Description
The financial sustainability of national systems of protected areas (PA) continues to be the most significant challenge in meeting conservation objectives worldwide. A large number of threats exist related to PA financing; these threats constantly undermine national and international efforts to preserve the planet's biodiversity.
The Nature Conservancy 1
Financial Planning for National
Systems of Protected Areas:
Guidelines and Early Lessons
Marlon Flores, Guillermo Rivero,
Fernando León, Guillermo Chan, et al.
Convention on
Biological Diversity
x
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 2
© 2008 The Nature Conservancy, Arlington, Virginia, US. — All rights reserved.
The reproduction of this publication for educational and other non-commercial purposes is authorized without
prior written permission of the copyright holder provided the source is fully acknowledged.
Citation: Flores, M., Rivero, G., León, F., Chan, G., et al., (2008). Financial Planning for National Systems of Protected
Areas: Guidelines and Early Lessons. The Nature Conservancy, Arlington, Virginia, US.
ISBN - 10: 0615231624
ISBN - 13: 9780615231624
Cover design: Chanda Carpenter
Graphic design: Jonathan Kerr
Editing and Production: Eva Vilarrubi, Fastlines
Illustrations: Eric Reece (www.bigbluerobots.com)
This publication is made possible, in part, by the generous support of the American people through the
United States Agency for International Development (USAID) under the terms of Grant No. EDG-A-
00-01-00023-00 for the Parks in Peril Program, and with support of other organizations. The content is
the responsibility of the authors and does not necessarily reflect the views of USAID or the United States
Government, The Nature Conservancy, PACT, The Convention on Biological Diversity (CBD), MINAM,
NEPA, SINAC, MAE and Mentefactura.
This document is a work-in-progress. Please send your comments and suggestions to:
Marlon Flores
External Affairs Division
The Nature Conservancy
4245 North Fairfax Drive
Arlington, VA 22203, US
Email: [email protected]
The Nature Conservancy 3
Contents
Foreword. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Authors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Chapter I: Financial Analysis: Defning Financial Needs and Gaps . . . . . . . . . . . . . . . . . . . . . . . . . . .15
1.1. Defnitions and Elements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
1.2. Prior Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
1.3. Stages in the Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
1.4. Use of the Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
1.5. Lessons Learned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Chapter II: Financial Mechanisms: Preselection, Selection, and Diversifcation . . . . . . . . . . . . . 29
2.1 Financial Mechanisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.2. Pre-selection of Financial Mechanisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
2.3. Selection of Financial Mechanisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
2.4. Lessons Learned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Chapter III: Enabling Conditions: Assessing the Legal and Institutional Framework . . . . . . . . . . 39
3.1. Legal and Institutional Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.2. Assessment of the Legal and Institutional Framework. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.3. Guidelines for Legal Reform. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
3.4. Lessons Learned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Chapter IV: The System-Level Financial Plan Based on Business Principles . . . . . . . . . . . . . . . . . 47
4.1. The Financial Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
4.2. Business Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
4.3. Components of a Financial Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
4.4. Measuring Progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
4.5. Lessons Learned. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Annexes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Websites of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .112
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 4
The Nature Conservancy 5
One of the greatest challenges facing governments
and their partner organizations is the need to develop
fnancially sustainable protected area systems and solid
organizations able to effciently manage these natural
assets. Although some progress has been achieved over
the past decades, to date most protected area systems
around the world are still severely under funded. In
most cases, protected areas are still dependent upon
limited national budget allocations, support from in-
ternational conservation organizations and short-term
international funding though projects.
During the 7th Conference of the Parties of the Con-
vention on Biological Diversity in February 2004, 188
national governments adopted the Global Program of
Action on Protected Areas to support establishment of
comprehensive, ecologically representative, and effec-
tively fnanced and managed regional and national pro-
tected areas. This contributed to the three objectives
on the Convention and the 2010 Goal to signifcantly
reduce the rate of biodiversity loss.
Although the 2004 Global Program of Action on Pro-
tected Areas reinvigorated many government’s com-
mitments to fnance protected areas, there has not been
a signifcant increase in funding to protected areas.
The budgets of the national systems of protected areas
are mostly composed of contributions from central
governments, international cooperation, and protected
area self-generated revenues. When comparing the
existing budgets of the national systems of protected
areas with their fnancing needs, there is evidence of
large defcits. For example, recent fnancial analysis
of the national systems of protected areas of Ecuador,
Peru, and Costa Rica, estimate annual defcits of US$6,
US$9, and US$17 million, respectively. It has been doc-
umented by known experts that the aggregated defcit
is alarming at global and national levels, and particularly
acute in developing nations.
In order to achieve the fnancial sustainability of
national systems of protected areas it is critical to take
into account the need to increase the capacity to self-
generate additional revenue at national levels, includ-
ing market value of payments for ecosystems services
such as water service, carbon sequestration, and scenic
beauty. On the other hand, it is equally important to
improve the institutional capacity to adequately manage
fnancial resources and carry out the necessary legal and
regulatory reform to enable reliable long-term funding.
With support from The Nature Conservancy and other
members of the CFA (Conservation Finance Alliance),
I am pleased to present this new publication that in-
cludes practical, accessible, and easy to use methods for
improving fnancial planning, and a road map for the
implementation of business-oriented fnancial plans
for the national systems of protected areas.
Antonio Brack
Minister of Environment of Peru
October, 2008
Foreword
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 6
CATI Computer Assisted Telephone Interviewing
CBD Convention on Biological Diversity
CEREPS Special Account for Productive and Social Reactivation (Ecuador)
CFA Conservation Finance Alliance
CI Conservation International
CITES Convention on International Trade in Endangered Species
CPM Center for Park Management
DASI International Affairs Directorate (Ecuador)
DGF General Forestry Directorate (Costa Rica)
DGVS Wildlife General Directorate (Costa Rica)
ESF-SNAP Financial Sustainability Strategy of the National System of Protected Areas
FAN National Environmental Fund (Ecuador)
GEF Global Environmental Facility
GPAN Participatory Management in Natural Protected Areas
IANP Offce of Protected Natural Areas (Peru)
INECI Ecuadorian Institute for International Cooperation
INRENA Natural Resources Intendance of Peru
IUCN International Union for Conservation of Nature
KfW German government-owned development bank (Kreditanstalt für Wiederaufbau)
MAE Ministry of Environment (Ecuador)
MAG Ministry of Agriculture and Livestock Farming (Costa Rica)
MARFUND Mesoamerican Reef Fund
MIDEPLAN Ministry of National Planning (Costa Rica)
MINAE Ministry of Environment and Energy (Costa Rica)
MINAM Ministry of Environment of Peru
MIRENEM Ministry of Natural Resources, Energy, and Mines (Costa Rica)
MoU Memorandum of Understanding
NEPA National Environment and Planning Agency (Jamaica)
NORAD Norwegian Agency for Development Cooperation
NPCA National Parks Conservation Association
PANE State Natural Areas (Ecuador)
SINAC National System of Conservation Areas (Costa Rica)
SINANPE II Project: “Development of SINANPE’s Institutional Capacity for the Management,
Administration, and Sustainable Use of Biodiversity and Natural Resources in
Natural Protected Areas”
SNAP National System of Protected Areas
SPN National Parks Service (Costa Rica)
TNC The Nature Conservancy
UNDP United Nations Development Programme
USAID United States Agency for International Development
WWF World Wildlife Fund
Acronyms
The Nature Conservancy 7
The authors wish to thank all of the people and institu-
tions who made valuable contributions at various stages
of the development of this document. Thus, we grate-
fully acknowledge the efforts and commitment of park
rangers, technical experts, administrators, and senior
management of the National Systems of Protected
Areas, who face the reality of the challenges of fnan-
cial sustainability and conservation in their day-to-day
work. This document would not have been possible
without their contributions.
We also appreciate the valuable support provided by
our TNC current and former colleagues Sheldon
Cohen, Jim Rieger, Terry Williams, Roberto Troya,
Eduardo Durand, Zdenka Piskulich, Steve Watkins,
Maria Elena Zúñiga, Elias Epstein, Sandra Isola, An-
gela Martin, Sara Hamberg and Jessie Rountree; and
Sarat Babu Gidda (CBD), Douglas Mason (USAID),
Scott Edwards (Environmental Defense), Marc Patry
(UNESCO), Chas Cartwright (National Park Ser-
vice, US), and Maria José Pacha (Foundation Vida
Silvestre, Argentina).
For their reviews and contributions we thank Luis
Pabón, Andy Drumm, John Terborgh, Andrew Soles,
Rob Weary and Jamie Ervin of TNC, Andrew Bovar-
nick (UNDP), and Jonathan Kerr. Also, Brenda
Bucheli and Marlene Salas of PACT for managing the
project’s learning community on fnancial planning.
We extend thanks to Raúl Solórzano Soto of the
National System of Conservation Areas of Costa Rica,
the staff of the Natural Protected Areas Intendance of
Peru (INRENA), the National System of Protected
Areas of Ecuador (SNAP), and Winsome Townsend
at Jamaica’s National Environment and Planning
Agency (NEPA).
Finally, we also like to thank Magali Martínez, María
Fernanda Aillón, Sandra Vela, and Esteban Vega, whose
valuable work on information collection and data
processing contributed to the development of different
chapters in this document.
The Authors
Acknowledgements
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 8
The Nature Conservancy 9
n Marlon Flores has a Master’s Degree in Economics
from the University of Manchester, UK, and a Public
Law equivalent Degree from the Central University
of Ecuador. He has extensive experience in fnancial
planning, business planning for protected areas, fscal
reform, and institutional capacity building. He works
for The Nature Conservancy, External Affairs Divi-
sion at the Worldwide Offce in Arlington Virginia,
US; and his current position is Senior Advisor on
Conservation Finance and Policy. Before joining
TNC, he worked with organizations such as the
World Bank (GEF Programs, Latin America), CARE
Denmark, COWI Consult of Denmark (Environ-
ment and Planning Division), and the National
Audit Offce of Ecuador. He has work experience in
North, Central and South America, the Caribbean,
Africa, Central and Eastern Europe, South East Asia
and the Pacifc.
n Guillermo G. Rivero Figueroa is an Economist with
a Master’s in Business Administration and a special-
ization in Project Management. He has more than
14 years of managerial and consulting experience
working with international non-proft organiza-
tions, local NGOs, and companies in Latin America,
Asia, and Africa. His areas of concentration are Or-
ganizational Development, Financial Management,
Strategic Management, Financial Sustainability, and
Performance Evaluation. He is the author of several
publications and participates as professor and lec-
turer in various fora and universities. He is currently
Financial Services Manager at Pact, USA.
n Sandra Jiménez has a degree in Economics from the
National University, with a specialization in banking
and fnance, and a Master’s in Business Administra-
tion from Costa Rica’s National Technological Insti-
tute. For 23 years she has held positions of increasing
management responsibility in the felds of fnance,
project implementation and strategic and operational
planning in the National System of Conservation
Areas (SINAC) of the Ministry of Environment and
Energy of Costa Rica (MINAE).
n Guillermo Chan has a Bachelor’s Degree in Business
Administration with an emphasis in fnance and an
Associate’s Degree in Banking Administration from
the University of Costa Rica (UCR). He works as Fi-
nance Coordinator for The Nature Conservancy and
has collaborated in the development and implemen-
tation of the Financing Strategy for the National Sys-
tem of Conservation Areas of Costa Rica (SINAC).
He also has 15 years of work experience with banking,
fnancial, and nonproft institutions. He is currently
pursuing a Master’s in Finance, as well as studies in
Natural Resource Administration and Environmental
Economics.
n Irene Suárez specialized in Local Economic Develop-
ment at the Latin American Faculty of Social Scienc-
es (FLACSO) and has a Master’s in Development
Studies from the Institute of Social Studies (The
Hague, Netherlands). She is currently the Manager
of The Nature Conservancy’s National Strategies
Program in Costa Rica. She has worked for more
than 10 years in community development, applied
Authors
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 10
economics, environmental conservation, training,
and in the design and implementation of projects
and environmental policies. She has also taught at the
Organization for Tropical Studies (OTS).
n Fernando León has a degree in Forest Engineering
from La Molina Agrarian National University, and has
completed graduate studies in total quality manage-
ment and productivity as well as a Master’s in Business
Administration at the Central American Institute of
Business Administration (INCAE), where he studied
on a scholarship from the MacArthur Foundation. He
is a consultant in the areas of environmental econom-
ics and conservation fnance for the Offce of Protect-
ed Natural Areas (IANP). For the last 12 years, he has
played an active consulting role for public and private
entities, both national and international. In addition,
for the last 10 years he has been a professor at La Mo-
lina Agrarian National University.
n Jaime Fernández-Baca has a degree in Agricultural
Engineering from the University of California at
Davis, a Master’s Degree in Agricultural Economics
from La Molina Agrarian National University, and
a Master’s Degree in Environmental Management
from the University of Stirling in Scotland. For the
last fve years he has been the Yungas and Central
Selva Project Coordinator for The Nature Conser-
vancy’s Southern Andes Conservation Program at
TNC’s offce in Peru, where he has been responsible
for managing USAID-funded conservation and
development projects. He previously served as an
environmental consultant for projects in the energy,
mining, and manufacturing industry sectors.
n L. Andrea Vergara has a degree in Commercial Engi-
neering, with a specialization in Economics and Busi-
ness, as well as a Master’s Degree in Natural Resources
and Environmental Economics at the University of
Concepción, Chile. Her areas of professional expertise
include conservation fnance, economic valuation, the
development of payment systems for environmental
services, and development of evaluation criteria for
bio-commerce projects, as well as the application of the
productive chain approach to rural tourism in Ecua-
dor. She has also been a professor at the University of
Concepción and at the Technological Institute of the
Catholic University of the Holy Conception, Chile.
n José Galindo has a Master’s Degree in Environmental
Planning and Management and is trained in business
management. He has substantial experience in con-
servation fnance, with a particular focus on fnancial
sustainability strategies and business plans for individual
protected areas and national systems of protected areas.
His experience includes project implementation and
technical assistance to environmental authorities in
Ecuador, Colombia, Costa Rica, Panama, and Argen-
tina. In addition, he has provided technical assistance
on fnancial planning for protected areas to the Gov-
ernment of Egypt. He is one of the founding members
of Mentefactura, an environmental consulting frm
specializing in fnancial sustainability and environmen-
tal economics. Mr. Galindo is currently a consultant to
national governments and international organizations
for the implementation of specifc fnancial aspects of
the CBD Program of Work on Protected Areas and is
supporting the development of IUCN’s conservation
fnance strategy in Latin America.
n Tatiana Egüez has a Degree in Biology from the Cen-
tral University of Ecuador and an equivalent from the
University of Sao Paulo, Brazil, and a Master’s Degree
in Environmental Auditing and Law. She has substan
tial experience in protected areas management and for
several years she directed the Ministry of Environment’s
Biodiversity and Protected Areas Department. She is
currently employed by The Nature Conservancy as Pro-
tected Area Advisor for the Northern Tropical Andes
Program. She participated in the development of the
SNAP’s Financial Sustainability Strategy, Financial Plan,
and Business Plan in 2005 and 2006.
The Nature Conservancy 11
The financial sustainability of national systems
of protected areas (PA) continues to be the most
significant challenge in meeting conservation ob-
jectives worldwide. A large number of threats exist
related to PA financing; these threats constantly
undermine national and international efforts to
preserve the planet’s biodiversity. These threats
include, for example, inadequate investments,
excessive dependence on international funding
sources, lack of participation of key stakeholders
(Ministries of Finance, private sector), limited
national capacity, and lack of tools for adequate
financial planning. Consequently, it has been dif-
ficult to formulate system-level financial plans
based on realistic needs, viable and diversified
financial mechanisms, and operational business
plans. As a result of this situation, there are now
only a few protected areas that can be considered
financially sustainable, while the vast majority of
protected areas and PA systems continue to face
dramatically high annual deficits.
Protected area funding (primarily international)
has not been able to keep pace with the rapid
growth and associated management costs of the
number of protected areas. According to IUCN
(2006), the number of protected areas listed by
the United Nations has increased tenfold in recent
decades. By 2004, there were already over 104,000
protected areas; and the area under conservation
had expanded from 2.4 million km
2
in 1962 to more
than 20 million km
2
. Approximately 12% of the land
surface of the planet is now under some category of
PA. Recent financial analyses of the national sys-
tems of protected areas of Ecuador, Peru, and Costa
Rica, for example, indicate annual financial deficits
of US$6, US$9, and US$17 million, respectively.
The collective financial gap is extreme on a global
level and is very visible in developing countries.
“Results from the only global estimate to date of
PA management needs (James et al. 1999a & 2001,
updated by Balmford 2003) suggest that for the
world as a whole, the budget shortfall for effectively
maintaining existing protected areas is approxi-
mately $2.5 billion annually, $1.5 billion of which is
in developing nations. Although $7 billion per year
is currently spent globally on PAs, less than $1 bil-
lion is spent in developing countries.”
1
When we analyze the fnancial sustainability of PAs
and the barriers to flling these large fnancial gaps, it is
necessary to take into account the different elements
of the fnancial equation: on the one hand, the “supply”
involved in generating additional fnancial resources
(income), and, on the other hand, the “demand” fo-
cused on adequate management of fnancial resources
at the level of individual PAs and PA systems (UNDP,
2007). Likewise, we should take into account aspects
related to legislation, regulatory frameworks, and the
institutional and individual capacities for adequate
fnancial management. The effective interaction of all
these aspects is essential for a country to be able to
Introduction
1. Bruner et al., “How much will effective protected areas cost?”
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 12
reduce or eliminate the fnancial gaps associated with
management of its protected areas.
The purpose of this document is to provide guide-
lines and lessons to optimize both the financial
planning processes of protected areas and the prod-
ucts resulting from these processes. In addition,
it is expected that this document will improve the
financial management capacities of individuals and
institutions working in protected areas.
At the same time, this document is designed to support
government commitments undertaken at the 7th Con-
ference of the Parties to the Convention on Biological
Diversity (CBD) in February, 2004. Here, 188 coun-
tries adopted the “Program of Work on Protected Ar-
eas,” including the fnancial sustainability of protected
areas. The governments committed themselves to “by
2008, establish and begin to implement country-level
sustainable fnancing plans that support national sys-
tems of protected areas, including necessary regulatory,
legislative, policy, institutional and other measures”. To
date, although countries are working towards this goal,
very few have made signifcant progress.
This document is organized around key aspects of the
fnancial planning process: a) fnancial analysis: funding
needs and gaps, b) preselection and analysis of fnan-
cial mechanisms and understanding the legislative and
regulatory framework, and c) formulation of fnancial
and business plans. Additionally we review important
aspects related to implementation, monitoring, and
evaluation.
This document uses the “fnancial planning roadmap”
as a frame of reference. This roadmap presents the
above-mentioned elements linked to the protected
area system’s management plan, which should be an
integrated part the national development agenda, as
illustrated above. The use of this roadmap helps us to
defne courses of action, establish a supportive institu-
tional framework, address gaps in institutional capacity
during the process, increase cost-effectiveness, accel-
erate the fulfllment of actions and goals, and create
The Nature Conservancy 13
ownership of the process, as well as foster transparency
and responsibility.
Chapter 1 examines the different aspects of fnancial
analysis (the fnancial needs and gaps of protected areas).
This chapter includes the review of different income
sources, the level of current and potential resource use,
and identifcation of cost-reduction opportunities. These
aspects determine the existing fnancial needs and gaps
to cover conservation priorities.
During the fnancial analysis, it is important to consider
the functionality of the fnancial management system
of the protected areas. This system supports important
processes such as accounting (income and expendi-
ture), salaries and benefts, classifcation of expenses
(standardization), cash fow, transparency (availability
of and access to information), and auditing (internal
and external).
Chapter 2 begins defining financial mechanisms
and then focuses on the preselection, feasibility
analysis, and selection of financial mechanisms.
Chapter 2 also examines conceptual and practical
aspects of the diversification of financing sources.
Such aspects are crucial to maintaining and increas-
ing income from conventional financial sources
(governments, donors, and trust funds), as well as
developing innovative alternatives (for example,
environmental compensation funds, market mecha-
nisms, etc.). The diversification of financial mecha-
nisms, considering market criteria, implementation
complexity, and impact, are also covered in this
chapter. Instead of providing a detailed descrip-
tion of income-generation alternatives, this chapter
indicates the elements and steps involved in making
the most appropriate selection and diversification
of financial mechanisms.
Chapter 3 analyzes the conditions that enable the
development of financial strategies. These condi-
tions are based on the premise that financial gaps
and the low returns of many financial mechanisms
(such as national park entrance fees) are due largely
to the low capacity to generate, administer, and dis-
tribute resources in an efficient manner, and to the
existence of excessively complicated and outdated
legal and institutional frameworks. Laws and regu-
lations usually focus on aspects related to budget
implementation and neglect the strategic aspects
that create conditions for resource mobilization,
business management, autonomy, good governance,
and the hiring of dedicated staff to support finan-
cial management.
This chapter not only examines different aspects re-
lated to the establishment of a supportive institutional
structure, but also provides guidelines for evaluation of
the legal and institutional structure, and presents an
interesting tool for evaluation of protected area sys-
tems’ legal and institutional frameworks (included in
Annex 13).
Finally, Chapter 4 begins with concepts and defini-
tions of financial plans, then, it examines business
management principles that apply to financial plans,
their components, and implementation. Chapter 4
also discusses different aspects related to the formu-
lation of financial and business plans. Financial plans
are usually drafted as a ‘wish-list’ for international
donors, with limited diversification, lack of business
vision, insufficient information, limited attention
to cost effectiveness, and a disconnection with the
private sector. Thus, this chapter presents differ-
ent steps to break out of this traditional pattern and
to achieve financial plans that respond to changing
conditions and are based on an accurate determina-
tion of financial need, economically-viable financial
mechanisms, diversified financial packages, and op-
erational business plans to support implementation
of the different financial strategies.
Chapter 4 also presents mechanisms to measure
progress, including the new “Financial Sustainability
Scorecard for National Systems of Protected Areas”
developed by the UNDP.
Achieving fnancial sustainability of national systems
of protected areas is not a destination per se, rather
it is a continuous cycle of challenges and opportuni-
ties related to increasing funding on the one hand and
building fnancial management capacity on the other, as
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 14
illustrated in the cartoon version of the fnancial plan-
ning cycle at the end of this section.
Single large multi-year donations from international
donors can lead protected area managers to a false
sense of financial well-being. However, once these
donations are spent and resources are diminished,
the reality and importance of long-term financial
planning becomes painfully apparent, and this will
in turn threaten the stability of the entire protected
area system.
Finally, this document has been developed with support
from the Parks in Peril Program, fnanced by USAID,
and the Conservation Finance Alliance.
2
The Parks
in Peril Program supported a learning community on
fnancial planning that developed this document be-
tween 2004 and 2007.
2. The CFA was created in 2002 to help address the challenges related to the lack of fnancing for protected areas. To accomplish this, the CFA promotes
collaboration among organizations active in area of conservation fnance and develops tools to optimize local capacity worldwide. The members of the
CFA, as of June 2007, are: The Nature Conservancy (TNC), Wildlife Conservation Society (WCS), Conservation International (CI), World Wildlife
Fund for Nature (WWF), USAID (Enterprise for the Americas Initiative/Tropical Forest Conservation Act), IUCN, UNDP, UNEP, National Park
Conservation Association (PCA-United States), RedLAC (Latin American and Caribbean Network of Environmental Funds), FUNBIO, The Royal
Society for the Protection of Birds, PricewaterhouseCoopers, Kreditanstalt Für Wierdereaubau KfW-Germany and GTZ (Germany).
The Nature Conservancy 15
Chapter I
Financial Analysis:
Defning Financial Needs and Gaps
3. In a fnancial analysis, the current situation is described in a baseline that captures the state of needs, costs, and income at the beginning of the project or
intervention.
The first step in the financial planning processes
is the financial analysis. It covers a number of as-
pects, the most important of which are the analysis
of protected area costs, the review of different
income sources, the determination of current and
potential resource use, and the identification of
cost-reduction opportunities; and determining
the financial gap. These financial elements make it
possible to establish the size of the existing finan-
cial gap that must be covered to meet conservation
priorities; further, these financial elements facili-
tate the identification, design, and implementation
of appropriate strategies for sustainable financing
of protected areas.
Based on experiences gained in Peru, Ecuador, Costa
Rica, and Jamaica, the following pages present a
series of guidelines on how to conduct a financial
analysis at both levels — individual protected areas
and protected area systems. These guidelines aim to
answer the following questions:
n Why is a fnancial analysis necessary?
n What are the necessary prior conditions for a sound
fnancial analysis?
n What steps should be followed to carry out a fnancial
analysis?
n What support tools are needed to conduct a fnancial
analysis?
n How can the results of the fnancial analysis be used?
1.1. Defnitions and Elements
Many specialists in the business sector refer to ‘fnancial
analysis’ as a set of techniques used to assess the viability,
stability, effectiveness , effciency, and proftability of
operations. It uses techniques such as funds fow analysis
and fnancial ratios to understand fnancial opportunities
and challenges, and improve decision-making. Although
this is a private sector perspective, there is much we can
learn from this approach. Applying such techniques to
protected area systems enables us to presents fnancial
data in a form that can be used to evaluate the protected
areas’ fnancial position and to plan growth. For the
purpose of this document, fnancial analysis consists of
quantifying the fnancial needs and gaps of an individual
protected area or protected area system, including the
creation of new protected areas. Accomplishing this
fnancial analysis requires a comparison of the resources
currently available
3
with the resources needed for both
a basic scenario (essential management programs to
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 16
ensure protection of basic ecosystem functions) and an
optimal scenario (a set of management programs for
optimal ecosystem functioning).
Figure 1 shows and example of the level of income by
program area and the needs to be covered in both the
basic and optimal scenarios. Figure 2 shows the fnancial
gaps, broken out by program area and type of expen-
diture, identifed in Costa Rica, Peru, and Ecuador. A
fnancial analysis provides the key following information:
1. Income by source: national or international;
2. Historical review of income by program, subpro-
gram, or activity;
3. Level of actual expenditures by program, subpro-
gram, or activity;
4
4. Identifcation of cost-reduction opportunities;
5
5. Level of needs by program, subprogram, or activity,
defned at both the basic and optimal levels; and,
6. Existing financial gaps by program, subprogram,
or activity through the comparison of income
vs. expenditures, and of needs vs. income. The
financial gap is the difference between available
funds and funds needed for basic or optimal lev-
els of conservation.
These defined elements are used to quantify the
investments needed and to optimize the strategic
allocation of funds to close the financial gaps. Thus, a
financial analysis is essential so that stakeholders can
select financing mechanisms and determine invest-
ment priorities.
There are various methods for conducting a finan-
cial analysis. The method selected should have clear
objectives and be tailored to the context of each pro-
tected area system. It is critical that the method used
helps to link conservation goals with actual costs.
Activity-based cost accounting (ABC) is a user-friend-
ly method that can serve this purpose. It is based on the
organization of activities carried out in protected areas
through functional areas and programs. The functional
areas consist of the different categories of operational
activities required to manage protected areas (including
the cost of the central protected area agency), which
include programs and subprograms, with programs
being the parts of the operation that require separate
management. Using metrics, costs are allocated to each
program and subprogram for basic and optimal levels of
conservation; fnancial gaps are determined by compar-
ing available resources with fnancial needs (basic and
optimal).
Figure 1. Financial Gap Analysis by Program Area (in US$)
4. This refers to the levels of budget execution and underspending.
5. Some cost-reduction strategies include: volume purchases, extending the useful life of goods and equipment (emphasis on preventive maintenance), a
balance between full-time staff and consultants, analysis of savings in main expenditure items, strategic adjustments in programs and activities, increased
effciency of fnancial-administrative systems, co-management, and protected area partnerships, among others.
Source: Business Plans from the Center for Park Management. USA.
The Nature Conservancy 17
This transparent method makes it pos-
sible to arrive at actual and reliable costs
since the allocated costs are directly
linked to the goals (results) of each of the
protected areas conservation programs. A
similar process is being used in protected
area tourism management, known as
the “Threshold of Sustainability.” This
process determines the minimum level of
investment needed to prevent the decline
of the protected area’s natural capital. For
further information on fnancial analysis
methods, see Annex 1.
Generally, carrying out a fnancial
analysis involves four steps:
6
Planning
and preparation, information gather-
ing,
7
processing and analysis and valida-
tion of results.
During the fnancial analysis, stake-
holders should reach mutual agreement
regarding the general conservation
criteria for both basic and optimal
scenario levels. Factors contributing to
this agreement may include diagnostic
studies of biodiversity threats, ecosys-
tem functions, current government
policy, and international conservation
standards, among others.
Generally, protected area conserva-
tion priorities are reflected in a pro-
tected area’s management program,
which can be evaluated —considering
the financial needs and gaps analy-
sis— by using scenario logic (for basic
and optimal scenarios) to facilitate
determination of resource needs. Ta-
ble 1 presents a breakdown of existing
financial gaps based on definite man-
agement programs and subprograms
of Peru’s National System of Natural
Protected Areas (SINANPE). This
table clearly shows that the available resources do not
cover the basic level. There is a gap of US$3.7 million
for the basis scenario and US$20.6 million for the
optimal level.
6. Section 1.3 contains a detailed description of each stage.
7. It is important to consider that opening up a participatory process does not necessarily guarantee access to all available information since each organiza-
tion has different policies for information management and distribution (concerning its income, costs, donors, etc.). In many cases, the way information
management is handled is left to the discretion of the different stakeholders.
Ecuador: Distribution of Annual Expenditures by Management Scenario (in US$)
Source: National System of Natural Protected Areas of Ecuador.
Figure 2. Financial Gap Analysis: The Cases of Costa Rica, Peru, and Ecuador
Source: SINAC. Based on mean data for the years 2004, 2005, and 2006.
Costa Rica: Financial Gap by Type of Expenditure (in US$)
Source: SINANPE 2005.
Peru: Financial Gap by Subprogram (in US$)
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 18
The analysis identifes and quantifes current fund-
ing sources and their specifc contribution to different
management programs. The analysis also identifes
both current expenses and investments.
8
The features of a sound fnancial needs assessment are
included in Box 1.
Scenarios
Box 1. Advantages of Conducting a Financial Gap Analysis
n Allows for results to be presented on a static level (for
one year in particular) and on a dynamic level (for several
years), according to specifc information requirements.
n Makes it easy to generate comparative information on
different areas, because this tool employs a manage-
ment program and activity structure that has been
validated by protected area authorities.
n Facilitates fnancing of activities and cost reduction.
n Provides valuable information to measure progress by
determining the current situation (baseline).
n Identifes fnancing sources and determines short-,
medium-, and long-term funding needs.
n Reveals essential information for the fnancial plan.
n Enables preparation of economic arguments to lever-
age fnancial resources from the central government,
international organizations, and private donors.
n The results can be used to raise public awareness.
n Guides decision-making in developing the budget.
n Encourages refection and a self-critical stance within
the system and allows for feedback from external
stakeholders.
n Generates a “learning” dynamic for stakeholders
through the process of carrying out the analysis of
needs, income, and gaps.
Table 1. Available Resources vs. Basic and Optimal Scenarios, SINANPE Peru* (in thousands of US$)
PROGRAMS AND SUBPROGRAMS** Available
Resources Basic Optimal
Resource Conservation
Protection and surveillance 1,153 2,474 2,470
Resource management 614 1,276 1,316
Public Use
Tourist and recreational use 568 - 1,219
Environmental education 595 - 1,278
Research 455 - 975
Management Support
Operations and administration 13,847 17,108 29,661
Planning and monitoring 473 921 1,012
Citizen participation 350 - 749
Total 18,058 21,781 38,683
* Figures have been taken from the Analysis of SINANPE Financing Needs 2005-2014.
** The classifcation of programs has been taken from the Natural Protected Areas Intendance. Peru. 2006.
*** Amounts based on the SINANPE budget for 2005, INRENA. 2005.
8. Análisis de las Necesidades de Financiamiento del Sistema Nacional de Áreas Naturales Protegidas del Ecuador, (Ministry of Environment, 2005), identifes seven
expenditure categories: 1. Staff, 2. Operating expenses, 3. Maintenance, 4. Equipment, 5. Professional services, 6. Infrastructure, and 7. Transportation.
Of these, 1, 2, 3, 5, and 7 are current expenses: the others are investment expenses.
***
The Nature Conservancy 19
n The analysis is based on conservation priorities:
The analysis recognizes conservation objectives
as key input for the development of fnancial esti-
mates. Conservation priorities include criteria related
to biodiversity, ecological balance, ecological gaps,
and preservation. These priorities are translated into
management programs (for example, administration,
control and surveillance, expansion of conservation
areas, participatory planning, community develop-
ment, and environmental education), which are key
elements of other important protected area manage-
ment tools, such as the master plan or strategic plans.
n The analysis defnes a basic management scenario
(basic level): Describes the minimum level of funding
required to operate key conservation programs while
meeting basic program’s requirements to sustain the
functions of the ecosystems in the protected areas.
n The analysis defnes an optimal management sce-
nario (optimal level): Describes the ideal level of
funding required to operate all programs to reach
and sustain optimal functions of the ecosystems in
the protected areas. It describes the ideal state of the
programs if all necessary funding, personnel, equip-
ment, and other resources were available to achieve
that state (CPM, 2002). This ensures the achieve-
ment of short-, medium-, and long-term goals for
the protected area, in accordance with the highest
environmental, social and economic standards. Table
2 shows the initial results of fnancial needs and gaps
analyses conducted in six countries.
n The analysis establishes a baseline (current situation
or starting point): The analysis determines the current
situation by considering fnancial needs and the avail-
ability of fnancial resources. The baseline is established
by examining the management programs selected for
both the basic and optimal scenarios. Because income
levels are reviewed, the baseline also provides an initial
mapping of funding sources and it is a concrete reference
point to measure progress in fnancial terms.
n The analysis helps to establish protected area man-
agement standards: Based on the different categories
of expenses and investments, the fnancial analysis
helps to defne standards
9
for effcient management
of conservation programs. For example, this tool can
be used to determine the number of park rangers
required for basic or optimal patrolling, considering
both existing threats and the need for greater cost-
effectiveness in terms of kilometers covered.
n The analysis helps to improve management of funds
at the system
10
and protected area levels: Given the
existence of laws and fnancial mechanisms affecting
protected areas, the fnancial analysis clarifes how
9. The adoption of research-based standards, lessons learned, and best practices provides an excellent frame of reference to increase the cost-effectiveness of
management programs.
10. System expenses can include activities related to coordination, policy formulation, and the maintenance and control of the group of protected areas from
a national institutional environmental perspective. System expenses may include such line items as: staff (for example, central payroll employees and staff
in decentralized offces), materials, and other operational resources at both national and regional levels.
Estimated
Annual Needs of
the Protected
Area System
Estimated Annual
Income to the
Protected Areas
from National
and International
Sources
National International Basic
Composción de los ingresos
existentes (en %)
Brecha de fnanciamiento
actual del sistema de
áreas protegidas
Optimal
Table 2. Results of Financial Gap Analyses (in millions of US$)
N/A: Not available
Costa Rica 36 17 80% 20% 14 19
Grenada 2.2 1.4 80% 20% 0.8 N/A
St. Vicent 2.5 1.5 80% 20% 1 N/A
Ecuador 6.2 2.7 70% 30% 3.5 9.2
Peru 41.8 10 20% 80% 14 31.8
Indonesia 160.3 53.3 71% 29% 106.9 N/A
Region /
Country
Composción de los ingresos
existentes (en %)
Brecha de fnanciamiento
actual del sistema de
áreas protegidas
Composition of
Existing Income
(in %)
Current Financial
Gap of the
Protected Area
Source: Information consolidated by TNC.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 20
expenses and income are broken down. In this way,
expenses covered at the central or regional levels (sala-
ries, for example) are also included to facilitate making
comprehensive calculations of the investment needed
for protected areas. In addition, the analysis also takes
into account revenue management to clarify whether
the resources generated by the protected areas are to
be remitted to the central level, or maintained in the
protected areas where they originate.
n The analysis includes an ongoing monitoring compo-
nent: An ongoing monitoring process that compares
projections of income, expenses, and fnancial gaps
with amounts executed (on an annual or semiannual
basis, etc.) is essential for ensuring adaptive fnancial
planning over time. This process can be supported
by using computer tools to facilitate the analysis. The
fnancial sustainability scorecard developed by the
UNDP is an interactive tool that can be used to moni-
tor protected area fnances over time. See section 4.2.
1.2. Prior Conditions
The key existing conditions for conducting a fnancial
analysis include:
n Commitment of government and relevant authorities
(for example, the ministries of Environment, Finance,
and Tourism). To build favorable political will that
will make the process viable, this commitment should
be based on a solid understanding of the rational
and objectives of a fnancial analysis. Planners must
remember that each part of the process may require
the commitment of different stakeholders.
n Information on management policies (for example,
in the master plan, strategic plan, or management
plan) is a critical input to quantify financial needs
by specific activity and program. Carrying out a
financial analysis without these programmatic
inputs is not ideal. Information on management
effectiveness (strengths and weaknesses) and ca-
pacity building needs are also important to ensure
that the financial analysis covers the improve-
ments needed to achieve protected area objectives.
However, in the absence of updated management
plans, programmatic priorities can be clarified by
conducting structured and semi-structured inter-
views complemented by quantitative information
surveys.
n Information on ecological gaps within the protected
area network: This information is a critical element
when determining future fnancial scenarios, and
should include the projected increase in protected
area size and coverage, or information on new pro-
tected areas.
n Establish a specialized multidisciplinary technical
team led by a professional with relevant experience. The
technical team should be made up of individuals with
broad knowledge of the national system of protected
areas, expertise in fnancial planning, and experience
working with Finance ministry offcials involved in
Box 2. Participation by a Secondment in the Financial Strategy of SINAC, Costa Rica
Much of the success in developing fnancial plans for
the national system of protected areas stems from
support provided by a technical assistant or
secondment to the work team during the
fnancial planning process.
Unlike ordinary consultancies, the purpose of a
secondment is to merge different organizational
cultures, and to obtain their best effort to achieve
the goals and objectives of the work they have been
charged with. Some of the characteristics of an
effective secondment are:
n Full-time dedication to the process.
n Total identifcation with the project’s guidelines
and needs.
n Substantial knowledge of, and interaction with,
key offcials involved in the process.
n Emphasis on analysis of the results obtained.
n Identifcation of related factors that affect
fnancial planning.
n Constant monitoring and feedback on the process.
n A high degree of operational autonomy.
However, it must be stressed that the secondment
should receive adequate support from a key offcial or
offcials in the process. In the case of SINAC, the insti-
tutional fnance specialist was designated to supervise
and support the work of the secondment.
Source: SINAC/ TNC, 2007.
The Nature Conservancy 21
formulation of the national budget. It may be necessary
to have a dedicated professional (secondment) who is
responsible for facilitating the fnancial planning pro-
cess inside the ministry of Environment or the national
park system (see Box 2). Having this professional inside
the protected area system facilitates process fow and
strengthens the capacity of the system.
n Identifcation of key stakeholders,
11
particularly
those with access to fnancial information. These
include both internal stakeholders from within the
national system of protected areas (offcials, techni-
cal staff, planners, etc.), and external organizations
outside the environmental sector (international
development organizations, ministries of Finance,
Tourism, NGOs, etc., see Table 3).
n Centralized and up-to-date information on the
fnancial situation is critical for the analysis of
expenses, income, and gaps. If only partial data is
available at the central level, the results obtained will
not have suffcient accuracy to infuence decision
making. In this case, in order to fll the information
gap, it is necessary to gather additional information
from primary frst-person sources through surveys,
interviews, focus groups. Table 4 presents examples
of different categories of information to be gathered
when conducting a fnancial analysis.
n
n Often, information is not available or is out of date,
and the institutional structure may lack defnition or
be undergoing changes. Given that these situations are
very common in protected area systems, participants
must collect basic information before proceeding with
the fnancial analysis. For example, in the case of Ja-
maica, the analysis was based on an extensive review of
studies, and interviews with key stakeholders from pro-
tected areas and focus groups. This preparatory work
focused on three areas: an analysis of the management
plan for the protected area system, on the regulatory
and institutional framework, and on government pri-
orities. Based on this “situational analysis”, a short-term
action plan was developed to strengthen leadership
and build capacities to address challenges related to
both management and fnancing of the protected area
system. Documentation of this situational analysis can
be found on the Jamaica Protected Area Trust web site:
www.jpat-jm.net/backgrnd/backgrnd.html. This work
was essential to draft the terms of reference
12
for devel-
opment of the fnancial strategy for Jamaica’s protected
area system (see Annex 2).
n Access to funds to cover the costs of the various
activities in the process. Planners must estimate the
cost of the process and its duration to determine
potential funding sources and identify possible part-
nerships to achieve the expected results.
11. Normally, a memorandum of understanding is established between key stakeholders to provide a mutually agreed upon platform for the performance
of joint activities.
12. Prepared by the Center for Park Management in collaboration with the government of Jamaica and TNC, December 2006.
Table 3. Participation of Key Actors in the Financial Gap Analysis
Level of contribution to the fnancial gap analysis: Low, Medium, High.
Government Ministry of Environment Medium
Ministry of Finance High
Municipalities Low
Auditors Low
Private sector Consultants High
Industry Low
BINGOS Medium
Local NGOs Medium
Research and development Universities High
Research Centers High
Actor Agency Participation
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 22
1.3. Stages in the Process
A fnancial analysis is comprised of four stages: planning
and preparation, information gathering, processing and
analysis, and validation of results. Details of these steps
are discussed below. Figure 3 illustrates the activities and
results of each state of the process in Peru.
1. Planning and preparation: This frst stage consists of
defning the objectives and scope of the work. To this
end, it is critical for the success of the analysis to defne
who the clients of the analysis are. Typically the fnancial
analysis will have multiple clients, for example: govern-
ments agencies such as the Ministry of Environment,
the National Protected Area Authority, the Ministry of
Finance & Economy, the Ministry of Tourism, private
sector enterprises, international cooperation organizations
(bilateral and multilateral), and international and national
NGOs. Thus the fnancial analysis may have multiple
objectives in order to address the needs of multiple clients.
This stage is complemented by the selection and validation
Table 4. Examples of Categories of Information Required for the Financial Gap Analysis of a Protected Area
Source: Expenditure categories taken from Long-term Financial Planning for Parks and Protected Areas. The Nature
Conservancy, USAID, and World Commission on Protected Areas, 2001, USA.
Categories 2004 2005 2006
Income Sources
Municipal 26 30 42
Central Government 233 273 376
Private Sources 25 29 40
Self-Generated Funds 14 16 22
Total National Sources 297 349 480
International Sources
Bilateral and Multilateral Entities 222 299 343
Private Sources 1,005 1,351 1,547
Total International Sources 1,227 1,650 2,164
Total Sources of Income 1,524 1,999 2,644
Expenditures by Program
Management and Research 588 738 1,027
Public Use and Education 555 722 951
Administration and Development 376 536 657
Total Expenditures 1,519 1,996 2,635
ToTAl 5 3 8
Breakdown of Expenditures
Categories According to Accounting Items 2004 2005 2006
Salaries 137 170 264
Training 76 90 145
Equipment and Materials 106 120 190
Transportation and Vehicles 91 100 184
Construction 197 240 356
Field Operations 258 319 435
Special Studies 122 190 179
Land Acquisition and Conservation 304 419 501
Institutional Administrative Support 94 150 158
Professional Services 103 140 184
Audits 30 60 40
Total Expenditures 1,519 1,996 2,636
(Thousands of US$; hypothetical)
The Nature Conservancy 23
of the methodology (standards based on clients’ needs,
objectives, and scope of work) and supportive tools for
information gathering and processing. Particular attention
must be placed on defning the standards, for example:
n Links between conservation goals and costs by using
functions, programs, indicators and metrics to mea-
sure achievement (Activity Based Cost accounting).
n Responsible staff (central and site-based) is assigned
to each function and program.
n Financial information is available for at least one
fscal year.
n Defnes investment priorities and cost reduction
opportunities.
n Defnes basic and optimal funding needs and gaps.
n Includes a fnancial position statement.
n Financial information is fed from the sites to the
central level.
