Biodiversity prospecting agreements: Evaluating their economic and conservation benefits in Costa Rica and Peru

The conversion of tropical forests to agricultural production, timber harvesting, or human habitation is contributing to the loss of biological diversity. Activities that deplete biodiversity for short-term gain appear economically rational because many of the values of biodiversity are not recognized and accounted for in decision-making. Stemming the loss of biodiversity, therefore, involves extending markets to capture unrecognized values of biodiversity in conserved ecosystems. Biodiversity prospecting, the search for wild organisms from which pharmaceuticals can be developed, is one mechanism to generate revenues for biodiversity-rich developing countries and create incentives for conservation. This research quantifies the extent of benefits that suppliers of biological samples have received in a bioprospecting agreement between the National Biodiversity Institute (INBio) of Costa Rica and Merck Pharmaceuticals, and in the International Cooperative Biodiversity Group (ICBG) bioprospecting program operating in Peru.; In both cases, the economic returns from bioprospecting are minor: Costa Rica earned {dollar}3 million from three contracts with Merck and now earns approximately {dollar}1 million per year from all its bioprospecting activities. Peru received only around {dollar}1 million over 5 years from the ICBG program. While in Costa Rica some funds are directed towards conservation areas, creating a link to conservation, in Peru the economic benefits distributed to those responsible for conservation are so limited that no incentive for conservation is likely to exist. Ultimately, bioprospecting generates significantly lower economic returns than alternative (destructive) land-use activities.; Bioprospecting revenues are limited, in part, because agreements capture too small a portion of the total pharmaceutical value of species; much of the value accrues to the pharmaceutical companies and to the users of the pharmaceutical products, both located primarily in developed countries. Nevertheless, complementary income earning opportunities that could take place alongside bioprospecting need to be developed to augment earnings from conserved areas. Suppliers of biological resources also must find ways to gain access to advanced technologies that would allow them to process and add more value to their raw resources. Finally, suppliers could attempt to increase earnings by creating regional cartels to restrict the supply of biological inputs.