37198 309 privatesector P U B L I C P O L I C Y F O R T H E NUMBER NOTE 2006 Managing National Parks JUNE Nico Saporiti Nico Saporiti How Public-Private Partnerships Can Aid Conservation (nsaporiti@ifc.org) is an investment officer in Positive experience with public-private partnerships in nature the Advisory Services conservation in Africa shows that they can improve service through Department of the International Finance professional management and marketing, reduce the need for public Corporation. subsidies, and mobilize capital for investment in park infrastructure The author is grateful for and biodiversity. The best choice of structure for such partnerships the valuable contributions PRESIDENCY depends mainly on the capacity of the incumbent public park agency. of Carla Faustino Coelho VICE of the International Global spending on protected areas amounts to solution. But such ventures need to perform a Finance Corporation and around US$6.5 billion a year, while estimates of range of functions requiring a broad set of skills Peter Fearnhead of the amount required to fully support conserva- (figure 1). Conservation tion range between US$12 billion and US$45 Partnerships. billion. Less than 12 percent is spent in devel- What are the policy choices? DEVELOPMENT oping countries, which often have the greatest As the creation of new protected areas has out- biodiversity. In fact, over the past decade many paced governments' ability to provide adequate SECTOR developing country governments have cut their financial resources, some park agencies have budgets for protected areas by more than half. developed autonomous models that allow a International aid for biodiversity conservation more businesslike management approach and PRIVATE has also declined. As a result, protected areas in greater financial independence. And some gov- developing countries receive an average of less ernments have entered into public-private part- than 30 percent of the funding estimated to be nerships. These partnerships fall into two broad needed for basic conservation management. categories, with different levels of responsibility GROUP Many national parks in developing countries and risk for the private partner: exist only on paper, lacking enough funds to pay I Traditional tourism partnerships. The private BANK for staff salaries, patrol vehicles, or wildlife con- partner uses the government's (natural) servation programs. Insufficiently protected, assets to provide services and generate these parks are vulnerable to poaching, defor- income, such as by operating shops, lodges, estation, and agricultural use by local communi- and restaurants. WORLD ties. How to protect their valuable biodiversity? I Biodiversity management partnerships. The pri- Responsible commercialization through public- vate partner performs a public function on THE private partnerships provides an important behalf of the government, such as the con- M A N A G I N G N A T I O N A L P A R K S H O W P U B L I C - P R I V A T E P A R T N E R S H I P S C A N A I D C O N S E R V A T I O N Figure The range of functions in managing protected areas 1 Biodiversity Service Establishment Restoration Operation management provision Land purchase Creation of basic Fire management Breeding, culling Lodging, restaurant, Expropriation and park infrastructure Maintenance of fences, Stocking and marketing services compensation (fences, gates, roads) roads, and equipment Environmental Outdoor activities Identification of Engagement of local Law enforcement, research Filming, photography boundaries and communities community programs Removal of alien Education 2 proclamation of Restocking with flora and fauna park indigenous species Licensing management Assessment of restoration needs Evaluation of commercial potential servation of public natural assets in protected With the ability to raise, retain, and reinvest areas. their own funds, autonomous wildlife agencies Which option is most appropriate depends have greatly increased their income and thus mainly on the technical and managerial capac- their capacity to support species conservation. ity of the incumbent public park agency. The Park pricing studies in Namibia show that needs of the protected area (for environmental tourists are willing to pay park entry fees 25­50 rehabilitation and investment in basic park percent higher if an autonomous organization, infrastructure) and the level of support for rather than the government, is responsible for reform among stakeholders also play an impor- managing park revenues, because they have tant part. more confidence that the fees they pay will be efficiently used for conservation. Autonomous public park agencies One downside of this model is the vulnera- Autonomous agencies are modeled after private bility of tourism revenue to fluctuations in corporations, with flat management structures, demand and exchange rates. The Kenya flexibility in staff compensation, and rewards for Wildlife Service, for example, lost an estimated performance. They prepare multiyear budgets, US$1.3 million in revenue (roughly 8 percent of set pricing policies, and manage license appli- its annual budget) when tourism dropped after cations and concession contracts. To