MPAs incur a range of costs and generate a range of benefits, but the distribution of these costs and benefits among stakeholders may not be optimal in terms of fairness or incentives for sustainable behavior. Effective and equitable distribution of costs and benefits will reinforce MPA management objectives. Conservation finance should include appropriate incentives, so sharing of costs and benefits is a core element of your overall sustainable financing strategy.

Why is Sharing Costs and Benefits Important?

Equity is a guiding principle for its own sake, but also for effectiveness: situations seen as unfair by local stakeholders, particularly local communities and resource users, are unlikely to be stable. MPAs may require restrictions on resource access (e.g., spatial restrictions, harvest quotas, and prohibited practices), imposing an opportunity cost on communities (see Box 1). Unless this is offset by clear benefits, these stakeholders may undermine MPA management objectives. Within communities, there are dominant groups (e.g., leaders, men, investors) that can capture a disproportionate share of benefits, which can undermine broad-based community support for an MPA.

Box 1: What is the opportunity cost?

Opportunity cost reflects the value of what resource users give up by not using their resources as they would in the absence of an MPA.
This is the balance of: The income that would be derived from extractive resource use such as collecting firewood from mangroves or harvesting fish (e.g., the value of firewood or fish that would be harvested without MPA restrictions). The value of ecosystem services that would be lost due to destructive resource use (e.g., damage to reefs, reduced biomass, loss of culturally significant resources).
Total foregone income from resource use minus the total avoided environmental costs is the opportunity cost of conservation. In some cases, resource users may not recognize the environmental costs of unsustainable use, resulting in a difference between actual and perceived opportunity cost. Through stakeholder engagement, MPA managers can try to enhance resource users’ understanding of environmental costs to reduce this difference.

Many of the benefits that MPAs provide are what economists call public goods, such as climate change mitigation and biodiversity maintenance (see Box 2). The challenge of covering costs of public good provision requires particular attention to cost-sharing arrangements/mechanisms. Typically, these are the responsibility of government, but in many settings, also require donor support. For example, funding mechanisms such as the Green Climate Fund help redistribute the cost burden of climate change mitigation.

Tools for for Economic Analysis of Ecosystem Services

Marine Ecosystem Services Partnership (MESP): Enhancing Conservation Through Ecosystem Services Assessment

Box 2. What are public goods?

Public goods are defined by two characteristics: They are “non-excludable” – people can’t be kept from enjoying them, regardless of whether or not they pay. They are “non-rival” – one person’s enjoyment doesn’t diminish the amount available for others to enjoy.
These characteristics make it difficult to ensure that beneficiaries help cover costs. When people can enjoy something regardless of whether or not they pay, they usually choose not to pay. Also, when the availability of a good is not decreased by people’s use of it, it makes no sense to take the time and expense necessary to exclude people.
These factors combine to generate very little incentive for private actors to voluntarily provide or pay for public goods. For example, lighthouses, national defence and many environmental benefits are public goods. Unless government or donors step in with funding or creative financing solutions, these types of goods will be under-supplied.

Who should be considered in cost- and benefit-sharing arrangements?

Governance arrangements provide a starting point for considering who should be included in cost- and benefit-sharing arrangements. Most MPAs are the responsibility of government agencies with mandates to manage resources in support of local and national socioeconomic and environmental goals. The cost burden, therefore, falls on these government agencies. Alternative governance arrangements include:

NGO or private sector management of MPAs (for example as a concession)
Co-management with local communities, NGOs or the private sector (see the case studies on Arnavon Islands, Port Honduras Marine Reserve, and Chumbe Island Coral Park).

While government typically retains the cost burden in community co-management arrangements, the rationale for recognizing private MPAs or granting management rights to an NGO typically includes shifting the cost burden from government to the management entity.

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How do you currently share the costs and benefits of your MPA?
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What challenges have you faced in ensuring equitable distribution among stakeholders?
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Which cost- or benefit-sharing mechanisms might be most applicable to your MPA context?

Along with governance, the impact of the MPA on property rights is another important part of the context. An MPA may affect the ownership, access, or use rights of rights holders. This results in opportunity costs relating to, for example:

Local community access to resources
Commercial fishers’ access to stocks
Government ability to grant resource exploitation licences.

Cost and benefit impacts of MPAs on local communities should be considered even in the absence of explicit or formalized property and access rights.

Identifying beneficiaries is essential to guide thinking on cost-sharing arrangements:

Government is a key beneficiary, as the MPA may further policy goals relating to sustainability, community development and economic growth.
Fishers, tourists and other recreational users, and the companies and operators that service them, derive a clear benefit, and through licence, permit and entry fees can contribute to cost-sharing.
Local communities may benefit from an improved resource base, employment opportunities and direct investment in the community (e.g., funding for schools or livelihood programmes). While these benefits could justify community cost-sharing, they often are positioned as offsetting the opportunity cost communities face as a result of the MPA.

What are some cost-sharing mechanisms?

Globally, government funding and philanthropy are the main financing sources for MPAs. MPA planners and site managers can also explore cost-sharing mechanisms in which direct beneficiaries contribute to the MPA budget. Options are summarized in Table 1 below.

Table 1 Cost-sharing mechanisms

What are some benefit-sharing mechanisms?

MPA benefit-sharing generally refers to ensuring that local communities benefit from the MPA. The table below details several options for doing so, which assume that there is funding available within the MPA budget for applying these mechanisms. This funding may be derived from cost-sharing mechanisms noted above.

Table 2 Potential modes of benefit-sharing

How can I share the costs and benefits of my MPA equitably?

Where in the MPA lifecycle?

What's this about

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Who should be considered in cost- and benefit-sharing arrangements?

A partnership between

How can I share the costs and benefits of my MPA equitably?

Where in the MPA lifecycle?

What is the MPA lifecycle?

What's this about

Good for ...

Why is Sharing Costs and Benefits Important?

Who should be considered in cost- and benefit-sharing arrangements?

What are some cost-sharing mechanisms?

What are some benefit-sharing mechanisms?

A partnership between