic growth and incur a large and ever increasing cost to the Montenegrin population and economy. The following message goes out to those decision makers who design fiscal austerity measures today: Should you be thinking of cutting down on already inadequate levels of investment in the protected areas network in Montenegro? Think again. This just may be the solution you are looking for in terms of domestic job creation and income generation for the government, businesses, and non-commercial beneficiaries, i.e. your citizens.

MBO#38  
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