The most important product of this stage is the ‘terms
of reference’ for the fnancial analysis. In addition, the
planning team should identify the location of neces-
sary information, the stakeholders who will contribute
(inputs and any technical assistance), and the universe
Figure 3. The Process of Preparing a Financial Analysis for the National System of Protected
Areas of Peru
Stages
Activities Results
1.
Planning and
preparation
Defnition of the scope and terms of reference
n Determination of expected products
n Defnition of the methodology to be used
Terms of Reference defned
to carry out the fnancial
needs and gaps analysis.
2.
Information
collection
n Identifcation of key stakeholders; organi-
zation of support and fnancing
n Management and/or strategic plans,
accounting and fnancial reports and
budgets
n Program activities and their impact on a
fnancial level
n Identifcation of criteria for basic and
integral scenarios
n Use of templates (forms, data sheets,
etc.) for data collection on income, dis-
bursements, needs and allocated amounts
Team trained in
data collection.
Relevant stakeholders
involved and
actively participating.
Necessary and suffcient
data collected on income,
disbursements, needs, and
allocated amounts.
3.
Processing and
analysis
4.
Validation of
results
n Distribution of the results of the analy-
sis to the stakeholders and participants
n Participatory review and interpretation
of the results
n Refection on future options for fnan-
cial sustainability
n Coding and review of data collected
n Organization and tabulation of the fgures
collected
n Study of the historical behavior of income,
disbursements, needs and allocated
amounts
n Preparation of tables and fgures compar-
ing both current income with current dis-
bursements, and needs (basic and integral
scenarios) with projected income
Financial gap calculated
between both current income
and disbursements, and
between needs (basic and
integral scenarios) and available
and potential income.
Management programs to be
prioritized have been identifed
Key investments and essential
operating costs clearly defned.
Shared understanding of
the fnancial gaps faced by
the protected area
and development
of a discussion forum
to generate
alternative solutions.
Source: F. León, IANP, 2006.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 24
of protected areas to be included in the analysis. Annex
3 presents an example of the terms of reference used to
carry out a fnancial analysis in Ecuador.
2. Information collection: This next stage is a partici-
patory process involving the main stakeholders from
the government, private sector, cooperation agencies,
and NGOs, among others. This process includes the
collection of primary and secondary information
13
cor-
responding to the expenses, income, and needs of the
protected areas. Gathering good data requires train-
ing in appropriate techniques and forms for collecting
information (for example, questionnaires, checklists,
survey instruments, matrices), as well as logistical
coordination among the many team members.
14
Box 3
presents recommendations for information gathering
and Box 4 summarizes the experience of Peru.
3. Processing and analysis: This third stage is often
a less participatory stage. It is aimed at organiz-
ing and consolidating information for the purpose
of drawing conclusions, and includes the coding,
review, validation, and organization of data on op-
erating expenses, investments, program implemen-
tation, financing mechanisms, and income sources.
All data must be processed adequately to facilitate
comparisons with data from other protected areas.
15
When conducting the financial analysis, planners
examine the magnitude of the financial gap by
comparing the income and expenses in the current
situation with the needs defined in the basic and
optimal scenarios. In order to facilitate the analy-
sis of the current financial situation, the analysis
should cross-check information (for example,
primary vs. secondary sources), study patterns (for
example, plans for income generation or decisions
about expenditures), and find a balance between
Box 3. Suggestions for Information Collection
n Contact the stakeholders in advance to be included in
the process and to coordinate agendas.
n Coordinate closely with staff experienced in program
management, the accountant, and the person respon-
sible for the protected area’s budgets.
n Use templates (forms, data sheets, etc.) to gather pri-
mary and secondary information in an orderly manner.
n Review management plans and/or strategic plans,
accounting and fnancial reports, and budgets.
n Review the historical evolution of program activities
and their impact on a fnancial level: income by type
of source, operating costs, and investments.
n Collect accounting information that quantifes the
amounts allocated to the different management pro-
grams or activities implemented in the protected area.
n Coordinate with other actors (governmental, private,
NGOs, etc.) who possess relevant program and fnan-
cial information.
Sources: Business Plans for Parks and Protected Areas, Center for Park Management, National
Parks Conservation Association, 2005, United States; Long-term Financial Planning for Parks
and Protected Areas, The Nature Conservancy, USAID and the World Commission on Pro-
tected Areas, 2001, United States.
13. Primary information is comprised of information obtained directly from surveys, interviews, focal groups, etc. Secondary information is based on existing
information collected from studies, research, and reports, etc. produced by other organizations and/or individuals.
14. Annexes 4 and 5 present examples of steps and support techniques for information collection. In addition, Annex 6 shows how the information gathered
in Peru, Ecuador, and Costa Rica was validated.
15. The level of sophistication of the data processing and analysis stage can vary from the use of a spreadsheet such as MS Excel to the use of specifc
statistical programs such as the SPSS (www.spss.com), or databases.
The Nature Conservancy 25
detailed information and data aggregation. In the
analysis stage, team members should consider issues
ranging from program strategy to operating expens-
es, including proposed investments in the basic and
optimal scenarios. Table 5 shows a range of tools for
processing and analyzing data.
4. Validation of results: In this fnal stage, the planning
team shares results with all participating stakeholders
in order to validate and reach a common agreement
on the results and refne conclusions. The team re-
views the needs of the basic and optimal scenarios, and
reaches an agreement on the fnancial gap and on cur-
rent and future resource needs. Validating the results
Table 5. Data Processing and Analysis Tools
Analysis
variables
n Use
n Data entry
n Investment
n Processes
n Data management
n Visualization of results
Tools
Spreadsheet
(Example: MS Excel, lotus)
Easy-to-use and generally intuitive
Easy-to-use for data entry
Included with MS Windows
Limited functionality for statistical
comparisons
Useful with small and medium
amounts of information
Include a variety of graphics and
results tables
Statistical Software
(Example: SPSS, SAS)
Requires training
Depends on the type of software
Depends on the type of software
Includes a variety of statistical
functions
Handles large numbers of records
with no problem
Offer many interesting graphics
options
Box 4. Collection of Financial Information on Protected Areas – Aspects Considered in Peru
Operating cost level
Planning documents: Management plans, period
covered, and costs of preparation or updates.
Protected area staff: Number of workers by position,
description of each position (manager, park rangers,
legal counsel, etc.), net monthly and annual salaries
received, and type of work.
operating costs in the feld: Unit of measure for each
resource, quantity, unit cost, and monthly and annual
cost of each expense item (fuel, rent, per diem,
messenger services, etc.).
Administrative costs: Monthly and annual cost of all
necessary resources (water, electricity, telephone,
insurance, etc.).
Training: Monthly and annual costs by type of training
(carried out by the National System of Protected Areas
or by other organizations).
Vehicle, infrastructure, and equipment maintenance:
Monthly and annual costs of preventive and corrective
maintenance, etc., and unit costs of maintenance.
Investment level:
Infrastructure, vehicles, and equipment: Type, quan-
tity, date of acquisition or construction, and estimated
useful life and unit costs.
Income level:
Detailed information on all current and potential
fnancing sources: State resources, own resources
(self-fnancing), transfers and donations, international
cooperation, debt-for-nature swaps, and resources from
private organizations, NGOs, foundations, etc.
Current income from protected areas: Annualized amount
by source and term of main fnancing agreements.
Average income over the last fve years: Annualized
amount of historical income received.
Potential income from protected areas: Annualized
amounts by source, dates when this income will become
available, and potential cooperating organizations.
Source: Proceso de Construcción del Plan Financiero a largo plazo para el SINANPE. Primera
Fase: Análisis de las Necesidades de Financiamiento del SINANPE 2005-2014.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 26
can be accomplished through several iterative rounds of
interaction. Annex 7 shows an example of the consoli-
dated information that can be shared with different
stakeholders during this stage.
1.4. Use of the Results
In the fnancial planning process, the results of a fnan-
cial analysis are used primarily as inputs for developing
a fnancial plan. The results of this analysis also con-
stitute a baseline that serves as a point of reference for
both monitoring and evaluation during implementation
of a fnancial sustainability plan.
Moreover, the planning team can use the financial
figures from the financial analysis to mobilize politi-
cal will of public and private decision makers and the
national cooperating agencies to increase protected
area investments, and to secure their participation as
short- and long-term partners. The results can also
be used to increase public awareness through infor-
mation campaigns.
Box 5 presents the results obtained in two specifc protected
areas based on a fnancial analysis carried out in Peru.
A concrete example of how a fnancial analysis can
garner support is the funding that the Gordon and
Betty Moore Foundation provided to SINANPE
through the Andes-Amazon Initiative (see Box 6).
1.5. lessons learned
The following lessons were learned during the imple-
mentation of fnancial analyses in Costa Rica, Peru,
and Ecuador.
n Assessing protected area management from a biolog-
ical perspective only often results in limited attention
to critical fnancial aspects. This, in turn, leads to un-
informed decisions that undermine the achievement
of critical conservation goals. Therefore, the training
of planners involved in protected area management
should include all aspects of fnancial planning. A
fnancial analysis (needs and gaps) is a careful exami-
nation of needs and resources. This is not an academ-
ic exercise but, rather, a concrete process with practi-
cal fndings and clear implementation guidelines. The
fndings of the fnancial analysis, if used strategically,
can lead to improved protected areas’ fnancial
sustainability.
Box 5. Protected Area Financial Plans Based on the Financial Gap Analysis of the System of
National Protected Areas of Peru
The SINANPE Financial Needs Analysis (2005-2014)
provides the database for this protected area system
and also constitutes a good frame of reference for
determining the fnancing needs of specifc areas.
Based on the above-mentioned study, two fnancial
plans have so far been prepared, corresponding to
the protected areas of:
n Pacaya Samiria National Reserve
(prepared between January and June 2006)
n Yanachaga Chemillén National Park
(prepared between July and December 2005)
Both plans were developed by consultancies.
These processes verifed that the fnancial gap
fgures obtained in the two studies were very close
to those obtained in the fnancial needs analysis
conducted for the whole system, thus validating the
methodology used in the SINANPE fnancial needs
analysis. Figures from both studies appear below.
*For the optimal level
The use of the results for the system saved time in
building the database, leaving more time for valida-
tion of information, analysis of results, and develop-
ment of feasible fnancial strategies.
Source: F. León, IANP, 2006.
Protected Area
/ Projection
Needs analysis
of the system*
(in US$)
Protected area
fnancial plan*
(in US$)
Pacaya Samiria
National Reserve 1,496,734 1,479,993
Yanachaga Chemillén
National Park 637,081 580,000
The Nature Conservancy 27
n The national authority for protected areas must own
the process of identifying current and future fnan-
cial needs for the protected areas, as well as cost
reduction opportunities. Their understanding of the
usability of the fnancial analysis is indispensable for
them to provide leadership in the process.
n Broad and organized participation is important to
compare and contrast approaches, and to improve the
accuracy of the data used to determine funding needs
and gaps. Having a mechanism for inter-institutional
coordination (for example, a memorandum of under-
standing) greatly facilitates the process of conducting a
participatory fnancial analysis.
n Information provided by protected area staff in the
feld is indispensable because non-quantitative as-
pects are vital to understand the true signifcance of
the fnancial information and data for the study.
n A fnancial analysis helps to make members of the
national system of protected areas aware of the cur-
rent and future fnancial situation so that they can
make informed decisions on how to improve pro-
tected area fnance.
n Realistic fnancial information in the fnancial analysis
becomes a fundamental tool, not only for the design of
a fnancial plan and improved fnancial management,
but also to persuade potential donors of the verifable
and accurate fnancial needs of the protected areas and,
thereby, to secure their fnancial support.
n Clearly defned objectives and standards are indis-
pensable for a successful fnancial analysis. Thus, it
is critical to defne who the primary clients of the
analysis are and how the results will be used. Subse-
quently the stakeholders should agree on the stan-
dards that will be applied during the study. In the
absence of standards it is diffcult to compare re-
sults from country to country and aggregate regional
data, which is useful for international cooperating
agencies and donors. An absence of standards may
also undermine the quality of the study and, conse-
quently, its usability.
Box 6. Financial Needs Information and the Moore Foundation
Information on protected area fnancial needs, pro-
jected to 10 years (2005-2014), can be very useful
to inform cooperating organizations of the extent
of investment required to improve management of
protected areas.
In the case of the Moore Foundation, the fnancial gap
analysis conducted by SINANPE enabled the founda-
tion to make decisions quickly and to continue con-
solidating its fnancial support in natural areas with
great conservation potential in the Amazon jungle of
Peru. In the framework of the Andes-Amazon Initia-
tive, the Moore Foundation is implementing a pilot
project aimed at promoting the fnancial sustainabil-
ity of new natural areas in this region.
Furthermore, the foundation has donated US$724,120
for the purchase of equipment, outftting of offces
for administrative staff, implementation of monitor-
ing activities, and the defnitive categorization of the
Santiago Comaina Reserve Zone.
The foundation also contributed to the declaration of
Sierra del Divisor as a Reserve Zone in April 2006. The
Moore Foundation’s fnancial support for implementa-
tion of this new protected area is part of a binational
project supporting conservation of Sierra del Divisor.
This project is implemented by TNC with partners in
Peru (Pronaturaleza, IBC, SPDA, CDC, and DAR) and
Brazil (SOS Amazonía and the Pro-Indian Commission
of Acre — CPI/AC).
Source: Based on contributions from TNC, CI, and INRENA.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 28
The Nature Conservancy 29
The next step in the fnancial planning process is
identifying and selecting fnancial mechanisms that can
maintain and increase income from existing sources and
establish new alternative resources in order to reduce
fnancial gaps. This step requires a systematic approach.
The identifcation and selection of fnancial mecha-
nisms should focus not only on conventional options,
such as annual government appropriations, interna-
tional grants and trust funds, which are often subject
to political pressures and diffcult to capitalize (in the
case of trust funds). The range of fnancial mechanisms
should include innovative alternatives (i.e., environ-
mental compensation funds, payment for environmen-
tal services, taxes, and other pricing instruments).
This chapter addresses the processes of pre-selection,
selection, and diversifcation of fnancial mechanisms,
considering market criteria, implementation complex-
ity, and potential impact. Given the proliferation of
existing literature on the range of fnancial mechanisms,
this aspect has not been considered in this chapter.
17
The framing questions for this chapter, below, are based
on experiences in Costa Rica, Ecuador, and Peru.
n What is meant by ‘fnancial mechanism’?
n What steps are involved in the identifcation, selec-
tion, and diversifcation of fnancial mechanisms?
n Why is it necessary to analyze existing and new
mechanisms?
n What criteria should be considered in the selection
of fnancial alternatives?
n What are the expected results?
2.1 Financial mechanisms
For the purpose of this document, fnancial mecha-
nisms are tools designed to raise, generate, or mobilize
funds to cover the different costs related to the imple-
mentation of conservation programs. Financial mecha-
nisms also contribute to build fnancial management
capacity because different sets of skills are required to
design, assess, and implement the great variety of exist-
ing fnancial mechanisms.
Financial mechanisms may be designed to mobilize
social and environmental benefits in addition to fis-
cal benefits. A solid connection between the alloca-
tion of funding from a diversified portfolio of finan-
cial mechanisms and priority investment programs
is critical to reducing financial gaps and ensuring the
long-term financial sustainability of the protected
area system.
Different criteria are used to classify fnancial mecha-
nism in order to facilitate planning and selection of
fnancial options (see Table 6). For example:
n Geographic criteria — international, national, and
local: In this document, this classifcation is used to
indicate the origin of the source of income.
Chapter I I
Financial Mechanisms:
Pre-selection, Selection, and Diversifcation
16
16. This chapter focuses on identifying fnancial mechanisms to support the sustainability of protected areas or protected area systems. This chapter does
not discuss specifc fnancial mechanisms.
17. For a detailed description of the fnancial mechanisms available for protected areas, see the Conservation Finance Guide, Conservation Finance
Alliance, www.conservationfnance.org.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 30
The Global Environment Fund (GEF), established
in 1991, is an international mechanism attached to
the Convention on Biological Diversity (CBD). Its
purpose is to fnance environmental protection proj-
ects in developing countries.
A national protected areas trust (endowment) fund
18
illustrates a mechanism with a national scope when it
supports the entire national protected area system. It
generates resources through rates of return on stock
market investments to fnance the cost of conservation
programs over time. “Environmental funds have been
set up in many countries as a way of managing funding
for protected areas. Such funds are typically estab-
lished in conjunction with large, one-off contributions
from donor agencies or NGOs. These funds may be
supplemented or replenished by private sector con-
tributions, fscal revenues, and earnings from market-
based charges for PA goods and services. Three types
of trust funds are common: endowment funds spend
only income while attempting to maintain or enhance
capital; sinking funds liquidate all of their assets
over a specifed period of time (for example, inter-
national projects or grants); while revolving funds
are designed to receive regular replenishments often
from various sources (for example, the GEF, which is
replenished by donor governments every four years).
Of these, only the frst is truly a long-term or revenue-
generating fnancial mechanism” (IUCN, 2003).
Individual protected area entry fees and site-based
tourism concessions that generate income which is
retained by the protected area are examples of fnan-
cial mechanisms with local scope.
n Market and non-market criteria: These mechanisms
focus on environmental externalities
19
generated by
market failures. To this end, fnancial mechanisms
aim to: a) cover the environmental costs of produc-
tion or consumption activities that are not included
in prices by imposing taxes or charges on products or
processes, b) use property rights to establish envi-
ronmental compensation or mitigation payments,
and c) develop alternative markets for environmental
18. For further information about trust funds, see www.worldwildlife.org/conservationfnance/trustfunds.cfm.
19. Harm or beneft experienced by an individual or business as a result of actions taken by other persons or entities: Positive externalities are produced
when an agent’s actions increase the well-being of other agents of the economy. Negative externalities are generated when an agent’s actions reduce the
well-being of other agents of the economy. Examples of negative externalities are: pollutant emissions and tailings from mining extraction, which are not
usually included in the costs and prices of the minerals, and, similarly, emissions and organic waste resulting from the production of fsh meal, which are
not generally included in fsh meal costs and prices.
Cuadro 6: Mecanismos financieros para áreas protegidas
Payment of tourism fees
Natural resource extraction fees
Carbon capture projects
Charging for the use of water resources
Sale of souvenirs
Government allocations/transfers
Fiscal instruments (taxes, etc.)
Investment funds
Donations from for-proft and not-for-proft entities
Global initiatives (Global Environment Facility)
Debt-for-nature swaps
Multilateral organizations (donations, cooperation)
Donations from foundations, NGOs,
international corporations
Geographic criteria
Market and non-
market crteria
Protected
Area
Yes No
International
level
Regional and
national
X
X
X
X
X
X
X
X
X
X
X
X
X
Financial mechanisms
X
X
X
X
X
X
X
X
X
X
X
X
Table 6: Examples of Classifications of Financial Mechanisms for Protected Areas
Adapted from: Conservation Finance Alliance, 2002, and Barry Spergel, 2007.
The Nature Conservancy 31
services (see examples in Table 7). Market-based
mechanisms are expected to offer competitive alter-
natives and create special niches so that the different
stakeholders can act in ways that most beneft them
without deteriorating the environment.
Mechanism such as government appropriations,
trust funds, and grants are considered non-market
mechanisms since they are designed not to deal with
externalities.
20
It should be noted that the above-mentioned clas-
sifcations are inclusive and complementary; that is, in
practice, mechanisms can be situated at the protected
area level, but their fnancing comes from a combina-
tion of various sources. For example, a trust fund for a
specifc protected area can be fnanced by both national
and international resources. For a more comprehensive
list of fnancial mechanism, see Annex 19.
2.2. Pre-selection of Financial Mechanisms
The identifcation or pre-selection of fnancial mecha-
nisms requires conducting a basic analysis of the viabil-
ity of different fnancial options using specifc criteria
such as level of complexity and potential impact. The
pre-selection of fnancial mechanisms allows fnancial
planners to: a) identify simple fnancial mechanisms not
requiring detailed studies or any legal reform for their
direct implementation (for example, the establishment
of collection boxes for the deposit of voluntary contribu-
tions at the visitor centers of national parks), b) identify
more complex fnancial mechanisms (for example, the
establishment of a trust fund or the creation of a tax)
that require detailed economic, social, legal, and envi-
ronmental viability analyses before making a defnitive
selection, even if the possibilities seem promising, and
c) determine which fnancial mechanisms are not viable
due to their high complexity and low impact.
Two examples of useful levels of analysis for the Pre-
selection of mechanisms are presented below:
21
n The frst level of analysis is based on the comparison
of the expected fnancial impact and the complexity
of implementing the mechanism. Financial impact is
defned as the capacity to generate fnancial resources,
while respecting environmental and social standards.
Complexity includes variables such as duration, multi-
sectoral coordination required, and the need for legal,
institutional and administrative reforms, among others.
This frst level of analysis makes it possible to identify
which fnancial mechanisms would have a greater or
lesser impact, and which would involve a greater or
lesser complexity of implementation.
22
The results of
this analysis helps planners eliminate a number of fnan-
cial options, thereby reducing the time and cost of con-
ducting a true cost-benefts analysis to all mechanisms.
n This method of preselecting fnancial mechanisms is
more effective if carried out through qualitative data
gathering methods, including: interviews with key staff,
workshops, focus groups, and the review of reports
and previous research. The application of the method
should be adapted to local or national conditions.
n Figure 4 presents an example of the application of an
impact-complexity analysis to a set of fnancial mecha-
nisms being considered to support the sustainability of
20. In general, traditional fnancial mechanisms, such as government appropriations and trust funds, are not designed to deal with externalities. However,
these mechanisms are also linked to market conditions in certain circumstances. For example, trust funds are linked to the market because they are
subject to fuctuations in the current rates of return. In the case of central transfers (appropriations), links to the market emerge when the national
budget relies on export prices of raw materials (for example, oil, minerals). In both cases, market fuctuations can cause an increase or decrease in
funding for protected areas.
21. For more detailed information on the pre-selection of fnancial mechanisms, see Business Plans for Parks and Protected Areas, op. cit., or the publication Con-
servation Finance Guide, Conservation Finance Alliance, 2003.
22. The complexity associated with fnancial mechanisms can be determined by measuring a combination of variables. Thus, for example, if this complexity
includes such variables as duration, multisectoral coordination, and necessary abilities, it can be assessed using a common scale to evaluate each variable
(example: a scale from 1 to 10, with 10 being the most favorable value) in combination with a specifc weighting for each variable (example: 15% for
duration, 35% for multisectoral coordination, and 50% for necessary abilities).
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 32
a protected area. In the example, the eight mechanisms
listed below were identifed after exploring possible
goods and services (such as hikes, scenic value, water
resources) the area has to offer, as well as potential clients
(such as tourists, flm producers, the water company).
n As can be seen, Mechanism 1 – collection of spare
change – is located in the “Low Impact – Low Complex-
ity” quadrant. Implementing this mechanism may only
require coin collection boxes and a sign appealing to
tourists to leave their spare change as a contribution to
the preservation of biodiversity. In general, mechanisms
that fall within this quadrant – known as “rapid results”
– do not require deep analyses, involve low investment,
and can be implemented by the protected area staff in
a relatively simple way. They are short-term implementation
mechanisms. However, it should be noted that the time
frame depends on the legal framework in force in each
protected area.
n Mechanisms 2, 3, and 4 – sale of souvenirs, volunteer
program, and voluntary donations in restaurant and
hotel accounts – are located in the “High Impact – Low
Complexity” quadrant, suggesting that their implemen-
tation should be a high priority. Generally, mechanisms
located in this quadrant require a good level of coor-
dination and good relations with other stakeholders
in order to facilitate implementation. As a result, these
Figure 4: Pre-selection of Financial Mechanisms
Mechanisms
1. Collection of spare change
2. Sale of souvenirs
3. Volunteer program
4. Voluntary donations in restaurant
and hotel accounts
5. Adopt a Hectare
6. Increase in entrance fees
7. Payment for water use
8. Establishment of a trust fund
Complexity of Implementation
Low High
High
Low
Relative
Impact
Source: Based on the approach in Business Plans for Parks and Protected Areas. Center for
Park Management, National Parks Conservation Association.
Figure 5: Linking of Goods and Services, Investors, and Financial Mechanisms
*Potential investors can provide funding for the feasibility study.
A
Activities
n Mapping and prioriti-
zation of goods and
services
n Identifcation of busi-
ness opportunities
A. Identify available goods and services in the protected areas.
B. Identify potential clients/investors for the identifed goods and services.
C. Identify a fnancial mechanism to connect goods and services with potential investors (taxes, concessions, etc.).
Activities
n Identifcation of the
fnancial mechanisms
n Feasibility study*
Activities
n Mapping and profling of
potential investors
n Seeking an initial commit-
ment by investors
C
B
Proceed
quickly
Proceed
strategically
Reject Proceed as
appropriate
1
2
3
4
5
6
8
7
The Nature Conservancy 33
mechanisms can be implemented in
the short and medium term. Normally,
they do not require exhaustive studies,
although there may be cases in which it
is necessary to gather specifc informa-
tion to facilitate the analysis, but they
do require concrete action plans to
render them operational.
n The “High Impact – High Complexity”
quadrant contains Mechanisms 5,
6, 7, and 8: adopt a hectare, increase
entrance fees, payment for water use,
and establishment of a trust fund.
These mechanisms are both promising and uncertain
sources of income. In general, they require detailed
studies to clarify their fnancial viability and collat-
eral aspects, such as the need for legal reform and the
identifcation of necessary abilities, among others.
Mechanisms that fall within this quadrant are usually
implemented in the medium and long term.
n Mechanisms located in the “Low Impact – High Com-
plexity” quadrant are a low priority. Generally, they
require the investment of resources and the success
of their implementation is uncertain. It is not recom-
mended that detailed viability studies be carried out
for these mechanisms.
n The result of the pre-selection is a clear mapping of
the most promising fnancial mechanisms. This makes
it possible to eliminate options that do not contribute
signifcantly to the fnancial sustainability of the area,
given their low impact and/or high complexity. It
should be stressed that ranking fnancial mechanisms
(in terms of complexity and impact) depends on each
country’s context.
n The second level of analysis is based on the principle
that it is possible to link a protected area’s goods and
services to potential investors through one or more
appropriate fnancial mechanisms. Figure 5 illustrates
this principle and corresponding activities. This analy-
sis has a greater level of depth and is mainly applied to
the most complex mechanisms (involving medium- and
long-term implementation), which are located in the “High
Impact – High Complexity” quadrant.
23
It is important
to indicate that the analysis of the link between goods
and services, and between investors and fnancial
mechanisms, not only provides more information
about fnancial mechanism possibilities, but also
facilitates the identifcation of potential investors who
are willing to cover the preinvestment
24
costs associ-
ated with the fnancial alternatives under study. The
results of this analysis make it possible to prioritize the
fnancial mechanisms that justify conducting a feasibil-
ity study. The three steps in this analysis are as follows:
(A) Step one: Seek to clarify what environmental
goods and services with high income-generation
potential exist at the level of the protected area
system or of a particular protected area. The map-
ping of the options can be done at a series of work
meetings with stakeholders (for example, protected
area staff, specialized consultants, and representa-
tives from communities adjacent to the protected
area, fnancial entities, and academic institutions,
among others). This process is expected to provide a
clear idea of what goods and services exist and what
their potential is. Ideally, the aim is for this analysis to
generate clear, specifc ideas that can be presented to
possible investors or other stakeholders, as indicated
in the next step. Table 7 presents examples of goods
and services.
(B) Step two: Based on the characteristics of the
goods and/or services that are defned, the next step
is to identify possible clients/investors with suff-
cient fnancial resources and interest in investing and
obtaining favorable returns from the production of
environmental goods and/or services. According to
23. It should be noted that this analysis can also be applied to the “Low Impact – Low Complexity” and “High Impact – Low Complexity” quadrants in order to
validate the results obtained from the analysis of impact vs. implementation complexity.
24. Preinvestment expenses include the costs of information, surveys, consultants, studies, etc.
Examples of goods Examples of services
n Ecotourism n Biodiversity conservation
n Sport fshing n Habitat for endangered species
n Medicinal plants n Protection from storms
n Water and wood n Grazing lands
n Fruits and other foods n Water/energy services
n Genetic material n Flood control
n Natural scenic beauty n Climate change mitigation/Carbon
sequestration
Table 7: Types of Goods and Services Protected Areas Can Offer
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 34
the type of product or environmental service, inves-
tors can be from the private or public sector, includ-
ing national businesses, international corporations,
municipalities and regional governments).
The identifcation of potential investors should be
selective, based on the opportunities identifed in the
previous step. Therefore, it is necessary to carry out a
local and international survey of businesses and organi-
zations interested in sustainable use of natural resources
to generate economic, environmental, and social
benefts. Thus, it is advisable to make direct contact
with chambers of commerce and exporters, investment
promoters, as well as other business networks, to discuss
opportunities, mutual benefts, and the challenges
associated with using goods and services from protected
areas. The expectation is that this dialogue will result in
one or more investors becoming interested in funding
pre-feasibility studies. It may be necessary to conduct
additional, basic studies in order to develop adequate
arguments (including, for example, surveys on willing-
ness to pay for services and spending capacity, percep-
tions of environmental services, and other exploratory
studies) to persuade potential investors to invest funds
in feasibility studies. It also may be helpful to collaborate
Table 8: Linkage of Goods and Services, Investors, and Financial Mechanisms
Source: Cases taken from Ecuador,
Costa Rica, and Peru.
* In addition, agreements have been signed with the CONELEC, AGIP, HCJB, and EMAAP-Q companies to pay for the
use of areas where they have infrastructure and/or carry out projects.
** Indicates services from protected natural areas and wildlife biodiversity that are contained in the Unifed Text
of Secondary Environmental Legislation, Book IX, and which deliver income to the Protected Area System.
Investors
Quito Metropolitan Area Sewage
and Water Company (EMAAP-Q)*
National and foreign tourists**
Tourism companies operating in
protected areas**
Tourism-related companies in
the Galapagos
Electric companies that use
protected areas**
Evian Company
Florida Ice & Farm Co.
Central government
Techos de Paz
Merck, Sharp & Dome
California’s Garden
Municipal Service Providers
(EPS) of Moyabamba
Duke Energy
SINANPE/Proabono
Several tourism companies oper-
ating in the Manu National Park
Financial Mechanisms
FONAG (Water Fund): Financing of community park rangers in protected
areas of interest to EMAAP-Q; and 1:1 matching funds for the development
of projects to protect Quito’s water catchment sources.
Payment of a variable fee depending on the protected area and tourist
category.
Payment for tourism operation permits.
Donations from tourists.
Annual payment (US$3,000) for the installation and operation of electric
energy towers. Each additional tower costs US$100.
Donation of a percentage of the sale of bottled water.
Donation of one colón for each bottle of water sold.
Water tax (for example, 1.9 colones for the use of water by agroindustry).
Fixed donation (US$10,000) for each condominium sold near a protected area.
Royalties on profts made from the use of genetic material in
pharmaceutical products.
Varied donations from the use of water for fsh farming (trout).
Specifc payment of two soles over the drinking water fees to fund various
conservation activities.
Voluntary donation to SINANPE, linked to water use for electricity generation.
Rate or percentage of sales from fertilizer extracted from the Guano
Islands and Peninsulas.
Fee of US$10,000 for non-consumptive landscape-use rights.
Goods / Services
Ecuador
Water
Tourism
Energy
Costa Rica
Water
Forests
Genetic material
Peru
Water
Organic fertilizer*
Scenic beauty
The Nature Conservancy 35
with international organizations in order to optimize
the results of the dialogue with the business and gov-
ernment sectors.
(C) Step three: Identify the most appropriate
fnancial mechanisms to link the selected good
and/or service with potential investors. This step
is more technical and may require strategic advice
from experts and national or international organi-
zations with experience in the subject, as well as the
active participation of the potential investor. This
part of the process helps to visualize the type or
types of mechanisms that can best engage a poten-
tial investor.
From the fnal result of this three-step analysis, it is
expected that the protected areas under consider-
ation should have an investor interested in specifc
goods or services and in providing funds for the
feasibility studies. Table 8 presents specifc examples
of goods and services, investors, and fnancial mecha-
nisms. In turn, Figure 6 shows the process used in
Ecuador to prioritize fnancial mechanisms for that
protected area system. (Annexes 8 and 9 describe
the methodology used.)
2.3. Selection of Financial Mechanisms
For the purposes of this document, the selection of
fnancial mechanisms is guided by the results of the
feasibility analysis
25
of one or more preselected fnan-
cial mechanisms.
The results of the feasibility analysis
26
help to deter-
mine whether or not to proceed to implement the
fnancial mechanism under study. If, during the
Figure 6: Sequence for Prioritization of Financial Mechanisms for the System of Protected Areas of Ecuador
Identifcation of conservation fnancial mecha-
nisms used in the country and abroad.
Result of grouping similar fnancial mechanisms.
List of prioritized fnancial mechanisms based
on the criteria established.
Besides the frst-priority mechanisms, 11
second-priority and 10 third-priority mecha-
nisms were identifed. For a description of each
mechanism, see Annex 9.
As a result of the presentation of the identifed
fnancial mechanisms to the stakeholders, ad-
ditional mechanisms were suggested.
SNAP Passport Public Sources
SNAP Logo Concessions
Infrastructure
Fee
Carbon
Offsets
Water Use
Fee
Income
Tax
SNAP Fund Donations
Volunteer
Work
59 fnancial mechanisms identifed
32 fnancial mechanisms
11 frst-priority mechanisms
8 fnancial mechanisms identifed by the
stakeholders interviewed
+
25. For a detailed review of this type of studies, the following publications, among others, can be consulted: Preparación y evaluación de proyectos by Nassir Sapag
Chain and Reinaldo Sapag Chain, McGraw Hill, Colombia; and Evaluación privada de proyectos by Arlette Beltrán and Hanny Cueva, Universidad del Pací-
fco, Peru. For specifc resources on the development of feasibility studies in the conservation sector, please see the web page of the Conservation Finance
Alliance: http://www.conservationfnance.org/Guide_Spanish/Spanish_home.htm.
26. This section is based on the article “What is a feasibility study?” published by Iowa State University. For further details, see:
http://www.extension.iastate.edu/agdm/wholefarm/html/c5-65.html.
Source: Ministry of Environment, Ecuador, 2006.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 36
analysis, a fnancial mechanism is
determined not to be economically,
socially, and environmentally viable,
this will save time, money, human
resources, and further complications.
A viable fnancial mechanism gener-
ates an adequate fow of fscal, social,
and environmental benefts. The
feasibility study analyzes and outlines
different alternatives or methods to
make the preselected mechanism
fnancially viable; that is, the feasibility
study helps to defne the best operat-
ing model to implement the fnancial
mechanism.
There are various reasons why a
feasibility study should or should
not be carried out. The direc-
tors of national parks, protected
areas, or those who make final decisions, or those
who make financial decisions, are often under
internal and external pressure to avoid carrying
out a feasibility analysis and are encouraged to
proceed directly with implementation of financial
mechanisms with the expectation
of rapidly generating funds. How-
ever, a feasibility study is a very
strategic step at both program and
financial levels, and has the added
benefit of promoting transparency
and responsibility. Most successful
businesses usually have a detailed
feasibility study. A feasibility study
should be conducted by an expert
consultant or team with experience
in the area of financial mechanisms
for conservation.
Business management principles,
and the linkages and roles involved
in the feasibility study, are presented
in chapter 4. Box 7 presents a set of
reasons to decide whether or not a
feasibility study should be carried out.
While pressure for not carrying out a feasibility study
can be strong, fnancial planners should remain frm
on their insistence on a thorough and accurate fea-
sibility study. Once the decision has been made to
pursue a fnancial mechanism, the decision is hard to
Box 7. Reasons Why a Feasibility Study Should or Should Not Be Carried Out
Commonly-cited reasons for not carrying out a
feasibility study:
n The protected area managers trust that the fnancial
mechanism is feasible simply because other parks
are already using it.
n If another feasibility study already exists from
previous years, why do another one?
n Feasibility studies are simply ways for consultants
to make money.
n The feasibility study has already been carried out
by the company that will be in charge of implement-
ing the fnancial mechanism.
n The feasibility study can be conducted internally
using park staff.
n Feasibility studies are a waste of time. It is better
to concentrate on conducting a survey, increasing
park entrance fees, and allocating resources for
urgent needs.
Reasons for carrying out a feasibility study:
It serves to:
n Defne the scope of the project.
n Identify the best business operating model.
n Reveal new opportunities through a research process.
n Identify reasons not to proceed.
n Increase the possibility of success by identifying
risk-mitigating factors.
n Provide updated and accurate information for
better decision making.
n Expand possibilities for investment in protected
areas.
n Verify that opportunities for success and failure
were investigated in suffcient detail.
n Help to secure fnancing from investors or donors.
Adapted from the article “What is a feasibility study?” published by Iowa State University.
For further details, see: www.extension.iastate.edu/agdm/wholefarm/html/c5-65.html.
The Nature Conservancy 37
reverse because there may be internal and external
institutional pressures. Therefore, the protected area
will have to live with the consequences of a bad deci-
sion. Thus, conducting a feasibility study is a strategic
and essential step, and, if carried out to high quality
standards, can be the best investment the protected
area has ever made.
A brief description of the key elements in a feasibility
study is presented below. This section does not indicate
how these steps are implemented since a large number
of studies have been published on this subject.
n Concept and description: Clear defnition of the
fnancial mechanism to be used (taxes, fees), its rela-
tionship to protected area goods or services (wood,
water), and interested clients, and investors (public
sector, private companies).
n Advantages and disadvantages: The benefts and limi-
tations of the selected fnancial mechanism are specif-
cally identifed. Above all, it is important to determine
the level of stability/variability of income generation
and whether the long-term prospects are good.
n Market analysis: Detailed study includes potential
clients; behavior of the demand, level, and character-
istics of the national and international competition;
27
market size; prices and costs; providers; entry barriers;
substitute or alternative products or services; location;
and seasonality, among others.
n Operating model: This should present one or more
options related to the process of producing the
selected good or service, the management structure,
estimated volumes, key processes, processes that can
be subcontracted, and productivity indicators, among
others. From these, links to activities in the manage-
ment plan can be made.
n Fiscal and administrative reform: Accurate assess-
ment of modifcations to the regulatory framework
that will allow implementation of the fnancial
mechanism under analysis. The level of required
change needed should be established in order to
evaluate the mechanism’s capacity to have an impact
and the time that must be invested in order to
achieve the desired changes.
n Financial analysis: Determination of the levels and
times of investment, the fow and behavior of income
and expenditure, identifcation of unit costs, calcu-
lation of the break-even point, contribution proft
margins, cost-effectiveness, and identifcation of key
variables to model and simulate the future behavior of
net income and returns.
n Risk analysis: Identifcation of potential sources of risk
in terms of image, operations, market, conservation, the
consequences for the management of the protected area
at fnancial and program levels; and the measures that
can be applied to control and/or mitigate adverse situa-
tions that arise during implementation of the fnancial
mechanism. It is important to indicate that risk cannot
be entirely minimized or eliminated.
n Potential to close fnancial gaps: Net quantifcation
of the fnancial mechanism’s contribution to the
costs of the protected area, in both basic and optimal
scenarios, as determined by the gap analysis. Together
with the risk analysis, estimating the returns gener-
ated by the fnancial mechanism under analysis will
facilitate comparison with other alternatives.
n Recommendations: To facilitate decision making, plan-
ners should present summarized information about
the advantages and disadvantages of the operating
models analyzed. Strategic suggestions should also be
included concerning links with key stakeholders, the
impact on the regulatory framework, how to attract
potential investors, required staff skills and experi-
ence, compatibility with neighboring communities
and their cultural and social framework, the imple-
mentation phases, the strategy to cover preinvestment
costs, start-up, operation, and the management model,
among others.
Whether at the level of the protected area or of the
protected area system, the critical elements on which the
selection of more complex fnancial mechanisms should
be based are: information on the amount of investment
required, the rate of return, and the level of risk. In turn,
the central factors that will contribute to the success-
ful implementation of the fnancial mechanism and to
closing the fnancial gaps of the protected areas are: an
appropriate selection of mechanisms, achievement of
27. When we analyze the competition, for example, it is important to take a local, national, and international approach. If the feasibility of increasing tourism
to protected areas is analyzed only by surveying current visitors, one loses the perspective of the national or international tourists who are in the country
but do not visit these areas; and, also the perspective of tourists who have chosen other tourist destinations in other countries.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 38
the necessary investment, the availability of a supportive
regulatory framework, coordination and partnerships
with key stakeholders, and effcient implementation.
Diversifcation of Financial Mechanisms
The results of the pre-selection and selection of fnancial
mechanisms constitute the frst step toward diversifying
fnancial options. Diversifcation can be defned as the
practice of maintaining a wide variety of fnancial alter-
natives in order to minimize vulnerability by distributing
risk. At the same time, in the case of protected areas, this
means reducing dependence on international sources
and central government budget allocations. The prin-
ciple behind the diversifcation of fnancial mechanisms
is the same as the one that applies to diversifcation of
investment portfolios such as retirement funds, trust
funds, and stock market investments. This is the prin-
ciple of “not putting all your eggs in one basket.”
Therefore, diversifying fnancial mechanisms for
protected areas is the best way to manage the unpre-
dictable risk fuctuations of traditional sources, such
as: international donors, government funding, projects,
and endowment funds. These sources are subject to
changes in the agendas of international cooperation
organizations, government willingness to pay the dura-
tion of the projects, and, in the case of endowment
funds, market fuctuations that can have a negative
effect on interest-rate returns.
Diversifying fnancial mechanisms means creating a
varied portfolio combining various mechanisms that
may be international, national, and/or local, and either
market or non-market based. For example, a diversifed
portfolio may include a trust fund that is capitalized
through a debt swap and/or a GEF project, government
funds, international donors, or self-generated income,
among others. The diversifcation of mechanisms does
not occur when protected areas only use two or three
international fnancial mechanisms for their fnancing.
For example, a protected area does not have a diversi-
fed portfolio if it is only fnanced by GEF, TNC, and
USAID, since these sources are purely international.
2.4. Lessons Learned
n One should take advantage of the opportunities mar-
ket economies generate to attract investments. Pro-
tected areas represent an important business oppor-
tunity for private investors. Therefore, it is important
to establish a legislative and regulatory framework that
enables support and participation of the private sector.
n When identifying and selecting fnancial mecha-
nisms, planners should focus on innovative options
to complement traditional fnancing sources. Iden-
tifying and eliminating legal, regulatory, and admin-
istrative barriers that hinder existing and potential
fnancial mechanisms is an important step in this
process. Strategic allocation of the resources gener-
ated should also be promoted. Moreover, fnancial
mechanisms can be designed to combine fscal,
social, and environmental benefts.
n Economic feasibility studies are valuable tools to
determine the real potential of fnancial mechanisms.
The omission of these studies can lead to poorly-
informed decisions and implementation problems
that can cause low fnancial returns. Also, planners
should consider a wide range of potential investors
when conducting their feasibility studies.
n It is essential for protected areas to maximize the use
of different fnancial mechanisms in order to reduce
risks associated with income fuctuation. Financial sus-
tainability of protected areas without adequate diversi-
fcation of fnancial mechanisms is not possible.
The Nature Conservancy 39
From a fnancial standpoint, one of the greatest chal-
lenges for the consolidation of protected area systems
is the absence of a legal and institutional framework
with favorable by laws, regulations, and institutions to
ensure funding for protected areas. Thus, beyond the
usual rhetoric on the importance of nature, there is a
critical need for effective national and global regulatory
frameworks aimed at strengthening technical fnancial
capacities for protected areas.
Low investment in protected areas has generated
significant financial gaps in most of the protected
area systems around the world. For this reason, it
is essential to increase the capacity to mobilize,
administer, and distribute financial resources, as
well as to develop the enabling legal and institu-
tional conditions that will ensure financial sustain-
ability in the future. Many opportunities exist to
simplify and improve the complex legal and institu-
tional framework of the institutions responsible for
managing protected areas. These changes, however,
should recognize the current context and needs of
demanding market economies. Along these lines,
legal and institutional modifications should also
focus on promoting fiscal, social, and environmen-
tal benefits, and establishing mechanisms that are
more transparent and responsible.
Because legal frameworks generally focus on the
regulation of operational aspects related to budget
implementation (for example, payroll and acquisi-
tion of goods or services), it is important to transi-
tion to more favorable conditions that focus on the
mobilization of financial resources, the adoption of
business management principles, the establishment
of innovative financial mechanisms, and the auton-
omy of financial management based on principles of
modern governance.
