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Biodiversity is often viewed as a public good whose provision offers little scope for private sector participation2. The role of conserving and sustainably providing biodiversity goods and services often falls on society as a whole and on the state as society’s intermediary. The state is expected to act as a regulator and/or provider of biodiversity conservation and sustainable use. Simultaneously, the state is expected to play a number of different roles including regional development, promotion of economic growth, alleviation of poverty and protection of different forms of capital – natural, man-made, human and social. This naturally pressures constrained budgets and biodiversity is often underprovided. Regulators also often enact regulations and create incentives that, intentionally or not, serve to accelerate biodiversity degradation.
Recently, the value of enlisting the private sector in the sustainable provision of biodiversity goods and services has been widely recognized (OECD, 2003)3. Successful examples have appeared in both developed and developing countries. Depending on existing regulatory conditions and on the biodiversity goods and services provided by a particular region, the enlistment of private sector and private / public mechanisms may assist in increasing the sustainable provision of biodiversity goods and services while helping local communities generate income.
This paper discusses how institutional and market failures, particularly the failure to capture the value of biodiversity as a 'public good', are the key drivers of biodiversity loss in the Sundarbans region of India4. It also argues that policy interventions to address these failures, as well as other measures that foster the development of markets that recognize the economic value of biodiversity, are a crucial tool for conserving and promoting the sustainable use of the Sundarbans' biodiversity. This paper consists of six sections, in addition to this introduction. The second section describes the study area; the third section briefly discusses an integrated development strategy for the Sundarbans and underscores that biodiversity conservation and sustainable use cannot be viewed in isolation from the overall development of the region; the fourth section summarizes the methodology used to prepare this analytical work on biodiversity; the fifth section discusses the analysis’ main findings; and the sixth section concludes by providing policy recommendations to strengthen conservation of biodiversity in the Sundarbans.