reduce the 2002 bombings in Mombasa. their reliance on external funding, they focus on offering creative and innovative services. Traditional tourism partnerships Commercially oriented agencies have diver- South African National Parks (SANParks), cre- sified their funding sources and lessened their ated in 1998 from the transformation of the reliance on tax revenue transfers from the cen- National Parks Board, became a successful tral government. These agencies have devel- autonomous parastatal entity, a leader in the oped such alternative revenue sources as development of the ecotourism industry with recreation fees, hunting fees, green safaris, high research standards. Yet despite managing endowment funds, for-profit investments, trad- some of the world's most spectacular natural able development rights, natural resource assets, SANParks was failing to deliver tourism extraction revenues, commercial operations in products efficiently. Service standards were often protected areas, airport and hotel fees, wetland mediocre, products were poorly differentiated, and carbon banking, revenue from the sale and and prices were not determined by the market. trade of wildlife, and voluntary contributions In 1999, following a benchmarking exercise from tourists and tourism operators. against similar, private operations, SANParks realized that it lacked the skills, incentives, and contracts with private partners, delegating con- access to capital that it needed to make the most servation and biodiversity management activi- of tourism opportunities. Deciding that it would ties as well as the rights for commercial use of not run commercial ventures, but instead focus parkland. on its core function of biodiversity management, Some of these contracts are with African SANParks developed the concept of "commer- Parks, which was created in 1999 as a private cialization as a conservation strategy." company by a group of senior SANParks employ- Part of this strategy was the concession of ees and is now a foundation controlled by a exclusive rights to commercial use of lodge sites wealthy conservationist. In 2003 African Parks 3 together with the surrounding parkland. Since started to develop partnerships with African gov- starting to implement the strategy, SANParks ernments to manage and finance protected has concessioned 12 lodges, 19 shops, 17 restau- areas. Within two years the company had signed rants, and 4 picnic sites to private partners. The six concession contracts in the Democratic 20-year concession contracts for lodges (with no Republic of Congo, Ethiopia, Malawi, Sudan, right of renewal or first refusal on expiration) and Zambia, with terms of 5­30 years. include environmental and social obligations African Parks works in countries still at the and penalties for noncompliance. The conces- frontier of the tourism industry. The protected sionaires pay SANParks an annual fee calculated areas for which it assumed responsibility were as a percentage of the turnover bid during the suffering from decades of neglect, uncontrolled tender process.1 exploitation, and the consequences of wars and In 2004 lodges, shops, and restaurants gen- famines. The natural environment was degraded erated concession fees of US$13.5 million, and to almost irrecoverable levels. To make these lodges attracted private investment of US$42.5 parks economically viable, African Parks had to million.2 SANParks is now independent from invest significantly in restoring their flora and government transfers for more than 75 percent fauna: without the return of large mammals, of its operating revenue. This is a spectacular tourists would not return. financial achievement, even compared with Even though African Parks has only begun to conservation agencies in industrial countries. restore the integrity of the parks under its man- The commercialization strategy has vastly agement, and transport and lodging facilities improved SANParks' standing in the eyes of are almost nonexistent, the results have been stakeholders, reduced unemployment in neigh- encouraging. Revenue from its park in Zambia, boring communities, and created economic for example, rose from less than US$100 in 2002 opportunities for previously disadvantaged (before the partnership was launched) to ethnic groups. As a result of this success, US$42,000 in 2005, with local communities the national government increasingly views earning an additional US$9,000 from tourism. national parks as a tool for economic develop- In addition, the park employs 91 permanent ment and has stepped up its annual financial staff (up from 14 before the partnership) and commitment to SANParks. Thanks to the many more temporary employees. The park is increase in public funds and the additional rev- now ready for at least one private tourism con- enue from its partnerships, SANParks has been cession, which will contribute an estimated able to expand the land under its protection by US$100,000 annually. More than US$2 million 5 percent in the past 10 years. has been invested in its rehabilitation. African Parks has mobilized more than Biodiversity management partnerships at US$23 million in private and public funds for the frontier of tourism future investments in the parks it