PROBLEMS WITH SUSTAINABLE DEVELOPMENT PROJECTS

The great majority of the most ecologically fertile and diverse natural areas in developing countries have retained their environmental integrity precisely because they are remote and undeveloped: with relatively low population densities, a largely untrained and uneducated potential workforce, poor transportation, energy,  and industrial infrastructures, rugged or inaccessible terrain, and few thriving economic enterprises of any kind.  Given these conditions, it should be obvious that creating effective sustainable development and ICAD programs in rural areas of bountiful ecological vitality is ordinarily a very difficult enterprise with a low success ratio.

Environmental groups (NGOs) and development-oriented organizations have often sponsored projects to help people in poor nations replace ecologically harmful practices with benign ones and to produce environmentally safer goods instead of more destructive ones.  However, the great majority of market-incentive initiatives have focused on promoting environmentally desirable goods and practices in-country, while much less emphasis has been placed on creating stable markets in wealthy consumer nations.  The resulting conservation-compatible goods and services have almost always been left to sink or swim by themselves in international and national markets.  These efforts usually fail because:

• (1)  It is normally more costly to produce goods and services in an environmentally safe way than in a non-sustainable harmful manner.  Harvesting tropical hardwoods through clear- cutting costs less than individual culling of forest trees, for example, and indiscriminate fishing methods that waste most of the catch are less expensive in the short run than selective fishing practices.  Many education, community organizing, monitoring, and other administrative costs are required for creation of conservation-compatible goods, but not for more destructive competitive goods.
  
  Environmentalists and many economists have been complaining for decades that the market prices of most goods do not reflect the full environmental costs of production and therefore do not provide valid market system signals about the real value of ecological resources.  Yet, most economic incentives programs to promote conservation or sustainable development have done nothing to confront serious imperfections in environmental markets.  These programs instead have asked entrepreneurs to produce environmentally preferable goods in poor countries, and yet have ultimately relied on the same kinds of distorted market prices and uncorrected market forces that have facilitated so much ecological damage around the world.

• (2)  The administrative costs of effective environmental protection are often higher than the activity can bear.  In many instances, the "sustainable" parts of   sustainable development projects have been jettisoned because that is not what governments or entrepreneurs in poor states really want and because ensuring that the local environment will actually be protected is correctly perceived as a difficult and expensive task.  Costs associated with defining baseline ecological conditions, monitoring notable changes, identifying activities responsible for significant degradation, educating and organizing communities to support conservation measures, and promoting broad distribution of benefits to increase public support tend to be negligible for production activities that make no attempt to encompass related environmental effects.

• (3)  Start-up enterprises in developing nations are normally very frail, and any restraint on market access, fluctuation in market prices, departure of crucial personnel, or interference with transportation and resources availability can cause their collapse.  In many cases, market incentive projects have depended on the initiative of a single environmental activist or entrepreneur, and then have fallen apart when that person left the program. In other cases, low market prices during a single year or season have undermined confidence in the project or have failed to generate enough income for local people to survive without returning to destructive practices. Moreover, many poor people in developing countries have no financial reserves or social nets to protect them during what may be "normal" market fluctuations.

• (4)  Local resistance and "backsliding" are common because it is often easier to continue harmful behavior arising from traditional production activities and lifestyle choices than to change long-accepted practices.  In many instances, such as the Philippines cyanide fish-collection problem discussed on our anti-cyanide web page, people who sincerely tried to adopt environmentally safer methods have become "backsliders" because non-sustainable exploitation practices continue to be both less difficult and more financially rewarding.  Why should people exert themselves to protect natural resources that their neighbors can continue to reap destructively while making more money for less effort?  Very few economic incentive programs have tried to take the profit out of environmentally destructive activities at the same time as they attempt to increase the economic benefits from benign conservation behavior.

Consider one example drawn from the WWF Web Site in 1999 describing an Integrated Conservation and Development Project in the Cerrado region of Brazil:

This integrated conservation and development (ICAD) project deserves a little praise because it is intended to increase the value of environmentally preferable income-generating activities for poor people in a relatively poor nation.   However, the failure to carry this development initiative beyond local and national market boundaries will greatly restrict its economic and conservation benefits.  The income the WWF-assisted flower collectors receive will be limited by the prices the "large exporting companies" pay for comparable flowers from other areas, where they may be collected in ecologically harmful ways with correspondingly lower production costs.  For example, flowers grown using "slash and burn" agricultural methods after illegal destruction of rainforest ecosystems would compete directly with flowers from the Cerrado project.  Exporting companies will attempt to purchase flowers as cheaply as possible, which means the income of  the "good" flower collectors will be capped and unstable because it depends on whatever flower prices and quantities the companies can obtain from other sources.  If the "good" collectors are able to raise their prices through community organization, as the WWF claims, their market share will become vulnerable to underbidding by other collectors less concerned about conservation practices.

As this WWF project stands now, "good" flower collectors will be wholly dependent on exporting companies with no incentive to increase payments in order to foster conservation in the Cerrado region--indeed, the buyers' major incentive is to find cheaper, less well-organized suppliers for their flowers.  If  "good" flower collectors lose a year's income because these companies fill their needs from less costly sources or because a flower crop fails due to adverse weather conditions, they will probably revert to more harmful subsistence agriculture practices and the WWF project's achievements will most likely be undone.

In this type of project, EcoVitality could act as a Service Bureau helping "good" collectors and WWF by marketing their flowers for higher prices in developed nations.  This effort would entail attempts to expand existing flower markets, create new markets, and attract greater interest from wholesale and retail purchasers by publicizing the conservation effects of this product.  EcoVitality might arrange to import the flowers directly from Brazil, or we might negotiate as good a deal as possible with a current exporting company while using the possibility of direct importing by our organization as a bargaining lever.  These kinds of potential commercial arrangements will distinguish EcoVitality marketing and importing expertise from other environmental groups that rely on local marketing under difficult conditions or rely on commercial export/import companies that have an incentive to limit the revenues of small-scale producers in developing countries.  Yet, the support of these small-scale producers will be essential for successful conservation efforts.