Generally, laws and regulatory frameworks have con-
centrated on the creation of new protected areas
(policy of command and control), neglecting the
corresponding creation of environmental fscal policy
to support protected area fnancing. According to the
IUCN, international fnancing of protected areas has
not been able to match the rapid growth of protected
areas and their associated management costs — over
the past four decades there has been a ten-fold in-
crease in the number of protected areas reported by
the World Conservation Monitoring Center, with over
120,000 sites reported. The area under protection has
likewise expanded, from 2.4 million km
2
in 1962 to over
20 million km
2
in 2004. Roughly 12% of the global land
surface is now defned as protected area.
28
This chapter presents guidelines for conducting an
assessment of the legal and institutional framework at
the national level. It presents the steps and benefts of
policy reform and summarizes the lessons learned from
policy reform in Costa Rica. The topics covered in this
chapter will help to answer to the following questions:
n What does a national legal and institutional frame-
work consist of?
n What are the opportunities and challenges for policy
reform to improve protected area fnancing?
Chapter III
Enabling Conditions: Assessing the Legal
and Institutional Framework
28. IUCN, 2006.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 40
n Why is it necessary to promote legal and institutional
reform to support the fnancial plans of protected
area systems?
n What tools can be applied to assess the legal and
institutional framework?
n What are the steps in the process of policy reform?
3.1. Legal and Institutional Structure
The effciency of the legal and institutional framework
depends largely on the importance each government
places on the conservation of its natural resources,
which is clearly refected in its environmental, social,
and fscal policies.
The legal and institutional framework supporting
protected area fnance should include legal, administra-
tive,
29
and participatory elements, such as.
Legal:
n Tax laws to ensure the generation of funds at system
and site levels (taxes, fees, fnes, etc.).
n Compatibility between local, national, and interna-
tional legislation.
n Effcient law enforcement and coercive mechanisms.
n Administrative regulations to guarantee the au-
tonomy and legal sustainability of institutions that
administer protected areas.
n Promotion of private sector participation and envi-
ronmentally-friendly resource production.
n Legal framework regulating land tenure.
n Mechanisms to regulate the transparent and effective
resource allocation, management, and control.
n Management monitoring and evaluation schemes.
n Mining, forestry, energy, and other sectors related to
the extraction of natural resources.
Administration and Management:
n Financial planning and harmonized strategic
planning.
n Decision making and executive management based
on accurate and decentralized administrative and
fnancial information.
n Compatibility with national development plans.
n Strategic and fnancial planning at area and
system levels.
n Integration of all components of the protected area
system, considering all types of expenses (for exam-
ple, staff, operating expenses, investment in infra-
structure, and equipment).
n Consolidation of national conservation and environ-
ment guidelines at the inter-ministerial level.
n Dedicated and trained human resources, and suff-
cient and well-allocated fnancial resources.
Participation:
n Clear communication of the benefts derived from
environmental initiatives in order to ensure partici-
pation of government organizations (for example,
ministries of Finance, Industry and Tourism, and
the legislative body).
n Broad participation of civil society organizations
in the co-administration and mobilization of
fnancial resources.
n Linkage with the private sector in order to facilitate
communication of technical knowledge and
fnancial resources.
n Adequate benefts sharing.
It is important to note that laws and regulatory frame-
works evolve at different rates, depending each country’s
political and socio-economic context. Annexes 10, 11,
and 12 show the evolution of the legal and institutional
framework in Costa Rica.
3.2. Assessment of the Legal and
Institutional Framework
Often the legal and institutional framework affecting
protected area fnancing is not conducive to improvement
of protected area funding due to limitations such as:
29. Among the administrative management aspects, it is important to consider the institutional capacities needed for the effective management of fnan-
cial resources. Such institutional capacities include leadership, strategic vision, administration of the organization, personnel management, resource
development, fnancial administration, external relations, and program capacity. See Institutional Self-Assessment: A Tool for Strengthening Nonproft Organizations.
Devine et al., 2001.
The Nature Conservancy 41
n Lack of consistency between sectoral laws and regula-
tions and those related to conservation.
n Existence of legal gaps with limited regulation and
lax control.
n Limited promotion of innovative program models.
n Little openness to creative fnancial schemes.
n Laws that do not correspond to the current context.
n Lack of harmonization with international regulations.
n Regulatory excess (for example, specifc defnition of
percentages, quotas).
n Lack of mechanisms to ensure transparency and
responsibility.
The fnancial sustainability of protected areas is
directly linked to the national legal and institutional
framework. For example, depending on the type
of regulations, it may not be possible to establish a
decentralized system for payment of park entry fees,
tourism concessions, sustainable extraction of natural
resources, etc. However, provided that these fnancial
options are environmentally and legally viable, they
can contribute to improve protected area fnancing,
and therefor should be implemented.
By assessing the legal-institutional framework, plan-
ners can identify the critical issues that have the
greatest impact on limiting financial management
and institutional dynamics. In particular, the legal
and institutional assessment enables planners to
determine the effectiveness of laws and regulations.
The assessment provides a systematic description of
the critical limiting factors, and a set of specific pro-
posals for improvement. These proposals can range
from simple modifications in daily operations to the
creation or reform of specific laws. It is important to
stress that every reform proposal should be support-
ed by a communications plan and lobbying process
led by protected area stakeholders.
30
This is discussed
further in Section 3.3.
The National System of Conservation Areas (SINAC)
of Costa Rica implemented a systematic process for
assessing that country’s legal-institutional framework.
Figure 7 illustrates the steps that were followed. It
should be noted that these steps are applicable at the
level of both protected area systems and individual
areas, and that these steps encourage broad participa-
tion of stakeholders representing different sectors of
civil society.
Figure 7. Stages in the Assessment of the Legal and Institutional Framework in Costa Rica
Institutional
coordinating
team for the
process.
Creation of
working groups
on each
issue to be
evaluated.
Working sessions of each group
with the main stakeholders in their
functional areas; application of
the assessment tool and
preparation of the results document.
Compilation of results
and drafting of a
reform proposals
for decision makers.
Presentation of proposals for
modifying existing and
creating new laws, institu-
tional adjustments, etc.
Workshops,
meetings,
research
centers, etc.
Assessment of the legal and
institutional framework of the
State. Institutionality of the SINAC.
Ideal structure for the SINAC.
Composed of representatives
from the functional areas of
the SINAC, with technical
support from a legal advisor on
matters of public legislation.
30. For example, if a fscal reform is proposed with the aim of improving the fnancing of a protected area system, it will be essential to involve key stakeholders
representing the Ministry of Finance, the State Comptroller’s Offce, congress, the private sector, and civil society organizations, among others, in order to
achieve broad representativeness and legitimacy to facilitate the desired legal-institutional change.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 42
Legal and Institutional Assessment Tool
SINAC developed a practical tool to carry out
a rapid assessment of the legal and institutional
framework regulating protected areas. This tool,
included in Annex 13, enables the development of a
baseline of the legal-institutional framework of the
system of protected areas. The application of this
tool makes it possible to develop a basic idea of how
effectively the legal-institutional framework sup-
ports the protected area system. This information
is very useful for those responsible for public policy
and decision making, and for other stakeholders
related to the field of conservation. The tool divides
the analysis into two categories:
1. Current legal and institutional framework. This sec-
tion presents a set of questions that facilitate identifcation
and analysis of the most relevant issues in the current situ-
ation. It also provides the opportunity to propose specifc
changes with respect to each of the issues discussed.
2. Ideal legal and institutional structure. This section
presents a set of questions focused on improving the
protected area system as a whole. The inputs generated
in the previous section are key to designing a consistent
proposal to promote sustainability of the protected
area system.
The two categories above promote broad discussion,
facilitate establishing benchmarks to evaluate the issues
discussed, and support identifcation of improvements.
The aim is to generate recommendations to assist in
the development of an initial action plan designed to
achieve the required policy reforms.
Since large differences exist in the legal and institutional
contexts of each country, not all of the questions and
benchmarks may be applicable. Therefore, before using
this tool, it is important to refne the questions and
benchmarks to be used. This process can be comple-
mented by adding additional questions and benchmarks,
according to the specifc needs of the system.
Guidelines for Applying the Assessment Tool
It is recommended that the tool be applied by a
facilitator experienced in conducting participatory
processes and familiar with conservation laws and
institutions. The stakeholders involved in the appli-
cation of this tool should represent the public sector,
business entities, NGOs, grassroots organizations,
and other sectors linked to the conservation and
financial sectors.
Before applying the tool with stakeholders, the facilita-
tor should explain the context and objectives for the
process. Besides the questionnaire, the process is en-
riched with discussions about the practical experience
of the participants. It is recommended that a full day be
allowed for the application of the tool.
It should be noted that the tool can be applied indi-
vidually (through interviews) or with groups (through
workshops). However, group application tends to be
more effective since it allows for feedback and exchange
of viewpoints among the participants, thus contribut-
ing to a more comprehensive analysis to support reform
proposals. Annex 14 includes guidelines for facilitators
who will use this tool.
The tool includes guiding questions and alternative ac-
tivities to facilitate dialogue and exchange. However, it
is possible to add questions in order to make the assess-
ment as meaningful as possible. There is a section after
each guiding question that can be used to consolidate
the analysis and suggest improvements.
Since the purpose of this tool is to carry out a rapid
assessment, the approach to data gathering emphasizes
qualitative analysis over quantitative analysis. In this
way, it seeks to map the central issues and sub-issues
that emerge from the assessment in order to identify
critical areas for reform. The process also includes the
evaluation of the level of consensus among the different
stakeholders regarding their assessment of the prob-
lems and proposed solutions.
The results of the assessment can be presented us-
ing concept maps
31
or summary tables to provide an
aggregate picture of the most critical areas on which
the reform interventions will focus. Based on the
results of the assessment, an action plan to imple-
ment the reform proposals with the greatest impact
31. Concept maps are graphic representations that facilitate the organization of concepts, ideas, results, and their interconnections according to criteria of
affnity. They are very useful for synthesizing and communicating key information.
The Nature Conservancy 43
potential is prepared. The next step should be to
begin the process of negotiating and implementing
the proposed reforms.
3.3. Policy Reform
This section provides planners with an overview of
different steps involving the implementation of policy
reform. Policy reform is not a linear process,
32
and often
a new environmental problem is not incorporated into
the political agenda, but it can be managed in a system-
atic manner.
In reality, most of the problems are already known
and, depending on the local circumstances and
context, these problems may or may not be pri-
orities in the policy agenda. Likewise, the policy
options available to resolve these problems are not
completely unknown (World Bank et al., 2005).
Because of this, it is important to be prepared to
recognize and intervene when an opportunity for
policy reform presents itself, or to create an oppor-
tunity for policy reform.
33
Part of this preparation includes being familiar with
the process of policy reform (see Figure 8). This ap-
proach assumes that the policy reform process starts
at a point in which public awareness of an environ-
mental problem (in this case, under funded pro-
tected area systems) is critically low and needs to be
raised. At this point, the key stakeholders are identi-
fied and an agenda (action plan) is put forward. At
this stage, civil society organizations and the media
can play an instrumental role in raising awareness
of the issue of under funded protected areas. The
increases of the problem’s profile in the public opin-
ion will trigger the discussion over policy options
to solve it. After different policy options have been
considered and weighed, and public perception of
the problem continues to rise, the critical moment
comes when decision makers (politicians and senior
managers of government agencies) need to convert
policy considerations into practical policy because
their decisions will be backed by public opinion.
The results of realistic analyses of protected areas fnan-
cial needs and gaps, and the contribution of protected
areas to the national economy and equity, combined,
offer a powerful tool to raise public awareness and per-
suade decision makers to take action.
32. For more information, see Environmental Fiscal Reform – What should be done and how to achieve it? Boyd, Richard et al. World Bank, 2005.
33. For example, taking advantage of the established political venues: COP, the World Parks Congress, meetings of the G8 Group, meetings of the
OECD, changes of elected government offcials or authorities, among others, with whom it is possible to reach political compromises through
intense lobbying efforts.
Identifcation of
key stakeholders
and defnition of
the agenda
Public aware-
ness of the
importance
of the
fnancial
problems of
protected
areas and
the potential
solutions.*
Figure 8. The Process of Fiscal Reform to Support Protected Area Financing
Discussion of the need
for fscal policy reform
and options
Decision
making
Implementation
Monitoring and
Evaluation
Time
Source: Adapted from Environmental Fiscal Reform, World Bank, May 2005.
* Public awareness can be increased through communications campaigns
that convey realistic ?nancial needs and gaps, and accurate assessments of
the contribution of protected areas to economic growth and equity.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 44
Generally, policy decisions that are made without
public support are not sustainable in the long-term.
The implementation of reforms should be accom-
panied by permanent monitoring and evaluation in
order to keep the reforms up-to-date, communicate
the results achieved, and ensure that the reforms
respond to socioeconomic and environmental condi-
tions. Likewise, in order to facilitate decision-making
and the support of public opinion, it is important for
fiscal reform to provide, ideally, multiple benefits:
social, environmental, and fiscal. An environmental
fiscal reform that achieves social benefits, in addi-
tion to financial and conservation benefits, is more
likely to be accepted than one that simply focuses on
obtaining funds for conservation. Table 9 presents a
hypothetical example of how a fiscal reform can pro-
vide the three above-mentioned benefits. In addi-
tion, Box 8 illustrates the elements to consider when
planning policy reform.
3.4. Lessons Learned
n At all levels of protected area administration, there
should be clarity regarding the processes and poli-
cies that are established for use and management of
fnancial resources allocated to the conservation of
protected areas. Much of the conservation resources
problem can be solved through more effective man-
agement of fnancial resources.
n In order to work toward the financial self-sus-
tainability of protected areas, it is indispensable
to have a firm policy that attracts qualified staff
Box 8: Elements to Consider When Planning Environmental Fiscal Environmental Reform*
Key stakeholders:
n Poor populations and vulnerable
groups (considering gender,
ethnic groups, location, etc.).
n The private sector.
n Civil society (NGOs, the press,
academic institutions).
n Politicians and decision makers
(ministries, legislators, political
parties).
n Bureaucrats (at every level).
n Development agencies and
international stakeholders.
Opportunities:
n Taxes on natural resource
extraction.
n Charges or fees (payment for
environmental services).
n Reform of perverse (environmen-
tally harmful) subsidies.
n Environmentally-related taxes.
n Conventional taxes (sales tax).
Barriers:
n Policy experts who say what to
do but not how to do it.
n Conservation policy experts who
place too much emphasis on
“command and control” policies.
n Lack of “political will.”
n Lack of institutional capacity.
Critical actions led by the envi-
ronmental community:
n Involve the Ministry of Finance
(interested in generating income
and achieving synergy with the
general tax framework, and
administrative simplicity).
n Develop links to the political
process in order to communicate
reform objectives and identify
the “winners and losers” in
the process.
n Promote the use of fscal instru-
ments to resolve environmental
problems.
n Move from command and control
policies to the use of economic
instruments.
n Develop environmental capacities
in the government (promote insti-
tutional cohesion, transparency,
responsibility, and auditing).
n Substantiate and communicate
the multiple benefts of reform.
Social Benefts
(Poverty Reduction):
n Access to infrastructure.
n Investment in anti-poverty mea-
sures according to Millennium
Development Goals.
Environmental benefts:
n Better management of natural
resources.
n Reduction of pollution.
n Mitigation/adaptation to climate
change.
n Funds for government agencies.
Fiscal benefts:
n Generation of funds.
n Reduction of distortions.
n Reduction of the need for cen-
tral funds.
* Source: Environmental Fiscal Reform, World Bank,
May 2005.
The Nature Conservancy 45
to manage effectively both conservation aspects
and the administration of financial resources
for protected areas. It is essential that the staff
of protected area systems have strong skills for
management and administration of public and
private funds.
n All reforms of the legal and institutional framework
that are related to the administration of fnancial
resources affecting third parties should promote
participation of all stakeholders, using broad consul-
tation and dissemination strategies in order to avoid
unnecessary opposition during implementation.
n The legal and institutional reforms that are promot-
ed should consider how they ft within the existing
regulatory structure of the country. For example,
the Ministry of Finance is more likely to accept and
adopt policy reforms that are simple and adminis-
tratively feasible.
Table 9. Environmental Fiscal Reform
Fiscal beneft
The gasoline sales tax generates,
for example, US$200 million an-
nually for the government. Out
of this amount, US$2 million, or
1 percent will be allocated to
support national parks.
Environmental beneft
US$1.5 million is allocated to
fnance patrolling and enforce-
ment programs in the national
parks.
Social beneft
The national park authority al-
locates US$.5 million annually to
support basic sanitation work in
indigenous communities in and
around protected areas. This can be
doubled with one-to-one matching
funds from private sector sources.
Example: A government has earmarked one percent of the income from gasoline sales tax that will
be allocated to the national protected area system.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 46
The Nature Conservancy 47
Financial plans and business plans are formulated in
different ways depending on the objective of the plan
and, in practice, the terms fnancial plan and busi-
ness plan are often used interchangeably. There is no
single recipe for how to formulate these plans, but it is
important to establish differences and links between
these two cornerstones of fnancial planning.
In this document, we will use both fnancial and busi-
ness plans to address strategic and resource mobiliza-
tion aspects. We consider the fnancial plan a much
broader strategic document which summarizes a wide
range of aspects related to the fnancial planning
process. The business plan, on the other hand, is a tool
designed to guide the implementation of specifc mar-
ket-based fnancial mechanisms and is subordinated
to the fnancial plan. These key operational defnitions
are included in Box 9.
One of the biggest challenges in ensuring the fnancial
sustainability of protected areas is to formulate opera-
tive and innovative fnancial plans. To accomplish this,
fnancial plans must include clear business principles
and solid links to both the private sector and govern-
ment organizations, particularly those outside the
environmental sector. In addition, fnancial plans are
instrumental for:
n Clarifying key operational defnitions (for example,
feasibility studies, fnancial plans, and business
plans).
n Linking fnancial plans at the level of individual
protected areas with the plan for the protected
area system.
n Strengthening fnancial management capacity.
n Strengthening informed decision-making by adding
fnance and economic information to science.
n Incorporating adaptive business practices from the
corporate sector.
The questions this chapter will help to answer include:
n What does a fnancial plan consist of and what are
its elements?
n What does a business plan consist of and what are
its elements?
n Why should protected areas fnancial management
be based on business principles?
n What are the differences and links between feasibil-
ity studies, fnancial plans, and business plans?
n What are the necessary conditions and steps for
developing fnancial plans?
n What does the expected product look like?
4.1. The Financial Plan
A system-level fnancial plan establishes lines of stra-
tegic action to mobilize fnancial resources and build
fnancial management capacity to support a network
of protected areas. In this sense, a fnancial plan evalu-
ates the fnancial condition of protected area opera-
tions, provides information on current and future
needs, and defnes options for leveraging resources
from both the public and private sectors.
It is important to emphasize that a system-level
fnancial plan does not replace a protected area
master or strategic plan, but rather complements it
Chapter IV
The System-Level Financial Plan Based on
Business Principles
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 48
with strategic fnancial guidelines. The formulation
of the system-level fnancial plan based on business
principles facilitates transition away from a tradi-
tional funding approach that is highly dependent on
international support (projects and trust funds) and
often incipient central transfers to a more operational,
market-based model that focuses on fnancial auton-
omy, realistic needs, diversifcation of funding sources,
self-generation of income, cost optimization, and
strategic resource allocation, among other elements.
Table 10 compares the main characteristics of these
approaches.
The transition from a traditional approach to one
based on business principles is not simple or easy.
Beyond the technical challenges, the adoption of
fnancial plans based on business principles poses
institutional and management challenges. One of
the most important institutional challenges is the
legal and regulatory reform required to create a more
autonomous and investment-friendly protected area
system. Thus, two management challenges are the
need to develop leadership abilities, and promote a
more entrepreneurial approach among protected area
managers and government decision makers.
Although the foregoing aspects are not solely fnan-
cial in nature, these challenges affect progress toward
fnancial sustainability. Therefore, fnancial plans
should include clear strategies to address and over-
come these barriers during their implementation.
4.2. Business Principles
The continuous decline of international funding and
the limited growth of government allocations and
protected area endowment funds are increasing gov-
ernments’ attention to use business principles when
formulating fnancial plans. For instance, Ecuador,
Peru, Costa Rica, Belize, and Grenada are in the pro-
cess of implementing such plans. In the United States,
there is substantial experience with business plans
for national parks, implemented by the National Park
Service and the Center for Park Management at the
National Parks Conservation Association.
34
When formulating a fnancial plan, the use of clear
operational terms (see Box 9) can facilitate adapting
and applying key business sector principles to increase
the opportunities for fnancial success. These prin-
ciples are illustrated in Figure 9 and include:
n Realism: Accurate and verifiable costs, needs and
gaps are defined by applying accounting methods
Table 10. Approaches to Financial Plans
Traditional approach
1. Short-term approach and unclear fnancial goals.
2. Undefned fnancial needs.
3. Based on international donations, trust funds, and
central government funding.
4. Focus on “what should be done.”
5. Doesn’t provide incentives for the self-generation of
resources.
6. Mainly focuses on ecological objectives.
7. Limited support to resolve institutional capacity issues.
8. Discourages the development of laws for the develop-
ment and retention of resources.
9. Generates dependence on international donors and the
public sector.
10. Undefned implementation responsibilities and follow up.
Market-based approach
1. Defned short-, medium-, and long-term fnancial goals.
2. Realistic fnancial needs and gaps.
3. Based on diversifcation of income, cost reduction, and
strategic allocation.
4. Focus on “how to do it.”
5. Promotes self-management and the use of supply and
demand analysis to attract resources.
6. Seeks to link conservation with fscal and social objectives.
7. Identifes and resolves fnancial capacity problems.
8. Promotes fscal reform and regulation to generate and
retain resources at protected areas level.
9. Promotes fnancial mechanisms supported by the pri-
vate sector, and public-private partnerships.
10. Dedicated staff and clear implementation and follow
up responsibilities.
34 . Developed through the Business Plan Initiative, Center for Park Management, National Parks Conservation Association, www.npca.org/cpm.
The Nature Conservancy 49
that include the use of metrics to connect the goals
of conservation programs with actual costs for
minimum and optimal levels of protection. Costs
are directly linked to what is required (for exam-
ple, staff and equipment) to achieve the goals of
each conservation program; and the financial gaps
are determined by comparing available resources
with financial needs.
n Supply and demand approach: Seeks to improve the
relation between providers of ecosystems’ goods
and services with the needs of customers, both the
public and the business sector, in order to gener-
ate sustainable fnancial resources. The supply and
demand approach helps to better determine the
price and quantity of goods and services sold in a
competitive market (for example, tourism). It aims
Box 9. Financial Planning – Key Operational Definitions
Financial sustainability: The government’s ability to en-
sure suffcient and stable long-term fnancial resources,
to allocate them in a timely and appropriate manner,
and to cover the total costs of protected area manage-
ment. Financial sustainability is not possible without
solid and effective institutions for protected area man-
agement (IUCN, 2006). Sustainable fnance implies the
“supply” issue of generating more revenue, but just as
importantly, the “demand” side challenge of managing
PA fnancing needs (UNDP, 2007).
Financial planning: For protected areas systems and
individual protected areas, we consider fnancial planning
a working framework. It includes interactive processes
with many stakeholders. Ideally, it creates broad ownership
across constituencies, systematizes actions, and attracts
suffcient resources to fund the protected area system in a
stable long-term manner. It includes the different processes
related to (a) assessing fnancial needs, income, expenses,
and fnancial gaps, (b) selection and feasibility assessment
of fnancial mechanisms and cost reduction strategies, and
(c) formulation of fnancial plans supported by defned
business principles and business plans. Financial planning
may also include assessment of the legal and institutional
framework to enable the establishment of diverse fnancial
mechanisms and implementation of the fnancial plan.
Financial plan (also known as sustainable fnance plan):
A business-oriented management tool that summarizes the
protected areas’ fnancial history (income, expenditures,
fnancial needs and gaps) and describes feasible fnancial
mechanisms and cost reduction strategies to address the
needs and reduce gaps. A fnancial plan may include sum-
maries of the feasibility analyses and business plans to
guide the implementation of specifc fnancial mechanisms.
Additionally, this plan may include strategic reforms to
improve the legal and regulatory framework related to
protected areas fnancing, and capacity building aspects.
Feasibility study: An analysis tool that determines whether
a given fnancial mechanism is feasible (see Chapter 2). A
feasibility study defnes different alternatives or models to
make the given mechanism operational and facilitate selec-
tion of the best operating model for implementation. If a
fnancial mechanism is not feasible, consideration may be
given to corrective measures to eliminate shortcomings or,
in extreme cases, the mechanism may simply be dropped.
A feasibility study is not a business plan.
Business plan: A management tool that outlines the
necessary actions to implement a fnancial mechanism
and maximize economic returns. Thus, based on the
best operating model defned in the feasibility study, the
business plan presents the steps and activities needed
for the most effcient implementation of the fnancial
mechanism. This should be developed only when the
fnancial mechanisms selected in the fnancial planning
process are determined to be feasible. In summary, a
business plan provides a “roadmap” for the strategy that
will be used to implement the fnancial mechanism.
Figure 9. Business Principles Relevant to Financial Planning in the Conservation Sector
Protected Area Financing
Foundations for Financial Success
Supply-
demand
approach
Efficiency Innovation
Transparency
and
accountability
Diversifcation
Pro-
investment
laws
Realism
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 50
at balancing the quantity demanded by consumers,
and the quantity supplied by providers (producers).
The use of business plans is critical in the supply
and demand approach.
n Operational effciency: Making best use of the
resources available. In practice, this means adopting
standards, reducing costs without reducing quality,
improving processes, implementing quality control
initiatives, and establishing incentives to improve
performance. Operational effciency is measured
through an effciency ratio “expenses as a percentage
of revenue.” A lower percentage is optimal because
it means that expenses are low and revenue is high.
Operational effciency looks at maximizing proft by
minimizing costs, taking external factors and envi-
ronmental and social aspects into account.
n Pro-investment policies: Demonstrating the friend-
liness of policy (business legislation and regulation
practice) to carry out business, especially for inves-
tors from the private sector, but also for the public.
It includes a wide range of policies that are appli-
cable to the conservation sector. For example, in the
2008 issue of the “Doing Business” report of the
World Bank and the International Finance Cor-
poration, countries received scores in ten specifc
policies: starting a business; dealing with licenses;
employing workers; registering property; getting
credit; protecting investors; paying taxes; trading
across borders; enforcing contracts and closing busi-
ness (see www.doingbusiness.org).
n Innovation: This is a key element in both cultural
and fnancial terms. The frst focuses on promot-
ing a culture of change, creativity, and continuous
improvement, thinking how things can be done
differently and more effectively, developing new
services, providing better attention to visitors, etc.
The second focuses on connecting change with
increase value (customer or producer value) and is
a major driver to increase revenue. Innovation also
includes adoption of processes and technologies to
enable the development of unique and comparative
advantages.
n Diversifcation: Consisting of the selection of a
varied portfolio of fnancial mechanisms used to
fnance all the costs related to the management
of the protected areas network, both market and
non-market-based mechanisms. Diversifed income
sources are indispensable to maximize economic
returns and manage risk through risk distribution.
See Chapter 2 for a more detailed discussion of
diversifcation.
n Transparency and Accountability: Both are central
to good governance in protected area management
and particularly in fnancial management. For the
purpose of this publication, transparency implies
fnancial openness and good communication. In this
sense, budgets and fnancial statements are considered
to be transparent when available for public review
(for example, through the Internet). Accountability
refers to responsibility, account-giving (obligation to
report), and liability of public offcials in their posi-
tions, for their actions, decisions, and the resulting
consequences. Transparency and accountability are
indispensable elements to minimize opportunity for
authorities to abuse the system in their personal inter-
est, both in the public and corporate sectors. There-
fore, it is necessary to introduce mechanisms that gen-
erate timely and accurate information, facilitate public
access to fnancial information, transparency, and
accountability standards and designate clear responsi-
bilities for fnancial management. The management of
public funds requires dedicated and responsible staff,
effcient fnancial and accounting systems, accurate
and timely reports, and communication of results.
A great deal of useful indicators for transparency can
be found at the IFI Transparency Resource webpage
www.iftransparencyresource.org, including indicators
for governance, policy and strategy formulation, evalu-
ation and audits, accountability mechanisms, disclosure
policies, public information and websites. Advanced
transparency indicators are commonly used at inter-
national fnancial institutions (IFI) such as the World
Bank and the International Monetary Fund.
The Nature Conservancy 51
As more protected areas and protected area systems
adopt the aforementioned business principles in their
fnancial planning, the possibilities of attracting more
funds in a sustainable manner will increase.
4.3. Components of a Financial
Plan for a System of Protected Areas
35
The essential components of a fnancial plan may vary
from one country to another, due to differences that
exist between protected area systems, the legal and
institutional frameworks, and the fnancial needs and
options available. In general, a fnancial plan should
include the following elements:
36
Protected Areas System Background
This section of the fnancial plan provides a concise over-
view of the protected area system. The main topics should
include: a description of the areas that make up the system
(geographic extension, natural and cultural resources,
and infrastructure), current legislation (summary of the
legal framework and legal challenges), historical evolu-
tion (increase or reduction in the number and size of the
areas), mission of the agency responsible for managing
the protected areas (functions and operational structure),
description of the program areas in the management plan,
contributions made by the system of areas to the develop-
ment of the country, maps of the protected area system,
and other information that facilitates understanding the
characteristics, challenges, and opportunities of the system
of protected areas.
Financial Background
This component of the plan presents the historical
evolution of income, expenditure, and investments
(consolidated for all areas of the system). The fnancial
background should list income according to sources
(national, international, private, public, etc.) and type
(transfers, self-generated income, donations, etc.). Infor-
mation on expenditures should specify the expenditure
structure (staff, materials, services, etc.) and break down
costs by functional area, according to categories in the
management plan. In terms of investment, the fnancial
background should include the types of capital goods
and studies that have been fnanced and their relations
to the protected area fnancing. It is very important for
the fnancial background section to also include a brief
description of the impact of the lack of fnancial resources
on the natural resources in the protected area system.
Objectives
The fnancial plan should clearly specify the objec-
tive and the action lines to achieve such objective. The
plan will guide the process of obtaining the necessary
resources to implement all of the programs of the
management plan of the protected area system. The
objective and actions should produce concrete and
lasting changes such as initiatives for self-generation of
income, diversifed income sources, cost reduction, and
standards for transparency and accountability.
Summary of Financial Needs and Gaps
This section presents a summary of the evolution,
current status of, as well as fnancial projections for,
the projected area system through the analysis of total
income, conservation needs (basic and optimal levels),
associated costs (operational and investment), and
fnancial gaps (see Chapter 1).
The “gap” analysis of the fnancial situation makes it
possible to determine the necessary fnancial resources
and establishes a framework for selection of the fnancial
mechanisms that will help to cover the system’s needs.
The summary of the fnancial gap analysis conducted at
the program-area level provides a complete picture of
the cost of current operations and the material, fnancial,
and human resources used. For example, the summary
for the tourism and recreation program area may include
subprograms related to collection of entrance fees, inter-
pretation centers, and visitor security and protection.
Investment Priorities
The investment priorities section should specify the
program areas that should receive more attention and,
therefore, more fnancial resources. The defnition of
priorities should consider two levels of analysis: a) a
review of the results of the fnancial analysis showing
each program area’s fnancial situation and needs, and
b) the determination of key program areas included in
the management plan essential for conservation.
The results of the investment priority analysis provide
a basis for selection of program areas where resources
35. Business Plans for Parks and Protected Areas, The National Parks Conservation Association (NPCA), 2005, has been referenced to develop this section.
36. Annex 15 illustrates the components of a fnancial plan based on the experience achieved in Ecuador.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 52
obtained with the fnancial plan should be allocated.
A good prioritization of program areas will make it
possible to allocate resources strategically and to attract
complementary resources.
Market Analysis
A market analysis provides an overview of who the cli-
ents, competition, and different stakeholders are, from
the social, economic, and political context in which the
protected area system functions.
The analysis of clients (such as investors, visitors, local
communities, and donors) focuses on a client pro-
fle (number, origin, preferences) and historic trends
(for example, over the last fve years). Analysis of the
competition focuses on businesses or institutions that
provide products and services similar to those existing
in the protected areas. For example, in the case of the
tourism sector, it identifes and profles other service
providers of activities such as white-water rafting, kaya-
king, adventure camping, sport fshing, and hunting.
The competition can be analyzed at the local, national,
and international level.
Summary of Financial Mechanisms (Mechanisms,
Feasibility Analysis, and Business Plans)
Based on fnancial needs and priorities, and the market
analysis, this “strategy” section presents a summary of
available and feasible mechanisms. It is important to
include a summary of the selection process and the
alternatives chosen, together with their respective
operating models.
The description of the fnancial mechanisms chosen
should be associated with the program areas where
resources are allocated. In this way, if the fnancial plan
includes the use of debt swap mechanisms, trust funds,
or tourism initiatives, it is important to make clear
where the funds generated will be allocated.
37
That is,
this section should specify the management programs
or sub-programs to be supported with these resources,
the level of reduction of fnancial gaps, the scope of
the fnancing (covering the whole system of protected
areas or some areas in particular), whether or not a
connection exists with other fnancial mechanisms,
and the need for legal reforms and capacity building
activities, among other aspects. It is also important to
Table 11. Options for Diversification of National Park Entry Passes and Fees
(Market-oriented fees are determined by considering the type of entry, service, number of people, and duration of pass.)
n General admission to a na-
tional parkk
n General admission to several
national parks (cluster, re-
gional and/or provincial)^
n General admission to all
parks in a system^^
n Diving pass
n Hunting pass
n Camping pass
n Special event pass
n Guided tour pass
n Horseback riding pass
n Fishing pass
n Kayaking pass
n Research pass*
n Individual
n Group
n Family
n Corporative
n Schools (primary and
secondary)**
n Vehicles pass: small-
vehicle (up to 7 people)
and large-vehicle (more
than 7 people)
Passes and services Number of people Duration of pass Payment type Point of purchase
n Daily
n Multiple entries
n Weekend
n Weekly
n Monthly
n Annual (valid
one year from
date of sale)
n Seasonal***
n Cash
n Credit card
n Debit card
n Airline miles
n Credit card
points
n Electronic
(e.g., Paypal-
type)
n Exchange for
goods or services
n Gift cards
n Supermarkets
^ For example, South Africa’s Wild Card, a smart card that records infor-
mation on use frequency. See www.sanparks.org/tourism/wild/
^^ Can be marketed as National Parks Passport (for example, Mexico’s
Conservation Passport). See www.conanp.gob.mx/pasaporte.
* Paid by academic or research institutions, public or private.
** Paid by the Ministry of Education, private schools, and/or private
companies.
*** Spring, summer, fall, and winter.
n Banks
n Internet
n Protected
areas
n Government
agencies
n Tourist
agencies
n Consulates
37. It is worth pointing out that not all fnancial mechanisms have the same fexibility for the allocation of funds. For example, there is less fexibility in the case
of park entrance fees; it is important for this income to be allocated primarily to services for visitors (water fountains, paths, signage, restrooms, cabins, etc.).
The Nature Conservancy 53
indicate the procedure that will be used to evaluate the
fnancial plan and its impact. This topic will be dis-
cussed in section 4.4.
To the extent that the selection of fnancial mecha-
nisms is based on analyses and research, it is impor-
tant to attach summaries of the feasibility studies
38
that substantiate the fnancial viability of each of the
selected mechanisms, and a summary or summaries of
the business plans
39
that facilitate implementation of
market-based mechanisms requiring a business plan.
The business plan can be formulated to support a spe-
38. Feasibility studies are critical elements of a fnancial plan. Such studies make it possible to reduce the uncertainty associated with fnancial mechanisms
and facilitate the best selection of fnancial alternatives for a protected area system.
39. Within a fnancial plan, business plans focus on all aspects related to implementation of the most appropriate operating model for a selected fnancial
mechanism. Business plans are a useful management tool to ensure that the fnancial goals of the selected mechanism are met.
Box 10. Key Elements of a Business Plan
In developing a business plan, it is important to consider
the following criteria:
n Impact and socioeconomic benefts: Job creation,
positive environmental benefts, and resource genera-
tion, for example.
n Technical feasibility: Having mastery of the techni-
cal process (for example, ecotourism) in order to
achieve the proposed goals through the optimal use of
resources.
n Implementation capacity: Assignment of adequate
staff for management, administration, and operations.
Adapted from: Estrategia de Generación de Ingresos Propios:
Planes de Negocios. Training Materials. G. Rivero, Pact, 2004.
Component
Description of the
mechanism
Market analysis
Marketing plan
Operations
Investment and return
(cost effciency)
Legal and adminis-
trative aspects
Description
Identifes the characteristics of a business opportunity (good or service) and the value added.
Analyzes the main characteristics of the market (size, trends, etc.) and evaluates the distinctive
elements of the product or service with respect to its competitors. Also evaluates whether there
are barriers to its acceptance.
Includes price setting, positioning of the product or service, and its promotion and distribu-
tion, consistent with market conditions.
Describes the key activities to develop and offer the selected product at a competitive price.
Determines the total investment (fxed assets, intangible assets, and working capital), proj-
ects the income and costs throughout an evaluation period, and estimates the level of return.
Focuses on the legal and institutional aspects required for implementation of the business
plan. Also defnes the functions and responsibilities of the necessary staff.
Figure 10. Components of a Financial Plan for a Protected Area System
Business Plan
n Description of
the mechanism
n Value added
n Operations
n Investment
and return
n Marketing
n Administration
System-level
Master Plan
System-level Financial Plan
n PA System background
n Objective
n Financial background
n Summary of fnancial needs and gaps
n Investment priorities
n Summary of fnancial mechanisms
n mechanisms
n feasibility analyses
n fnancial goals and gap reduction
n business plans*
n Economic impact
n Implementation program (action plan)
* The busisness plan(s) can be either part
of the document’s main text, annexed,
or a separate document.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 54
cifc mechanism, or could include various mechanisms
in a protected area. See Box 10 for the key elements of
a business plan and the link to the fnancial plan. In the
case of tourism, for example, it is essential to have busi-
ness plans. These plans help to improve or establish the
link between supply and demand. A very specifc case
is that of the collection of payment for tourism services
offered by national parks (entry fees), which are too
often, due to limitations in the regulatory framework,
based on a single and rigid entry fee payable only at
the parks’ entrance. An example of the different ele-
ments (for example, type of pass and service, number
of people, duration of pass, payment method, and point
of purchase) to consider when designing market-based
entry fees is available in Table 11.
As noted at the beginning of this chapter, there is
no single recipe for how fnancial plans and business
plans should be formulated; recall that for purposes
of this publication, the business plan is subordinate to
the fnancial plan. Figure 10 illustrates how the busi-
ness plan(s) is included within the broader framework
of a fnancial plan, and Box 11 summarizes the process
of linking Ecuador’s fnancial plan and business plan.
Economic Impact
This section describes the economic impact of the
protected area on the community, the region, and the
country, as well as the external benefts of protected
areas, such as watershed protection and clean air. Like
the marketing plan, the economic impact analysis sec-
tion can be as detailed as desired or can be summarized
in a table. However, as a general rule, the shorter and
more concise, the better. The process of economic
impact analysis is, in fact, very specialized and complex,
generally involving a separate assessment. The goal of
this section is to provide readers with a summary of the
economic impact of the protected area. This section is
useful to mobilize political will to support implemen-
tation of your fnancial plan by focusing on the how
monetary and non-monetary benefts fow, where these
benefts are generated, and who the ultimate recipients
of such benefts are. For example, the economic impact
analysis can illustrate how protected areas help to gen-
erate spending (for example, from visitors), both inside
and outside protected areas. Table 12 illustrates how
this information can be presented.
Table 12. Economic Impact of Foreign Visitors to Laughing Bird Caye National Park (LBCNP), Belize (in US$)
Total Foreign Visitors to LBCNP 2004 6,980
Number of non-dive visitors 5,809
Average tour price $90
Value to tour operators $522,810
Number of scuba divers 1,171
Average dive-trip price $170
Value to dive operators $199,070
Direct revenue to tour operators $721,880
Average hotel price in Placencia per person — shared (2003) $90
Value of hotel for night of LBCNP visit $631,097
Meals and miscellaneous expenses day of visit $30
Value meals and miscellaneous expenses $209,400
Total value 1-day LBCNP visit to Placencia $1,562,377
The Nature Conservancy 55
Implementation Plan
This plan refers to the programing of all the actions
necessary to carry out the fnancial plan. The imple-
mentation plan should cover the following key topics:
n Program of activities: Inclusion of all actions related
to market and non-market-based fnancial mecha-
nisms, including business plans and all institutional,
legal, and regulatory aspects.
n Budget: Clear determination of the resources needed
to implement the plan and its fnancing.
n Decision-making structure: Determination of levels
of decision making and their functioning.
n Assignment of staff: Identifcation of necessary staff
(quantity and quality) and determination of their
roles and responsibilities.
n Communications plan: Defnition of actions aimed
at disseminating fnancial information to internal and
external stakeholders of the system of protected areas.
The components of a fnancial plan can be adjusted
according to the context of each country or region
(in the case of fnancial plans being developed at the
subsystem level, such as the federal, state, or munici-
pal level). In turn, every fnancial plan should include
elements such as a preface (by the director of the
protected area system), an executive summary, and
other elements needed, depending on the specifc
context (bibliography, annexes, fnancial tables, etc.).
Finally, it is worth remembering that a fnancial plan
is essential because it:
Box 11. Financial Plan and Business Plans in Ecuador
From 2004 to 2007, the Ministry of Environment
of Ecuador led a process aimed at improving the
fnancial sustainability of the 36 areas that make up
the National System of Protected Areas of Ecuador
(SNAP). The process began with the formation of a
working group representing nine organizations that
share an interest and specifc capabilities for sup-
porting the Ministry of Environment with technical
and fnancial resources.
The frst stage of the process consisted of a system-
wide fnancial needs analysis, which produced valu-
able information on the current fnancial status of
SNAP, as well as a 10-year projection of fnancial needs
and gaps. This information was obtained through an
analysis of the main barriers and structural limitations
to increasing the amount of resources SNAP currently
receives. These analysis inputs made it possible to ad-
equately gauge the requirements of fnancial planning.
Based on the analysis, the planners developed specifc
instruments on three levels.
The frst instrument, the fnancial sustainability strat-
egy, consisted of macro-level strategic planning for
the whole SNAP, including the analysis of supply and
demand for resources. This strategy proposed alterna-
tive fnancing mechanisms and identifed a set of legal,
political, and institutional elements that created an
enabling environment for fnancial sustainability. At
the second level, specifc business plans were devel-
oped for each of the most promising alternatives and
for mechanisms that were considered in the fnancial
sustainability strategy. Finally, at the third level, steps
were taken to operationalize different instruments at
the level of implementation plans and specifc evalua-
tion systems, in order to measure the progress of each
priority line of action. This planning made it possible
to differentiate a hierarchy in terms of the existing
planning instruments. This planning also facilitated
organizing the participation of different stakeholders
who have committed their support for implementation
of each instrument. Annex 15 contains extracts from
these plans.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 56
n Promotes a shift toward attitudes that support the
adoption of business strategies.
n Aligns fnancial opportunities with protected area
conservation objectives.
n Promotes informed decision making supported by
fnancial information.
n Anticipates funding cuts and proposes solutions.
40
n A feasibility analysis, part of the fnancial planning
process, determines whether a fnancial mechanism
is worth the investment of time, effort, and resources
(see Chapter 2).
n A market analysis helps to understand the strengths
and weaknesses of the market, and enables planners
to make adjustments to achieve the fnancial goals.
The fnancial plan is the protected area’s “business
card.” Thus, the government, donors, the private sec-
tor, and the general public see protected area manag-
ers as business professionals who know their fnancial
situations, have clear fnancial goals, and know how
to reach them.
4.4. Measuring of Progress
Traditionally, implementation of fnancial plans at the
protected area system level has not had mechanisms
to evaluate progress and facilitate timely feedback.
As part of the effort to fll this gap, the United
Nations Development Program (UNDP), in coor-
dination with members of the Conservation Finance
Alliance (CFA), has developed a scorecard
41
to
measure progress of protected area systems toward
fnancial sustainability. This tool is discussed below,
and Box 14 contains basic principles on how to evalu-
ate a fnancial plan.
