Continuous decline of biodiversity over the past decades suggests that efforts to decrease biodiversity loss have been insufficient. One option to deal with this problem is the use of market-based mechanisms for biodiversity conservation. Several studies have analysed such mechanisms individually, but there is no comprehensive review with a comparative assessment of the performance of various mechanisms. This paper presents (i) an analysis of the economic conditions under which markets for biodiversity can be expected to function; (ii) an analysis of the efficiency of five selected biodiversity markets in the light of market and contract theory; and (iii) an assessment of the potential to scale up local or national payment mechanisms for biodiversity conservation. Our analysis shows the difficulties that market-based mechanisms face, among which are the need to ensure long-term conservation and the lack of a standardized unit of measurement for biodiversity. We provide a number of recommendations on how to overcome these difficulties. We argue that the set-up of a global registry embedded within the framework of the Convention on Biological Diversity would facilitate measurement, reporting and verification of biodiversity credits to support market-based mechanisms.
- ecosystem services