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Against the background of ongoing biodiversity loss and ecosystem degradation, there is a need for more conservation efforts at all governance levels that also take into account the needs of subnational governments, cities and other local authorities. This paper presents a rationale for including ecological indicators in intergovernmental fiscal transfers that redistribute public revenue from national and regional state governments to decentralised governments. Although recommended for introduction in a number of European countries (such as Germany and Poland), to date only Portugal and to some extent France have implemented fiscal transfers for biodiversity conservation in Europe. In this paper we provide, first, a review of existing and proposed schemes across Europe, classifying them in relation to the stages of a policy cycle. Second, we identify critical design features of ecological fiscal transfers (EFT) in order to develop recommendations for improving existing or introducing new EFT schemes.

Economic instruments that promise “win-win” solutions for both biodiversity conservation and human livelihoods have become increasingly popular over recent years. There however remains a gap in terms of practical and policy-relevant guidance about appropriate approaches that take into account the local needs and the specific cultural, legal, and ecological context in which such instruments are being developed and applied. This paper presents a step-by-step framework that helps conservation and development planners and practitioners to identify economic instruments that can promote pro-conservation behaviour in a specific setting. The concept of ‘ecosystem service opportunities’ builds on, and brings together, general economic principles and an ecosystem services perspective. The framework was designed to also address a number of concerns regarding economic approaches in order to help practitioners recognise the potentials and limits of economic approaches to nature conservation. The framework is illustrated by its application within the realm of a biodiversity conservation project in Thailand.

SUMMARYHabitat banking and tradable development rights (TDR) have gained considerable currency as a way of achieving ‘no net loss’ of biodiversity and of reconciling nature conservation with economic development goals. This paper reviews the use of these instruments for biodiversity conservation and assesses their roles in the policy mix. The two instruments are compared in terms of effectiveness, cost effectiveness, social impact, institutional context and legal requirements. The role in the policy mix is discussed highlighting sequential relationships, as well as complementarities or synergies, redundancy and conflicts with other instruments, such as biodiversity offsets and land-use zoning.Habitat banking and TDR have the potential to contribute to biodiversity conservation objectives and attain cost-effective solutions with positive social impacts on local communities and landowners. They can also help to create a new mind-set more favourable to public-private cooperation in biodiversity conservation. At the same time, these policy instruments face a number of theoretical and implementation challenges, such as additionality and equivalence of offsets, endurance of land-use planning regulations, monitoring of offset performance, or time lags between restoration and resulting conservation benefits.A clear, enforceable regulatory approach is a prerequisite for the success of habitat banking and TDR. In return, these schemes provide powerful incentives for compliance with regulatory norms and ensure a more equitable allocation of the benefits and costs of land-use controls and conservation. Environmentally harmful subsidies in other policy sectors as well as alternative offset options, however, reduce the attractiveness and effectiveness of these instruments. Thus, the overall performance of habitat banking and TDR hinges on how they are integrated into the biodiversity conservation policy mix and fine-tuned with other sectoral policies.

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