The UNDP’s Scorecard was offcially launched in
October 2007 in Bariloche, Argentina, during IUCN’s
Second Latin American Congress on National Parks
and Other Protected Areas. This tool is already being
implemented widely, and the results have helped to
identify the strengths and weaknesses of those systems
of protected areas needing more support. The results
also demonstrate to government agencies the impor-
tance of providing greater fnancial support and pro-
moting legal reforms to improve the fnancial systems
of protected areas.
The Scorecard makes it possible to evaluate both the
available funding supply and the demand for funds to
satisfy fnancial needs at both the site and the protected
area system levels. At the same time, the tool allows the
assessment of protected area fnancing on two levels:
a) analysis of the fnancial system of protected areas
(what amount of resources is being used and how much
is needed for effective management), and b) analysis of
the structural basis established to improve long-term
fnancing. A summary of the main aspects of the Score-
card tool is presented below.
Objective: To aid governments, donors, and NGOs
in evaluating different aspects of a protected area
system’s fnancing by analyzing its current perfor-
mance and progress toward a better fnancial situa-
tion. The tool is designed for protected area systems
but can be used at other levels (such as departmental
and regional levels).
Structure: The tool has three parts:
n Part I requires fnancial information to analyze costs,
income, and both current and projected fnancial
gaps. It facilitates quantitative analysis and provides
information to determine fnancial objectives and the
amount of additional funds needed.
n Part II includes three components: a) the gover-
nance structure for sustainable fnancing (covering
legal, policy, and regulatory issues, among others), b)
business plans and cost-analysis tools for effective
management (addressing such aspects as fnancial
planning, accounting, business plans, levels of expen-
diture, increased income, cost control, cash fow,
etc.), and c) tools and systems for resource genera-
tion and mobilization (focused on maximizing exist-
ing or potential income mechanisms and diversifying
income sources in order to reduce vulnerability).
n Part III covers the scoring process and the measure-
ment of progress.
Scoring: The scoring system makes it possible to
compare the year-by-year progress of a given country
40. Business Planning for Protected Areas, Center for Park Management, 2002.
41. Financial Sustainability Scorecard for Nacional Systems of Protected Areas, Bovarnick, PNUD. June 2007.
The Nature Conservancy 57
Box 12. Evaluation of Performance and Impact of Financial Plans
Generally, the impact of fnancial plans is measured
in terms of their effect on biodiversity conservation
objectives. While this is adequate from a conservation
perspective, it has many limitations from the point of
view of the mobilization of fnancial resources and the
diversifcation of income sources.
An appropriate measure of the performance and impact
of fnancial strategies focuses on analyzing the reduction
of fnancial gaps and the fulfllment of fnancial sustain-
ability goals. In particular, a measure of fnancial impact
should cover such matters as increased revenues, cost
reduction, diversifcation of sources, strategic resource
allocation, and other relevant matters. A set of aspects
that can be considered in evaluating the impact of a
fnancial plan is presented below.
Once the targets for the assessment have been estab-
lished, it is important to develop performance indica-
tors, which may be qualitative, quantitative, or behav-
ioral.* It is important for these indicators to consider
the following aspects: a) target group (for whom), b)
quantity (how much), c) quality (how well), d) time
(when), and e) place (where). For example:
Indicator: “Ten high-mountain national parks in the
National System of Protected Areas (whose income from
entrance fees has been reduced to less than US$30,000)
increase their income by 50% between January 2009 and
December 2011, recovering the income level recorded
in the period from 1990-1995, in accordance with the
standards, fnancial mechanisms, and goals defned in
the 2009 Business Plan.”
Finally, in order to support the process of evaluating
the impact of fnancial plans, it is necessary to have
external audits performed by the national comptroller’s
offce or specialized private frms. These audits provide
revised information on the level of transparency and
responsibility in accountability for one protected area
and/or the system of protected areas.
What Do We Want to Measure?
Direct impacts: For example, results related to the
funds generated to close fnancial gaps.
n The performance of specifc fnancial mechanisms
(for example, how much income an endowment
generates or what revenues are generated by
park entrance fees).
n Whether the funds generated by the fnancial
mechanisms contribute to covering the needs of
priority program areas and to reducing
fnancial gaps.
n The growth of fnancial resources at the
level of protected area systems or individual
protected areas.
Indirect impacts: For example, results related to
other matters that contribute to the achievement of
the goals of the fnancial plan.
n Increased fnancial management capacity of the
protected area system.
n Effciency in the use of fnancial resources.
n Effciency of the legal framework.
* Annex 16 describes the steps to formulate performance indicators based on the NORAD (Norwegian
Agency for Development Cooperation) approach.
or group of countries. It is important to consider that
certain variables may not be applicable to all of the
countries evaluated. At the same time, some aspects
may be more relevant in some cases. Due to these
factors, it is possible to change the relative weight
assigned to the variables in order to better refect local
and assessment conditions.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 58
Application: The Scorecard should be applied by a
working team from the protected area system. Mem-
bers of the team should have extensive knowledge of
the system’s fnances and be supported by experts,
donors, and NGOs. The time needed to fll out the
Scorecard depends on the availability of fnancial data
for Part I. Using this information, the staff can fll out
Part II and obtain the score (Part III) in one day’s
work. The time needed for Part I will depend on the
available data, but since much fnancial information is
often not available, additional assistance may be needed
to generate and compile the fnancial data for Part I.
The Scorecard is available online in English and Span-
ish: www.undp.org/gef/05/kmanagement/newpublica-
tion.html. Also see: www.conservationfnance.org.
In addition, Box 12 presents basic criteria to assess the
performance and impact of fnancial plans.
4.5. Lessons Learned
n The development of a system-level fnancial plan is
a process that requires implementation of a set of
activities that should be framed within the general
guidelines established by the national authority for
the protected areas system. It is important to note
that the existence of a system-level fnancial plan will
make it possible to generate a macro strategy for all
areas of the system, including those with less fnan-
cial potential that may require subsidies from central
funding or wealthier protected areas.
n Rather than emphasize the differences between
a market objective and a conservation and devel-
opment objective, which may present conficting
interests, the market approach should be considered
a useful tool to achieve the conservation and develop-
ment objectives. It is critical to internalize this link to
all conservation stakeholders.
n Among the most important risk factors that should
be considered in planning for implementation of
a system-level fnancial plan is the resistance to
change in some governmental levels that are inclined
to maintain the status quo, avoiding changes that
can affect the form and structure of their current
operations.
n A key problem to overcome is the lack of confdence
in the public sector. This situation becomes an entry
barrier for potential fnancial opportunities offered
by the private sector. In order to build trust in the
public sector, attention should be given to improving
transparency and accountability during planning and
implementation.
n It is critical to improve the understanding of the
importance of financial information to support
decision making, so that government officials will
support the implementation of financial plans.
n A fnancial plan is a tool that builds on a series of
already existing planning instruments. It is not
intended to replace a strategic plan for a system
of protected areas; on the contrary, the fnancial
plan strengthens the strategic plan from a fnancial
perspective.
n The development of a fnancial plan is a dynamic
process that should be continuously reviewed and
updated based on newly available information, situa-
tions, new opportunities, etc.
The Nature Conservancy 59
Activity-Based Cost Accounting (ABC)
This method assesses revenues, expenditures, and
financial needs and gaps related to protected area
operations. It can be used at site or system level.
This method has been successfully used by the US
National Park Service; and by the Center for Park
Management (CPM) and the Nature Conservancy in
collaboration with various national governments. Ac-
tivity-based costing is part of the business planning
process used by the National Park Service’s Business
Management Group.
ABC accounting is an easy to use results-oriented
method that makes a link between conservation goals
with actual costs. It is based on the organization of the
activities carried out in protected areas through func-
tional areas and programs. The functional areas consist
of the different categories of operational activities
required to manage protected areas (including the cost
of the central protected area agency), which include
programs and subprograms, with programs being the
parts of the operation that require separate manage-
ment. Using metrics, costs are allocated to each pro-
gram and subprogram for basic and optimal levels of
conservation; fnancial gaps are determined by compar-
ing available resources with fnancial needs (basic and
optimal). This method makes it possible to arrive at
actual and reliable costs since the allocated costs are di-
rectly linked to the goals of each of the protected areas
conservation programs.
In addition, this tool is very useful for defning invest-
ment priorities and reducing costs. Above all, activ-
ity-based costing introduces realism into conservation
fnance. The information produced by the fnancial
analysis is fundamental to the development of fnancial
plans and mechanisms to close the gaps detected. For
more information on this method, visit: www.npca.
org/cpm/, www.conservationfnance.org, and www.con-
serveonline.org/workspaces/patools/resources/fnance/
fnanceresources. The Nature Conservancy in collabo-
ration with members of the CFA offers a comprehen-
sive On-line Training Program on Business Planning
for Protected Areas which includes a module on ABC
accounting. For details and programming please visit
www.conservationfnance.org.
Threshold of Sustainability
The “Threshold of Sustainability” is the minimum level
of investment required in tourism management to
ensure that the protected area’s natural capital does not
decline. The threshold of sustainability is reached by
ensuring adequate investment in key management pro-
grams such as: impact monitoring, basic infrastructure,
security, and interpretation and information. These
costs could be built into a sustainable fnance plan for
protected areas where tourism is suitable, and must be
an integral part of annual park budgets. For more infor-
mation on the “threshold of sustainability”, please visit:
www.conserveonline.org/workspaces/
tncecotourismprogram/publications.
Financial Analysis of the National System of
Protected Areas (SNAP), Ecuador
This analysis includes a description of the methodology
and scope of the study and the results. The methods
focus on analyzing sources of funding, fnancial, re-
source fows, spending trends, defning fnancial needs
for basic and optimal (integral) management scenarios,
and defnition of fnancial gaps. The analysis used the
SNAP’s database to organize the fnancial information.
The analysis was supported by MAE, TNC, CI, KfW,
Annexes
Annex 1. Methods for Protected Area Financial Analysis
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 60
Environment Fund, Ecociencia, Fundación Natura,
USAID, IUCN, Mentefactura, and CEC. The study
and the database can be downloaded from the follow-
ing link: www.ceda.org.ec/descargas/biblioteca/
analisis_necesidades_snap.pdf.
Financial Needs Analysis of the SINANPE, Peru:
2005–2014
The method includes the selection of representative
protected areas for the fnancial analysis, the analysis
the PA system’s fnance (revenue and expenditure)
from both a historical and a current perspective, and
the defnition of funding needs and gaps for basic and
optimal conservation. This analysis was used to de-
velop a 10-year projection (2004-2014) of revenues
and expenditures in order to determine the long-term
fnancial needs. The analysis also includes (in annexes)
detailed information on revenues, expenditures, projec-
tions, and the fnancial gap for each national protected
area in SINANPE (National System of State-Protect-
ed Natural Areas). This method required a comprehen-
sive feld study in 19 highly representative natural pro-
tected areas of the SINANPE, selected using a set of
agreed-upon management indicators; and included the
management cost of the central protected area agency.
The analysis was fnanced by the World Bank fnanced
project “Participatory Management in Natural Areas”
(GPAN), and the SINANPE II project, fnanced by
KfW, provided technical support. The complete ver-
sion of the analysis and the database can be downloaded
from the following link: www.inrena.gob.pe/ianp/ca/
downloads/Documentos%20de%20interes/El%20
fnanciamiento%20del%20SINANPE/Estudio%20
de%20necesidades%20y%20brecha%20fnanciera%
20SINANPE_web.pdf.
MYCOSIS
This model uses Excel sheets to record recurrent costs
(staff, vehicles, etc.) and necessary investments. Myco-
sis also offers a set of key benchmark indicators or vari-
ables for management of natural reserves. This method
has been used for global studies, in Federal Conserva-
tion Units in Brazil and Honduras. The version applied
in Honduras can be downloaded from the following
link: www.birdlist.org/cam/honduras/hn_parks_
study1.htm.
MARFUND
This method used by the Coastal and Marine Protected
Areas Fund of the Mesoamerican Reef. Protected
areas are classifed according to country, type (coastal
or marine), size (small, medium, or large), and phase
of operation (start-up, consolidation, full operation).
The fnancial part of the model uses Excel, provides
information on operating expenses, investments, and
revenues at the protected-area level. This method has
been used in Belize, Honduras, Guatemala, and Mexico.
The category of regional-level expenditures is also con-
sidered in order to refect the demands of coordination
and control by member countries, and the process of
adding information. Additional information, including
the fle downloadable version, can be found at: www.
marfund.org/indexingles.html. This method was devel-
oped with support from WWF and MARFUND.
Long-term Financial Planning for Parks and
Protected Areas
The method connects long-term strategic programs
and fnancial planning. It also uses Excel spread sheets.
It includes detailed steps to estimate the resources
needed to implement conservation programs and cov-
ers key areas such as: threats, activities, fundraising
strategies, personnel, land acquisition, expense details
and summary, and revenue allocation. This method is
useful to determine the different levels for informa-
tion gathering and analyses. It was developed by TNC
with support from USAID. The manual can be down-
loaded from: www.parksinperil.org/resources/art18405.
html#consfnance.
The Nature Conservancy 61
Goals and Objectives
The primary objective of this initiative was to provide
the government of Jamaica with a roadmap to address
two concerns: fnancial sustainability for the protected
area system, and improved fnancial management of
protected areas through the formulation and imple-
mentation of business plans. This roadmap will include
the necessary steps to establish the proper institutional
framework and identify the fnancial mechanisms that
can be implemented.
The frst phase of this initiative include three compo-
nents: 1) identify the system-level fnancial needs and
gap, thereby establishing a target funding amount that
will meet the conservation goals and objectives of the
system, and will close the gap; 2) identify the policy
barriers to fnancial sustainability and recommend
steps to break down those barriers, and, then, identify
appropriate and viable fnancial mechanisms to achieve
fnancial sustainability; and lastly, 3) develop a fnancial
sustainability plan for the system.
The implementation aspects of this initiative are not
included in this proposal but will immediately follow
completion of this fnancial sustainability plan. The
development of the fnancial plan will train protected
area managers in business planning principles and
strategy development (including feasibility assessments
of potential fnancial mechanisms). With this added
capacity and business plan analysis, protected area
managers will be able to make more informed decisions
that have an impact on their developing realistic goals
and objectives.
The specifc objectives of this initiative (Phase I) are
the following:
n The CBD Programme of Work requirements for
Phase I are met.
n Have an integrated biodiversity gap and capacity gap
assessments in their fnancial planning for the pro-
tected area system.
n Defned the funding gap based on cost accounting
methods and a tested methodology.
n Key protected area staff and administrators will have
a fundamental understanding of fnancial sustainabil-
ity planning and both sustainable fnance theory and
application.
n External local capacity has been built for fnancial
planning and for the possible establishment of a pro-
tected area fnancial management curriculum at the
local university.
n Several fnancial strategies are identifed that will
broaden the diversity of funding for the protected
area system.
n An action plan is in place to implement several of
these fnancial strategies.
n Protected area stakeholders maintain a high degree of
buy-in to the fnancial plan.
n The ideal political and legal framework is identifed
to promote and facilitate fnancial sustainability for
the protected area system.
In Phase II, the fnancial sustainability initiative will
address formulation of site-level business plans and im-
plementation of site- and system-level fnancial strate-
gies to improve the fnancial sustainability and manage-
ment effectiveness of the protected areas system.
Annex 2. Draft Proposal for the Development of a Financial
Sustainability Plan for the System of Protected Areas
1
1. A similar structure was used to develop the draft for the Financial Plan of the PA System of Jamaica, currently being discussed.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 62
Timescale and Work plan for Phase I
A
Financial
analysis
B
Screening and
feasibility of
fnancial
mechanisms
C
Formulate
fnancial
sustainability
plan for the
PA system
Start Date
July – September
2006
August – September
2006
September – November
2006
Details
n Meet with government offcials to kick off project and defne key
stakeholders
n Draw up a detailed work plan and share it with key stakeholders
n Set deadlines for data required by Government / NGOs
n Work with Government and partners to identify biodiversity and
capacity goals and objectives for the system
n Collect fnancial and administrative data from Government and NGOs
managing PAs
n Research fow of funds from source to expenditure
n Analyze budgeting and accounting principles and methodology for PA
system and sites
n Research system and site-level fnancial mechanisms
n Identify protected area goods and services (biodiversity, recreation,
etc.), drawn from management plans and conservation plans
n Conduct market analysis and quantify demand
n Identify political, legal, and market barriers to fnancial sustainabil-
ity for the system
n Draft cost-beneft analyses for each fnancial mechanism
n Work with stakeholders and Government to create a framework for
the fnancial sustainability plan
n Draft outlines of implementation plans for key fnancial strategies
n Complete draft fnancial sustainability plan for review
n Finalize plan
The Nature Conservancy 63
I. Objectives
1. Identifcation of budgeted costs of the SNAP for the
applicable years and at the three administrative levels
of the Ministry of Environment (MAE): central,
regional, and protected area levels.
2. Identifcation of actual (implemented) annual
expenditures, including resources from the central
government budget and contributions from other
institutions and international cooperation.
3. Determination of self-generated funds at the pro-
tected area level.
4. Defnition of fnancial needs to cover basic and inte-
gral (optimal) management cost of the SNAP.
5. Analysis and defnition of the gap between real
baseline expenditures (2003) and the estimates of
fnancial needs to cover the basic and integral man-
agement costs of the SNAP, in coordination with the
Protected Area Management Team. The analysis will
include different levels such as: budgets at district
and individual protected areas; budgets of protected
areas with similar geographic distribution; budgets of
protected areas supported by the National Environ-
mental Fund (FAN); and groups of protected areas
grouped by management categories.
II. Key Tasks
1. Coordinate actions with the Financial Plan Work-
ing Group (known as Promoting Group) to obtain
information from the Headquarters and Provincial
Districts of MAE, as well as from NGOs and the
international cooperation.
2. Review and adjust the proposed methodology and
tools for information gathering.
3. Support the Protected Area Management Team in pre-
paring a “working folder” for information gathering.
4. Carry out visits to Regional Districts as necessary to
gather information.
5. Collect information and data using different in-
formation sources whenever possible (NGOs and
cooperation agencies, among others).
6. Systematize and analyze the information according
to the objectives, scenarios and hypotheses.
7. Define financial performance criteria and indica-
tors based on the basic and integral management
cost of the SNAP, using the 2003 expenditure
baseline as a reference.
8. Produce information on the 2003 actual expen-
ditures and present it and validate it in Regional
District workshops.
9. Participate in analyzing information on basic and
integral management costs with the Protected Area
Management Team.
10. Develop a budget projection for protected areas
considering baseline data and the needs to cover
basic and integral management costs.
11. Prepare interim reports and presentations for dis-
cussion with the Promoting Group, MAE, donors,
and other key actors.
12. Work with the Protected Area Management Team
to develop a fnal document with the results of the
Financial Analysis of the SNAP, including: method,
opportunities for replication, systematization and
analysis of the fnancial information, conclusions,
and recommendations.
13. Present the Final Report to different stakeholders.
III. Expected Products
1. A document describing the methodology, scope of
work, limitations, and information sources used to
calculate the baseline.
Annex 3. Terms of Reference for the
Financial Analysis of the SNAP, Ecuador
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 64
2. Matrices with information on actual 2003 expendi-
tures and self-generated revenues.
3. Analysis of the fnancial gap between 2003 baseline
expenditures and the fnancial needs to cover basic
and integral management costs, including fnancial
indicators.
4. Financial projection to 2010 based on the results of
the study and income assumptions.
5. A fnal study document integrating the results pro-
duced by the Protected Areas Management Team and
the Financial Team, based on the objectives of the
study, including conclusions and recommendations,
methodology, and process.
6. PowerPoint presentations on the results of the study
to be used in presentations to different stakeholders
and donors.
7. Communications material on the results of the study
to be used by protected area managers.
Source: Ministry of Environment of Ecuador / TNC, 2005.
The Nature Conservancy 65
Before Visits
n Communicate to the protected area (PA) staff the
objectives, scope of work, and work plan for the
study.
n Send PA staff the forms, explain how to complete
them, and specify the type of information needed.
n Review the travel itinerary, coordinate logistical as-
pects, agree on a visit schedule, and confrm PA staff
attendance.
n Review secondary information from the PA on f-
nance, administration, and management.
During Visits
n Hold a workshop with selected PA staff to inform
them of data collected, analyze the fgures, and ex-
change opinions.
n Conduct interviews, as necessary, with key PA staff
and local entities that support the PA.
n Determine cost management diffculties to be con-
sidered in the recommendations.
n During the process, always ask: Why is this resource
needed? How can the costs of this activity be reduced
while maintaining quality?
After Visits
n Consult with PA staff on any doubts and/or gaps in
the information received.
n Validate the information with protected area staff.
n Analyze and systematize the validated information.
Source: F. León, Of?ce of Protected Natural Areas (IANP), 2006.
Annex 4. Key Actions to Gather Information
During Visits to Protected Areas
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 66
A variety of methods can be used to collect data.
Some of the most important include:
n Interviews:
Conducting interviews is an effective way of ob-
taining qualitative information. Interviews can be
structured or semi-structured; i.e. scripted or con-
versational. For example, interviews with protected
area staff in charge of specifc programs are useful
to gather information on expenses, investments, and
revenues.
n Surveys:
Surveys are a very useful tool to collect qualitative
information and can be in printed form or on the
Internet. The Internet is recommended, and less
expensive, because there are service providers with
existing platforms and easy to format surveys that
automatically compile and process survey results.
n Workshops with Focus Groups:
These meetings bring together relevant actors to
exchange ideas about a specifc topic. For example, a
workshop can be held with cooperating institutions
to discuss issues related to fnancing, donations, and
commitment periods. Likewise, government authori-
ties can be called on to analyze the fow of funds
(revenues and expenditures) in the protected area
system; and key protected area staff can be brought
together to discuss the elements that make up each
management program.
n Workshops:
These meetings may include different actors and are
particularly useful for defning joint action agendas,
reviewing results, and validating information.
Annex 5. Methods for Data Collection
The Nature Conservancy 67
Annex 6. Validation of Information Gathered through Workshops —
Experiences in Peru, Ecuador, and Costa Rica
System of Protected Areas
Costa Rica
n The technical team pre-
sented the information to
the working group the day
after the workshop. The
working group reviewed
the information and made
the necessary corrections.
n The information produced
by each protected area
was consolidated and
analyzed.
n The information was sub-
mitted in CD-ROM format
to staff in each conserva-
tion area for daily use.
Ecuador
n Information obtained in
the different workshops
was refned by conduct-
ing interviews with area
managers as a means of
correcting imprecision and
errors in completion of the
matrices and addressing
inconsistencies in the in-
formation on the inventory
of protected areas assets.
Peru
n The information was
analyzed in a participatory
manner taking into account
the experience and knowl-
edge of area coordinators
and thematic coordinators
from the Offce of Protected
Natural Areas (IANP).
n Information collected during
on-site visits was refned
through coordination meet-
ings and telephone inter-
views with area directors
to adjust data on the forms
and validate information on
the inventory of protected
area assets.
Actions
performed
during the
Workshops
Sources: Financial Strategy for the National System of Conservation Areas of Costa Rica. Phase 1: Financial Needs Plan 2004-2006; Process of Developing the Long-term
Financial Plan for the SINANPE. Phase 1: Analysis of the Financial Needs of the SINANPE 2005-2014 (Peru); and Analysis of the Financial Needs of the SNAP in Ecuador.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 68
Annex 7. Financial Gaps of Laughing Bird Caye National Park, Belize (in US$)
Functional Areas E
Source: Business Plans for Parks and Protected Areas, Center for Park Management, National Parks Conservation
Association, 2005, United States.
I II III IV
Available Resources Scenarios Financial Gap
Sources Total Basic Optimal Basic Optimal
Gov’t Int’l Local Own Funds Funds Funds Funds Funds
NGOs NGOs Revenues
A B C D F G H I
(A+B+C+D) (F-E) (G-E)
RESOURCE MANAGEMENT & PROTECTION
Patrolling and Enforcement - 7,315 - 12,562 19,877 25,310 30,244 5,434 10,367
Wildlife Mngmt. & Habitat Restoration - - - - - - - - -
Zoning and Boundaries - 356 - 681 1,037 5,740 9,649 4,703 8,612
Wildland Fire Management - - - - - - - - -
Cultural Resource Management - - - - - - - - -
Subtotal - 43,115 - 19,154 62,270 92,787 127,353 30,518 65,083
TOURISM & RECREATION
Visitor Safety and Protection - 1,721 - 5,050 6,771 5,888 7,486 (883) 715
Recreation Fee Collection - 2,432 - 4,453 6,885 4,386 5,184 (2,499) (1,701)
Visitor Education and Interpretation - 4,334 - 5,206 9,540 11,063 16,308 1,523 6,768
Concession and Recreation Special Uses - - - - - 5,460 22,838 5,460 -
Subtotal - 8,486 - 14,709 23,196 26,797 51,817 3,601 28,621
COMMERCIAL PRODUCTS & USES
Fishing (Marine Resources) - - - - - - - - -
Timber and Forest Products - - - - - - - - -
Non-Renewable Resources - - - - - - - - -
Special Commercial Uses - - - - - - - - -
Subtotal - - - - - - - - -
MANAGEMENT & ADMINISTRATION
General Management and Administration - 16,587 - 682 17,270 14,385 16,385 (2,884) (885)
Financial Management and Administration - 16,035 - 193 16,228 14,485 16,035 (1,743) (193)
Planning - 12,678 - 872 13,550 15,115 17,315 1,565 3,765
Partner Relations - 13,251 - 898 14,150 34,712 66,816 20,563 52,666
Information Technology - 4,945 - 157 5,102 9,997 30,161 4,895 25,059
Subtotal - 63,496 - 2,802 66,299 88,694 146,712 22,395 80,413
COMMUNITY DEVELOPMENT & OUTREACH
Formal Environmental Education - 7,603 - 388 7,991 104,216 106,166 96,225 98,175
Public Outreach and Info. Dissemination - 21,134 - 436 21,570 13,741 24,485 (7,828) 2,915
Alternative Livelihoods - 9,818 - 214 10,032 4,566 7,466 (5,466) (2,566)
Subtotal - 38,555 - 1,038 39,593 122,522 138,117 82,930 98,524
FACILITY OPERATIONS & MAINTENANCE
Buildings, Grounds, and Utilities - 11,406 - 2,504 13,909 13,123 15,623 (787) 1,714
Roads - - - - - - - - -
Trails - 972 - 2,221 3,193 3,783 6,049 590 2,856
Docking Facilities (Marine) - 631 - 1,097 1,728 3,219 4,168 1,492 2,440
Transportation and Vehicle Fleet - 9,340 - 855 10,195 8,580 9,237 (1,616) (958)
Campgrounds and Picnic Facilities - 666 - 1,228 1,894 2,079 2,808 185 914
Subtotal - 23,014 - 7,904 30,919 30,783 37,884 (136) 6,965
TOTAL - 176,667 - 45,608 222,276 361,584 501,883 139,308 279,607
The Nature Conservancy 69
The previous table shows the results of the fnancial
analysis in the case of Laughing Bird Caye National
Park. The information in this table has improved the
understanding of the protected area’s fnancial situ-
ation and makes possible the identifcation of prior-
ity investment areas. The information in the table is
organized into four blocks:
I) Functional Areas: This information shows resource
allocation organized by program activity instead of the
typical breakdown by expenditure item (such as staff,
rent, supplies, etc.).
II) Available Resources: This section provides informa-
tion on the protected area’s current fnancing, orga-
nized by type of source.
III) Scenarios: These show the resources needed to
implement program activities in basic and optimal
scenarios.
IV) Financial Gap: This block brings together results
of the fnancial needs and gaps analysis, and shows the
existing fnancial gap between available resources and
those resources needed for basic and optimal scenarios.
A review of the table shows a fnancial gap of 62%
between the total expenditure covered in the current
situation (US$222,276) and the projected expendi-
ture for the basic scenario (US$361,584). This gap
increases to 125% when expenditures in the current
situation (US$222,276) are compared with those
projected for the optimal scenario (US$501,883).
The programs showing the largest fnancial gaps are:
Community Development and Outreach, Manage-
ment and Administration, and Resource Manage-
ment and Protection. These results make clear that,
depending on the level of threats, these programs
require a greater level of investment.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 70
Annex 8. Identifcation, Prioritization, and Selection of Financial
Mechanisms for the System of Protected Areas of Ecuador
The methodology used for identifcation, prioritization,
and selection of fnancial mechanisms is based mainly
on the collection of information from primary and
secondary sources, the establishment of prioritization
criteria, an analysis of the feasibility of implementing
the prioritized mechanisms, and fnally, grouping the
identifed mechanisms. The steps followed in this pro-
cess are presented below.
a) Review of secondary information sources:
1
This step
focused on identifying fnancial mechanisms at national
and international levels. The information gathered pro-
vided a clear description of the mechanisms, how they
work, and the results of their application.
2
b) Prioritization: The prioritization was based on the
criteria and indicators presented in Table A.
This criteria was supported by a rating system (1-3)
where 1 indicated that the mechanism is performing
inadequately and 3 that the mechanism is performing
satisfactorily. Based on these criteria and the scale ad-
opted, 11 of the 59 mechanisms identifed were selected
as high priority. The mechanisms selected were: SNAP
logo, SNAP Fund, concessions in protected areas, fees
for infrastructure in protected areas, sale of carbon
bonds, water-use rates, donation of 25% of income
tax to the system, other donations, volunteer work in
protected areas, SNAP Passport, and presentation of
projects for funding through the Special Account for
Table A: Criteria and Indicators for the Prioritization of Financial Mechanisms
Criteria Indicators
1. Management capacity a. Capacity for control of payment and use.
b. Administrative capacity of the MAE.
c. Capacity to promote the mechanism.
2. Financial aspects d. Degree of complexity of information requirements and/or previous studies.
e. Level of investment required to develop the mechanism.
f. Financial appeal of the mechanism.
3. Environment compatibility g. Degree of adaptation to local values.
and risk h. Degree of consistency of the mechanism with local and national
conservation objectives.
i. Risk that the mechanism may threaten biodiversity.
j. Risk of generating perverse incentives to carry out other activities.
4. Policy and legal feasibility k. Existence of a law or rule to regulate the mechanism.
l. Existence of policy support for implementation of the mechanism.
m. Time frame for implementation of the mechanism.
Source: Prepared by Mentefactura, 2006.
1. The main sources of information used were experiences and documents available on the Internet primarily from institutions involved in environmental
conservation.
2. Fifty-nine mechanisms were initially identifed.
The Nature Conservancy 71
Table B: Legal Scenarios Considered in Ecuador
Scenario Defnition Time Frame
“ No changes in current
regulations”
“ Minor changes in
current regulations”
“ Profound changes in
current regulations”
Mechanisms whose implementation only requires direct enforcement
of the current legal system.
Mechanisms whose implementation requires reforms to secondary
norms contained in Ministerial Agreements and/or Executive Decrees.
Mechanisms whose application requires reforms to legal norms, such
as organic and ordinary laws.
Short-term
Medium-term
Long-term
Source: Prepared by Mentefactura, 2006.
3. The results were validated by a group of legal experts from different institutions.
Productive and Social Revitalization, Scientifc and
Technological Development, and Fiscal Stabilization
(CEREPS).
d) Conducting in-depth interviews: The purpose of the
interviews was to determine the current perception of
prioritized mechanisms, their feasibility, their attrac-
tiveness to investors, key actors, and also other mecha-
nisms. The interviews were conducted with actors that
currently fnance or may potentially fnance the SNAP.
e) Feasibility: In order to identify the most viable
fnancial mechanisms, the prioritized mechanisms
were analyzed from a legal perspective considering the
changes or reforms needed in the current legislation
to allow their operation. This analysis considered the
legal scenarios presented in Table B and included an
in-depth review of the existing regulations for each
mechanism identifed.
3
Finally, the time and money required for the necessary
changes were estimated for each mechanism.
f) Selection of fnancing categories: Based on the
above steps, the selected mechanisms were grouped in
three categories: corporate social responsibility (SNAP
logo and corporate donations), tourism (SNAP Pass-
port and fees) and personal donations/contributions
(donation of 25% of income tax and donations by
Ecuadorians and foreigners), as well as fnancing from
government sources and international cooperation.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 72
Annex 9. Prioritization and Description of Financial Mechanisms, SNAP Ecuador
First Priority
1 SNAP logo
2 Service concessions
3 Antenna installation fee
4 Sale of carbon credits
5 SNAP Passport (for tourists and/or
operators)
6 Public sources
(other than central budget)
7 Personal and/or corporate
donations
8 Donation of 25% of the
income tax
9 Water use and/or watershed
protection fee
10 SNAP Endowment Fund
11 Volunteer work
Second Priority
12 Annual permits for installation/
operation of towers for electric
power lines
13 Scientifc research licenses
14 Debt-for-nature swaps
15 Airport surcharge fees for tourists
16 Annual infrastructure permits
Description
Creation of a logo that facilitates private funding of protected areas in exchange
for rights to use the logo to promote commercial products and/or services.
Service or infrastructure concessions in protected areas; the concession permit-
ting process should take less than 17 months.
Payment for installation of cell phone and television antennas in protected areas.
Revenues for the system from carbon offsets generated by planting new forests
and implementing deforestation reduction projects.
Annual payment for a Passport allowing yearly unlimited entry to protected areas
in the system.
Public funding from various sources, such as the CEREPS.
Donations from individuals and/or the corporate sector; this may be implemented
through “adopt-an-acre” or “adopt-an-animal” programs.
Donation of part of the income tax to support conservation.
Payment from users to ensure the future provision of water through conservation
of the watershed.
Creation of a fund to fnance conservation with contributions from cooperation
agencies and the private sector.
Capitalize on people’s environmental concerns and involve them in performing
volunteer activities in protected areas.
Description
Annual permits for installation and operation of towers for electric power lines in
areas of the system, with authorization of the MAE.
Licenses to conduct scientifc research activities.
Assess opportunities for new transactions with mechanisms such as the Tropical
Forest Conservation Act/U.S. Treasury
Fees collected from all tourists entering the country and a commission
percentage from all cruise ship passengers.
Permits for oil companies to develop and/or use infrastructure in areas of the
System.
The Nature Conservancy 73
Second Priority (continued)
17 Fuel subsidies
18 Tourism entrance fees to
protected areas
19 Hotel surcharges
20 Aermits for pipelines
operation
21 Bioprospecting permits
22 Environmental compensation
and mitigation (offsets)
Third Priority
23 Payment of mooring or
anchorage fees
24 International fnancing
25 Governmental budget allocations
26 Fishing licenses
27 Diving permits
28 Taxes to polluters
29 Private grants
30 Management cost reductions
31 VAT surcharge
32 Fees for extraction of
natural resources
Description
Establishment of subsidies for the use of diesel and gasoline for patrolling
protected area systems.
Review of the tourist fee system based on realistic potential supply and demand
for each individual protected area.
Surcharges to hotel guests in or near protected areas.
Annual permits for the installation and operation of multipurpose pipelines in and
across protected areas (natural gas, crude oil).
Sale of permits to specialized commercial interests marketing health benefts of
marine or terrestrial protected area products.
Payments for damages to the environment. A direct payment to support protected
areas or to create similar ecosystems to offset those damages; for example, im-
pacts from an oil pipeline, hotel, or hydroelectric infrastructure.
Description
Fees paid by vessels in protected areas within or around marine
protection zones.
Financing from multilateral or bilateral sources.
Increasing central government funding for conservation.
Commercial and sport fshing licenses in marine and freshwater protected areas.
Fee paid by divers and instructors in marine or freshwater systems, with different
fees for nationals and foreign visitors.
Establishment of taxes in sectors that damage the environment.
Donations from individuals, foundations, and NGOs.
Strategic partnerships with other sectors connected with the system; for
example, tourist dive boats could support the task of patrolling, thus reducing
conservation costs.
Establishment of a VAT surcharge to support conservation.
A percentage of revenues derived from the fees for extraction of products from
protected areas. This mechanism may include revenue from fees for registration
of the designation of origin of these products.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 74
Annex 10. The Legal and Institutional Framework of the SINAC, Costa Rica
Costa Rica’s National System of Conservation
Areas (SINAC) includes three directorates,
11 conservation areas, 32 regional offces, and
160 protected areas. It has specifc powers and
multiple relations with state and private enti-
ties at local, national, and regional levels. The
legislation that currently regulates SINAC is
one of the most complete, and is the result of a
process of evolution and fexible adaptation of
both programming and fnancial aspects (see
Annexes 11 and 12).
Evolution of the System
The SINAC was created in the 1980s with the
establishment of the model of Regional Con-
servation Units, which grouped national parks
according to similar regions; however, each
national park maintained a degree of autonomy
through its management units.
In the following years, SINAC continued to
evolve and Costa Rica’s national parks became
core areas of absolute protection and included
buffer zones (territories adjacent to national
parks with restrictions on natural resource use
that would enhance park protection). Only three na-
tional parks – Corcovado, Guanacaste, and Palo Verde
– were included in this plan. This model did not have
broad coverage because it was based on national parks
and their surroundings, leaving several areas of national
territory at the “margin” of protection and conservation
efforts since these adjacent areas were not given park
status.
SINAC’s management model was restructured begin-
ning in 1994. The new structure involved merging the
three directorates directly managing natural resources
at the Ministry of Natural Resources, Energy and
Mines (MIRENEM), namely, the General Forestry
Directorate (DGF), the National Parks Service (SPN),
and the General Wildlife Directorate (DGVS). The
purpose of this merge was threefold: to ensure that
the entire system would operate under the managing
unit, to improve coordination of interventions, and to
optimize resource administration. The responsibility
for control of this process was assigned to the Higher
Directorate of Natural Resources.
Initially, the process of integrating the three branches
of DGF, SPN, and DGVS was complex due to differ-
ences in each branch’s territorial distribution, organi-
zational cultures, and working methods. However, the
integration process has gradually taken shape as a result
of a clear defnition of the strategic framework.
Strategic Framework of SINAC
Vision: SINAC is the leading conservation organization
which provides quality services and implements conser-
vation programs for protection of biodiversity and man-
agement of natural resources. The SINAC vision has
three elements: active participation of society, resource
mobilization, and the development of innovative ideas
for responsible environmental management.
SINAC - COSTA RICA
National Coun-
cil on Natural
Resources
Minister/
Vice-Minister of
the Environment
National Envi-
ronmental Impact
Commission
Tech.
Operations
Adminis-
tration
Cent.
Volc.
R.O.
Are-
nal
R.O.
Amis-
tad
R.O.
Cent.
Pac.
R.O.
Osa
R.O.
Coco
Island
R.O.
Guan.
R.O.
Tort.
R.O.
Temp.
R.O.
National Parks
Service
Wildlife
Directorate
Forestry
Directorate
Higher Directorate of
Natural Resources (SINAC)
Internal
Auditors
Planning and Interna-
tional Cooperation
Civil Society
Commission
Public and
Press Relations
The Nature Conservancy 75
Mission: To conserve biodiversity, ensure the sustainable
use of natural resources, and promote a fair sharing of
the benefts and costs of biodiversity use.
Operational Principles, represented by the “3 D’s”:
n Democratization: Participation and gradual incorpo-
ration of civil society in decision making.
n Deconcentration (redistribution): Transfer of admin-
istration of human, fnancial, material, and adminis-
trative resources to conservation areas.
n Decentralization: Complete fnancial autonomy and
the gradual transfer of decision-making authority to
conservation areas.
Regulatory Framework for Administrative and
Financial Matters
SINAC is governed by the following laws: Planning
Law (No. 5525), General Law of Public Administration
(No. 6227), Fiscal Contingency Law (No. 8343), Ad-
ministrative Contracting Law (No. 7494), Law of the
Comptroller General of the Republic (No. 7428), Law
on Financial Balance of the Public Sector (No. 6955),
Law of Tax Simplifcation and Effciency (No. 8114),
Law on Financial Administration and Public Budgets
(No. 8131), Internal Control Law (No. 8292), and the
Law against Corruption and Illegal Enrichment in Pub-
lic Administration (No. 8422).
The Comptroller General of the Republic supervises
SINAC and is also responsible for approving, control-
ling and monitoring its fnancial operations.
Current Situation
SINAC currently represents “a model of decentral-
ized and participatory institutional management that
integrates powers over forestry, wildlife, and protected
areas in order to plan and execute processes to achieve
the sustainable management of the country’s natu-
ral resources.” Administratively, SINAC is a system
consisting of conservation areas and a central head-
quarters.
SINAC is a decentralized agency with instrumental
legal status and great fnancial autonomy, although it re-
ceives administrative supervision from the Ministry of
Environment and Energy (MINAE) for management,
planning, coordination, and control. In the future, it is
expected that SINAC will be a decentralized agency
with its own legal status and fnancial autonomy. Also,
SINAC will delegate resource administration to con-
servation areas and protected wildlife areas. The advan-
tages of making SINAC an autonomous agency are:
n Eliminate the ‘single account’ principle established
in article 66 of the Law on Financial Administration
and Public Budgets.
n Autonomy for budgeting and resource
administration.
n Transfer of decision making powers from MINAE to
SINAC.
n Full implementation of SINAC’s operating principles
– democratization, deconcentration, and
decentralization.
n Powers would be deconcentrated from SINAC to the
conservation areas.
Source: SINAC, 2007.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 76
Annex 11. Evolution of the Legal and Institutional
Framework for Conservation in Costa Rica
Law 4465 (1969)
Purpose: Provide for the protection, use, conserva-
tion, and promotion of the country’s forest resources
according to the principle of multiple use of renewable
natural resources. This law created the General For-
estry Directorate (DGF), which made possible the es-
tablishment of protected areas, forest reserves, national
parks, and biological reserves, as well as measures to
conserve and increase wild fora and fauna. The es-
tablishment of wildlife refuges was not considered. To
deal with these responsibilities, the DGF established
regional offces distributed throughout the country ac-
cording to a territorial division similar to that estab-
lished by MIDEPLAN.
Law 6048 (1977)
Purpose: Promote the development and management
of national parks for conservation of the country’s natu-
ral heritage. At the same time, this law moved the Gen-
eral Subdirectorate of National Parks into the General
Forestry Directorate within the General Directorate of
the National Parks Service at the Ministry of Agricul-
ture and Livestock. The main focus of this law was the
protection and control of national parks and biological
reserves. Other aspects related to communities next to
protected areas were not addressed.
Law 7317 (1992)
Purpose: Ensure wildlife conservation by introducing
three management subcategories: national state-man-
aged wildlife refuges, privately-managed reserves, and
mixed public-private managed reserves. This law also
created the General Directorate of Wildlife, an inde-
pendent unit of the Forestry Directorate, with respon-
sibility for administering Wildlife Refuges.
Law 7575 (1996)
Purpose: Adapt the functions of forestry law to cur-
rent demands of Costa Rican society by introducing
updated conservation concepts. This law also autho-
rized transformation of the General Forestry Director-
ate into the State Forestry Administration and created
other entities related to the forestry sector. Among
these, the Forestry Financing Fund is responsible for
raising funds from forestry-based payments for envi-
ronmental services, and for obtaining fnancing from
other activities related to the natural resources sector.
The Nature Conservancy 77
Annex 12. Evolution of the Legal and Institutional Framework
for Conservation, Financial Aspects, Costa Rica
Law 4465 (1969)
Aspects related to fnancial support for the forestry
sector and the Forestry Fund include:
n Fees charged for forest use in forest reserves,
national reserves, and state-owned farms under
DGF management.
n Revenues from all fnes and forfeitures received in
accordance with the law.
n Revenues from fees charged for exploitation of
secondary products such as vegetable charcoal, chicle,
rubber, roots, mangrove bark, and other similar
products.
n Tariff revenues from the export of forestry products
and by-products.
n Voluntary contributions from conservation organiza-
tions and other physical or legal entities as may exist
or may be created in the future with an interest in
natural resource conservation.
n Legacies, donations, and, in general, all kinds of goods
and fees that are deposited in the Forestry Fund by
law or individual choice.
n Contributions from international organizations or
foreign governments in accordance with agreements
entered into for the development of forestry pro-
grams in particular and of renewable natural resourc-
es in general.
n Revenues from a tax on the extraction of timber (i.e.,
per-cubic-meter).
The Comptroller General of the Republic is in charge
of overseeing of the Forestry Fund.
