The Convention on Biological Diversity recognizes that the threat to biological diversity requires both strong action at the national/local level and also a cooperative response of the international community. Convention parties agree to develop national strategies which reflect the goals of the CBD, and, in Article 11, agree to "adopt economically and socially sound measures that act as incentives for the conservation and sustainable use of components of biological diversity." It is also understood, however, that the costs involved in achieving global goals of preserving biological diversity would not necessarily be distributed evenly or, in the case of developing nations, equitably. Articles 20 and 21, outline the role of the international community in general, and an international financial mechanism in particular, in implementing the measures foreseen by the Convention.

Article 20 of the CBD, referring to financial resources, stipulates that party nations will provide financial support to achieve CBD objectives, in accordance with national capacities and programs. It is further agreed that developed countries will provide "new and additional financial resources" to assist developing countries in meeting additional ("incremental") costs of achieving identified global goals. Article 21 foresees the establishment of a financial mechanism to facilitate the co-financing of measures which address priority convention objectives in developing nations. Upon drafting the Convention in 1992, the Global Environmental Facility (GEF) was chosen as an interim institution to fulfill this role.

In the early 1990s, the United Nations Environment Program, United Nations Development Program, and the World Bank became the implementing agencies of the newly established GEF. The GEF provides financial support for environmental measures with global benefit in four specified focal areas: climate change, biological diversity, international waters, and ozone-depleting substances. The supporting philosophy of the GEF mission is to provide "agreed incremental costs of measures to achieve agreed global environmental benefits." Within the GEF framework, incremental cost is the difference between the cost of an activity undertaken with global environmental objectives in mind, and the cost of an alternative that a country would implement in the absence of global environmental concerns (Labbate, 1999).

Applying the incremental costs approach to identify priority activities for GEF support faces a host of challenges: agreeing on reasonable domestic alternatives in absence of global concerns (baselines), identifying those measures that achieves both domestic policy goals and a global environmental benefits; and selecting the most efficient measures to address global concerns with limited financial resources. In the area of biological diversity conservation, "there are often pre-existing baselines of development activities where the proximate causes of biodiversity loss have been identified (e.g. agriculture, industry, transport, etc.)" (GEF, 1996). Where such documentation has been elaborated, for example in national sustainable development plans, baseline scenarios are more readily established.

Within the biological diversity focal area, the GEF supports activities within four priority ecosystem zones and two additional project funding categories. The ecosystem priority zones are: arid and semi-arid zones (4.1% total GEF spending); coastal, marine and freshwater ecosystems (6.5%); forest ecosystems (15.5%); and mountain ecosystems (2.4%). The GEF also supports "enabling activities," such as the preparation of biodiversity strategy and action plans and national reports to the CBD (2.2%). A final category, "short-term response measures" (8%) provides support to other biodiversity protection programs.

Of a total contribution of USD 2 billion supporting global environmental improvements to date, the GEF has allocated USD 773 million to the biological diversity focal area. This is roughly equal to GEF financing in the climate change focal area (USD 775 million). In certain cases, GEF co-financing of incremental costs is coordinated with or used to leverage bi- or multi-lateral assistance. In CEE and NIS, GEF support has contributed to (among others) the following programs: forest biodiversity protection in Belarus, Poland, Romania, and Russia; protection of the Danube River Delta, Black Sea, and Transcarpathian mountain region of Ukraine; integrated coastal management in Georgia; and enabling activities in most countries of CEE and NIS. Recent statistics available from the GEF describe support to CEE/NIS in the area of biological diversity totaling approximately USD 60 million.

Information on the Convention on Biological Diversity is available at www.biodiv.org and from the CBD Secretariat, World Trade Centre, 393 St Jacques Street, Office 300, Montréal, Québec Canada H2Y 1N9. Tel: +1-514-288-2220 Fax: +1-514-288-6588.

For further information contact the GEF website, www.gefweb.org

Labbate, Gabriel. "The Incremental Cost Concept in the Global Environmental Facility Context." also available at www.gef.org