The role of market-based instruments for biodiversity conservation in Central and Eastern Europe

This paper analyses the development and emergence of market based instruments for biodiversity conservation in Central and Eastern European (CEE) countries. The development of market-based instruments for biodiversity conservation has been receiving increased attention as a possible cheaper and more effective alternative to the global regulatory approach. The implementation of such instruments is particularly challenging in post-socialist countries, where the former state command-and-control economy disturbed the normal functioning of markets. Our analysis indicates that market-based instruments can increase the effectiveness of biodiversity conservation, but are not always suitable and appropriate. The following preconditions for the effective design of market-based instruments in CEE countries have been identified: clear property rights and decision making structure, transparent rules for information dissemination, and monitoring responsibilities. Our results show that the successful implementation of market-based instruments for biodiversity conservation in CEE countries is furthermore influenced by pre-existing formal and informal institutions, in which reputation and trust may play a role. However, market-based instruments should complement rather than substitute regulatory approaches, and in combination with traditional regulation, such can become critical in achieving the objectives of biodiversity conservation.