Law 6084 (1977)
The creation of the National Parks Fund was based on
the following articles:
Article 6: The National Parks Service (SPN) shall be
allocated resources from the ordinary and extraor-
dinary budgets of the Republic. The National Parks
Service shall also receive the following revenues, which
shall be deposited in the National Parks Fund:
n Donations made by the State or any physical or legal
person, to be administered by the SPN. These dona-
tions are exempt from payment of Charity Taxes,
University Stamp Taxes, and Public Registry fees; it
is necessary to formalize these exemptions according
to the Civil Code and related laws.
n Entrance fees to national parks as determined by
the SPN.
n Such resources as may be generated by the SPN pur-
suant to exercising the functions and powers legally
conferred upon it.
n Revenues from the sale of national park stamps,
established in the following article.
Article 7: A national park stamp shall be established
and issued by the Central Bank of Costa Rica, which
will collect its revenues. The denominations of the
stamp are:
n One-colón stamp, which shall be included on all
types of municipal permits; and
n Five-colones stamp, which shall be paid for:
- Passports and safe conducts issued to leave the
country, not applicable to those persons exempted
from taxes and fees by current treaties and laws.
- The necessary documents for the frst-time regis-
tration of a motor vehicle in the Public Registry of
Motor Vehicle Ownership.
- Authentications of signatures performed by the
Ministry of Foreign Affairs.
n One-hundred-colones stamp, which shall be paid
annually by all social clubs, public dance halls, and
similar for-proft facilities, as well as upon applica-
tions to open this type of business.
Law 7317 (1992)
This law includes the creation of the Wildlife Fund, as
provided for in the following article:
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 78
Article 11: In order to ensure that the objectives of
this law are achieved and to meet the expenses arising
from this law, the General Wildlife Directorate of the
Ministry of Natural Resources, Energy, and Mines shall
receive resources from the Wildlife Fund, consisting of:
n Revenues generated by the wildlife stamp tax (Ar-
ticle 124 of Law 7317).
n Amounts received from permits and licenses (estab-
lished in articles 31, 38, 53, and 64 of Law 7317).
n Legacies and donations by physical and legal persons,
as well as national and international organizations,
both public and private, and contributions from the
State or its institutions.
n Revenues from fnes and forfeitures received in ac-
cordance with Law 7317.
Law 7575 (1996)
The purpose of this Law is to diversify revenue sources
and clarify revenue allocation. Article 39 establishes the
following concepts related to revenue generation:
Article 39: The resources of the Forestry Fund shall
consist of the following:
n Amounts collected from the tax on wood.
n Legacies and donations received by the Ministry of
Environment and Energy.
n Contributions from national and international
organizations, both public and private, according to
agreements or donations.
n The issuance of forestry bonds already approved or
which may be issued in the future. These bonds may
be used to pay all kinds of taxes or fees.
n Revenues the State receives from fnes and forfei-
tures according to this law.
n Revenues from the sale of trees from forest nurser-
ies and of wood of unknown ownership, as well as
income from forfeitures, as appropriate.
n Revenues from the sale of forest seeds.
n Revenues from the sale of publications and other
documents as necessary to meet the purposes of
the law.
n Amount from fees or rates that the Ministry of Envi-
ronment and Energy establishes for natural resource
use permits granted in protected wildlife areas com-
prising the State’s natural heritage, regardless of their
management category.
n Resources from other revenues related to the for-
estry sector.
The Protected Wildlife Areas Trust was created as a
more fexible instrument of management that merges
the National Parks Fund and the other two funds
(Forestry and Wildlife) into one trust fund. This law
also updates the costs of national park entrance fees
(fscal stamps) and authorizes the charging of different
entrance fees to protected wildlife areas for residents
and non-residents, as well as the charging of different
fees for different protected areas based on the services
provided.
Finally, this law authorizes the SINAC to grant conces-
sions for non-essential services in protected areas,
as provided in article 39 of this Law.
The Nature Conservancy 79
ANNEX 13. Evaluation Tool for the Legal and Institutional Framework of the
System of Protected Areas, used by the SINAC in Costa Rica
Instructions
For sections 1 and 2:
n Each question should be carefully considered, and the
facilitator should take notes of the main points made.
n The benchmark responses to each question should be
read carefully; the frst benchmark in the boxes is the
ideal state while the last benchmark represents a less
desirable state. Next, the most appropriate answer to
the question should be marked with an “X.”
n Finally, specifc areas requiring more attention will be
identifed in order to develop a feasible plan of action
to achieve structural changes in the legal system.
For section 2:
n Consider the aspects discussed in section 1 as input
to identify the ideal, the legal, and the institutional
framework.
Public institutions exist with administrative and fnancial autonomy to establish their own internal
mechanisms for regulatory and administrative control and implementation of their resources.
The operations of some state institutions are administratively and fnancially separate from operations
of the Single Account, but not from the directives issued by public resource regulatory agencies.
Through operation of the Single State Account, the legal and institutional framework allows some institu-
tions to use their resources in accordance with the specifc purposes for which the allocations were made.
The State legislation establishes that all directorates, organizations, and institutions shall administer
their resources under the concept of a Single State Account; the Treasury Department or Ministry of
Finance defnes the corresponding budget for each agency.
1. Legal and Institutional Framework:
1.1. Does the State’s legal and institutional framework allow for creation of autonomous institutions capable of
adjusting their structures to the changes needed to achieve the fnancial sustainability of the System of Pro-
tected Areas?
Based on the selected benchmark, briefy explain the current situation and analyze options to improve the legal and
regulatory framework for the System of Protected Areas.
Benchmarks
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 80
The State’s legal structure allows for the generation, approval, and retention of specifc revenues
including, but not limited to, taxes, and the collection of these revenues by the institutions interested
in managing them.
Intermediary agencies exist to manage or approve incorporation of new revenue items by
the institutions.
The State’s legal structure retains the power of approval over any revenue items institutions may
incorporate.
Benchmarks
Based on the above benchmark, indicate the Protected Area System’s opportunities for generating its
own revenues.
1.3. Is there a budget preparation and approval process for protected areas?
The State’s legal structure allows for incorporation of all self-generated resources into an
institution’s budget.
The Treasury Department or Ministry of Finance defnes the spending limits of institutions;
additional resources can only be incorporated through negotiation with this institution.
The State’s legal structure allows institutions themselves to prepare and approve their
own budgets.
Other government institutions exist with the authority to approve institutional budgets.
The State structure has legislation providing that budgetary management of fnancial resources shall
only be managed in accordance with the Budget Law of the Republic.
Benchmarks
Explain the current situation and indicate opportunites for improving the budget preparation and
approval process.
1.2. Does the State’s legal structure allow for the generation and retention of an entity’s own revenues, for
example, either taxes or self-generated resources (like the sale of goods and services)?
The Nature Conservancy 81
Benchmarks
Current legislation allows for the generation and management of revenues by non-governmental
organizations.
The legislation considers the possibility of creating alternative revenue generation mechanisms.
The legislation on the System of Protected Areas considers revenue generation through taxes or other
own revenue sources.
The revenues of the System of Protected Areas come directly from State contributions/funding.
Explain the current legal situation and indicate opportunites for improving legislation on revenue generation for
the protected area system.
1.5. Are there adequate mechanisms for the participation of the civil society (NGOs, associations, clubs, and
others) in protected areas revenue-generation?
Benchmarks
The State’s legal and institutional framework allows for total participation of civil society through con-
cessions, the creation of alliances, and other mechanisms for management of all protected areas.
The State’s legal and institutional framework allows for participation of civil society through the con-
cession of some services considered non-essential, the creation of strategic alliances, and other mecha-
nisms for management of some protected area services.
The legal and institutional framework of the System of Protected Areas allows for participation of civil
society only through administrative contracting mechanisms established by the State (requests for bids,
direct contracting, or others).
The legal and institutional framework does not allow the participation of civil society in the fnancial
affairs of the System of Protected Areas.
Explain the current situation and indicate opportunites for improving revenue management with the participa-
tion of civil society.
1.4. Does the current legal and institutional framework of the System of Protected Areas contain all of the requi-
red elements to ensure revenue generation and promote long-term fnancial sustainability?
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 82
1.6. Are protected area revenues managed in a centralized manner?
Benchmarks
Each protected area has its own account and is responsible for managing its own resources.
Protected area revenues may be deposited directly into a single account or fund managed by the System
of Protected Areas.
Revenues from the sale of goods and services may be deposited into a special subaccount or fund in the
Single State Account.
Not all revenues generated, but only taxes, need to be deposited into the General Fund accounts of the
Single State Account.
All revenues generated by the System of Protected Areas must be deposited into the General Fund
accounts of the Single State Account.
Explain the current situation and indicate opportunites for improving it.
1.7. How are budget allocations made for protected areas and the System of Protected Areas?
The System of Protected Areas allocates its budget based on the operating costs of each protected area.
The System of Protected Areas has designed a budget distribution method with variables applicable to
all protected areas.
The System of Protected Areas allocates to each protected area a portion of the budget equal to what
that protected area generates.
The System of Protected Areas allocates a percentage of the budget to each protected area.
The System of Protected Areas allocates the same fxed budget to each protected area.
Explain the current situation and indicate opportunites for improving budget allocations for protected areas.
Benchmarks
The Nature Conservancy 83
1.8. Is the fnancial structure appropriate for fnancial resource management?
Benchmarks
There is a solid fnancial structure that allows revenues, expenditures, and investments to be managed
in a transparent, timely, and responsible manner, including the generation, management, implementa-
tion, and control of resources.
There is a somewhat solid fnancial structure that may allow revenues, expenditures, and investments
to be managed in a transparent, timely, and responsible manner.
The protected areas have a minimum, required fnancial structure.
The existing fnancial structure is not suffcient for revenue management (generation, administration,
implementation, and control of resources).
Explain the current situation and indicate opportunities for improving the fnancial structure of protected areas.
1.9. Are adequate staff resources dedicated to management of fnancial resources and the fnancial plan?
Benchmarks
The System of Protected Areas has suffcient human resources well trained dedicated to management of
fnancial resources and the fnancial plan.
The System of Protected Areas has suffcient human resources with basic skills for management of fnan-
cial resources; but there is no fnancial sustainability plan or staff responsible for it.
The System of Protected Areas has no staff trained to manage fnancial resources; there is no fnancial
sustainability plan or staff responsible for it.
The protected areas do not have a person on staff knowledgeable about fnancial management.
Explain the current situation and indicate opportunities for improvement.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 84
1.11. What role do specialized NGOs play in the strengthening of the System of Protected Areas?
Level of participation:
High-medium-low
Level of impact:
High-medium-low
Decision-making:
High-medium-low
Comment on and/or explain your choices.
1.10 Is a fnancial sustainability plan being developed for the System of Protected Areas? Indicate the state of the
process or the reasons why it is not being done.
1.12. Is there community participation in fnancial management of protected areas? If so, indicate
how and what its benefts are; if not, indicate the reasons.
The Nature Conservancy 85
Description
Responsible for effcient fnancial management, including tasks
such as the keeping and preparation of fnancial records and
reports and the development and maintenance of fee collec-
tion and resource management systems, among other tasks.
Responsible for formulating, implementing, updating, and
evaluating both a long-term fnancial strategy and business
plans for the protected area system.
Responsible for providing maintenance services for vehicles,
infrastructure, general equipment, and other such items.
Responsible for contracting for goods and services, processing
various acquisitions, and managing inventory control.
Responsible for the processes of hiring, induction, training,
and human resource development in general.
Responsible for the development of fnancial, accounting, and
management systems and databases.
Areas
Financial Management –
Accounting – Budgeting
Long-term Financial
Sustainability
General Services
Administrative Contracting
and Inventory Control
Human Resource
Management
Information and Technologi-
cal Support Systems
Does it exist?
Yes No
2.1 What are the biggest challenges to imporve effciency in the existing structures?
2. Ideal Financial Structure for a System of Protected Areas
Inter-institutional commissions
Governmental negotiation
(lobbying, legal reforms)
Participation of other actors (private
sector, academia, civil society)
Conclusion
What priority actions are needed to bring about changes in the legal and institutional framework? Consi-
der the following levels:
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 86
Annex 14. Guidelines for Facilitators of the Assessment of the Legal
and Institutional Framework of the Protected Area System
General Aspects
An assessment is most effective and objective when
facilitated by an outside professional. The facilitator as-
sists in designing an appropriate assessment process for
the specifc situation. Assessments can be conducted
using a variety of approaches, which may include per-
sonal interviews, work in small groups, and/or a work-
shop. The main goal is to promote a general discussion
on the current stage of development, as well as future
directions. The facilitator acts as a moderator through-
out the process, documenting the assessment process
and helping to identify the best approaches to develop
an action plan for improvement. Objective refection
and clear direction are the result of a well-planned and
well-facilitated assessment. When choosing a facilitator,
keep in mind that institutional development profes-
sionals are best suited to perform this task because
they have the necessary skills to plan and implement
institutional strengthening processes.
More so than with any other type of intervention, the
facilitator must build trust and confdence in partici-
pants to conduct an effective assessment. Also impor-
tant is defning the degrees of confdentiality that will
be used with the resulting information. Finally, every
effort should be made to ensure that the assessment
is not being conducted only to comply with donor
requirements.
Before the Assessment
It is important to work very closely with key actors
involved in the protected area system to clarify the pur-
poses of the assessment and jointly design an imple-
mentation process that fts the organizational culture.
During the preparation process, the facilitator should:
n Coordinate the appropriate time for and carefully
plan the assessment.
n Establish contact with public organizations (Ministry
of Finance or Treasury, Planning, Comptroller) and
specialized private institutions having information on
protected area fnancing (TNC, WWF, CI, IUCN).
n Ensure that key actors understand the process, ben-
efts, and expected results.
n Allow the National System of Protected Areas
(SNAP) to determine who should participate in the
assessment (including internal and external partici-
pants) and formally convene the assessment.
Before beginning an assessment process, the use of the
information generated during the assessment should
be discussed to determine the degree of confdentiality
required to satisfy all stakeholders.
During the Assessment
At the beginning of the assessment, the facilitator
should explain to participants the background and
objectives of the exercise and describe the process that
will be used. In addition, the facilitator should cover the
following topics in the introduction:
n Specify the potential benefts offered by conducting
an assessment: identifcation of gaps and priorities,
improved effectiveness, demonstrated professional-
ism to donors, promotion of access to fund, monitor-
ing and documentation of progress, and highlighting
areas of disagreement that can lead to rich discussion
and learning.
n Indicate if an international NGO or other external
organization is in any way involved and its objectives
in participating in the self-assessment.
n Explain why the assessment is most effective if the
process is externally facilitated.
n Emphasize the value of mutual learning and of the
shared vision the assessment can provide.
n Explain the format of the assessment.
n Indicate that discussions should focus on the future.
The goal is to identify and solve problems, not to
dwell on past complaints.
The Nature Conservancy 87
After the Assessment
What happens after the assessment is as important as,
or more important than, the exercise itself. Aspects to
consider:
n The assessment should establish a baseline for
measuring progress over time. Based on assessment
results, an action plan should be developed that will
include the goals to be achieved within a specifc
timeframe. The action plan should also identify the
individuals responsible for meeting those goals.
n Ideally, the facilitator should provide follow-up
support to monitor the progress of the action plan
periodically.
n The aggregate results and recommendations from
the assessment should be used as key input to carry
out initiatives to reform the legal and institutional
framework; ideally, these initiatives should be incor-
porated into the overall fnancial strategy.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 88
Annex 15. Development of a Financial Plan: The Case of Ecuador
This section presents the main components of a fnan-
cial plan based on experience gained in Ecuador.
1
The
information included in this annex has been drawn
mainly from the following documents: a) Financial Sus-
tainability Strategy for the National System of Protect-
ed Areas: 2007–2016
2
and b) Financial Sustainability
Plan for the National System of Protected Areas of
Ecuador.
3
The fnancial plan contains the following ten
sections, summarized below.
1. General Framework of the National System
of Protected Areas
The Constitution of Ecuador states that the Na-
tional System of Protected Areas (SNAP) is a mat-
ter of public interest to ensure conservation of the
protected areas, their biodiversity and the ecological
services they provide in accordance with international
treaties and agreements (article 86, number 3, and
article 248). Further, the Constitution provides that
the State has sovereign rights over biological diver-
sity, natural reserves, protected areas, and national
parks. Their conservation and sustainable use shall be
conducted with the participation of the communities
involved and by private initiative.
According to its Strategic Plan (2007–2016), the
SNAP promotes integrated management of Ecua-
dor’s protected areas through administration of four
of its subsystems: the State Natural Areas (PANE),
Protected Areas of Sectional Governments (APGS),
Community, Indigenous, and Afro-Ecuadorian
Protected Areas (APC), and Private Protected Areas
(APPRI). Of these subsystems, the PANE has the
greatest geographic coverage (see Box A).
1. The fnancial sustainability process of Ecuador’s protected areas was supported by: the Promoter Group (led by the MAE, see Annex 17), the Coalition
to Advance the Implementation of the Program of Work on Protected Areas of the Convention on Biological Diversity, G9 (a group of international
NGOs that coordinates actions and allocates funding), and the Donor Working Group (bilateral and multilateral donors that coordinate investment
priorities for the MAE).
2. Developed by the Ministry of Environment of Ecuador and other agencies, 2007.
3. Prepared by Mentefactura. Ecuador, 2007.
Box A. The State Natural Areas (PANE)
The PANE currently protects 4,757,986 hectares of
land surface (18.7% of Ecuador’s national territory) and
14,110,000 hectares of sea surface that contain bio-
logical and ecological elements of importance to the
current and future well-being of the Ecuadorian people.
PANE contains natural resources of national interest,
such as water sources that supply population centers
and both extensive crop and livestock production areas.
In addition, this territory provides scenic beauty to
the tourism industry, Ecuador’s fourth largest revenue
source. The protected areas are also home to signifcant
cultural diversity represented by the presence of many
indigenous peoples and nations, and Afro-Ecuadorian
populations.
At present, the PANE consists of 35 areas, 13 of which
are larger than 100 thousand hectares (Galapagos Marine
Biological Reserve; National Parks: Yasuní, Galapagos,
Sangay, Llanganates, Sumaco-Napo-Galeras, and Podo-
carpus; Cuyabeno Fauna Production Reserve; Ecologi-
cal Reserves: Cayambe Coca, Cotacachi-Cayapas, Los
Illinizas, Antisana, and Mache-Chindul); and 11 areas with
extensions greater than 5,000 hectares (Limoncocha Bio-
logical Reserve; Wildlife Reserves: Muisne River Estuary
Mangroves, El Zarza, La Chiquita, Isla Corazón, Pasochoa,
Santa Clara Island, and Pululahua Geobotancial Reserve;
El Condor National Park; and National Recreation Areas:
El Boliche and Parque Lago). The remaining 11 areas
(Fauna Production Reserves: Chimborazo and Manglares
El Salado; National Parks: Machalilla, Cotopaxi, and El
Cajas; Ecological Reserves: Cofán-Bermejo, Cayapas
Mataje, Manglares-Churute, Arenillas, and El Ángel; and
El Quimi Biological Reserve) are less than 5,000 ha. The
oldest protected area in Ecuador is Galapagos National
Park, created in 1936, and the newest is El Quimi Biologi-
cal Reserve, created in January 2007.
Source: MAE, 2007.
The Nature Conservancy 89
4. Based on studies conducted by Mentefactura (2007), Villacrés (2005), and others.
Although the Constitution and several laws declare
the SNAP to be of public interest, this recognition is
not included in all sectoral policies and practices. The
legal framework for the management of the System of
Protected Areas is summarized in Table I.
Ecuador’s protected areas play a critical role, not only
because they are guardians of biodiversity so that fu-
ture generations can enjoy natural resources and their
potential uses, but also because these protected areas
generate environmental goods and services that cur-
rently contribute to the economic growth of Ecuador’s
cities and local communities. Table II shows illustrates
some the benefts provided by protected areas.
In Ecuador, 227,986 people (1.75% of the population)
live inside or on the borders of protected areas. These
people depend directly on protected areas for their
livelihood and the maintenance of their traditional
ways of life.
Policy Framework
n Convention on Biological Diversity - OR 647 of
March 6, 1995. (OR: Offcial Governemt Bulletin)
n Millennium Declaration (2000).
n National Biodiversity Policy and Strategy
2001-2010 - ED 2232 of January 9, 2007.
n Forestry Strategy.
Legal Framework
n Laws: on Environmental Management (Law 37, OR 245
of July 30, 1999), on Water (OR 687 of May 18, 1987),
on Tourism (and Regulation of Tourism in Protected Ar-
eas - OR 733 of December 27, 2002), on the Electricity
Sector (and the Environmental Regulation for Electric-
ity Supply - ED 1761, published in OR 396 of August
23, 2001), on Tax Reform (OR 325 of May 14, 2001),
on the Stock Market (OR 367 of July 23, 1998), and on
the Modernization of the State and of Public Sector
Budgets.
n Codifcation of the Forestry Law - OR 418 of
September 10, 2004.
n Statute of the Legal-Administrative Regime of the
Executive Function – ERJAFE.
n Civil Code - OR/ Sup 104 of November 20, 1970.
n Regulations: General Regulation of the Law of Pub-
lic Sector Budgets and Substitute Regulation to the
Regulation of the Organic Law on Fiscal Responsibility,
Stabilization, and Transparency.
Table I. Policy and Legal Framework for the Financial Sustainability of the SNAP
Benefts Description
Table II. Benefts Provided by Protected Areas
4
Recreation and develop-
ment
Generation of water
supply
Tourism is the country’s fourth largest industry. In 2003, Ecuador hosted a total of
403,000 visitors (68% were domestic tourists). Of this number, 260,745 visited mainland
protected areas (Ministry of Tourism, 2003).
34% of the Ecuadorian population (4.5 million people) receive water in their homes
from resources provided by protected areas.
The country’s capital city alone consumes more than 17 billion liters of water per
month to meet the needs of its population (1.5 million people), industry, and
surrounding irrigation areas.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 90
A general picture of the contributions protected areas
make to the livelihoods of these populations was devel-
oped by Lascano and others in 2007.
5
The key aspects
identifed by the study were:
n Provision of food and medicinal plants. Although these
benefts vary by region, the average family beneft is
US$127 per month (an average of US$200 per month
in the highlands, and of US$83.30 per month on the
coast). In the highlands, 80% of these revenues are
attributable to natural resource extraction.
n Signifcant non-monetary contribution. This con-
tribution is evident in the use of resources for home
construction, the manufacture of household articles,
the construction of means of transportation, and the
use of frewood and water.
n The contribution of tourism activities are low in
comparison to extractive activities that put pressure
on protected areas (only 5-7% of households have one
member employed in tourism activities).
2. Financial Background
A frst aspect identifed in the Analysis of Financial
Needs of the SNAP is the signifcant difference in fund-
ing between the Galapagos National Park and Marine
Reserve and the continental protected areas (MAE,
2005):
n Total investment in State Natural Areas in 2003 was
US$8,718,650 (0.05% of the State budget). Of this
amount, 70% was allocated to the Galapagos National
Park and Marine Reserve and only US$2,705,788 to
State Natural Areas in the mainland.
n Taken together, the State Natural Areas in the
mainland have an inventory of goods and equipment
valued at US$1,610,373, equivalent to 38% of the total
inventory of protected areas of the Galapagos. This
situation is partly explained by the high capacity of
the Galapagos National Park to self-generate rev-
enues. In 2003, this area produced 4.8 times more
self-generated revenues than all of the 31 continental
areas combined (MAE, 2006).
n In 2003, 306 people worked in protected areas of
the Galapagos (30% were offcials of the Ministry
of Environment), while 277 people worked in the
continental SNAP (158 were direct employees of
the MAE and 119 were fnanced by project and
donor resources). The Amazon areas have the least
staff in relation to size (Yasuní and Cuyabeno have
a ratio of over 80,000 hectares per employee) and
there are fve areas with no staff assigned to them
(MAE, 2005).
Another key fnding of the fnancial analysis is the defni-
tion of the fnancial gaps.
n The results of the analysis established that the re-
sources available to State Natural Areas on the main-
land only cover 45% of the required funds for a basic
conservation scenario. This shortfall has led to limited
investment, a small number of park guards, and insuf-
fcient equipment to meet each area’s demands and
needs (MAE, 2005).
n Of the amount allocated to State Natural Areas on the
mainland, US$215,741 correspond to investment expen-
ditures and US$1,733,706 to recurrent expenditures
(72% of the latter amount is allocated to personnel).
n The current fnancing of State Natural Areas includes
donor participation, the Protected Areas Fund, and
funding through agreements (see Figure A). The
largest percentage of funding comes from fscal
resources (35%).
n Self-generated revenues in protected areas of the
mainland come almost exclusively from the sale of
Figure A. Funding Sources for State
Natural Areas in Ecuador
Source: MAE, 2005.
5. For this study, 939 surveys were conducted in 21 protected areas with a 5% margin of error.
The Nature Conservancy 91
park entrance tickets (fiscal stamps). Some 87% of
revenues were generated by five areas: Cotopaxi,
Machalilla, Cuyabeno, Chimborazo, and Cotaca-
chi-Cayapas. At the other end of the scale, 13 areas
generated less than 5% of self-generated revenues
in 2006.
3. Objectives
The Financial Sustainability Strategy for the
National System of Protected Areas of Ecuador
(2007–2016) has one general objective and five
specific objectives.
General Objective:
Achieve long-term fnancial sustainability for the
PANE by implementing strategies to generate funds,
ensure effectiveness of expenditure, and establish
structures for participation in the management of the
areas, as well as implementation of communication
strategies and policy advocacy for the SNAP.
Speci?c Objectives:
n Objective 1: Increase funding: the state’s contribu-
tion to the SNAP; contributions from public and
private actors (both national and international) and
self-generated revenue.
n Objective 2: Generate a clear regulatory and insti-
tutional framework to promote participation of pri-
vate and community actors in funding mechanisms
for the SNAP.
n Objective 3: Position the SNAP as a strategic sector
for Ecuador’s economic development, as well as in
public opinion and with decision makers.
n Objective 4: Strengthen the capacity of the National
Park Authority for management and administration
of State Natural Areas and consolidation of other
subsystems of the SNAP.
n Objective 5: Ensure that public, private, and commu-
nity actors participate actively in implementation of
the fnancial sustainability strategy.
4. Determination of Financial Gaps
According to the Analysis of Financial Needs (MAE,
2005), the 31 continental protected areas require
a total of US$6,293,455 per year for the basic sce-
nario and US$12,211,681 for the integral scenario.
The current annual gap is US$3,587,667 for the basic
scenario and US$9,505,893 for the integral scenario
(see Figure B). The results of the 2005 Financial
Analysis indicate that the State Natural Areas have
not improved their financial situation compared to
the level of financing achieved in 1998.
5. Analysis of Investment Priorities and
Funding Strategies
This analysis identified barriers to improving the
system and described the current situation with re-
gard to 13 critical aspects affecting financial viabil-
ity of the system. The process established specific
strategies to address the challenges of the system.
These strategies were grouped into two categories:
a) resource generation (fiscal resources, self-gen-
erated revenues, individual and business dona-
tions, capitalization of the national environmental
fund, international donations, sustainable tourism,
third-party administration, and site-based manage-
ment), and b) consolidation of the SNAP (legal
and institutional framework, social recognition of
the SNAP, positioning of the SNAP, and strength-
ening administrative and financial management
capacities). Table III summarizes the main chal-
lenges and strategies identified to promote financial
sustainability of the National System of Protected
Areas of Ecuador.
Figure B: Financial Needs and Gaps of State
Natural Areas in Ecuador (in millions of US$)
Source: MAE, 2005.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 92
Table III. Matrix of Problems and Strategies: SNAP — Ecuador
Problems
State investment is
insufcient to cover the
fnancial needs of the
SNAP.
Inadequate mechanisms
to increase current
revenues and limited
diversifcation.
There is a lack of involve-
ment of private-sector
actors in the fnancing of
State protected areas.
Few areas are covered by
the protected areas fund
(FAN).
Funding from interna-
tional cooperation has
declined in recent years
and investments often
overlap.
Insufcient investments
to increase and improve
the quality of services
and number of visitors to
the SNAP.
Lack of clarity regarding
participation and joint
administration.
Coordination mecha-
nisms are lacking
involvement by diferent
actors and interest
groups.
Current Situation
State funding only covers 16.4% of the
basic needs of the SNAP. In addition,
there is limited capacity to infuence
budget allocations.
The SNAP is currently fnanced by four
stable revenue sources: the State Budget,
tourism revenues, the protected areas
fund, and other agreements. There is
insufcient investment in the SNAP due
to the limited capacity to generate and
manage resources from diferent sources.
There are few experiences with private
sector support for the management and
fnancing of PAs in the PANE.
The FAN supports only 11 PAs in the
PANE with limited funds for each.
The trend of international cooperation
funding has been declining in Ecuador
since 1998, and there is often overlap
between investments in the same areas
and issues.
Lack of fnancing to improve the qual-
ity of PA services for tourism activities,
such as infrastructure and guide service,
among others.
There is no concerted policy on partici-
pation, joint administration, or delega-
tion. A concession is being developed
as a pilot case study in El Boliche
Recreation Area.
Lack of coordination and participation
in the management of the SNAP, with
limited involement of other actors in
fnancial management.
Strategies
Increase fscal resources
by reorienting State
investment.
Apply and diversify self-
funding mechanisms,
including reinvestment
instruments.
Develop donation instru-
ments to channel resources
from individuals and private-
sector enterprizes.
Capitalize the protected
areas fund.
Coordinate a strategy with
international cooperation
agencies to scope out and
increase funding streams.
Implement the sustain-
able tourism strategy in
protected areas.
Implement the strategy of
third-party administration.
Promote coordination of
actors at the local level,
where they can have an
impact on generating
benefts for communities
(Management Plans).
Expected Situation
The fnancial requirements of the Basic
Scenario have been covered and prog-
ress is being made toward achieving the
Integral Scenario in a signifcant number of
protected areas in the PANE.
Multiple funding strategies are being used
for the SNAP. Innovative fnancial mecha-
nisms are being applied to the manage-
ment of other subsystems of the SNAP.
Companies and individuals recognize the
importance of the PNAs in the PANE and
contribute to their management.
All protected areas in the PANE are in-
cluded in the fap cycle with funds assigned
to support their management.
Coordination channels exist for cooperat-
ing agencies to invest in the SNAP and
their fnancing has increased.
Sustainable tourism management models
involving visitors in PA conservation have
been implemented in the protected areas
and generate revenues for the System.
Local actors are incorporated in the SNAP
through successfully managed third-party
administration strategies.
National, international, and local actors
are involved in management of the SNAP
and participate in fnancing the System.
Local communities receive direct benefts
from the SNAP and are familiar with it.
The services provided by protected areas
are recognized and valued by authorities,
communities, and direct and indirect users.
The Nature Conservancy 93
Table III. Matrix of Problems and Strategies: SNAP — Ecuador (cont.)
Problems
The regulatory and inter-
institutional framework
does not respond to the
fnancial sustainability
needs of the SNAP.
The fnancing of the
SNAP is not a strategic
priority for the State, the
private sector or the civil
society.
Decision makers do not
consider the SNAP to
be an essential factor
for the well-being of
the country’s cities and
development.
Limited autonomy and
few incentives for PA
administrators to
achieve adequate levels
of funding.
Limited capacity for
implementation,
control, and monitoring
of fnancial resources.
Current Situation
Ambiguities in the legal framework hinder
diversifcation of revenue mechanisms. The
current legal framework does not recognize
the possibility of developing new instru-
ments and mechanisms, and there is no clear
process for inclusion of other sectors. There is
confusion about responsibilities at the level
of NPA managers, Regional Directorates,
and the National Directorate for Biodiversity,
Protected Areas and Wildlife (DNBAPVS). This
situation also afects collaboration by diverse
organizations such as local governments and
international cooperation.
There are no mechanisms to disseminate
the contributions the SNAP makes to the
national economy and the development
of the country.
Few decision makers know about the
SNAP and, consequently, have not incor-
porated it into their agenda.
PA managers have limited fnancial
management authority. There are no
incentives for introducing new
fnancial planning models and tools.
Financial management links between the
diferent levels of the MAE are weak or
nonexistent, especially between Ministry
Headquarters and the PA Administrative
Units. This situation creates problems
for fnancial and administrative man-
agement. The government’s capacity
to make strategic fnancial decisions is
limited by the lack fnancial information.
Strategies
Strengthen the regula-
tory and interinstitutional
framework to develop and
introduce a coherent and
simplifed legal basis for
the raising, management,
and efcient reinvest-
ment and expenditure of
resources generated in the
SNAP.
Promote social recogni-
tion of the contributions
protected areas make to
national development,
thereby motivating sup-
port and commitment by
the State, the private sec-
tor, and the civil society.
Position the SNAP in State
policies as a key element in
the country’s development
in order to infuence deci-
sion makers.
Strengthen the national
Environmental Authority
and protected areas for the
implementation of the FSS
of the SNAP.
Restructure administrative
and fnancial management
of the SNAP, simplifying
the planning hierarchy and
generating explicit links
with other management
areas.
Expected Situation
The Environmental Authority has a coher-
ent and simplifed legal basis for the
raising, management, and reinvestment of
resources generated in the SNAP, as well as
their efcient expenditure. There is a solid
structure for the implementation of the
Financial Sustainability Strategy (FSS) of
the SNAP; this structure involves diferent
management actors and allows them to
interact directly with each other.
The SNAP has been positioned in State
policies as a key element for the country’s
development. There is social recognition
of the contributions that protected areas
make to national development.
Political support exists in various State
agencies to apply the FSS of the SNAP.
The Ministry of Environment has a struc-
ture (the DNBAPVS) that implements and
monitors the FSS of the SNAP, providing
incentives for protected area revune gen-
eration. The protected area managers have
fnancial management authority.
The administrative and fnancial manage-
ment of the SNAP is closely related to plan-
ning for the System. The Andean Guaran-
tee System (SAG) has been implemented
throughout the PANE and has resulted in
greater transparency of fnancial informa-
tion on expenditures and contributions to
protected areas from public and private
organizations.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 94
6. Financial Sustainability Strategies
Ecuador has made important progress in implement-
ing a national fnancial sustainability strategy for its
system of protected areas. For example, establishing
clear guidelines for fnancial management, international
cooperation, and policy advocacy (see Box B).
In addition, the process of implementing the strat-
egy of self-generated revenue is presented below,
together with the results achieved. This strategy
focuses on three markets: 1) the corporate and busi-
ness sector, 2) the public at large, and 3) incoming
(international) tourism.
6
The process followed in the
analysis of the above-mentioned markets has includ-
ed four stages: identification of actors, conducting a
market study on the financial mechanisms, develop-
ment of a marketing strategy, and development of
the mechanisms.
6. Foreigners who visit the country.
Fiscal Management Strategy:
1
This strategy aims to
identify whether the barriers that hinder increas-
ing financial resources for the PA system are of an
economic, structural, and/or legal nature. This
strategy will help to determine the best operation-
al model and indicators to manage public funding.
2
For example, revenue and expenditure flow. This
strategy will help to identify reforms to increase
resources such as: administrative reform, informa-
tion management, and legal reform.
International Cooperation Strategy: This strategy
seeks to promote a better articulation amongst in-
ternational cooperation agencies and organizations
in order to optimize efforts and generate synergies
between organizations involved in the financing of
the PA system though a coherent “Country Agenda;”
and improve coordination with the MAE, SNAP, the
Directorate of International Affairs at MAE and
INECI. Particularly, coordination beyond the Gala-
pagos National Park and Marine Reserve, which is
the protected area of greatest interest to interna-
tional cooperation agencies.
Policy Advocacy Strategy:
3
The aim of this strategy
is to ensure that the different initiatives and mech-
anisms proposed to achieve the financial sustain-
ability of the System are known and adopted by key
actors. To this end, decision makers must support
the objectives of the Financial Sustainability Strat-
egy for the SNAP in order to improve co-financing,
accomplish legal reforms, and build capacity. The
development of a policy advocacy strategy requires
identifying actors involved in the implementation
of each financial mechanism. Thus, the strategy
will develop tailored approaches to engage actors,
including specific timing and the key messages to
be conveyed. In addition, the products developed
in the FSS for the SNAP will be interconnected and
linked to other related national and local processes
that can provide additional support.
Notes:
1. Work in progress, only information on the proposed working methodology is available.
2. Annex 18 shows the operation model of public fnance planning in Costa Rica, Colombia, Ecuador, and Panama
3. Work in progress, only information on the proposed working methodology is available.
Box B. Strategies for Fiscal Management, International Cooperation, and Policy Advocacy
The Nature Conservancy 95
7. A cluster is a group of actors from different sectors or industries..
8. This time frame was the agreed upon period for assessing the investments in the SNAP.
9. In addition to the actors involved in the fnancing of the SNAP, other actors that could provide services to the System were also identifed. These
included administrative, fnancial, training and consulting services.
Table IV. Example of Information on Projects Financed by International Cooperation
(Bilateral, Multilateral, and South-South)
Donor Counterpart and/or Name Start End Amount Source
Implementing Agency of Project Date Date Allocated (US$)
U.S. Gov- MAE/TNC/Fund. Parks 2001 2007 1,152,103 INECI
ernment Antisana/Ecociencia/ in Peril (2006)
Rumicocha Foundation 2000
Source: Prepared by Mentefactura, 2006.
7. Identifcation of Actors
The first step was to carry out the “Mapping of Ac-
tors Associated with Conservation Finance.” This
activity consisted of conducting in-depth inter-
views and systematizing the results together with
other relevant information from studies and other
sources. The aim of this activity was to generate a
project matrix showing the sources, amounts, and
uses of cooperation funds for the SNAP, and to de-
velop a proposal for a conservation finance cluster.
7
In Ecuador, the cluster approach has been used to
show the current operation of the sector on a na-
tional level, providing a description of the different
financing actors, their scope of work and how they
are related. This process demonstrated the need for
a variety of communication channels and allowed
the development of proposals involving new actors,
mechanisms and institutions to promote greater
interaction within the cluster. The steps taken in
this stage were:
a) Collection and analysis of information on actors:
This consisted of systematizing information on the
investment lines of cooperating agencies, consider-
ing the amounts invested and the projects in which
they participated from 1991 to 2005,
8
as well as the
cooperation agencies’ priority areas, main activi-
ties, etc. Examples of the information collected are
presented in Tables IV and V.
b) Classifcation of actors identifed: Actors were
classifed as current or potential based on whether
or not they were currently participating in fnancing
9
the SNAP, as well as by activities they carried out and
their area of work. Actors include cooperation agen-
cies, service provider companies (consulting, advis-
ing, etc.), public sector (local governments, the State,
ministries, etc.), private sector (actors with which
strategic alliances could be established), and commu-
nity organizations.
c) Analysis and grouping of actors: Information gen-
erated in the previous step was used to develop the
conservation finance cluster. This approach simpli-
fied mapping of actors and their relations, making it
possible to clarify which actors were needed for the
cluster to operate efficiently. The groups of actors
in the financial cluster included potential clients,
direct suppliers, promoters, the government sector,
and other support sectors (national and international
organizations).
d) Validation and consolidation of donor informa-
tion: Information collected from secondary sources
(including studies by the government agency respon-
sible for international cooperation – the Ecuadorian
Institute for International Cooperation, INECI)
had to be validated with different donors in order
to agree on the level of investments and project
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 96
10. Surveys were administered to Ecuador’s major private companies and to foreigners visiting the country (incoming tourists). Tourism fees were assessed
using information generated by a study of on-site demand from eight protected areas. These survey forms may be requested from [email protected].
11. Steps b, c, d, e, f and g may be outsourced to a company with experience conducting market studies in order to speed up the process and allow the working
team to focus primarily on process design and review and analysis of the results.
Table V. Example of Forms of Operation of the Main Donors
Donor
United States
Government,
through
USAID
Source: Prepared by Mentefactura, 2006.
Operation
The bilateral programs of tech-
nical and economic assistance of
the United States Government
to the Government of Ecuador
offcially began in 1942.
USAID-Ecuador works in areas
of technical and economic
cooperation, coordinating most
of its international environmen-
tal programs and activities with
various national and interna-
tional counterparts, both public
and private.
Scope of work
Five priority areas on a
national level:
- Development of Northern
and Southern Border Areas
- Biodiversity Conservation
- Poverty Reduction
- Strengthening of
Democracy
USAID’s environmental
programs focus on
long-term projects
addressing national and
global environmental
challenges.
Funds (US$)
Analysts estimated
that by 2003 the
funds channeled into
USAID’s biodiversity
conservation program
in protected areas
(through different
NGOs) amounted to
3.8 million dollars.
Source
Ecumenical
Projects Committee
(2001).
programing. Thus, with support from the MAE,
a month-long validation process was conducted
through which input was obtained from 9 of the 31
organizations. One of the key findings was the need
to systematize information regarding the operation
of international cooperation.
8. Conducting a Market Study on
Financial Mechanisms
A market analysis was conducted involving design
and application of surveys and in-depth inter-
views, according to the financial mechanisms and
target audiences
10
identified. The steps taken were
as follows:
11
a) Conceptualization of priority funding mechanisms:
The prioritized mechanisms were conceptualized by
considering the different audiences to which they
were directed (product differentiation approach).
Table VI shows the products and markets analyzed.
b) Defnition of the sample: This was determined
according to the population size of each target audi-
ence and the required sampling error. The market
Products
Corporate/Business
Sector
Conservation logo
Donation of 25% of income
tax to the SNAP
SNAP Passport (gift for clients)
Ecuadorian
Population
“A minute of clean air”
“ Donate your change for a
condor’s nest”
Collection of entrance fees
from Ecuadorians
Incoming
Tourism
Incoming tourist
donations
SNAP Passport
Entrance fees
Table VI. Markets and Products
Markets
The Nature Conservancy 97
study targeted tourism companies and was based on
207 surveys. Additionally, 406 surveys were taken
with incoming tourists, and 500 surveys were taken
by the public at large. Table VII summarizes the
characteristics of the survey process.
c) Defnition of areas for survey administration: In
accordance with geographic distribution of the target
audience, surveys were conducted with companies on a
national level. These surveys focused on higher density
areas (the coast and highlands of the country), while
surveys of incoming tourists were administered in the
preboarding room at Mariscal Sucre International
Airport (Quito).
d) Design of surveys/questionnaires for each target
audience: The sections and questions included
on the surveys were tailored to the mechanisms
to be evaluated and the working hypotheses. The
surveys have four parts: a) an introductory section
explaining the objectives of the survey and other
relevant information, b) a general section focused
on identifying the respondent’s interest in financial
mechanisms and conservation of the SNAP, c) this
section focuses on the financial mechanisms to be
evaluated, aimed at learning the respondents’ per-
ceptions of these mechanisms, the most appropriate
means of implementation, the characteristics of the
service, and willingness to pay, and d) a final section
dedicated to the socio-economic background of the
respondents.
The surveys of companies took 15 minutes to admin-
ister and were conducted by phone using the CATI
System (Computer Assisted Telephone Interviewing),
while the surveys of incoming tourists involved their
taking no more than 20 minutes to independently
complete the questionnaires.
e) Training of survey administrators: The survey ad-
ministrators
12
were trained through a thorough review
of the survey and the required management process.
f ) Processing information: Cross-tabulation tech-
niques were used to determine relations and dif-
ferences in each sampling segment and in the total.
The key results of the market research are shown in
Figures C, D, E, and F.
g) Analysis of results by target audience:
13
The
results of the study were analyzed and used to
develop “General Market Guidelines for Sustain-
able Financing of the SNAP” (see Box C). These
guidelines were organized from two perspectives
aimed at: a) generating strategic guidelines for sus-
tainable financing of the SNAP, and b) providing
strategic market guidelines for prioritized finan-
cial mechanisms.
12. The number of survey administrators varied depending on the sample being considered as well as the length of time allocated to conduct the surveys.
13. One of the most important fndings was the limited level of positioning of the MAE and the SNAP in the national context. This research showed that
development of strategic alliances with institutions from other sectors, together with a clear communication strategy on resource use and its effects, could
improve the positioning of the MAE and the SNAP.
Type of
Study
Corporate/Business
Sector
Surveys and interviews. Sample of
207 respondents drawn from the
Superintendence of Companies,
the Internal Revenue Service, and
the Ecuadorian Consortium for
Social Responsibility.
