Negotiation Processes for the Protection of Biodiversity

Consider a developing country that has the potential for biodiversity conservation, and developed countries that benefit from biodiversity but are not in position to produce it. From the statu quo, some incremental protections of biodiversity would be harmful for the developing country but would benefit the developed countries and the world as a whole; in other words, biodiversity protection is a global public good. The negotiation problem is then: how to organize compensation transfers from the developed countries to the developing country to sustain a higher (Pareto optimal) level of biodiversity, given that: i) each developed country has an incentive to free-ride on transfers conceded by others, ii) no supranational authority exists that has both the necessary relevant information on countries's willingness to pay for biodiversity, and the power to impose a socially beneficial profile of transfers? This paper investigates how, and to what extent, the theory of resource allocation processes can shed light into this issue, and how it can be best tailored and qualified to cope with the problem at hand. The focus is put on the incentive properties of the suggested negotiation processes, and their ability to respect countries' sovereignty.