manages. In contrast with SANParks, some park agencies Despite the need for grants and donations to realized that they lacked the institutional and fund the initial investment in environmental financial resources to undertake biodiversity restoration, the company aims to demonstrate management themselves. For this reason some that professionally managed protected areas have chosen to enter into long-term concession can be economically self-sufficient. M A N A G I N G N A T I O N A L P A R K S H O W P U B L I C - P R I V A T E P A R T N E R S H I P S C A N A I D C O N S E R V A T I O N Biodiversity management on a ment in environmental restoration and basic commercial basis park infrastructure. Ecotourism is a competitive The size and number of parks it manages in dif- market, and parks must offer high-quality or ferent countries makes African Parks unique. unique environmental characteristics to suc- Many small private companies have been cre- ceed. Private and public grants are needed to viewpoint ated for the purpose of managing a single con- finance this initial investment. Project finance servation area. One such company is Chumbe won't work because natural parks generate too Island Coral Park Ltd. (CHICOP), which since little income to repay the capital investment. is an open forum to 1994 has managed the first marine park in The vulnerability to fluctuations in the encourage dissemination of Zanzibar. tourism market, the primary source of income public policy innovations for The island of Chumbe is a sustainable model for commercially managed parks, can be miti- private sector­led and of a protected area run on a commercial basis. gated by developing a basket of complementary market-based solutions for The profits from ecotourism are reinvested revenue sources, creating reserves, and ensur- development. The views exclusively in conservation and education for ing guaranteed access to funding sources of last published are those of the tourists and local communities. The revenues recourse. authors and should not be fully cover operating expenses (CHICOP Within a national system of protected areas a attributed to the World receives no public funding), but are insufficient diversified funding strategy makes it possible to Bank or any other affiliated to repay the initial investment in environmental focus public resources on the protected areas organizations. Nor do any of restoration and tourism infrastructure (around that cannot be self-financing but are critical to the conclusions represent US$1 million, donated by the private project achieving the system's biodiversity objectives. official policy of the World sponsor and by institutional donors). Bank or of its Executive Thanks to the public-private partnership, the Directors or the countries overfished and depleted reef adjacent to the they represent. marine park has been restocked and the reef has Notes become one of the richest and most pristine in 1. To guarantee the transparency of the process and To order additional copies the region, with 370 species of fish and more safeguard public interests, SANParks contracted the contact Suzanne Smith, than 200 species of coral. The coral "forest" cov- Private Sector Advisory Services unit of the International managing editor, ering the island is one of the last intact in Room F 4K-206, Finance Corporation as lead adviser. All concessions were Zanzibar and has become a sanctuary for highly The World Bank, subject to a minimum rental payment equal to 65 percent 1818 H Street, NW, endangered species. of the fees projected in the bid offers, to discourage "over- Washington, DC 20433. bidding." Conclusion 2. Exchange rate and values are as of March 31, 2004. Telephone: National parks in developing countries are 001 202 458 7281 home to the planet's most undervalued natural References Fax: assets. Responsible commercialization offers a Balmford, Andrew, and others. 2002. "Economic 001 202 522 3480 way to capture their significant economic value. Reasons for Conserving Wild Nature." Science 297 (5583): Email: Public-private partnerships can play an impor- 950­53. ssmith7@worldbank.org tant part in this. They offer a powerful policy Krug, Wolf, Helen Suich, and Ndeutalala Haimbodi. tool for improving the economic sustainability 2002. "Park Pricing and Economic Efficiency in Namibia." Produced by Grammarians, of parks, enhancing the quality of services, effi- DEA Research Discussion Paper 45. Namibia Ministry of Inc. ciently leveraging investment in conservation, Environment and Tourism, Directorate of Environmental and, through all this, contributing to the core Affairs, Windhoek. Printed on recycled paper function of protecting biodiversity. World Wildlife Fund, Center for Conservation Commercially managed protected areas can Finance. 2004. "Financing Species Conservation: A Menu generate enough revenue to fully cover operat- of Options." Washington, D.C. ing and maintenance costs. Most do not need operating subsidies to be economically viable. But parks where flora and fauna have been depleted will require significant up-front invest- T h i s N o t e i s a v a i l a b l e o n l i n e : h t t p : / / r r u . w o r l d b a n k . o r g / P u b l i c P o l i c y J o u r n a l