Ecuadorian
Public at Large
500 surveys of mid- to
high-income shoppers at
Supermaxi Supermarkets and
Fybeca Pharmacies in Quito,
as well as in-depth interviews
with organizations conducting
donation campaigns.
Incoming
Tourism
Administration of surveys in
preboarding rooms at the inter-
national airport. Sample of 406
respondents (tourists over age
17, residents of North America,
Latin America, and Ecuador).
Table VII. Markets and Type of Study
Markets
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 98
F
i
g
u
r
e
C
.
A
v
e
r
a
g
e
A
m
o
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n
t
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D
o
n
a
t
i
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n
s
b
y
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o
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p
a
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e
s
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g
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r
e
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.
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e
c
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o
r
t
h
a
t
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o
u
l
d
b
e
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r
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z
e
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e
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r
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s
t
s
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y
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s
t
s
The Nature Conservancy 99
9. Development of a Marketing Strategy
After formulating the guidelines mentioned in the pre-
vious activity, a “marketing plan” was developed for the
different products identifed. The steps followed were:
a) Identifcation of different product lines: This
step involved identifying the specific actions needed
for each mechanism, including the characteristics of
the target groups, and the potential product portfo-
lio. Table VIII shows an example of a product line
aimed at corporate or business donations.
b) Development of strategic guidelines for the promo-
tion of different products: These guidelines were used
to develop a communications campaign and purchase
media space to help position and promote the products
(see Table IX).
c) Development of a media plan: For each product,
media were selected and time frames established for dis-
semination of promotional messages. The communica-
tions media to be used varied depending on the different
target groups. Table X shows suggested media outlets for
dissemination of promotional messages to each segment.
d) Determination of product prices: This step con-
sisted of estimating costs and analyzing the results of
the willingness to pay for each prioritized product (see
Table XI).
e) Strategy for distribution: Different strategies
were developed based on the market segment to
be served. For example, in the corporate sector the
strategy developed consists of employing a sales force
to make door-to-door visits to offer the products of
Box C. General Market Guidelines for Financing the SNAP
The guidelines presented below focus on improving the
image and capacity of the MAE and the SNAP:
n Build a team of people in the MAE to professionalize
resource management and fundraising for the System.
This will be accomplished by strengthening the MAE’s
capacity for marketing, sales, and promotion of new
fnancing mechanisms.
n Promote MAE’s contribution to sustainable develop-
ment in Ecuador through the improvement of natural
resources management. Special attention should be
put on promoting the MAE as a highly qualifed and
effciently managed institution with transparent ma-
nagement of its funding mechanisms.
n Strengthening accountability and communications
mechanisms of the Environmental Authority. This
can be achieved through the development and use
of effcient administrative and fnancial mechanisms
capable of generating periodic fnancial reports.
n Demonstrate and communicate how additional fun-
ding is helping to achieve conservation goals.
n Establish a systematic public relations and commu-
nication process as part of a social responsibility
strategy to facilitate positioning of the MAE and the
SNAP as mechanisms for national development.
n Raise the political profle of the SNAP to improve
national public opinion and in the market in general.
n Prioritize diversifcation of stable, long-term funding
sources for the protected area subsystems.
n Implement mechanisms to effectively allocate funds
and measure the effectiveness and cost-effciency of
expenditure on conservation.
n Promote alignment and harmonization of the interna-
tional cooperation agencies that support the SNAP in
order to avoid duplication of efforts.
n Design and propose strategies to increase State
budget allocation to the SNAPP and promote develop-
ment of new mechanisms and economic instruments.
n The revenues generated through the implementation
of the additional fnancial mechanisms identifed in
this study should be complemented and not replaced
by the State’s budget allocation to the SNAP.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 100
Media Used to
Communicate
Promotional
Messages
Corporate/Business Sector
Business and airline magazines,
direct mail campaigns, public
relations, national TV, environ-
mental sustainability and business
seminars, high-level events and
advertisements in newspapers of
national circulation.
Ecuadorian Public at large
Specifc to each project to be
implemented jointly with a
retail consultant specialized in
mass communications strate-
gies using TV, radio, newspa-
pers. Promotional messages
should be linked to ongoing
publicity for the SNAP.
Incoming Tourism
Airline magazines, pro-
jection of a video on the
SNAP, airport stands and
collection boxes, use of
billboards, bilingual websi-
te, publicity on Google and
Yahoo.
Table X. Media Used to Communicate Promotional Messages
Markets
Product Line
Corporate dona-
tions for pro-
tection of the
country’s natural
capital
Message
Clearly communicate what
is being offered and appeal
to the sensitivity of the
target groups to motivate
their participation.
Objective
Appeal to the sensitivity of
the target groups, report on
activities carried out, and
account for funds received.
How to Achieve this Aim?
Select an endangered animal
from Ecuador that has been
globally “humanized” and
inspires tender feelings to
be a symbol of the need for
protection.
Table IX. Example of Product Promotion
Source: Prepared by Mentefactura, 2007.
Product Line
Corporate
donations for
protection of
the country’s
natural capital
Positioning
“By helping to protect the SNAP, your
company is having a profound impact on
the protection of some of the most biodi-
verse natural areas in the world. You will
be periodically updated on the use of your
contribution and its impact on conservation.
In addition, the MAE will recognize and pro-
mote your efforts for habitat protection.”
Target Group(s)
Large and medium-
sized companies
that actively sup-
port their com-
munities through
donations or direct
investment in
matters of social
or environmental
interest.
Product Portfolio
Logo for Conservation of
the SNAP.
Contribution of 25% of
income tax to the con-
servation of the SNAP.
SNAP Passport.
Table VIII. Example of the Identifcation of a Product Line
Source: Prepared by Mentefactura, 2007.
the SNAP to different company executives. The po-
tential customers are cultivated through a Customer
Relations Management System (CRM). Table XII
shows the suggested distribution strategies for each
market analyzed.
f ) Operational structure: The structure is central to
the operation of the marketing plan and will be the
“resource-generating machine” for the SNAP. The
suggested structure consists of a business unit which
includes three sections: 1) marketing, in charge of
designing and implementing activities to enhance
The Nature Conservancy 101
Proposed Organizational Structure
Business
Unit
Public Relations and Media
Purchasing Services
Marketing
Marketing
Assistant
Quito Guayaquil
Sales Management
the image of the SNAP and its products, 2) sales,
in charge of fundraising, and 3) public relations
and media, in charge of promotion and dissemina-
tion. (See diagram below on Proposed Organiza-
tional Structure.)
g) Collection of fnancial information: This step fo-
cused on quantifying the market and involved esti-
mating the potential demand for each type of product
offered. This information was then used to determine
associated revenues and costs. Table XIII presents
details on the size of each market segment.
Table XI. Prices Used for the Financial Analysis (US$)
To estimate the demand for
different fnancial strategies,
respondents were asked about
their interest in each of the
products.
In order to establish the level
of demand for the price that
would generate the most fund-
raising proft, the demand for
each product was determined
using top-box responses, and
the willingness to pay for each
product was analyzed.
SNAP Passport
Domestic Tourists 6
Foreign Tourists 40
Donation of 25% of Income Tax
Large companies 24,000
Employees of large companies 50
Medium-sized companies 1,875
Employees of medium-sized companies 25
SNAP Logo
Large companies 15,000
Medium-sized companies 1,300
Tourist Donations
Incoming Tourists 23
Incremental Revenues from Fees
Foreign Tourists 4
Domestic Tourists 1
Distribution
Strategy
Corporate/Business Sector
Door-to-door sales force,
use of a customer relation-
ship management system
(CRM), and public relations
activities.
Ecuadorian Public at Large
The channels used will be those
chosen by the consultant select-
ed as the partner for each proj-
ect. The relationships developed
through sales to the corporate
sector will provide access to
donations from the employees of
the companies visited.
Incoming Tourism Market
Website of the SNAP; points of en-
try to the protected areas; points
of sales and collection boxes in
the country’s main airports; travel
agencies and qualifed tourism
operators; tax on domestic fights;
and a sales team for the corpo-
rate sector.
Table XII. Markets and Distribution Strategy
Markets
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 102
Table XIII. Size of Market Segments
10. Development of Financial Estimates
Based on the information collected, revenue and
expenditure estimates were developed for each mecha-
nism in order to analyze the required levels of invest-
ment and the returns associated with different sce-
narios, recovery periods, etc. The steps involved in this
activity were:
n Identifcation of all operating costs.
n Calculation of initial and additional investments.
n Determination of types and levels of revenues.
n Defnition of the time frame for evaluation.
n Determination of the capital cost to update revenue
and cost fows.
n Calculation of performance measures (net present
value, internal rate of return, etc.).
A comparison of the costs and benefts of different
fnancial mechanisms facilitated choosing those offer-
ing the greatest returns and impact.
Tables XIV and XV show a breakdown of total pro-
jected sales and the consolidated cash fow.
As the tables show, the experience of the National Sys-
tem of Protected Areas of Ecuador provides important
information on both process and outcomes, which can
serve as valuable benchmarks to support the fnancial
sustainability of other protected area systems.
Including the conducting of an annual
campaign generating net revenue of
US$100,000.
Source for Tables XIII-XV: MAE, 2005
Segments Estimated Size Unit
and Products of Segment Description
Large companies 500
Passports 380 employees/companies
Contribution of 25% of Income Tax 380 companies
Employees 128 employees/companies
‘Diamond’ Conservation Logo 48 companies
Medium-sized companies 2,000
Passports 1,360 employees/companies
Contribution of 25% of Income Tax 1,360 companies
Employees 21 employees/companies
‘Gold’ Conservation Logo 375 companies
Incoming Tourism 203,998
Donations 64,780 # of tourists per year
Passports without Galapagos 41,387 # of tourists per year
Passports with Galapagos 25,825 # of tourists per year
Incremental Revenues from Fees 261,738
Foreign Tourists 82,633 # of foreign tourists per year
Domestic Tourists 179,105 # of domestic tourist per year
Ecuadorian Donations
Campaign # 1
Campaign # 2
Campaign # 3
The Nature Conservancy 103
Table XIV. Projected Sales by Product for the First Five Years in US$
Table XV. Cash Flow Summary for the Proposed Projects
CASH FLOW SUMMARY – FSS FOR THE SNAP
YEARS/BUDGET ITEMS YEAR 0 YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
1. REVENUES
SNAP Passport - 348,944 602,517 858,538 858,538 858,538
Donation of 25% of Income Tax - 394,050 624,900 921,030
SNAP Logo - 300,992 601,985 902,977 1,203,969 1,203,969
Tourist Donations - 364,388 728,775 728,775 728,775 728,775
National Donation Campaigns - 100,000 100,000 100,000 100,000 100,000
Total Revenues 1,114,323 2,033,276 2,984,340 3,516,182 3,812,312
2. SALES COSTS - 16,407 28,105 40,264 43,962 43,962
3. SALES EXPENSES - 1,036,207 885,236 1,142,663 1,122,080 1,190,821
4. ADMINISTRATIVE EXPENSES 60,000 60,000 60,000 60,000 60,000
5. GENERAL EXPENSES - 42,000 42,000 42,000 42,000 42,000
6. PRE-TAX PROFIT - -40,290 1,017,935 1,699,413 2,248,140 2,475,528
7. TAXES - -10,073 254,484 424,853 562,035 618,882
8. NET PROFIT - -24,174 610,761 1,019,648 1,348,884 1,485,317
9. PLUS DEPRECIATION 11,480 11,480 11,480 11,480 11,480
10. PLUS AMORTIZATION
11. OPERATING CASH FLOW - -12,694 622,241 1,031,128 1,360,364 1,496,797
12. INVESTMENTS -47,800
13. WORKING CAPITAL - -1,606,827
14. NET CASH FLOW -47,800 -1,619,521 622,241 1,031,128 1,360,364 1,496,798
Segments and products Units Year 1 Year 2 Year 3 Year 4 Year 5
SNAP Passport
Large companies Annual transactions 1,615 2,423 3,230 3,230 3,230
Average revenue per transaction 6 6 6 6 6
Medium-sized companies Annual transactions 1,360 1,428 1,904 1,904 1,904
Average revenue per transaction 6 6 6 6 6
Incoming Tourism Annual transactions 8,277 14,485 20,693 20,693 20,693
Average revenue per transaction 40 40 40 40 40
Subtotal US$ 348,944 602,517 858,538 858,538 858,538
Donation of 25% of Income Tax
Large companies Annual transactions 8 15 23
Average revenue per transaction 24,000 24,000 24,000
Employees of large companies Annual transactions 969 1,938 2,907
Average revenue per transaction 50 50 50
Medium-sized companies Annual transactions 68 68 95
Average revenue per transaction 1,875 1,875 1,875
Employees of medium-sized companies Annual transactions 1,428 1,428 1,999
Average revenue per transaction 25 25 25
Subtotal US$ 394,050 624,900 921,030
SNAP Logo
Large companies Annual transactions 12 24 36 48 48
Average revenue per transaction 15,000 15,000 15,000 15,000 15,000
Medium-sized companies Annual transactions 94 187 281 375 375
Average revenue per transaction 1,300 1,300 1,300 1,300 1,300
Subtotal US$ 300,992 601,985 902,977 1,203,969 1,203,969
Tourist Donations
Annual transactions 16,195 32,390 32,390 32,390 32,390
Average revenue per transaction 23 23 23 23 23
Subtotal US$ 364,388 728,775 728,775 728,775 728,775
National Donation Campaigns
Subtotal Average revenue per campaign 100,000 100,000 100,000 100,000 100,000
Total US$ 1,114,323 2,033,276 2,984,340 3,516,182 3,812,312
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 104
Annex 16. Guide to Formulating Performance
Indicators
1
for Financial Sustainability
Performance indicators are used to define how to
measure the results or changes achieved in the dif-
ferent stages of a project or activity. Indicators can be
of different types:
n Quantitative,
2
for example, the number of fnancial
instruments that have been established in a protected
area or system of protected areas.
n Qualitative, for example, how effectively the fnancial
mechanisms are working.
n Behavioral, for example, protected area systems will
give priority to developing business plans and estab-
lishing fnancial mechanisms.
When direct quantitative indicators are used, yet have
a “general” quality, it may be necessary to include in-
direct indicators that carry more specifc information,
such as the following:
Defning How to Verify the Results
Indicators show the performance standard an activity
must reach in order to achieve a general or specifc objec-
tive, and the desired results associated with that objec-
tive. Thus, indicators provide a basis for carrying out
monitoring and evaluation, which should
specifcally address the following aspects:
n Target group (for whom)
n Quantity (how much)
n Quality (how well)
n Time (by when)
n Location (where)
Fomulating Indicators
A good indicator is:
n Substantial, i.e., the indicator refects an essential
aspect of an objective or result, in very precise terms.
n Independent, at different levels. The same indicator
should not be used for more than one objective, result,
or activity.
n Factual / Objective. The indicator should refect
fact rather than subjective impression. The indicator
should have the same meaning for people involved in
the activity as for outside observers.
n Plausible, i.e., the changes recorded can be directly
attributed to implementation of the activities
undertaken.
Indicators should be based on data that can be obtained
and verifed. Indicators should draw on data from readily
available, reliable sources or data that can be collected
without too much effort.
The measures provided by indicators should be accurate
enough for the indicators to be objectively verifable.
An indicator is “objectively verifable” when different
persons using the same measuring mechanism indepen-
dently of one another obtain the same result.
In the early stages of implementing an activity, indicators
are only “guiding values” with which to analyze the ratio-
1. Adapted from “The Logical Framework Approach”, NORAD.
2. As much as possible, quantitative measures should be formulated in such ways that they can be measured (quantifed).
Expected
Result
Increased
revenues in
all areas of
the National
System of
Protected
Areas.
Direct
Indicator
Entry fees
to pro-
tected areas
(national
parks).
Indirect
Indicators
Purchase of
equipment for
park rangers.
Park administra-
tion offces have
zinc roofs.
Park trails are
marked with
treated wood
signs.
The Nature Conservancy 105
nale of the activity. Indicators must be reviewed when
activities have progressed and the review fnds it neces-
sary to replace the indicators with more specifc ones.
Example of the Development of a Financial
Sustainability Indicator
Expected result
“Increased fnancial resources”
1. Identify the indicator
For example, entry fees to national parks.
2. Determine the target group
For example, national parks where annual revenues from
visitor entrance fees have fallen to less than US$30,000.
3. Defne the quantity
For example, 10 national parks will increase their
revenues from entrance fees by 50%.
4. Defne the quality
For example, maintaining an acceptable level of revenues
at least equivalent to the amount raised in the 1990-
1995 period (over US$50,000 per year).
5. Defne the time frame
For example, between January 2006 and December 2007.
6. Establish the place
National parks close to urban areas in the National Sys-
tem of Protected Areas (SNAP).
7. Integrate the above-defned elements
Indicator: “Ten national parks, close to urban areas, in the National System of
Protected Areas (where annual revenues from visitor entrance fees have fallen
to less than US$30,000) increase their revenues by 50% between January 2006
and December 2007, recovering the level of revenues recorded in the 1990–1995
period in accordance with the standards, fnancial mechanisms, and goals in the
2007 Business Plan.”
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 106
Annex 17. The Promoter Group and the System of
Protected Areas of Ecuador
The process of moving toward the fnancial sustainability
of the SNAP is led by the Ministry of Environment of
Ecuador (MAE) through its National Directorate for
Biodiversity, Protected Areas, and Wildlife, with support
from a broad group of NGOs and cooperation agencies.
Within this institutional framework, a Promoter Group
was formed in 2004 to provide technical, fnancial, and
policy support for the fnancial sustainability planning
process. The Promoter Group consists of: Ministry of
Environment, The Nature Conservancy, Conservation
International, USAID-Ecuador, IUCN, KfW, Nation-
al Environmental Fund, Ecociencia, Fundación Natura,
SNAP-GEF Project, and Mentefactura (a consulting
frm hired to develop the fnacial plan).
The promoter group has been instrumental in sup-
porting the development of the fnancial plan, and has
produced four important outcomes.
a) Creation of awareness of the fnancial sustainability
challenges of the SNAP.
b) Positioning and visibility of the problem on interin-
stitutional agendas.
c) Provision of basic information on the fnancial needs
and current state of the System.
d) As a result of the above achievements, the national
system of protected areas has begun to capitalize on
the results of the project through additional revenue
generation for the System by different sources.
It is recommended that other key non-tradi-
tional actors be strategically involved, such as
the Ministry of Economy (Finance or Treasury),
Ministry of Planning, Ministry of Tourism, the
Comptroller General of the State, and repre-
sentatives from the private business sector and
academia. This includes government actors, in
particular those that have a great infuence on
fnancial decisions in the planning process, as
shown in Annex 18.
The Nature Conservancy 107
Annex 18. Planning and Budgeting Hierarchies in Selected Countries
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Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 108
Annex 19. Sample of Financial Mechanisms:
Market and Non-market Based
Non-market based options
n Government’s budget allocations
n Private capital donations
n Corporate long-term contributions
n Debt-for-nature swaps
n Trust funds
Market based options
“User-pays principle” options: fees and taxes which are
directly based on renewable use of natural resources in
and outside protected areas:
Tourism-based fees and taxes
n Park entry fees
n Recreational activity fees (dive fees, hiking fees,
boat and mooring fees)
n Concession fees
n Hotel taxes
Payments for environmental services
n Watershed protection
n Carbon sequestration
“Polluter-pays principle” options: compensation fees,
earmarked taxes and fnes based on natural resource use
n Fines and damage awards, pollution charges, fuel
taxes
n Environmental compensation
n Natural resource extraction fees (leases, concessions,
royalties, and severance taxes) for: timber, minerals,
oil and gas, commercial-scale fshing
Earmarked revenues which are NOT related to environ-
ment, for instance:
n “Sin taxes” (for example, on cigarettes, alcohol,
gambling)
n Sales tax surcharge on green labeled or non-labeled
products
n Special license plates and postage stamps
Options based on activities outside PAs that could be
earmarked for conservation: Land use taxes, forestry
taxes, grazing fees, mining fees and severance taxes,
oil concessions, lease payments and royalties, sand and
gravel excavation charges
n Real estate taxes
n Water supply, hydropower, and sewage charges
n Pesticide and fertilizer taxes
n Fines (for example, for pollution, illegal logging,
illegal fshing)
n Environmental compensation
n Carbon taxes
n Biodiversity offsets
n Profts from green venture capital funds and
eco-enterprises
The Nature Conservancy 109
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Proyectos. Universidad del Pacífco. Peru. 1999.
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Nacional Systems of Protected Areas. UNDP. 2007.
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should be done and how to achieve it? World Bank.
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Brealey, Richard A., and Myers, Stewart C. Principios de Finan-
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Devine, Richard, et al. Institutional Self-Assessment: A Tool for
Strengthening Nonproft Organizations. TNC. USA. 2001.
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trabajo. Ecuador. 2006.
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Ecuador. 2006.
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A Guide for Evaluation and Strengthening. TNC. USA. 2005.
Francke, M., and Morgan, M.L. La sistematización: Apuesta por
la generación de conocimientos a partir de las Experiencias
de Promoción. Escuela para el Desarrollo. Lima. 1995.
Fundación para el Desarrollo del Sistema Nacional de Áreas
Protegidas y Servicio Nacional de Áreas Protegidas. Plan
Financiero del SNAP. Bolivia. 2005.
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Financial Mechanisms for Biodiversity Conservation, WWF,
2008.
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scentralizada de las áreas protegidas en Costa Rica, SINAC,
MINAE. Costa Rica. 2005.
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Naturales Protegidas. Peru. 2002.
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Naturales Protegidas. Guía Metodológica para la elaboración
de Planes Maestros de las Áreas Naturales Protegidas.
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The Nature Conservancy 111
Websites of Interest
Ministry of Environment of Ecuador. Agency responsible for establishing na-
tional environmental policies and coordinating conservation interventions.
National System of Protected Areas of Ecuador (SNAP). Agency responsible
for controling and monitoring conservation and preservation activities.
The Spider is a leading resource for biodiversity economists that allows
searches on a selection of sites on environmental economics, and is spon-
sored by IUCN and WWF.
The Business and Biodiversity Offset Program (BBOP) is a partnership to
explore biodiversity offsets benefts.
Conservation Finance. This site provides information and resources on
fnancing for conservation. It also promotes cooperation and learning about
fnancing strategies among governments, international agencies, and NGOs.
Fundación EcoCiencia. Ecuadorian Foundation for Ecological Studies. Pro-
vides information on the programs and activities it implements in Ecuador.
Environmental Management and Law Corporation (ECOLEX). This site pro-
vides information and research resources.
Fundación Natura. Ecuadorian Foundation for the Protection and Conserva-
tion of Nature.
Detailed information on the feasibility study approach and its applications.
Also presents a clear distinction between feasibility studies and business plans.
National Environmental Fund (FAN). Private, non-proft that supports fnanc-
ing of environmental management for sustainable development of Ecuador.
National Forestry Financing Fund. Data on reforestation processes and
Payment for Ecosystem Services.
Foundation for the Development of the Central Volcanic Mountain Range.
Provides information on forest certifcation processes, coverage maps, etc.
National Biodiversity Institute. Important information on conservation,
biology, and the state of biodiversity in Costa Rica.
National Institute of Statistics and Information. The National Institute of
Statistics and Information (INEI) is the governing body of the National
Systems of Statistics and Information in Peru.
National Institute of Natural Resources. Peru’s public authority responsible
for carrying out and promoting the necessary actions for sustainable use of
renewable natural resources, conservation of biodiversity, and sustainable
management of rural environments.
Situational Analysis of Jamaica’s Protected Area System.
International Katoomba Group gatherings are events for sharing ideas and
developing the implementation of Payments for Ecosystems Services (PES).
Ministry of Agriculture and Livestock of Costa Rica. This site contains infor-
mation on sustainable production processes and an extensive virtual library.
www.ambiente.gov.ec
www.ambiente.gov.ec/paginas_espanol/
4ecuador/areas.htm
http://biodiversityeconomics.
org/the_spider.html
http://www.forest-trends.org/
biodiversityoffsetprogram/
www.conservationfnance.org
www.ecociencia.org
www.ecolex-ec.org
www.ecuanex.net.ec/natura
www.extension.iastate.edu/agdm/
wholefarm/html/c5-65.html
www.fan.org.ec/
www.fonaffo.com
www.fundecor.org
www.inbio.ac.cr
www.inei.gob.pe
www.inrena.gob.pe
www.jpat-jm.org/netcentr/refibrary/pdfs/
SitAnalJaPASystem.pdf
www.katoombagroup.org
www.mag.go.cr
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 112
Ministry of Economy and Finance of Peru. The MEF designs, proposes, and executes
economic and fnancial policies to promote economic growth.
Mentefactura. A private organization that has worked on and supported the develop-
ment of the Financial Sustainability Strategy for the SNAP – Ecuador.
Ministry of Agriculture of Peru. MINAG promotes competitive, proftable, and sustain-
able agricultural, and the appropriate use of sustainable natural resources.
Ministry of Environment and Energy. Governing body for matters related to the envi-
ronment, energy, and telecommunications, in Costa Rica.
Ministry of Environment of Peru. MINAM is the national environmental authority of Peru.
System of Sustainable Development Indicators (SIDES), Costa Rica.
The Nature Conservancy (TNC), Ecuador. This website describes the conservation
programs and activities TNC is involved in.
Peruvian Trust Fund for National Parks and Protected Areas. PROFONANPE provides
stable, long-term fnancing for biodiversity conservation in Peru.
The Latin American and Caribbean Environmental Funds Network (RedLAC). The web-
site contains current tools for improving management of environmental funds.
National Service for Protected Areas. SERNAP maintains representative samples of
Bolivia’s biogeographic provinces through the implementation of policies, strategies,
plans, and programs, and the development of regulations.
National System of Conservation Areas of Costa Rica. The Directorate of the MINAE re-
sponsible for overseeing conservation and protection of Costa Rica’s protected areas.
National System of Conservation Areas of Costa Rica (SINAC). Information and docu-
ments related to the fnancial sustainability process for Costa Rica’s protected areas.
Forest Resources Information System of Costa Rica. Relevant information on timber
extraction permits and sustainable forest exploitation.
The World Conservation Union. IUCN provides opportunities for discussion and the
exchange of information on conservation issues.
World Wildlife Fund. This site presents innovative tools to promote conservation
fnance, as well as extensive information on Debt-for-Nature Swaps, Trust Funds, etc.
www.mef.gob.pe
www.mentefactura.net
www.minag.gob.pe
www.minae.go.cr
www.minam.gob.pe
mideplan.go.cr/sides/ambiental/
www.nature.org/wherewework/
southamerica/ecuador/
www.profonanpe.org.pe
www.redlac.org
www.sernap.gov.bo
www.sinac.go.cr
www.sinaccr.net
www.sirefor.go.cr
www.iucn.org
www.worldwildlife.org/
conservationfnance/
doc_827232269.pdf
The financial sustainability of national systems of protected areas (PA) continues to be the most significant challenge in meeting conservation objectives worldwide. A large number of threats exist related to PA financing; these threats constantly undermine national and international efforts to preserve the planet's biodiversity.
The Nature Conservancy 1
Financial Planning for National
Systems of Protected Areas:
Guidelines and Early Lessons
Marlon Flores, Guillermo Rivero,
Fernando León, Guillermo Chan, et al.
Convention on
Biological Diversity
x
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 2
© 2008 The Nature Conservancy, Arlington, Virginia, US. — All rights reserved.
The reproduction of this publication for educational and other non-commercial purposes is authorized without
prior written permission of the copyright holder provided the source is fully acknowledged.
Citation: Flores, M., Rivero, G., León, F., Chan, G., et al., (2008). Financial Planning for National Systems of Protected
Areas: Guidelines and Early Lessons. The Nature Conservancy, Arlington, Virginia, US.
ISBN - 10: 0615231624
ISBN - 13: 9780615231624
Cover design: Chanda Carpenter
Graphic design: Jonathan Kerr
Editing and Production: Eva Vilarrubi, Fastlines
Illustrations: Eric Reece (www.bigbluerobots.com)
This publication is made possible, in part, by the generous support of the American people through the
United States Agency for International Development (USAID) under the terms of Grant No. EDG-A-
00-01-00023-00 for the Parks in Peril Program, and with support of other organizations. The content is
the responsibility of the authors and does not necessarily reflect the views of USAID or the United States
Government, The Nature Conservancy, PACT, The Convention on Biological Diversity (CBD), MINAM,
NEPA, SINAC, MAE and Mentefactura.
This document is a work-in-progress. Please send your comments and suggestions to:
Marlon Flores
External Affairs Division
The Nature Conservancy
4245 North Fairfax Drive
Arlington, VA 22203, US
Email: [email protected]
The Nature Conservancy 3
Contents
Foreword. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Authors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Chapter I: Financial Analysis: Defning Financial Needs and Gaps . . . . . . . . . . . . . . . . . . . . . . . . . . .15
1.1. Defnitions and Elements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
1.2. Prior Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
1.3. Stages in the Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
1.4. Use of the Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
1.5. Lessons Learned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Chapter II: Financial Mechanisms: Preselection, Selection, and Diversifcation . . . . . . . . . . . . . 29
2.1 Financial Mechanisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.2. Pre-selection of Financial Mechanisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
2.3. Selection of Financial Mechanisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
2.4. Lessons Learned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Chapter III: Enabling Conditions: Assessing the Legal and Institutional Framework . . . . . . . . . . 39
3.1. Legal and Institutional Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.2. Assessment of the Legal and Institutional Framework. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.3. Guidelines for Legal Reform. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
3.4. Lessons Learned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Chapter IV: The System-Level Financial Plan Based on Business Principles . . . . . . . . . . . . . . . . . 47
4.1. The Financial Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
4.2. Business Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
4.3. Components of a Financial Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
4.4. Measuring Progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
4.5. Lessons Learned. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Annexes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Websites of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .112
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 4
The Nature Conservancy 5
One of the greatest challenges facing governments
and their partner organizations is the need to develop
fnancially sustainable protected area systems and solid
organizations able to effciently manage these natural
assets. Although some progress has been achieved over
the past decades, to date most protected area systems
around the world are still severely under funded. In
most cases, protected areas are still dependent upon
limited national budget allocations, support from in-
ternational conservation organizations and short-term
international funding though projects.
During the 7th Conference of the Parties of the Con-
vention on Biological Diversity in February 2004, 188
national governments adopted the Global Program of
Action on Protected Areas to support establishment of
comprehensive, ecologically representative, and effec-
tively fnanced and managed regional and national pro-
tected areas. This contributed to the three objectives
on the Convention and the 2010 Goal to signifcantly
reduce the rate of biodiversity loss.
Although the 2004 Global Program of Action on Pro-
tected Areas reinvigorated many government’s com-
mitments to fnance protected areas, there has not been
a signifcant increase in funding to protected areas.
The budgets of the national systems of protected areas
are mostly composed of contributions from central
governments, international cooperation, and protected
area self-generated revenues. When comparing the
existing budgets of the national systems of protected
areas with their fnancing needs, there is evidence of
large defcits. For example, recent fnancial analysis
of the national systems of protected areas of Ecuador,
Peru, and Costa Rica, estimate annual defcits of US$6,
US$9, and US$17 million, respectively. It has been doc-
umented by known experts that the aggregated defcit
is alarming at global and national levels, and particularly
acute in developing nations.
In order to achieve the fnancial sustainability of
national systems of protected areas it is critical to take
into account the need to increase the capacity to self-
generate additional revenue at national levels, includ-
ing market value of payments for ecosystems services
such as water service, carbon sequestration, and scenic
beauty. On the other hand, it is equally important to
improve the institutional capacity to adequately manage
fnancial resources and carry out the necessary legal and
regulatory reform to enable reliable long-term funding.
With support from The Nature Conservancy and other
members of the CFA (Conservation Finance Alliance),
I am pleased to present this new publication that in-
cludes practical, accessible, and easy to use methods for
improving fnancial planning, and a road map for the
implementation of business-oriented fnancial plans
for the national systems of protected areas.
Antonio Brack
Minister of Environment of Peru
October, 2008
Foreword
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 6
CATI Computer Assisted Telephone Interviewing
CBD Convention on Biological Diversity
CEREPS Special Account for Productive and Social Reactivation (Ecuador)
CFA Conservation Finance Alliance
CI Conservation International
CITES Convention on International Trade in Endangered Species
CPM Center for Park Management
DASI International Affairs Directorate (Ecuador)
DGF General Forestry Directorate (Costa Rica)
DGVS Wildlife General Directorate (Costa Rica)
ESF-SNAP Financial Sustainability Strategy of the National System of Protected Areas
FAN National Environmental Fund (Ecuador)
GEF Global Environmental Facility
GPAN Participatory Management in Natural Protected Areas
IANP Offce of Protected Natural Areas (Peru)
INECI Ecuadorian Institute for International Cooperation
INRENA Natural Resources Intendance of Peru
IUCN International Union for Conservation of Nature
KfW German government-owned development bank (Kreditanstalt für Wiederaufbau)
MAE Ministry of Environment (Ecuador)
MAG Ministry of Agriculture and Livestock Farming (Costa Rica)
MARFUND Mesoamerican Reef Fund
MIDEPLAN Ministry of National Planning (Costa Rica)
MINAE Ministry of Environment and Energy (Costa Rica)
MINAM Ministry of Environment of Peru
MIRENEM Ministry of Natural Resources, Energy, and Mines (Costa Rica)
MoU Memorandum of Understanding
NEPA National Environment and Planning Agency (Jamaica)
NORAD Norwegian Agency for Development Cooperation
NPCA National Parks Conservation Association
PANE State Natural Areas (Ecuador)
SINAC National System of Conservation Areas (Costa Rica)
SINANPE II Project: “Development of SINANPE’s Institutional Capacity for the Management,
Administration, and Sustainable Use of Biodiversity and Natural Resources in
Natural Protected Areas”
SNAP National System of Protected Areas
SPN National Parks Service (Costa Rica)
TNC The Nature Conservancy
UNDP United Nations Development Programme
USAID United States Agency for International Development
WWF World Wildlife Fund
Acronyms
The Nature Conservancy 7
The authors wish to thank all of the people and institu-
tions who made valuable contributions at various stages
of the development of this document. Thus, we grate-
fully acknowledge the efforts and commitment of park
rangers, technical experts, administrators, and senior
management of the National Systems of Protected
Areas, who face the reality of the challenges of fnan-
cial sustainability and conservation in their day-to-day
work. This document would not have been possible
without their contributions.
We also appreciate the valuable support provided by
our TNC current and former colleagues Sheldon
Cohen, Jim Rieger, Terry Williams, Roberto Troya,
Eduardo Durand, Zdenka Piskulich, Steve Watkins,
Maria Elena Zúñiga, Elias Epstein, Sandra Isola, An-
gela Martin, Sara Hamberg and Jessie Rountree; and
Sarat Babu Gidda (CBD), Douglas Mason (USAID),
Scott Edwards (Environmental Defense), Marc Patry
(UNESCO), Chas Cartwright (National Park Ser-
vice, US), and Maria José Pacha (Foundation Vida
Silvestre, Argentina).
For their reviews and contributions we thank Luis
Pabón, Andy Drumm, John Terborgh, Andrew Soles,
Rob Weary and Jamie Ervin of TNC, Andrew Bovar-
nick (UNDP), and Jonathan Kerr. Also, Brenda
Bucheli and Marlene Salas of PACT for managing the
project’s learning community on fnancial planning.
We extend thanks to Raúl Solórzano Soto of the
National System of Conservation Areas of Costa Rica,
the staff of the Natural Protected Areas Intendance of
Peru (INRENA), the National System of Protected
Areas of Ecuador (SNAP), and Winsome Townsend
at Jamaica’s National Environment and Planning
Agency (NEPA).
Finally, we also like to thank Magali Martínez, María
Fernanda Aillón, Sandra Vela, and Esteban Vega, whose
valuable work on information collection and data
processing contributed to the development of different
chapters in this document.
The Authors
Acknowledgements
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 8
The Nature Conservancy 9
n Marlon Flores has a Master’s Degree in Economics
from the University of Manchester, UK, and a Public
Law equivalent Degree from the Central University
of Ecuador. He has extensive experience in fnancial
planning, business planning for protected areas, fscal
reform, and institutional capacity building. He works
for The Nature Conservancy, External Affairs Divi-
sion at the Worldwide Offce in Arlington Virginia,
US; and his current position is Senior Advisor on
Conservation Finance and Policy. Before joining
TNC, he worked with organizations such as the
World Bank (GEF Programs, Latin America), CARE
Denmark, COWI Consult of Denmark (Environ-
ment and Planning Division), and the National
Audit Offce of Ecuador. He has work experience in
North, Central and South America, the Caribbean,
Africa, Central and Eastern Europe, South East Asia
and the Pacifc.
n Guillermo G. Rivero Figueroa is an Economist with
a Master’s in Business Administration and a special-
ization in Project Management. He has more than
14 years of managerial and consulting experience
working with international non-proft organiza-
tions, local NGOs, and companies in Latin America,
Asia, and Africa. His areas of concentration are Or-
ganizational Development, Financial Management,
Strategic Management, Financial Sustainability, and
Performance Evaluation. He is the author of several
publications and participates as professor and lec-
turer in various fora and universities. He is currently
Financial Services Manager at Pact, USA.
n Sandra Jiménez has a degree in Economics from the
National University, with a specialization in banking
and fnance, and a Master’s in Business Administra-
tion from Costa Rica’s National Technological Insti-
tute. For 23 years she has held positions of increasing
management responsibility in the felds of fnance,
project implementation and strategic and operational
planning in the National System of Conservation
Areas (SINAC) of the Ministry of Environment and
Energy of Costa Rica (MINAE).
n Guillermo Chan has a Bachelor’s Degree in Business
Administration with an emphasis in fnance and an
Associate’s Degree in Banking Administration from
the University of Costa Rica (UCR). He works as Fi-
nance Coordinator for The Nature Conservancy and
has collaborated in the development and implemen-
tation of the Financing Strategy for the National Sys-
tem of Conservation Areas of Costa Rica (SINAC).
He also has 15 years of work experience with banking,
fnancial, and nonproft institutions. He is currently
pursuing a Master’s in Finance, as well as studies in
Natural Resource Administration and Environmental
Economics.
n Irene Suárez specialized in Local Economic Develop-
ment at the Latin American Faculty of Social Scienc-
es (FLACSO) and has a Master’s in Development
Studies from the Institute of Social Studies (The
Hague, Netherlands). She is currently the Manager
of The Nature Conservancy’s National Strategies
Program in Costa Rica. She has worked for more
than 10 years in community development, applied
Authors
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 10
economics, environmental conservation, training,
and in the design and implementation of projects
and environmental policies. She has also taught at the
Organization for Tropical Studies (OTS).
n Fernando León has a degree in Forest Engineering
from La Molina Agrarian National University, and has
completed graduate studies in total quality manage-
ment and productivity as well as a Master’s in Business
Administration at the Central American Institute of
Business Administration (INCAE), where he studied
on a scholarship from the MacArthur Foundation. He
is a consultant in the areas of environmental econom-
ics and conservation fnance for the Offce of Protect-
ed Natural Areas (IANP). For the last 12 years, he has
played an active consulting role for public and private
entities, both national and international. In addition,
for the last 10 years he has been a professor at La Mo-
lina Agrarian National University.
n Jaime Fernández-Baca has a degree in Agricultural
Engineering from the University of California at
Davis, a Master’s Degree in Agricultural Economics
from La Molina Agrarian National University, and
a Master’s Degree in Environmental Management
from the University of Stirling in Scotland. For the
last fve years he has been the Yungas and Central
Selva Project Coordinator for The Nature Conser-
vancy’s Southern Andes Conservation Program at
TNC’s offce in Peru, where he has been responsible
for managing USAID-funded conservation and
development projects. He previously served as an
environmental consultant for projects in the energy,
mining, and manufacturing industry sectors.
n L. Andrea Vergara has a degree in Commercial Engi-
neering, with a specialization in Economics and Busi-
ness, as well as a Master’s Degree in Natural Resources
and Environmental Economics at the University of
Concepción, Chile. Her areas of professional expertise
include conservation fnance, economic valuation, the
development of payment systems for environmental
services, and development of evaluation criteria for
bio-commerce projects, as well as the application of the
productive chain approach to rural tourism in Ecua-
dor. She has also been a professor at the University of
Concepción and at the Technological Institute of the
Catholic University of the Holy Conception, Chile.
n José Galindo has a Master’s Degree in Environmental
Planning and Management and is trained in business
management. He has substantial experience in con-
servation fnance, with a particular focus on fnancial
sustainability strategies and business plans for individual
protected areas and national systems of protected areas.
His experience includes project implementation and
technical assistance to environmental authorities in
Ecuador, Colombia, Costa Rica, Panama, and Argen-
tina. In addition, he has provided technical assistance
on fnancial planning for protected areas to the Gov-
ernment of Egypt. He is one of the founding members
of Mentefactura, an environmental consulting frm
specializing in fnancial sustainability and environmen-
tal economics. Mr. Galindo is currently a consultant to
national governments and international organizations
for the implementation of specifc fnancial aspects of
the CBD Program of Work on Protected Areas and is
supporting the development of IUCN’s conservation
fnance strategy in Latin America.
n Tatiana Egüez has a Degree in Biology from the Cen-
tral University of Ecuador and an equivalent from the
University of Sao Paulo, Brazil, and a Master’s Degree
in Environmental Auditing and Law. She has substan
tial experience in protected areas management and for
several years she directed the Ministry of Environment’s
Biodiversity and Protected Areas Department. She is
currently employed by The Nature Conservancy as Pro-
tected Area Advisor for the Northern Tropical Andes
Program. She participated in the development of the
SNAP’s Financial Sustainability Strategy, Financial Plan,
and Business Plan in 2005 and 2006.
The Nature Conservancy 11
The financial sustainability of national systems
of protected areas (PA) continues to be the most
significant challenge in meeting conservation ob-
jectives worldwide. A large number of threats exist
related to PA financing; these threats constantly
undermine national and international efforts to
preserve the planet’s biodiversity. These threats
include, for example, inadequate investments,
excessive dependence on international funding
sources, lack of participation of key stakeholders
(Ministries of Finance, private sector), limited
national capacity, and lack of tools for adequate
financial planning. Consequently, it has been dif-
ficult to formulate system-level financial plans
based on realistic needs, viable and diversified
financial mechanisms, and operational business
plans. As a result of this situation, there are now
only a few protected areas that can be considered
financially sustainable, while the vast majority of
protected areas and PA systems continue to face
dramatically high annual deficits.
Protected area funding (primarily international)
has not been able to keep pace with the rapid
growth and associated management costs of the
number of protected areas. According to IUCN
(2006), the number of protected areas listed by
the United Nations has increased tenfold in recent
decades. By 2004, there were already over 104,000
protected areas; and the area under conservation
had expanded from 2.4 million km
2
in 1962 to more
than 20 million km
2
. Approximately 12% of the land
surface of the planet is now under some category of
PA. Recent financial analyses of the national sys-
tems of protected areas of Ecuador, Peru, and Costa
Rica, for example, indicate annual financial deficits
of US$6, US$9, and US$17 million, respectively.
The collective financial gap is extreme on a global
level and is very visible in developing countries.
“Results from the only global estimate to date of
PA management needs (James et al. 1999a & 2001,
updated by Balmford 2003) suggest that for the
world as a whole, the budget shortfall for effectively
maintaining existing protected areas is approxi-
mately $2.5 billion annually, $1.5 billion of which is
in developing nations. Although $7 billion per year
is currently spent globally on PAs, less than $1 bil-
lion is spent in developing countries.”
1
When we analyze the fnancial sustainability of PAs
and the barriers to flling these large fnancial gaps, it is
necessary to take into account the different elements
of the fnancial equation: on the one hand, the “supply”
involved in generating additional fnancial resources
(income), and, on the other hand, the “demand” fo-
cused on adequate management of fnancial resources
at the level of individual PAs and PA systems (UNDP,
2007). Likewise, we should take into account aspects
related to legislation, regulatory frameworks, and the
institutional and individual capacities for adequate
fnancial management. The effective interaction of all
these aspects is essential for a country to be able to
Introduction
1. Bruner et al., “How much will effective protected areas cost?”
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 12
reduce or eliminate the fnancial gaps associated with
management of its protected areas.
The purpose of this document is to provide guide-
lines and lessons to optimize both the financial
planning processes of protected areas and the prod-
ucts resulting from these processes. In addition,
it is expected that this document will improve the
financial management capacities of individuals and
institutions working in protected areas.
At the same time, this document is designed to support
government commitments undertaken at the 7th Con-
ference of the Parties to the Convention on Biological
Diversity (CBD) in February, 2004. Here, 188 coun-
tries adopted the “Program of Work on Protected Ar-
eas,” including the fnancial sustainability of protected
areas. The governments committed themselves to “by
2008, establish and begin to implement country-level
sustainable fnancing plans that support national sys-
tems of protected areas, including necessary regulatory,
legislative, policy, institutional and other measures”. To
date, although countries are working towards this goal,
very few have made signifcant progress.
This document is organized around key aspects of the
fnancial planning process: a) fnancial analysis: funding
needs and gaps, b) preselection and analysis of fnan-
cial mechanisms and understanding the legislative and
regulatory framework, and c) formulation of fnancial
and business plans. Additionally we review important
aspects related to implementation, monitoring, and
evaluation.
This document uses the “fnancial planning roadmap”
as a frame of reference. This roadmap presents the
above-mentioned elements linked to the protected
area system’s management plan, which should be an
integrated part the national development agenda, as
illustrated above. The use of this roadmap helps us to
defne courses of action, establish a supportive institu-
tional framework, address gaps in institutional capacity
during the process, increase cost-effectiveness, accel-
erate the fulfllment of actions and goals, and create
The Nature Conservancy 13
ownership of the process, as well as foster transparency
and responsibility.
Chapter 1 examines the different aspects of fnancial
analysis (the fnancial needs and gaps of protected areas).
This chapter includes the review of different income
sources, the level of current and potential resource use,
and identifcation of cost-reduction opportunities. These
aspects determine the existing fnancial needs and gaps
to cover conservation priorities.
During the fnancial analysis, it is important to consider
the functionality of the fnancial management system
of the protected areas. This system supports important
processes such as accounting (income and expendi-
ture), salaries and benefts, classifcation of expenses
(standardization), cash fow, transparency (availability
of and access to information), and auditing (internal
and external).
Chapter 2 begins defining financial mechanisms
and then focuses on the preselection, feasibility
analysis, and selection of financial mechanisms.
Chapter 2 also examines conceptual and practical
aspects of the diversification of financing sources.
Such aspects are crucial to maintaining and increas-
ing income from conventional financial sources
(governments, donors, and trust funds), as well as
developing innovative alternatives (for example,
environmental compensation funds, market mecha-
nisms, etc.). The diversification of financial mecha-
nisms, considering market criteria, implementation
complexity, and impact, are also covered in this
chapter. Instead of providing a detailed descrip-
tion of income-generation alternatives, this chapter
indicates the elements and steps involved in making
the most appropriate selection and diversification
of financial mechanisms.
Chapter 3 analyzes the conditions that enable the
development of financial strategies. These condi-
tions are based on the premise that financial gaps
and the low returns of many financial mechanisms
(such as national park entrance fees) are due largely
to the low capacity to generate, administer, and dis-
tribute resources in an efficient manner, and to the
existence of excessively complicated and outdated
legal and institutional frameworks. Laws and regu-
lations usually focus on aspects related to budget
implementation and neglect the strategic aspects
that create conditions for resource mobilization,
business management, autonomy, good governance,
and the hiring of dedicated staff to support finan-
cial management.
This chapter not only examines different aspects re-
lated to the establishment of a supportive institutional
structure, but also provides guidelines for evaluation of
the legal and institutional structure, and presents an
interesting tool for evaluation of protected area sys-
tems’ legal and institutional frameworks (included in
Annex 13).
Finally, Chapter 4 begins with concepts and defini-
tions of financial plans, then, it examines business
management principles that apply to financial plans,
their components, and implementation. Chapter 4
also discusses different aspects related to the formu-
lation of financial and business plans. Financial plans
are usually drafted as a ‘wish-list’ for international
donors, with limited diversification, lack of business
vision, insufficient information, limited attention
to cost effectiveness, and a disconnection with the
private sector. Thus, this chapter presents differ-
ent steps to break out of this traditional pattern and
to achieve financial plans that respond to changing
conditions and are based on an accurate determina-
tion of financial need, economically-viable financial
mechanisms, diversified financial packages, and op-
erational business plans to support implementation
of the different financial strategies.
Chapter 4 also presents mechanisms to measure
progress, including the new “Financial Sustainability
Scorecard for National Systems of Protected Areas”
developed by the UNDP.
Achieving fnancial sustainability of national systems
of protected areas is not a destination per se, rather
it is a continuous cycle of challenges and opportuni-
ties related to increasing funding on the one hand and
building fnancial management capacity on the other, as
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 14
illustrated in the cartoon version of the fnancial plan-
ning cycle at the end of this section.
Single large multi-year donations from international
donors can lead protected area managers to a false
sense of financial well-being. However, once these
donations are spent and resources are diminished,
the reality and importance of long-term financial
planning becomes painfully apparent, and this will
in turn threaten the stability of the entire protected
area system.
Finally, this document has been developed with support
from the Parks in Peril Program, fnanced by USAID,
and the Conservation Finance Alliance.
2
The Parks
in Peril Program supported a learning community on
fnancial planning that developed this document be-
tween 2004 and 2007.
2. The CFA was created in 2002 to help address the challenges related to the lack of fnancing for protected areas. To accomplish this, the CFA promotes
collaboration among organizations active in area of conservation fnance and develops tools to optimize local capacity worldwide. The members of the
CFA, as of June 2007, are: The Nature Conservancy (TNC), Wildlife Conservation Society (WCS), Conservation International (CI), World Wildlife
Fund for Nature (WWF), USAID (Enterprise for the Americas Initiative/Tropical Forest Conservation Act), IUCN, UNDP, UNEP, National Park
Conservation Association (PCA-United States), RedLAC (Latin American and Caribbean Network of Environmental Funds), FUNBIO, The Royal
Society for the Protection of Birds, PricewaterhouseCoopers, Kreditanstalt Für Wierdereaubau KfW-Germany and GTZ (Germany).
The Nature Conservancy 15
Chapter I
Financial Analysis:
Defning Financial Needs and Gaps
3. In a fnancial analysis, the current situation is described in a baseline that captures the state of needs, costs, and income at the beginning of the project or
intervention.
The first step in the financial planning processes
is the financial analysis. It covers a number of as-
pects, the most important of which are the analysis
of protected area costs, the review of different
income sources, the determination of current and
potential resource use, and the identification of
cost-reduction opportunities; and determining
the financial gap. These financial elements make it
possible to establish the size of the existing finan-
cial gap that must be covered to meet conservation
priorities; further, these financial elements facili-
tate the identification, design, and implementation
of appropriate strategies for sustainable financing
of protected areas.
Based on experiences gained in Peru, Ecuador, Costa
Rica, and Jamaica, the following pages present a
series of guidelines on how to conduct a financial
analysis at both levels — individual protected areas
and protected area systems. These guidelines aim to
answer the following questions:
n Why is a fnancial analysis necessary?
n What are the necessary prior conditions for a sound
fnancial analysis?
n What steps should be followed to carry out a fnancial
analysis?
n What support tools are needed to conduct a fnancial
analysis?
n How can the results of the fnancial analysis be used?
1.1. Defnitions and Elements
Many specialists in the business sector refer to ‘fnancial
analysis’ as a set of techniques used to assess the viability,
stability, effectiveness , effciency, and proftability of
operations. It uses techniques such as funds fow analysis
and fnancial ratios to understand fnancial opportunities
and challenges, and improve decision-making. Although
this is a private sector perspective, there is much we can
learn from this approach. Applying such techniques to
protected area systems enables us to presents fnancial
data in a form that can be used to evaluate the protected
areas’ fnancial position and to plan growth. For the
purpose of this document, fnancial analysis consists of
quantifying the fnancial needs and gaps of an individual
protected area or protected area system, including the
creation of new protected areas. Accomplishing this
fnancial analysis requires a comparison of the resources
currently available
3
with the resources needed for both
a basic scenario (essential management programs to
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 16
ensure protection of basic ecosystem functions) and an
optimal scenario (a set of management programs for
optimal ecosystem functioning).
Figure 1 shows and example of the level of income by
program area and the needs to be covered in both the
basic and optimal scenarios. Figure 2 shows the fnancial
gaps, broken out by program area and type of expen-
diture, identifed in Costa Rica, Peru, and Ecuador. A
fnancial analysis provides the key following information:
1. Income by source: national or international;
2. Historical review of income by program, subpro-
gram, or activity;
3. Level of actual expenditures by program, subpro-
gram, or activity;
4
4. Identifcation of cost-reduction opportunities;
5
5. Level of needs by program, subprogram, or activity,
defned at both the basic and optimal levels; and,
6. Existing financial gaps by program, subprogram,
or activity through the comparison of income
vs. expenditures, and of needs vs. income. The
financial gap is the difference between available
funds and funds needed for basic or optimal lev-
els of conservation.
These defined elements are used to quantify the
investments needed and to optimize the strategic
allocation of funds to close the financial gaps. Thus, a
financial analysis is essential so that stakeholders can
select financing mechanisms and determine invest-
ment priorities.
There are various methods for conducting a finan-
cial analysis. The method selected should have clear
objectives and be tailored to the context of each pro-
tected area system. It is critical that the method used
helps to link conservation goals with actual costs.
Activity-based cost accounting (ABC) is a user-friend-
ly method that can serve this purpose. It is based on the
organization of activities carried out in protected areas
through functional areas and programs. The functional
areas consist of the different categories of operational
activities required to manage protected areas (including
the cost of the central protected area agency), which
include programs and subprograms, with programs
being the parts of the operation that require separate
management. Using metrics, costs are allocated to each
program and subprogram for basic and optimal levels of
conservation; fnancial gaps are determined by compar-
ing available resources with fnancial needs (basic and
optimal).
Figure 1. Financial Gap Analysis by Program Area (in US$)
4. This refers to the levels of budget execution and underspending.
5. Some cost-reduction strategies include: volume purchases, extending the useful life of goods and equipment (emphasis on preventive maintenance), a
balance between full-time staff and consultants, analysis of savings in main expenditure items, strategic adjustments in programs and activities, increased
effciency of fnancial-administrative systems, co-management, and protected area partnerships, among others.
Source: Business Plans from the Center for Park Management. USA.
The Nature Conservancy 17
This transparent method makes it pos-
sible to arrive at actual and reliable costs
since the allocated costs are directly
linked to the goals (results) of each of the
protected areas conservation programs. A
similar process is being used in protected
area tourism management, known as
the “Threshold of Sustainability.” This
process determines the minimum level of
investment needed to prevent the decline
of the protected area’s natural capital. For
further information on fnancial analysis
methods, see Annex 1.
Generally, carrying out a fnancial
analysis involves four steps:
6
Planning
and preparation, information gather-
ing,
7
processing and analysis and valida-
tion of results.
During the fnancial analysis, stake-
holders should reach mutual agreement
regarding the general conservation
criteria for both basic and optimal
scenario levels. Factors contributing to
this agreement may include diagnostic
studies of biodiversity threats, ecosys-
tem functions, current government
policy, and international conservation
standards, among others.
Generally, protected area conserva-
tion priorities are reflected in a pro-
tected area’s management program,
which can be evaluated —considering
the financial needs and gaps analy-
sis— by using scenario logic (for basic
and optimal scenarios) to facilitate
determination of resource needs. Ta-
ble 1 presents a breakdown of existing
financial gaps based on definite man-
agement programs and subprograms
of Peru’s National System of Natural
Protected Areas (SINANPE). This
table clearly shows that the available resources do not
cover the basic level. There is a gap of US$3.7 million
for the basis scenario and US$20.6 million for the
optimal level.
6. Section 1.3 contains a detailed description of each stage.
7. It is important to consider that opening up a participatory process does not necessarily guarantee access to all available information since each organiza-
tion has different policies for information management and distribution (concerning its income, costs, donors, etc.). In many cases, the way information
management is handled is left to the discretion of the different stakeholders.
Ecuador: Distribution of Annual Expenditures by Management Scenario (in US$)
Source: National System of Natural Protected Areas of Ecuador.
Figure 2. Financial Gap Analysis: The Cases of Costa Rica, Peru, and Ecuador
Source: SINAC. Based on mean data for the years 2004, 2005, and 2006.
Costa Rica: Financial Gap by Type of Expenditure (in US$)
Source: SINANPE 2005.
Peru: Financial Gap by Subprogram (in US$)
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 18
The analysis identifes and quantifes current fund-
ing sources and their specifc contribution to different
management programs. The analysis also identifes
both current expenses and investments.
8
The features of a sound fnancial needs assessment are
included in Box 1.
Scenarios
Box 1. Advantages of Conducting a Financial Gap Analysis
n Allows for results to be presented on a static level (for
one year in particular) and on a dynamic level (for several
years), according to specifc information requirements.
n Makes it easy to generate comparative information on
different areas, because this tool employs a manage-
ment program and activity structure that has been
validated by protected area authorities.
n Facilitates fnancing of activities and cost reduction.
n Provides valuable information to measure progress by
determining the current situation (baseline).
n Identifes fnancing sources and determines short-,
medium-, and long-term funding needs.
n Reveals essential information for the fnancial plan.
n Enables preparation of economic arguments to lever-
age fnancial resources from the central government,
international organizations, and private donors.
n The results can be used to raise public awareness.
n Guides decision-making in developing the budget.
n Encourages refection and a self-critical stance within
the system and allows for feedback from external
stakeholders.
n Generates a “learning” dynamic for stakeholders
through the process of carrying out the analysis of
needs, income, and gaps.
Table 1. Available Resources vs. Basic and Optimal Scenarios, SINANPE Peru* (in thousands of US$)
PROGRAMS AND SUBPROGRAMS** Available
Resources Basic Optimal
Resource Conservation
Protection and surveillance 1,153 2,474 2,470
Resource management 614 1,276 1,316
Public Use
Tourist and recreational use 568 - 1,219
Environmental education 595 - 1,278
Research 455 - 975
Management Support
Operations and administration 13,847 17,108 29,661
Planning and monitoring 473 921 1,012
Citizen participation 350 - 749
Total 18,058 21,781 38,683
* Figures have been taken from the Analysis of SINANPE Financing Needs 2005-2014.
** The classifcation of programs has been taken from the Natural Protected Areas Intendance. Peru. 2006.
*** Amounts based on the SINANPE budget for 2005, INRENA. 2005.
8. Análisis de las Necesidades de Financiamiento del Sistema Nacional de Áreas Naturales Protegidas del Ecuador, (Ministry of Environment, 2005), identifes seven
expenditure categories: 1. Staff, 2. Operating expenses, 3. Maintenance, 4. Equipment, 5. Professional services, 6. Infrastructure, and 7. Transportation.
Of these, 1, 2, 3, 5, and 7 are current expenses: the others are investment expenses.
***
The Nature Conservancy 19
n The analysis is based on conservation priorities:
The analysis recognizes conservation objectives
as key input for the development of fnancial esti-
mates. Conservation priorities include criteria related
to biodiversity, ecological balance, ecological gaps,
and preservation. These priorities are translated into
management programs (for example, administration,
control and surveillance, expansion of conservation
areas, participatory planning, community develop-
ment, and environmental education), which are key
elements of other important protected area manage-
ment tools, such as the master plan or strategic plans.
n The analysis defnes a basic management scenario
(basic level): Describes the minimum level of funding
required to operate key conservation programs while
meeting basic program’s requirements to sustain the
functions of the ecosystems in the protected areas.
n The analysis defnes an optimal management sce-
nario (optimal level): Describes the ideal level of
funding required to operate all programs to reach
and sustain optimal functions of the ecosystems in
the protected areas. It describes the ideal state of the
programs if all necessary funding, personnel, equip-
ment, and other resources were available to achieve
that state (CPM, 2002). This ensures the achieve-
ment of short-, medium-, and long-term goals for
the protected area, in accordance with the highest
environmental, social and economic standards. Table
2 shows the initial results of fnancial needs and gaps
analyses conducted in six countries.
n The analysis establishes a baseline (current situation
or starting point): The analysis determines the current
situation by considering fnancial needs and the avail-
ability of fnancial resources. The baseline is established
by examining the management programs selected for
both the basic and optimal scenarios. Because income
levels are reviewed, the baseline also provides an initial
mapping of funding sources and it is a concrete reference
point to measure progress in fnancial terms.
n The analysis helps to establish protected area man-
agement standards: Based on the different categories
of expenses and investments, the fnancial analysis
helps to defne standards
9
for effcient management
of conservation programs. For example, this tool can
be used to determine the number of park rangers
required for basic or optimal patrolling, considering
both existing threats and the need for greater cost-
effectiveness in terms of kilometers covered.
n The analysis helps to improve management of funds
at the system
10
and protected area levels: Given the
existence of laws and fnancial mechanisms affecting
protected areas, the fnancial analysis clarifes how
9. The adoption of research-based standards, lessons learned, and best practices provides an excellent frame of reference to increase the cost-effectiveness of
management programs.
10. System expenses can include activities related to coordination, policy formulation, and the maintenance and control of the group of protected areas from
a national institutional environmental perspective. System expenses may include such line items as: staff (for example, central payroll employees and staff
in decentralized offces), materials, and other operational resources at both national and regional levels.
Estimated
Annual Needs of
the Protected
Area System
Estimated Annual
Income to the
Protected Areas
from National
and International
Sources
National International Basic
Composción de los ingresos
existentes (en %)
Brecha de fnanciamiento
actual del sistema de
áreas protegidas
Optimal
Table 2. Results of Financial Gap Analyses (in millions of US$)
N/A: Not available
Costa Rica 36 17 80% 20% 14 19
Grenada 2.2 1.4 80% 20% 0.8 N/A
St. Vicent 2.5 1.5 80% 20% 1 N/A
Ecuador 6.2 2.7 70% 30% 3.5 9.2
Peru 41.8 10 20% 80% 14 31.8
Indonesia 160.3 53.3 71% 29% 106.9 N/A
Region /
Country
Composción de los ingresos
existentes (en %)
Brecha de fnanciamiento
actual del sistema de
áreas protegidas
Composition of
Existing Income
(in %)
Current Financial
Gap of the
Protected Area
Source: Information consolidated by TNC.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 20
expenses and income are broken down. In this way,
expenses covered at the central or regional levels (sala-
ries, for example) are also included to facilitate making
comprehensive calculations of the investment needed
for protected areas. In addition, the analysis also takes
into account revenue management to clarify whether
the resources generated by the protected areas are to
be remitted to the central level, or maintained in the
protected areas where they originate.
n The analysis includes an ongoing monitoring compo-
nent: An ongoing monitoring process that compares
projections of income, expenses, and fnancial gaps
with amounts executed (on an annual or semiannual
basis, etc.) is essential for ensuring adaptive fnancial
planning over time. This process can be supported
by using computer tools to facilitate the analysis. The
fnancial sustainability scorecard developed by the
UNDP is an interactive tool that can be used to moni-
tor protected area fnances over time. See section 4.2.
1.2. Prior Conditions
The key existing conditions for conducting a fnancial
analysis include:
n Commitment of government and relevant authorities
(for example, the ministries of Environment, Finance,
and Tourism). To build favorable political will that
will make the process viable, this commitment should
be based on a solid understanding of the rational
and objectives of a fnancial analysis. Planners must
remember that each part of the process may require
the commitment of different stakeholders.
n Information on management policies (for example,
in the master plan, strategic plan, or management
plan) is a critical input to quantify financial needs
by specific activity and program. Carrying out a
financial analysis without these programmatic
inputs is not ideal. Information on management
effectiveness (strengths and weaknesses) and ca-
pacity building needs are also important to ensure
that the financial analysis covers the improve-
ments needed to achieve protected area objectives.
However, in the absence of updated management
plans, programmatic priorities can be clarified by
conducting structured and semi-structured inter-
views complemented by quantitative information
surveys.
n Information on ecological gaps within the protected
area network: This information is a critical element
when determining future fnancial scenarios, and
should include the projected increase in protected
area size and coverage, or information on new pro-
tected areas.
n Establish a specialized multidisciplinary technical
team led by a professional with relevant experience. The
technical team should be made up of individuals with
broad knowledge of the national system of protected
areas, expertise in fnancial planning, and experience
working with Finance ministry offcials involved in
Box 2. Participation by a Secondment in the Financial Strategy of SINAC, Costa Rica
Much of the success in developing fnancial plans for
the national system of protected areas stems from
support provided by a technical assistant or
secondment to the work team during the
fnancial planning process.
Unlike ordinary consultancies, the purpose of a
secondment is to merge different organizational
cultures, and to obtain their best effort to achieve
the goals and objectives of the work they have been
charged with. Some of the characteristics of an
effective secondment are:
n Full-time dedication to the process.
n Total identifcation with the project’s guidelines
and needs.
n Substantial knowledge of, and interaction with,
key offcials involved in the process.
n Emphasis on analysis of the results obtained.
n Identifcation of related factors that affect
fnancial planning.
n Constant monitoring and feedback on the process.
n A high degree of operational autonomy.
However, it must be stressed that the secondment
should receive adequate support from a key offcial or
offcials in the process. In the case of SINAC, the insti-
tutional fnance specialist was designated to supervise
and support the work of the secondment.
Source: SINAC/ TNC, 2007.
The Nature Conservancy 21
formulation of the national budget. It may be necessary
to have a dedicated professional (secondment) who is
responsible for facilitating the fnancial planning pro-
cess inside the ministry of Environment or the national
park system (see Box 2). Having this professional inside
the protected area system facilitates process fow and
strengthens the capacity of the system.
n Identifcation of key stakeholders,
11
particularly
those with access to fnancial information. These
include both internal stakeholders from within the
national system of protected areas (offcials, techni-
cal staff, planners, etc.), and external organizations
outside the environmental sector (international
development organizations, ministries of Finance,
Tourism, NGOs, etc., see Table 3).
n Centralized and up-to-date information on the
fnancial situation is critical for the analysis of
expenses, income, and gaps. If only partial data is
available at the central level, the results obtained will
not have suffcient accuracy to infuence decision
making. In this case, in order to fll the information
gap, it is necessary to gather additional information
from primary frst-person sources through surveys,
interviews, focus groups. Table 4 presents examples
of different categories of information to be gathered
when conducting a fnancial analysis.
n
n Often, information is not available or is out of date,
and the institutional structure may lack defnition or
be undergoing changes. Given that these situations are
very common in protected area systems, participants
must collect basic information before proceeding with
the fnancial analysis. For example, in the case of Ja-
maica, the analysis was based on an extensive review of
studies, and interviews with key stakeholders from pro-
tected areas and focus groups. This preparatory work
focused on three areas: an analysis of the management
plan for the protected area system, on the regulatory
and institutional framework, and on government pri-
orities. Based on this “situational analysis”, a short-term
action plan was developed to strengthen leadership
and build capacities to address challenges related to
both management and fnancing of the protected area
system. Documentation of this situational analysis can
be found on the Jamaica Protected Area Trust web site:
www.jpat-jm.net/backgrnd/backgrnd.html. This work
was essential to draft the terms of reference
12
for devel-
opment of the fnancial strategy for Jamaica’s protected
area system (see Annex 2).
n Access to funds to cover the costs of the various
activities in the process. Planners must estimate the
cost of the process and its duration to determine
potential funding sources and identify possible part-
nerships to achieve the expected results.
11. Normally, a memorandum of understanding is established between key stakeholders to provide a mutually agreed upon platform for the performance
of joint activities.
12. Prepared by the Center for Park Management in collaboration with the government of Jamaica and TNC, December 2006.
Table 3. Participation of Key Actors in the Financial Gap Analysis
Level of contribution to the fnancial gap analysis: Low, Medium, High.
Government Ministry of Environment Medium
Ministry of Finance High
Municipalities Low
Auditors Low
Private sector Consultants High
Industry Low
BINGOS Medium
Local NGOs Medium
Research and development Universities High
Research Centers High
Actor Agency Participation
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 22
1.3. Stages in the Process
A fnancial analysis is comprised of four stages: planning
and preparation, information gathering, processing and
analysis, and validation of results. Details of these steps
are discussed below. Figure 3 illustrates the activities and
results of each state of the process in Peru.
1. Planning and preparation: This frst stage consists of
defning the objectives and scope of the work. To this
end, it is critical for the success of the analysis to defne
who the clients of the analysis are. Typically the fnancial
analysis will have multiple clients, for example: govern-
ments agencies such as the Ministry of Environment,
the National Protected Area Authority, the Ministry of
Finance & Economy, the Ministry of Tourism, private
sector enterprises, international cooperation organizations
(bilateral and multilateral), and international and national
NGOs. Thus the fnancial analysis may have multiple
objectives in order to address the needs of multiple clients.
This stage is complemented by the selection and validation
Table 4. Examples of Categories of Information Required for the Financial Gap Analysis of a Protected Area
Source: Expenditure categories taken from Long-term Financial Planning for Parks and Protected Areas. The Nature
Conservancy, USAID, and World Commission on Protected Areas, 2001, USA.
Categories 2004 2005 2006
Income Sources
Municipal 26 30 42
Central Government 233 273 376
Private Sources 25 29 40
Self-Generated Funds 14 16 22
Total National Sources 297 349 480
International Sources
Bilateral and Multilateral Entities 222 299 343
Private Sources 1,005 1,351 1,547
Total International Sources 1,227 1,650 2,164
Total Sources of Income 1,524 1,999 2,644
Expenditures by Program
Management and Research 588 738 1,027
Public Use and Education 555 722 951
Administration and Development 376 536 657
Total Expenditures 1,519 1,996 2,635
ToTAl 5 3 8
Breakdown of Expenditures
Categories According to Accounting Items 2004 2005 2006
Salaries 137 170 264
Training 76 90 145
Equipment and Materials 106 120 190
Transportation and Vehicles 91 100 184
Construction 197 240 356
Field Operations 258 319 435
Special Studies 122 190 179
Land Acquisition and Conservation 304 419 501
Institutional Administrative Support 94 150 158
Professional Services 103 140 184
Audits 30 60 40
Total Expenditures 1,519 1,996 2,636
(Thousands of US$; hypothetical)
The Nature Conservancy 23
of the methodology (standards based on clients’ needs,
objectives, and scope of work) and supportive tools for
information gathering and processing. Particular attention
must be placed on defning the standards, for example:
n Links between conservation goals and costs by using
functions, programs, indicators and metrics to mea-
sure achievement (Activity Based Cost accounting).
n Responsible staff (central and site-based) is assigned
to each function and program.
n Financial information is available for at least one
fscal year.
n Defnes investment priorities and cost reduction
opportunities.
n Defnes basic and optimal funding needs and gaps.
n Includes a fnancial position statement.
n Financial information is fed from the sites to the
central level.
The most important product of this stage is the ‘terms
of reference’ for the fnancial analysis. In addition, the
planning team should identify the location of neces-
sary information, the stakeholders who will contribute
(inputs and any technical assistance), and the universe
Figure 3. The Process of Preparing a Financial Analysis for the National System of Protected
Areas of Peru
Stages
Activities Results
1.
Planning and
preparation
Defnition of the scope and terms of reference
n Determination of expected products
n Defnition of the methodology to be used
Terms of Reference defned
to carry out the fnancial
needs and gaps analysis.
2.
Information
collection
n Identifcation of key stakeholders; organi-
zation of support and fnancing
n Management and/or strategic plans,
accounting and fnancial reports and
budgets
n Program activities and their impact on a
fnancial level
n Identifcation of criteria for basic and
integral scenarios
n Use of templates (forms, data sheets,
etc.) for data collection on income, dis-
bursements, needs and allocated amounts
Team trained in
data collection.
Relevant stakeholders
involved and
actively participating.
Necessary and suffcient
data collected on income,
disbursements, needs, and
allocated amounts.
3.
Processing and
analysis
4.
Validation of
results
n Distribution of the results of the analy-
sis to the stakeholders and participants
n Participatory review and interpretation
of the results
n Refection on future options for fnan-
cial sustainability
n Coding and review of data collected
n Organization and tabulation of the fgures
collected
n Study of the historical behavior of income,
disbursements, needs and allocated
amounts
n Preparation of tables and fgures compar-
ing both current income with current dis-
bursements, and needs (basic and integral
scenarios) with projected income
Financial gap calculated
between both current income
and disbursements, and
between needs (basic and
integral scenarios) and available
and potential income.
Management programs to be
prioritized have been identifed
Key investments and essential
operating costs clearly defned.
Shared understanding of
the fnancial gaps faced by
the protected area
and development
of a discussion forum
to generate
alternative solutions.
Source: F. León, IANP, 2006.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 24
of protected areas to be included in the analysis. Annex
3 presents an example of the terms of reference used to
carry out a fnancial analysis in Ecuador.
2. Information collection: This next stage is a partici-
patory process involving the main stakeholders from
the government, private sector, cooperation agencies,
and NGOs, among others. This process includes the
collection of primary and secondary information
13
cor-
responding to the expenses, income, and needs of the
protected areas. Gathering good data requires train-
ing in appropriate techniques and forms for collecting
information (for example, questionnaires, checklists,
survey instruments, matrices), as well as logistical
coordination among the many team members.
14
Box 3
presents recommendations for information gathering
and Box 4 summarizes the experience of Peru.
3. Processing and analysis: This third stage is often
a less participatory stage. It is aimed at organiz-
ing and consolidating information for the purpose
of drawing conclusions, and includes the coding,
review, validation, and organization of data on op-
erating expenses, investments, program implemen-
tation, financing mechanisms, and income sources.
All data must be processed adequately to facilitate
comparisons with data from other protected areas.
15
When conducting the financial analysis, planners
examine the magnitude of the financial gap by
comparing the income and expenses in the current
situation with the needs defined in the basic and
optimal scenarios. In order to facilitate the analy-
sis of the current financial situation, the analysis
should cross-check information (for example,
primary vs. secondary sources), study patterns (for
example, plans for income generation or decisions
about expenditures), and find a balance between
Box 3. Suggestions for Information Collection
n Contact the stakeholders in advance to be included in
the process and to coordinate agendas.
n Coordinate closely with staff experienced in program
management, the accountant, and the person respon-
sible for the protected area’s budgets.
n Use templates (forms, data sheets, etc.) to gather pri-
mary and secondary information in an orderly manner.
n Review management plans and/or strategic plans,
accounting and fnancial reports, and budgets.
n Review the historical evolution of program activities
and their impact on a fnancial level: income by type
of source, operating costs, and investments.
n Collect accounting information that quantifes the
amounts allocated to the different management pro-
grams or activities implemented in the protected area.
n Coordinate with other actors (governmental, private,
NGOs, etc.) who possess relevant program and fnan-
cial information.
Sources: Business Plans for Parks and Protected Areas, Center for Park Management, National
Parks Conservation Association, 2005, United States; Long-term Financial Planning for Parks
and Protected Areas, The Nature Conservancy, USAID and the World Commission on Pro-
tected Areas, 2001, United States.
13. Primary information is comprised of information obtained directly from surveys, interviews, focal groups, etc. Secondary information is based on existing
information collected from studies, research, and reports, etc. produced by other organizations and/or individuals.
14. Annexes 4 and 5 present examples of steps and support techniques for information collection. In addition, Annex 6 shows how the information gathered
in Peru, Ecuador, and Costa Rica was validated.
15. The level of sophistication of the data processing and analysis stage can vary from the use of a spreadsheet such as MS Excel to the use of specifc
statistical programs such as the SPSS (www.spss.com), or databases.
The Nature Conservancy 25
detailed information and data aggregation. In the
analysis stage, team members should consider issues
ranging from program strategy to operating expens-
es, including proposed investments in the basic and
optimal scenarios. Table 5 shows a range of tools for
processing and analyzing data.
4. Validation of results: In this fnal stage, the planning
team shares results with all participating stakeholders
in order to validate and reach a common agreement
on the results and refne conclusions. The team re-
views the needs of the basic and optimal scenarios, and
reaches an agreement on the fnancial gap and on cur-
rent and future resource needs. Validating the results
Table 5. Data Processing and Analysis Tools
Analysis
variables
n Use
n Data entry
n Investment
n Processes
n Data management
n Visualization of results
Tools
Spreadsheet
(Example: MS Excel, lotus)
Easy-to-use and generally intuitive
Easy-to-use for data entry
Included with MS Windows
Limited functionality for statistical
comparisons
Useful with small and medium
amounts of information
Include a variety of graphics and
results tables
Statistical Software
(Example: SPSS, SAS)
Requires training
Depends on the type of software
Depends on the type of software
Includes a variety of statistical
functions
Handles large numbers of records
with no problem
Offer many interesting graphics
options
Box 4. Collection of Financial Information on Protected Areas – Aspects Considered in Peru
Operating cost level
Planning documents: Management plans, period
covered, and costs of preparation or updates.
Protected area staff: Number of workers by position,
description of each position (manager, park rangers,
legal counsel, etc.), net monthly and annual salaries
received, and type of work.
operating costs in the feld: Unit of measure for each
resource, quantity, unit cost, and monthly and annual
cost of each expense item (fuel, rent, per diem,
messenger services, etc.).
Administrative costs: Monthly and annual cost of all
necessary resources (water, electricity, telephone,
insurance, etc.).
Training: Monthly and annual costs by type of training
(carried out by the National System of Protected Areas
or by other organizations).
Vehicle, infrastructure, and equipment maintenance:
Monthly and annual costs of preventive and corrective
maintenance, etc., and unit costs of maintenance.
Investment level:
Infrastructure, vehicles, and equipment: Type, quan-
tity, date of acquisition or construction, and estimated
useful life and unit costs.
Income level:
Detailed information on all current and potential
fnancing sources: State resources, own resources
(self-fnancing), transfers and donations, international
cooperation, debt-for-nature swaps, and resources from
private organizations, NGOs, foundations, etc.
Current income from protected areas: Annualized amount
by source and term of main fnancing agreements.
Average income over the last fve years: Annualized
amount of historical income received.
Potential income from protected areas: Annualized
amounts by source, dates when this income will become
available, and potential cooperating organizations.
Source: Proceso de Construcción del Plan Financiero a largo plazo para el SINANPE. Primera
Fase: Análisis de las Necesidades de Financiamiento del SINANPE 2005-2014.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 26
can be accomplished through several iterative rounds of
interaction. Annex 7 shows an example of the consoli-
dated information that can be shared with different
stakeholders during this stage.
1.4. Use of the Results
In the fnancial planning process, the results of a fnan-
cial analysis are used primarily as inputs for developing
a fnancial plan. The results of this analysis also con-
stitute a baseline that serves as a point of reference for
both monitoring and evaluation during implementation
of a fnancial sustainability plan.
Moreover, the planning team can use the financial
figures from the financial analysis to mobilize politi-
cal will of public and private decision makers and the
national cooperating agencies to increase protected
area investments, and to secure their participation as
short- and long-term partners. The results can also
be used to increase public awareness through infor-
mation campaigns.
Box 5 presents the results obtained in two specifc protected
areas based on a fnancial analysis carried out in Peru.
A concrete example of how a fnancial analysis can
garner support is the funding that the Gordon and
Betty Moore Foundation provided to SINANPE
through the Andes-Amazon Initiative (see Box 6).
1.5. lessons learned
The following lessons were learned during the imple-
mentation of fnancial analyses in Costa Rica, Peru,
and Ecuador.
n Assessing protected area management from a biolog-
ical perspective only often results in limited attention
to critical fnancial aspects. This, in turn, leads to un-
informed decisions that undermine the achievement
of critical conservation goals. Therefore, the training
of planners involved in protected area management
should include all aspects of fnancial planning. A
fnancial analysis (needs and gaps) is a careful exami-
nation of needs and resources. This is not an academ-
ic exercise but, rather, a concrete process with practi-
cal fndings and clear implementation guidelines. The
fndings of the fnancial analysis, if used strategically,
can lead to improved protected areas’ fnancial
sustainability.
Box 5. Protected Area Financial Plans Based on the Financial Gap Analysis of the System of
National Protected Areas of Peru
The SINANPE Financial Needs Analysis (2005-2014)
provides the database for this protected area system
and also constitutes a good frame of reference for
determining the fnancing needs of specifc areas.
Based on the above-mentioned study, two fnancial
plans have so far been prepared, corresponding to
the protected areas of:
n Pacaya Samiria National Reserve
(prepared between January and June 2006)
n Yanachaga Chemillén National Park
(prepared between July and December 2005)
Both plans were developed by consultancies.
These processes verifed that the fnancial gap
fgures obtained in the two studies were very close
to those obtained in the fnancial needs analysis
conducted for the whole system, thus validating the
methodology used in the SINANPE fnancial needs
analysis. Figures from both studies appear below.
*For the optimal level
The use of the results for the system saved time in
building the database, leaving more time for valida-
tion of information, analysis of results, and develop-
ment of feasible fnancial strategies.
Source: F. León, IANP, 2006.
Protected Area
/ Projection
Needs analysis
of the system*
(in US$)
Protected area
fnancial plan*
(in US$)
Pacaya Samiria
National Reserve 1,496,734 1,479,993
Yanachaga Chemillén
National Park 637,081 580,000
The Nature Conservancy 27
n The national authority for protected areas must own
the process of identifying current and future fnan-
cial needs for the protected areas, as well as cost
reduction opportunities. Their understanding of the
usability of the fnancial analysis is indispensable for
them to provide leadership in the process.
n Broad and organized participation is important to
compare and contrast approaches, and to improve the
accuracy of the data used to determine funding needs
and gaps. Having a mechanism for inter-institutional
coordination (for example, a memorandum of under-
standing) greatly facilitates the process of conducting a
participatory fnancial analysis.
n Information provided by protected area staff in the
feld is indispensable because non-quantitative as-
pects are vital to understand the true signifcance of
the fnancial information and data for the study.
n A fnancial analysis helps to make members of the
national system of protected areas aware of the cur-
rent and future fnancial situation so that they can
make informed decisions on how to improve pro-
tected area fnance.
n Realistic fnancial information in the fnancial analysis
becomes a fundamental tool, not only for the design of
a fnancial plan and improved fnancial management,
but also to persuade potential donors of the verifable
and accurate fnancial needs of the protected areas and,
thereby, to secure their fnancial support.
n Clearly defned objectives and standards are indis-
pensable for a successful fnancial analysis. Thus, it
is critical to defne who the primary clients of the
analysis are and how the results will be used. Subse-
quently the stakeholders should agree on the stan-
dards that will be applied during the study. In the
absence of standards it is diffcult to compare re-
sults from country to country and aggregate regional
data, which is useful for international cooperating
agencies and donors. An absence of standards may
also undermine the quality of the study and, conse-
quently, its usability.
Box 6. Financial Needs Information and the Moore Foundation
Information on protected area fnancial needs, pro-
jected to 10 years (2005-2014), can be very useful
to inform cooperating organizations of the extent
of investment required to improve management of
protected areas.
In the case of the Moore Foundation, the fnancial gap
analysis conducted by SINANPE enabled the founda-
tion to make decisions quickly and to continue con-
solidating its fnancial support in natural areas with
great conservation potential in the Amazon jungle of
Peru. In the framework of the Andes-Amazon Initia-
tive, the Moore Foundation is implementing a pilot
project aimed at promoting the fnancial sustainabil-
ity of new natural areas in this region.
Furthermore, the foundation has donated US$724,120
for the purchase of equipment, outftting of offces
for administrative staff, implementation of monitor-
ing activities, and the defnitive categorization of the
Santiago Comaina Reserve Zone.
The foundation also contributed to the declaration of
Sierra del Divisor as a Reserve Zone in April 2006. The
Moore Foundation’s fnancial support for implementa-
tion of this new protected area is part of a binational
project supporting conservation of Sierra del Divisor.
This project is implemented by TNC with partners in
Peru (Pronaturaleza, IBC, SPDA, CDC, and DAR) and
Brazil (SOS Amazonía and the Pro-Indian Commission
of Acre — CPI/AC).
Source: Based on contributions from TNC, CI, and INRENA.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 28
The Nature Conservancy 29
The next step in the fnancial planning process is
identifying and selecting fnancial mechanisms that can
maintain and increase income from existing sources and
establish new alternative resources in order to reduce
fnancial gaps. This step requires a systematic approach.
The identifcation and selection of fnancial mecha-
nisms should focus not only on conventional options,
such as annual government appropriations, interna-
tional grants and trust funds, which are often subject
to political pressures and diffcult to capitalize (in the
case of trust funds). The range of fnancial mechanisms
should include innovative alternatives (i.e., environ-
mental compensation funds, payment for environmen-
tal services, taxes, and other pricing instruments).
This chapter addresses the processes of pre-selection,
selection, and diversifcation of fnancial mechanisms,
considering market criteria, implementation complex-
ity, and potential impact. Given the proliferation of
existing literature on the range of fnancial mechanisms,
this aspect has not been considered in this chapter.
17
The framing questions for this chapter, below, are based
on experiences in Costa Rica, Ecuador, and Peru.
n What is meant by ‘fnancial mechanism’?
n What steps are involved in the identifcation, selec-
tion, and diversifcation of fnancial mechanisms?
n Why is it necessary to analyze existing and new
mechanisms?
n What criteria should be considered in the selection
of fnancial alternatives?
n What are the expected results?
2.1 Financial mechanisms
For the purpose of this document, fnancial mecha-
nisms are tools designed to raise, generate, or mobilize
funds to cover the different costs related to the imple-
mentation of conservation programs. Financial mecha-
nisms also contribute to build fnancial management
capacity because different sets of skills are required to
design, assess, and implement the great variety of exist-
ing fnancial mechanisms.
Financial mechanisms may be designed to mobilize
social and environmental benefits in addition to fis-
cal benefits. A solid connection between the alloca-
tion of funding from a diversified portfolio of finan-
cial mechanisms and priority investment programs
is critical to reducing financial gaps and ensuring the
long-term financial sustainability of the protected
area system.
Different criteria are used to classify fnancial mecha-
nism in order to facilitate planning and selection of
fnancial options (see Table 6). For example:
n Geographic criteria — international, national, and
local: In this document, this classifcation is used to
indicate the origin of the source of income.
Chapter I I
Financial Mechanisms:
Pre-selection, Selection, and Diversifcation
16
16. This chapter focuses on identifying fnancial mechanisms to support the sustainability of protected areas or protected area systems. This chapter does
not discuss specifc fnancial mechanisms.
17. For a detailed description of the fnancial mechanisms available for protected areas, see the Conservation Finance Guide, Conservation Finance
Alliance, www.conservationfnance.org.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 30
The Global Environment Fund (GEF), established
in 1991, is an international mechanism attached to
the Convention on Biological Diversity (CBD). Its
purpose is to fnance environmental protection proj-
ects in developing countries.
A national protected areas trust (endowment) fund
18
illustrates a mechanism with a national scope when it
supports the entire national protected area system. It
generates resources through rates of return on stock
market investments to fnance the cost of conservation
programs over time. “Environmental funds have been
set up in many countries as a way of managing funding
for protected areas. Such funds are typically estab-
lished in conjunction with large, one-off contributions
from donor agencies or NGOs. These funds may be
supplemented or replenished by private sector con-
tributions, fscal revenues, and earnings from market-
based charges for PA goods and services. Three types
of trust funds are common: endowment funds spend
only income while attempting to maintain or enhance
capital; sinking funds liquidate all of their assets
over a specifed period of time (for example, inter-
national projects or grants); while revolving funds
are designed to receive regular replenishments often
from various sources (for example, the GEF, which is
replenished by donor governments every four years).
Of these, only the frst is truly a long-term or revenue-
generating fnancial mechanism” (IUCN, 2003).
Individual protected area entry fees and site-based
tourism concessions that generate income which is
retained by the protected area are examples of fnan-
cial mechanisms with local scope.
n Market and non-market criteria: These mechanisms
focus on environmental externalities
19
generated by
market failures. To this end, fnancial mechanisms
aim to: a) cover the environmental costs of produc-
tion or consumption activities that are not included
in prices by imposing taxes or charges on products or
processes, b) use property rights to establish envi-
ronmental compensation or mitigation payments,
and c) develop alternative markets for environmental
18. For further information about trust funds, see www.worldwildlife.org/conservationfnance/trustfunds.cfm.
19. Harm or beneft experienced by an individual or business as a result of actions taken by other persons or entities: Positive externalities are produced
when an agent’s actions increase the well-being of other agents of the economy. Negative externalities are generated when an agent’s actions reduce the
well-being of other agents of the economy. Examples of negative externalities are: pollutant emissions and tailings from mining extraction, which are not
usually included in the costs and prices of the minerals, and, similarly, emissions and organic waste resulting from the production of fsh meal, which are
not generally included in fsh meal costs and prices.
Cuadro 6: Mecanismos financieros para áreas protegidas
Payment of tourism fees
Natural resource extraction fees
Carbon capture projects
Charging for the use of water resources
Sale of souvenirs
Government allocations/transfers
Fiscal instruments (taxes, etc.)
Investment funds
Donations from for-proft and not-for-proft entities
Global initiatives (Global Environment Facility)
Debt-for-nature swaps
Multilateral organizations (donations, cooperation)
Donations from foundations, NGOs,
international corporations
Geographic criteria
Market and non-
market crteria
Protected
Area
Yes No
International
level
Regional and
national
X
X
X
X
X
X
X
X
X
X
X
X
X
Financial mechanisms
X
X
X
X
X
X
X
X
X
X
X
X
Table 6: Examples of Classifications of Financial Mechanisms for Protected Areas
Adapted from: Conservation Finance Alliance, 2002, and Barry Spergel, 2007.
The Nature Conservancy 31
services (see examples in Table 7). Market-based
mechanisms are expected to offer competitive alter-
natives and create special niches so that the different
stakeholders can act in ways that most beneft them
without deteriorating the environment.
Mechanism such as government appropriations,
trust funds, and grants are considered non-market
mechanisms since they are designed not to deal with
externalities.
20
It should be noted that the above-mentioned clas-
sifcations are inclusive and complementary; that is, in
practice, mechanisms can be situated at the protected
area level, but their fnancing comes from a combina-
tion of various sources. For example, a trust fund for a
specifc protected area can be fnanced by both national
and international resources. For a more comprehensive
list of fnancial mechanism, see Annex 19.
2.2. Pre-selection of Financial Mechanisms
The identifcation or pre-selection of fnancial mecha-
nisms requires conducting a basic analysis of the viabil-
ity of different fnancial options using specifc criteria
such as level of complexity and potential impact. The
pre-selection of fnancial mechanisms allows fnancial
planners to: a) identify simple fnancial mechanisms not
requiring detailed studies or any legal reform for their
direct implementation (for example, the establishment
of collection boxes for the deposit of voluntary contribu-
tions at the visitor centers of national parks), b) identify
more complex fnancial mechanisms (for example, the
establishment of a trust fund or the creation of a tax)
that require detailed economic, social, legal, and envi-
ronmental viability analyses before making a defnitive
selection, even if the possibilities seem promising, and
c) determine which fnancial mechanisms are not viable
due to their high complexity and low impact.
Two examples of useful levels of analysis for the Pre-
selection of mechanisms are presented below:
21
n The frst level of analysis is based on the comparison
of the expected fnancial impact and the complexity
of implementing the mechanism. Financial impact is
defned as the capacity to generate fnancial resources,
while respecting environmental and social standards.
Complexity includes variables such as duration, multi-
sectoral coordination required, and the need for legal,
institutional and administrative reforms, among others.
This frst level of analysis makes it possible to identify
which fnancial mechanisms would have a greater or
lesser impact, and which would involve a greater or
lesser complexity of implementation.
22
The results of
this analysis helps planners eliminate a number of fnan-
cial options, thereby reducing the time and cost of con-
ducting a true cost-benefts analysis to all mechanisms.
n This method of preselecting fnancial mechanisms is
more effective if carried out through qualitative data
gathering methods, including: interviews with key staff,
workshops, focus groups, and the review of reports
and previous research. The application of the method
should be adapted to local or national conditions.
n Figure 4 presents an example of the application of an
impact-complexity analysis to a set of fnancial mecha-
nisms being considered to support the sustainability of
20. In general, traditional fnancial mechanisms, such as government appropriations and trust funds, are not designed to deal with externalities. However,
these mechanisms are also linked to market conditions in certain circumstances. For example, trust funds are linked to the market because they are
subject to fuctuations in the current rates of return. In the case of central transfers (appropriations), links to the market emerge when the national
budget relies on export prices of raw materials (for example, oil, minerals). In both cases, market fuctuations can cause an increase or decrease in
funding for protected areas.
21. For more detailed information on the pre-selection of fnancial mechanisms, see Business Plans for Parks and Protected Areas, op. cit., or the publication Con-
servation Finance Guide, Conservation Finance Alliance, 2003.
22. The complexity associated with fnancial mechanisms can be determined by measuring a combination of variables. Thus, for example, if this complexity
includes such variables as duration, multisectoral coordination, and necessary abilities, it can be assessed using a common scale to evaluate each variable
(example: a scale from 1 to 10, with 10 being the most favorable value) in combination with a specifc weighting for each variable (example: 15% for
duration, 35% for multisectoral coordination, and 50% for necessary abilities).
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 32
a protected area. In the example, the eight mechanisms
listed below were identifed after exploring possible
goods and services (such as hikes, scenic value, water
resources) the area has to offer, as well as potential clients
(such as tourists, flm producers, the water company).
n As can be seen, Mechanism 1 – collection of spare
change – is located in the “Low Impact – Low Complex-
ity” quadrant. Implementing this mechanism may only
require coin collection boxes and a sign appealing to
tourists to leave their spare change as a contribution to
the preservation of biodiversity. In general, mechanisms
that fall within this quadrant – known as “rapid results”
– do not require deep analyses, involve low investment,
and can be implemented by the protected area staff in
a relatively simple way. They are short-term implementation
mechanisms. However, it should be noted that the time
frame depends on the legal framework in force in each
protected area.
n Mechanisms 2, 3, and 4 – sale of souvenirs, volunteer
program, and voluntary donations in restaurant and
hotel accounts – are located in the “High Impact – Low
Complexity” quadrant, suggesting that their implemen-
tation should be a high priority. Generally, mechanisms
located in this quadrant require a good level of coor-
dination and good relations with other stakeholders
in order to facilitate implementation. As a result, these
Figure 4: Pre-selection of Financial Mechanisms
Mechanisms
1. Collection of spare change
2. Sale of souvenirs
3. Volunteer program
4. Voluntary donations in restaurant
and hotel accounts
5. Adopt a Hectare
6. Increase in entrance fees
7. Payment for water use
8. Establishment of a trust fund
Complexity of Implementation
Low High
High
Low
Relative
Impact
Source: Based on the approach in Business Plans for Parks and Protected Areas. Center for
Park Management, National Parks Conservation Association.
Figure 5: Linking of Goods and Services, Investors, and Financial Mechanisms
*Potential investors can provide funding for the feasibility study.
A
Activities
n Mapping and prioriti-
zation of goods and
services
n Identifcation of busi-
ness opportunities
A. Identify available goods and services in the protected areas.
B. Identify potential clients/investors for the identifed goods and services.
C. Identify a fnancial mechanism to connect goods and services with potential investors (taxes, concessions, etc.).
Activities
n Identifcation of the
fnancial mechanisms
n Feasibility study*
Activities
n Mapping and profling of
potential investors
n Seeking an initial commit-
ment by investors
C
B
Proceed
quickly
Proceed
strategically
Reject Proceed as
appropriate
1
2
3
4
5
6
8
7
The Nature Conservancy 33
mechanisms can be implemented in
the short and medium term. Normally,
they do not require exhaustive studies,
although there may be cases in which it
is necessary to gather specifc informa-
tion to facilitate the analysis, but they
do require concrete action plans to
render them operational.
n The “High Impact – High Complexity”
quadrant contains Mechanisms 5,
6, 7, and 8: adopt a hectare, increase
entrance fees, payment for water use,
and establishment of a trust fund.
These mechanisms are both promising and uncertain
sources of income. In general, they require detailed
studies to clarify their fnancial viability and collat-
eral aspects, such as the need for legal reform and the
identifcation of necessary abilities, among others.
Mechanisms that fall within this quadrant are usually
implemented in the medium and long term.
n Mechanisms located in the “Low Impact – High Com-
plexity” quadrant are a low priority. Generally, they
require the investment of resources and the success
of their implementation is uncertain. It is not recom-
mended that detailed viability studies be carried out
for these mechanisms.
n The result of the pre-selection is a clear mapping of
the most promising fnancial mechanisms. This makes
it possible to eliminate options that do not contribute
signifcantly to the fnancial sustainability of the area,
given their low impact and/or high complexity. It
should be stressed that ranking fnancial mechanisms
(in terms of complexity and impact) depends on each
country’s context.
n The second level of analysis is based on the principle
that it is possible to link a protected area’s goods and
services to potential investors through one or more
appropriate fnancial mechanisms. Figure 5 illustrates
this principle and corresponding activities. This analy-
sis has a greater level of depth and is mainly applied to
the most complex mechanisms (involving medium- and
long-term implementation), which are located in the “High
Impact – High Complexity” quadrant.
23
It is important
to indicate that the analysis of the link between goods
and services, and between investors and fnancial
mechanisms, not only provides more information
about fnancial mechanism possibilities, but also
facilitates the identifcation of potential investors who
are willing to cover the preinvestment
24
costs associ-
ated with the fnancial alternatives under study. The
results of this analysis make it possible to prioritize the
fnancial mechanisms that justify conducting a feasibil-
ity study. The three steps in this analysis are as follows:
(A) Step one: Seek to clarify what environmental
goods and services with high income-generation
potential exist at the level of the protected area
system or of a particular protected area. The map-
ping of the options can be done at a series of work
meetings with stakeholders (for example, protected
area staff, specialized consultants, and representa-
tives from communities adjacent to the protected
area, fnancial entities, and academic institutions,
among others). This process is expected to provide a
clear idea of what goods and services exist and what
their potential is. Ideally, the aim is for this analysis to
generate clear, specifc ideas that can be presented to
possible investors or other stakeholders, as indicated
in the next step. Table 7 presents examples of goods
and services.
(B) Step two: Based on the characteristics of the
goods and/or services that are defned, the next step
is to identify possible clients/investors with suff-
cient fnancial resources and interest in investing and
obtaining favorable returns from the production of
environmental goods and/or services. According to
23. It should be noted that this analysis can also be applied to the “Low Impact – Low Complexity” and “High Impact – Low Complexity” quadrants in order to
validate the results obtained from the analysis of impact vs. implementation complexity.
24. Preinvestment expenses include the costs of information, surveys, consultants, studies, etc.
Examples of goods Examples of services
n Ecotourism n Biodiversity conservation
n Sport fshing n Habitat for endangered species
n Medicinal plants n Protection from storms
n Water and wood n Grazing lands
n Fruits and other foods n Water/energy services
n Genetic material n Flood control
n Natural scenic beauty n Climate change mitigation/Carbon
sequestration
Table 7: Types of Goods and Services Protected Areas Can Offer
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 34
the type of product or environmental service, inves-
tors can be from the private or public sector, includ-
ing national businesses, international corporations,
municipalities and regional governments).
The identifcation of potential investors should be
selective, based on the opportunities identifed in the
previous step. Therefore, it is necessary to carry out a
local and international survey of businesses and organi-
zations interested in sustainable use of natural resources
to generate economic, environmental, and social
benefts. Thus, it is advisable to make direct contact
with chambers of commerce and exporters, investment
promoters, as well as other business networks, to discuss
opportunities, mutual benefts, and the challenges
associated with using goods and services from protected
areas. The expectation is that this dialogue will result in
one or more investors becoming interested in funding
pre-feasibility studies. It may be necessary to conduct
additional, basic studies in order to develop adequate
arguments (including, for example, surveys on willing-
ness to pay for services and spending capacity, percep-
tions of environmental services, and other exploratory
studies) to persuade potential investors to invest funds
in feasibility studies. It also may be helpful to collaborate
Table 8: Linkage of Goods and Services, Investors, and Financial Mechanisms
Source: Cases taken from Ecuador,
Costa Rica, and Peru.
* In addition, agreements have been signed with the CONELEC, AGIP, HCJB, and EMAAP-Q companies to pay for the
use of areas where they have infrastructure and/or carry out projects.
** Indicates services from protected natural areas and wildlife biodiversity that are contained in the Unifed Text
of Secondary Environmental Legislation, Book IX, and which deliver income to the Protected Area System.
Investors
Quito Metropolitan Area Sewage
and Water Company (EMAAP-Q)*
National and foreign tourists**
Tourism companies operating in
protected areas**
Tourism-related companies in
the Galapagos
Electric companies that use
protected areas**
Evian Company
Florida Ice & Farm Co.
Central government
Techos de Paz
Merck, Sharp & Dome
California’s Garden
Municipal Service Providers
(EPS) of Moyabamba
Duke Energy
SINANPE/Proabono
Several tourism companies oper-
ating in the Manu National Park
Financial Mechanisms
FONAG (Water Fund): Financing of community park rangers in protected
areas of interest to EMAAP-Q; and 1:1 matching funds for the development
of projects to protect Quito’s water catchment sources.
Payment of a variable fee depending on the protected area and tourist
category.
Payment for tourism operation permits.
Donations from tourists.
Annual payment (US$3,000) for the installation and operation of electric
energy towers. Each additional tower costs US$100.
Donation of a percentage of the sale of bottled water.
Donation of one colón for each bottle of water sold.
Water tax (for example, 1.9 colones for the use of water by agroindustry).
Fixed donation (US$10,000) for each condominium sold near a protected area.
Royalties on profts made from the use of genetic material in
pharmaceutical products.
Varied donations from the use of water for fsh farming (trout).
Specifc payment of two soles over the drinking water fees to fund various
conservation activities.
Voluntary donation to SINANPE, linked to water use for electricity generation.
Rate or percentage of sales from fertilizer extracted from the Guano
Islands and Peninsulas.
Fee of US$10,000 for non-consumptive landscape-use rights.
Goods / Services
Ecuador
Water
Tourism
Energy
Costa Rica
Water
Forests
Genetic material
Peru
Water
Organic fertilizer*
Scenic beauty
The Nature Conservancy 35
with international organizations in order to optimize
the results of the dialogue with the business and gov-
ernment sectors.
(C) Step three: Identify the most appropriate
fnancial mechanisms to link the selected good
and/or service with potential investors. This step
is more technical and may require strategic advice
from experts and national or international organi-
zations with experience in the subject, as well as the
active participation of the potential investor. This
part of the process helps to visualize the type or
types of mechanisms that can best engage a poten-
tial investor.
From the fnal result of this three-step analysis, it is
expected that the protected areas under consider-
ation should have an investor interested in specifc
goods or services and in providing funds for the
feasibility studies. Table 8 presents specifc examples
of goods and services, investors, and fnancial mecha-
nisms. In turn, Figure 6 shows the process used in
Ecuador to prioritize fnancial mechanisms for that
protected area system. (Annexes 8 and 9 describe
the methodology used.)
2.3. Selection of Financial Mechanisms
For the purposes of this document, the selection of
fnancial mechanisms is guided by the results of the
feasibility analysis
25
of one or more preselected fnan-
cial mechanisms.
The results of the feasibility analysis
26
help to deter-
mine whether or not to proceed to implement the
fnancial mechanism under study. If, during the
Figure 6: Sequence for Prioritization of Financial Mechanisms for the System of Protected Areas of Ecuador
Identifcation of conservation fnancial mecha-
nisms used in the country and abroad.
Result of grouping similar fnancial mechanisms.
List of prioritized fnancial mechanisms based
on the criteria established.
Besides the frst-priority mechanisms, 11
second-priority and 10 third-priority mecha-
nisms were identifed. For a description of each
mechanism, see Annex 9.
As a result of the presentation of the identifed
fnancial mechanisms to the stakeholders, ad-
ditional mechanisms were suggested.
SNAP Passport Public Sources
SNAP Logo Concessions
Infrastructure
Fee
Carbon
Offsets
Water Use
Fee
Income
Tax
SNAP Fund Donations
Volunteer
Work
59 fnancial mechanisms identifed
32 fnancial mechanisms
11 frst-priority mechanisms
8 fnancial mechanisms identifed by the
stakeholders interviewed
+
25. For a detailed review of this type of studies, the following publications, among others, can be consulted: Preparación y evaluación de proyectos by Nassir Sapag
Chain and Reinaldo Sapag Chain, McGraw Hill, Colombia; and Evaluación privada de proyectos by Arlette Beltrán and Hanny Cueva, Universidad del Pací-
fco, Peru. For specifc resources on the development of feasibility studies in the conservation sector, please see the web page of the Conservation Finance
Alliance: http://www.conservationfnance.org/Guide_Spanish/Spanish_home.htm.
26. This section is based on the article “What is a feasibility study?” published by Iowa State University. For further details, see:
http://www.extension.iastate.edu/agdm/wholefarm/html/c5-65.html.
Source: Ministry of Environment, Ecuador, 2006.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 36
analysis, a fnancial mechanism is
determined not to be economically,
socially, and environmentally viable,
this will save time, money, human
resources, and further complications.
A viable fnancial mechanism gener-
ates an adequate fow of fscal, social,
and environmental benefts. The
feasibility study analyzes and outlines
different alternatives or methods to
make the preselected mechanism
fnancially viable; that is, the feasibility
study helps to defne the best operat-
ing model to implement the fnancial
mechanism.
There are various reasons why a
feasibility study should or should
not be carried out. The direc-
tors of national parks, protected
areas, or those who make final decisions, or those
who make financial decisions, are often under
internal and external pressure to avoid carrying
out a feasibility analysis and are encouraged to
proceed directly with implementation of financial
mechanisms with the expectation
of rapidly generating funds. How-
ever, a feasibility study is a very
strategic step at both program and
financial levels, and has the added
benefit of promoting transparency
and responsibility. Most successful
businesses usually have a detailed
feasibility study. A feasibility study
should be conducted by an expert
consultant or team with experience
in the area of financial mechanisms
for conservation.
Business management principles,
and the linkages and roles involved
in the feasibility study, are presented
in chapter 4. Box 7 presents a set of
reasons to decide whether or not a
feasibility study should be carried out.
While pressure for not carrying out a feasibility study
can be strong, fnancial planners should remain frm
on their insistence on a thorough and accurate fea-
sibility study. Once the decision has been made to
pursue a fnancial mechanism, the decision is hard to
Box 7. Reasons Why a Feasibility Study Should or Should Not Be Carried Out
Commonly-cited reasons for not carrying out a
feasibility study:
n The protected area managers trust that the fnancial
mechanism is feasible simply because other parks
are already using it.
n If another feasibility study already exists from
previous years, why do another one?
n Feasibility studies are simply ways for consultants
to make money.
n The feasibility study has already been carried out
by the company that will be in charge of implement-
ing the fnancial mechanism.
n The feasibility study can be conducted internally
using park staff.
n Feasibility studies are a waste of time. It is better
to concentrate on conducting a survey, increasing
park entrance fees, and allocating resources for
urgent needs.
Reasons for carrying out a feasibility study:
It serves to:
n Defne the scope of the project.
n Identify the best business operating model.
n Reveal new opportunities through a research process.
n Identify reasons not to proceed.
n Increase the possibility of success by identifying
risk-mitigating factors.
n Provide updated and accurate information for
better decision making.
n Expand possibilities for investment in protected
areas.
n Verify that opportunities for success and failure
were investigated in suffcient detail.
n Help to secure fnancing from investors or donors.
Adapted from the article “What is a feasibility study?” published by Iowa State University.
For further details, see: www.extension.iastate.edu/agdm/wholefarm/html/c5-65.html.
The Nature Conservancy 37
reverse because there may be internal and external
institutional pressures. Therefore, the protected area
will have to live with the consequences of a bad deci-
sion. Thus, conducting a feasibility study is a strategic
and essential step, and, if carried out to high quality
standards, can be the best investment the protected
area has ever made.
A brief description of the key elements in a feasibility
study is presented below. This section does not indicate
how these steps are implemented since a large number
of studies have been published on this subject.
n Concept and description: Clear defnition of the
fnancial mechanism to be used (taxes, fees), its rela-
tionship to protected area goods or services (wood,
water), and interested clients, and investors (public
sector, private companies).
n Advantages and disadvantages: The benefts and limi-
tations of the selected fnancial mechanism are specif-
cally identifed. Above all, it is important to determine
the level of stability/variability of income generation
and whether the long-term prospects are good.
n Market analysis: Detailed study includes potential
clients; behavior of the demand, level, and character-
istics of the national and international competition;
27
market size; prices and costs; providers; entry barriers;
substitute or alternative products or services; location;
and seasonality, among others.
n Operating model: This should present one or more
options related to the process of producing the
selected good or service, the management structure,
estimated volumes, key processes, processes that can
be subcontracted, and productivity indicators, among
others. From these, links to activities in the manage-
ment plan can be made.
n Fiscal and administrative reform: Accurate assess-
ment of modifcations to the regulatory framework
that will allow implementation of the fnancial
mechanism under analysis. The level of required
change needed should be established in order to
evaluate the mechanism’s capacity to have an impact
and the time that must be invested in order to
achieve the desired changes.
n Financial analysis: Determination of the levels and
times of investment, the fow and behavior of income
and expenditure, identifcation of unit costs, calcu-
lation of the break-even point, contribution proft
margins, cost-effectiveness, and identifcation of key
variables to model and simulate the future behavior of
net income and returns.
n Risk analysis: Identifcation of potential sources of risk
in terms of image, operations, market, conservation, the
consequences for the management of the protected area
at fnancial and program levels; and the measures that
can be applied to control and/or mitigate adverse situa-
tions that arise during implementation of the fnancial
mechanism. It is important to indicate that risk cannot
be entirely minimized or eliminated.
n Potential to close fnancial gaps: Net quantifcation
of the fnancial mechanism’s contribution to the
costs of the protected area, in both basic and optimal
scenarios, as determined by the gap analysis. Together
with the risk analysis, estimating the returns gener-
ated by the fnancial mechanism under analysis will
facilitate comparison with other alternatives.
n Recommendations: To facilitate decision making, plan-
ners should present summarized information about
the advantages and disadvantages of the operating
models analyzed. Strategic suggestions should also be
included concerning links with key stakeholders, the
impact on the regulatory framework, how to attract
potential investors, required staff skills and experi-
ence, compatibility with neighboring communities
and their cultural and social framework, the imple-
mentation phases, the strategy to cover preinvestment
costs, start-up, operation, and the management model,
among others.
Whether at the level of the protected area or of the
protected area system, the critical elements on which the
selection of more complex fnancial mechanisms should
be based are: information on the amount of investment
required, the rate of return, and the level of risk. In turn,
the central factors that will contribute to the success-
ful implementation of the fnancial mechanism and to
closing the fnancial gaps of the protected areas are: an
appropriate selection of mechanisms, achievement of
27. When we analyze the competition, for example, it is important to take a local, national, and international approach. If the feasibility of increasing tourism
to protected areas is analyzed only by surveying current visitors, one loses the perspective of the national or international tourists who are in the country
but do not visit these areas; and, also the perspective of tourists who have chosen other tourist destinations in other countries.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 38
the necessary investment, the availability of a supportive
regulatory framework, coordination and partnerships
with key stakeholders, and effcient implementation.
Diversifcation of Financial Mechanisms
The results of the pre-selection and selection of fnancial
mechanisms constitute the frst step toward diversifying
fnancial options. Diversifcation can be defned as the
practice of maintaining a wide variety of fnancial alter-
natives in order to minimize vulnerability by distributing
risk. At the same time, in the case of protected areas, this
means reducing dependence on international sources
and central government budget allocations. The prin-
ciple behind the diversifcation of fnancial mechanisms
is the same as the one that applies to diversifcation of
investment portfolios such as retirement funds, trust
funds, and stock market investments. This is the prin-
ciple of “not putting all your eggs in one basket.”
Therefore, diversifying fnancial mechanisms for
protected areas is the best way to manage the unpre-
dictable risk fuctuations of traditional sources, such
as: international donors, government funding, projects,
and endowment funds. These sources are subject to
changes in the agendas of international cooperation
organizations, government willingness to pay the dura-
tion of the projects, and, in the case of endowment
funds, market fuctuations that can have a negative
effect on interest-rate returns.
Diversifying fnancial mechanisms means creating a
varied portfolio combining various mechanisms that
may be international, national, and/or local, and either
market or non-market based. For example, a diversifed
portfolio may include a trust fund that is capitalized
through a debt swap and/or a GEF project, government
funds, international donors, or self-generated income,
among others. The diversifcation of mechanisms does
not occur when protected areas only use two or three
international fnancial mechanisms for their fnancing.
For example, a protected area does not have a diversi-
fed portfolio if it is only fnanced by GEF, TNC, and
USAID, since these sources are purely international.
2.4. Lessons Learned
n One should take advantage of the opportunities mar-
ket economies generate to attract investments. Pro-
tected areas represent an important business oppor-
tunity for private investors. Therefore, it is important
to establish a legislative and regulatory framework that
enables support and participation of the private sector.
n When identifying and selecting fnancial mecha-
nisms, planners should focus on innovative options
to complement traditional fnancing sources. Iden-
tifying and eliminating legal, regulatory, and admin-
istrative barriers that hinder existing and potential
fnancial mechanisms is an important step in this
process. Strategic allocation of the resources gener-
ated should also be promoted. Moreover, fnancial
mechanisms can be designed to combine fscal,
social, and environmental benefts.
n Economic feasibility studies are valuable tools to
determine the real potential of fnancial mechanisms.
The omission of these studies can lead to poorly-
informed decisions and implementation problems
that can cause low fnancial returns. Also, planners
should consider a wide range of potential investors
when conducting their feasibility studies.
n It is essential for protected areas to maximize the use
of different fnancial mechanisms in order to reduce
risks associated with income fuctuation. Financial sus-
tainability of protected areas without adequate diversi-
fcation of fnancial mechanisms is not possible.
The Nature Conservancy 39
From a fnancial standpoint, one of the greatest chal-
lenges for the consolidation of protected area systems
is the absence of a legal and institutional framework
with favorable by laws, regulations, and institutions to
ensure funding for protected areas. Thus, beyond the
usual rhetoric on the importance of nature, there is a
critical need for effective national and global regulatory
frameworks aimed at strengthening technical fnancial
capacities for protected areas.
Low investment in protected areas has generated
significant financial gaps in most of the protected
area systems around the world. For this reason, it
is essential to increase the capacity to mobilize,
administer, and distribute financial resources, as
well as to develop the enabling legal and institu-
tional conditions that will ensure financial sustain-
ability in the future. Many opportunities exist to
simplify and improve the complex legal and institu-
tional framework of the institutions responsible for
managing protected areas. These changes, however,
should recognize the current context and needs of
demanding market economies. Along these lines,
legal and institutional modifications should also
focus on promoting fiscal, social, and environmen-
tal benefits, and establishing mechanisms that are
more transparent and responsible.
Because legal frameworks generally focus on the
regulation of operational aspects related to budget
implementation (for example, payroll and acquisi-
tion of goods or services), it is important to transi-
tion to more favorable conditions that focus on the
mobilization of financial resources, the adoption of
business management principles, the establishment
of innovative financial mechanisms, and the auton-
omy of financial management based on principles of
modern governance.
Generally, laws and regulatory frameworks have con-
centrated on the creation of new protected areas
(policy of command and control), neglecting the
corresponding creation of environmental fscal policy
to support protected area fnancing. According to the
IUCN, international fnancing of protected areas has
not been able to match the rapid growth of protected
areas and their associated management costs — over
the past four decades there has been a ten-fold in-
crease in the number of protected areas reported by
the World Conservation Monitoring Center, with over
120,000 sites reported. The area under protection has
likewise expanded, from 2.4 million km
2
in 1962 to over
20 million km
2
in 2004. Roughly 12% of the global land
surface is now defned as protected area.
28
This chapter presents guidelines for conducting an
assessment of the legal and institutional framework at
the national level. It presents the steps and benefts of
policy reform and summarizes the lessons learned from
policy reform in Costa Rica. The topics covered in this
chapter will help to answer to the following questions:
n What does a national legal and institutional frame-
work consist of?
n What are the opportunities and challenges for policy
reform to improve protected area fnancing?
Chapter III
Enabling Conditions: Assessing the Legal
and Institutional Framework
28. IUCN, 2006.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 40
n Why is it necessary to promote legal and institutional
reform to support the fnancial plans of protected
area systems?
n What tools can be applied to assess the legal and
institutional framework?
n What are the steps in the process of policy reform?
3.1. Legal and Institutional Structure
The effciency of the legal and institutional framework
depends largely on the importance each government
places on the conservation of its natural resources,
which is clearly refected in its environmental, social,
and fscal policies.
The legal and institutional framework supporting
protected area fnance should include legal, administra-
tive,
29
and participatory elements, such as.
Legal:
n Tax laws to ensure the generation of funds at system
and site levels (taxes, fees, fnes, etc.).
n Compatibility between local, national, and interna-
tional legislation.
n Effcient law enforcement and coercive mechanisms.
n Administrative regulations to guarantee the au-
tonomy and legal sustainability of institutions that
administer protected areas.
n Promotion of private sector participation and envi-
ronmentally-friendly resource production.
n Legal framework regulating land tenure.
n Mechanisms to regulate the transparent and effective
resource allocation, management, and control.
n Management monitoring and evaluation schemes.
n Mining, forestry, energy, and other sectors related to
the extraction of natural resources.
Administration and Management:
n Financial planning and harmonized strategic
planning.
n Decision making and executive management based
on accurate and decentralized administrative and
fnancial information.
n Compatibility with national development plans.
n Strategic and fnancial planning at area and
system levels.
n Integration of all components of the protected area
system, considering all types of expenses (for exam-
ple, staff, operating expenses, investment in infra-
structure, and equipment).
n Consolidation of national conservation and environ-
ment guidelines at the inter-ministerial level.
n Dedicated and trained human resources, and suff-
cient and well-allocated fnancial resources.
Participation:
n Clear communication of the benefts derived from
environmental initiatives in order to ensure partici-
pation of government organizations (for example,
ministries of Finance, Industry and Tourism, and
the legislative body).
n Broad participation of civil society organizations
in the co-administration and mobilization of
fnancial resources.
n Linkage with the private sector in order to facilitate
communication of technical knowledge and
fnancial resources.
n Adequate benefts sharing.
It is important to note that laws and regulatory frame-
works evolve at different rates, depending each country’s
political and socio-economic context. Annexes 10, 11,
and 12 show the evolution of the legal and institutional
framework in Costa Rica.
3.2. Assessment of the Legal and
Institutional Framework
Often the legal and institutional framework affecting
protected area fnancing is not conducive to improvement
of protected area funding due to limitations such as:
29. Among the administrative management aspects, it is important to consider the institutional capacities needed for the effective management of fnan-
cial resources. Such institutional capacities include leadership, strategic vision, administration of the organization, personnel management, resource
development, fnancial administration, external relations, and program capacity. See Institutional Self-Assessment: A Tool for Strengthening Nonproft Organizations.
Devine et al., 2001.
The Nature Conservancy 41
n Lack of consistency between sectoral laws and regula-
tions and those related to conservation.
n Existence of legal gaps with limited regulation and
lax control.
n Limited promotion of innovative program models.
n Little openness to creative fnancial schemes.
n Laws that do not correspond to the current context.
n Lack of harmonization with international regulations.
n Regulatory excess (for example, specifc defnition of
percentages, quotas).
n Lack of mechanisms to ensure transparency and
responsibility.
The fnancial sustainability of protected areas is
directly linked to the national legal and institutional
framework. For example, depending on the type
of regulations, it may not be possible to establish a
decentralized system for payment of park entry fees,
tourism concessions, sustainable extraction of natural
resources, etc. However, provided that these fnancial
options are environmentally and legally viable, they
can contribute to improve protected area fnancing,
and therefor should be implemented.
By assessing the legal-institutional framework, plan-
ners can identify the critical issues that have the
greatest impact on limiting financial management
and institutional dynamics. In particular, the legal
and institutional assessment enables planners to
determine the effectiveness of laws and regulations.
The assessment provides a systematic description of
the critical limiting factors, and a set of specific pro-
posals for improvement. These proposals can range
from simple modifications in daily operations to the
creation or reform of specific laws. It is important to
stress that every reform proposal should be support-
ed by a communications plan and lobbying process
led by protected area stakeholders.
30
This is discussed
further in Section 3.3.
The National System of Conservation Areas (SINAC)
of Costa Rica implemented a systematic process for
assessing that country’s legal-institutional framework.
Figure 7 illustrates the steps that were followed. It
should be noted that these steps are applicable at the
level of both protected area systems and individual
areas, and that these steps encourage broad participa-
tion of stakeholders representing different sectors of
civil society.
Figure 7. Stages in the Assessment of the Legal and Institutional Framework in Costa Rica
Institutional
coordinating
team for the
process.
Creation of
working groups
on each
issue to be
evaluated.
Working sessions of each group
with the main stakeholders in their
functional areas; application of
the assessment tool and
preparation of the results document.
Compilation of results
and drafting of a
reform proposals
for decision makers.
Presentation of proposals for
modifying existing and
creating new laws, institu-
tional adjustments, etc.
Workshops,
meetings,
research
centers, etc.
Assessment of the legal and
institutional framework of the
State. Institutionality of the SINAC.
Ideal structure for the SINAC.
Composed of representatives
from the functional areas of
the SINAC, with technical
support from a legal advisor on
matters of public legislation.
30. For example, if a fscal reform is proposed with the aim of improving the fnancing of a protected area system, it will be essential to involve key stakeholders
representing the Ministry of Finance, the State Comptroller’s Offce, congress, the private sector, and civil society organizations, among others, in order to
achieve broad representativeness and legitimacy to facilitate the desired legal-institutional change.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 42
Legal and Institutional Assessment Tool
SINAC developed a practical tool to carry out
a rapid assessment of the legal and institutional
framework regulating protected areas. This tool,
included in Annex 13, enables the development of a
baseline of the legal-institutional framework of the
system of protected areas. The application of this
tool makes it possible to develop a basic idea of how
effectively the legal-institutional framework sup-
ports the protected area system. This information
is very useful for those responsible for public policy
and decision making, and for other stakeholders
related to the field of conservation. The tool divides
the analysis into two categories:
1. Current legal and institutional framework. This sec-
tion presents a set of questions that facilitate identifcation
and analysis of the most relevant issues in the current situ-
ation. It also provides the opportunity to propose specifc
changes with respect to each of the issues discussed.
2. Ideal legal and institutional structure. This section
presents a set of questions focused on improving the
protected area system as a whole. The inputs generated
in the previous section are key to designing a consistent
proposal to promote sustainability of the protected
area system.
The two categories above promote broad discussion,
facilitate establishing benchmarks to evaluate the issues
discussed, and support identifcation of improvements.
The aim is to generate recommendations to assist in
the development of an initial action plan designed to
achieve the required policy reforms.
Since large differences exist in the legal and institutional
contexts of each country, not all of the questions and
benchmarks may be applicable. Therefore, before using
this tool, it is important to refne the questions and
benchmarks to be used. This process can be comple-
mented by adding additional questions and benchmarks,
according to the specifc needs of the system.
Guidelines for Applying the Assessment Tool
It is recommended that the tool be applied by a
facilitator experienced in conducting participatory
processes and familiar with conservation laws and
institutions. The stakeholders involved in the appli-
cation of this tool should represent the public sector,
business entities, NGOs, grassroots organizations,
and other sectors linked to the conservation and
financial sectors.
Before applying the tool with stakeholders, the facilita-
tor should explain the context and objectives for the
process. Besides the questionnaire, the process is en-
riched with discussions about the practical experience
of the participants. It is recommended that a full day be
allowed for the application of the tool.
It should be noted that the tool can be applied indi-
vidually (through interviews) or with groups (through
workshops). However, group application tends to be
more effective since it allows for feedback and exchange
of viewpoints among the participants, thus contribut-
ing to a more comprehensive analysis to support reform
proposals. Annex 14 includes guidelines for facilitators
who will use this tool.
The tool includes guiding questions and alternative ac-
tivities to facilitate dialogue and exchange. However, it
is possible to add questions in order to make the assess-
ment as meaningful as possible. There is a section after
each guiding question that can be used to consolidate
the analysis and suggest improvements.
Since the purpose of this tool is to carry out a rapid
assessment, the approach to data gathering emphasizes
qualitative analysis over quantitative analysis. In this
way, it seeks to map the central issues and sub-issues
that emerge from the assessment in order to identify
critical areas for reform. The process also includes the
evaluation of the level of consensus among the different
stakeholders regarding their assessment of the prob-
lems and proposed solutions.
The results of the assessment can be presented us-
ing concept maps
31
or summary tables to provide an
aggregate picture of the most critical areas on which
the reform interventions will focus. Based on the
results of the assessment, an action plan to imple-
ment the reform proposals with the greatest impact
31. Concept maps are graphic representations that facilitate the organization of concepts, ideas, results, and their interconnections according to criteria of
affnity. They are very useful for synthesizing and communicating key information.
The Nature Conservancy 43
potential is prepared. The next step should be to
begin the process of negotiating and implementing
the proposed reforms.
3.3. Policy Reform
This section provides planners with an overview of
different steps involving the implementation of policy
reform. Policy reform is not a linear process,
32
and often
a new environmental problem is not incorporated into
the political agenda, but it can be managed in a system-
atic manner.
In reality, most of the problems are already known
and, depending on the local circumstances and
context, these problems may or may not be pri-
orities in the policy agenda. Likewise, the policy
options available to resolve these problems are not
completely unknown (World Bank et al., 2005).
Because of this, it is important to be prepared to
recognize and intervene when an opportunity for
policy reform presents itself, or to create an oppor-
tunity for policy reform.
33
Part of this preparation includes being familiar with
the process of policy reform (see Figure 8). This ap-
proach assumes that the policy reform process starts
at a point in which public awareness of an environ-
mental problem (in this case, under funded pro-
tected area systems) is critically low and needs to be
raised. At this point, the key stakeholders are identi-
fied and an agenda (action plan) is put forward. At
this stage, civil society organizations and the media
can play an instrumental role in raising awareness
of the issue of under funded protected areas. The
increases of the problem’s profile in the public opin-
ion will trigger the discussion over policy options
to solve it. After different policy options have been
considered and weighed, and public perception of
the problem continues to rise, the critical moment
comes when decision makers (politicians and senior
managers of government agencies) need to convert
policy considerations into practical policy because
their decisions will be backed by public opinion.
The results of realistic analyses of protected areas fnan-
cial needs and gaps, and the contribution of protected
areas to the national economy and equity, combined,
offer a powerful tool to raise public awareness and per-
suade decision makers to take action.
32. For more information, see Environmental Fiscal Reform – What should be done and how to achieve it? Boyd, Richard et al. World Bank, 2005.
33. For example, taking advantage of the established political venues: COP, the World Parks Congress, meetings of the G8 Group, meetings of the
OECD, changes of elected government offcials or authorities, among others, with whom it is possible to reach political compromises through
intense lobbying efforts.
Identifcation of
key stakeholders
and defnition of
the agenda
Public aware-
ness of the
importance
of the
fnancial
problems of
protected
areas and
the potential
solutions.*
Figure 8. The Process of Fiscal Reform to Support Protected Area Financing
Discussion of the need
for fscal policy reform
and options
Decision
making
Implementation
Monitoring and
Evaluation
Time
Source: Adapted from Environmental Fiscal Reform, World Bank, May 2005.
* Public awareness can be increased through communications campaigns
that convey realistic ?nancial needs and gaps, and accurate assessments of
the contribution of protected areas to economic growth and equity.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 44
Generally, policy decisions that are made without
public support are not sustainable in the long-term.
The implementation of reforms should be accom-
panied by permanent monitoring and evaluation in
order to keep the reforms up-to-date, communicate
the results achieved, and ensure that the reforms
respond to socioeconomic and environmental condi-
tions. Likewise, in order to facilitate decision-making
and the support of public opinion, it is important for
fiscal reform to provide, ideally, multiple benefits:
social, environmental, and fiscal. An environmental
fiscal reform that achieves social benefits, in addi-
tion to financial and conservation benefits, is more
likely to be accepted than one that simply focuses on
obtaining funds for conservation. Table 9 presents a
hypothetical example of how a fiscal reform can pro-
vide the three above-mentioned benefits. In addi-
tion, Box 8 illustrates the elements to consider when
planning policy reform.
3.4. Lessons Learned
n At all levels of protected area administration, there
should be clarity regarding the processes and poli-
cies that are established for use and management of
fnancial resources allocated to the conservation of
protected areas. Much of the conservation resources
problem can be solved through more effective man-
agement of fnancial resources.
n In order to work toward the financial self-sus-
tainability of protected areas, it is indispensable
to have a firm policy that attracts qualified staff
Box 8: Elements to Consider When Planning Environmental Fiscal Environmental Reform*
Key stakeholders:
n Poor populations and vulnerable
groups (considering gender,
ethnic groups, location, etc.).
n The private sector.
n Civil society (NGOs, the press,
academic institutions).
n Politicians and decision makers
(ministries, legislators, political
parties).
n Bureaucrats (at every level).
n Development agencies and
international stakeholders.
Opportunities:
n Taxes on natural resource
extraction.
n Charges or fees (payment for
environmental services).
n Reform of perverse (environmen-
tally harmful) subsidies.
n Environmentally-related taxes.
n Conventional taxes (sales tax).
Barriers:
n Policy experts who say what to
do but not how to do it.
n Conservation policy experts who
place too much emphasis on
“command and control” policies.
n Lack of “political will.”
n Lack of institutional capacity.
Critical actions led by the envi-
ronmental community:
n Involve the Ministry of Finance
(interested in generating income
and achieving synergy with the
general tax framework, and
administrative simplicity).
n Develop links to the political
process in order to communicate
reform objectives and identify
the “winners and losers” in
the process.
n Promote the use of fscal instru-
ments to resolve environmental
problems.
n Move from command and control
policies to the use of economic
instruments.
n Develop environmental capacities
in the government (promote insti-
tutional cohesion, transparency,
responsibility, and auditing).
n Substantiate and communicate
the multiple benefts of reform.
Social Benefts
(Poverty Reduction):
n Access to infrastructure.
n Investment in anti-poverty mea-
sures according to Millennium
Development Goals.
Environmental benefts:
n Better management of natural
resources.
n Reduction of pollution.
n Mitigation/adaptation to climate
change.
n Funds for government agencies.
Fiscal benefts:
n Generation of funds.
n Reduction of distortions.
n Reduction of the need for cen-
tral funds.
* Source: Environmental Fiscal Reform, World Bank,
May 2005.
The Nature Conservancy 45
to manage effectively both conservation aspects
and the administration of financial resources
for protected areas. It is essential that the staff
of protected area systems have strong skills for
management and administration of public and
private funds.
n All reforms of the legal and institutional framework
that are related to the administration of fnancial
resources affecting third parties should promote
participation of all stakeholders, using broad consul-
tation and dissemination strategies in order to avoid
unnecessary opposition during implementation.
n The legal and institutional reforms that are promot-
ed should consider how they ft within the existing
regulatory structure of the country. For example,
the Ministry of Finance is more likely to accept and
adopt policy reforms that are simple and adminis-
tratively feasible.
Table 9. Environmental Fiscal Reform
Fiscal beneft
The gasoline sales tax generates,
for example, US$200 million an-
nually for the government. Out
of this amount, US$2 million, or
1 percent will be allocated to
support national parks.
Environmental beneft
US$1.5 million is allocated to
fnance patrolling and enforce-
ment programs in the national
parks.
Social beneft
The national park authority al-
locates US$.5 million annually to
support basic sanitation work in
indigenous communities in and
around protected areas. This can be
doubled with one-to-one matching
funds from private sector sources.
Example: A government has earmarked one percent of the income from gasoline sales tax that will
be allocated to the national protected area system.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 46
The Nature Conservancy 47
Financial plans and business plans are formulated in
different ways depending on the objective of the plan
and, in practice, the terms fnancial plan and busi-
ness plan are often used interchangeably. There is no
single recipe for how to formulate these plans, but it is
important to establish differences and links between
these two cornerstones of fnancial planning.
In this document, we will use both fnancial and busi-
ness plans to address strategic and resource mobiliza-
tion aspects. We consider the fnancial plan a much
broader strategic document which summarizes a wide
range of aspects related to the fnancial planning
process. The business plan, on the other hand, is a tool
designed to guide the implementation of specifc mar-
ket-based fnancial mechanisms and is subordinated
to the fnancial plan. These key operational defnitions
are included in Box 9.
One of the biggest challenges in ensuring the fnancial
sustainability of protected areas is to formulate opera-
tive and innovative fnancial plans. To accomplish this,
fnancial plans must include clear business principles
and solid links to both the private sector and govern-
ment organizations, particularly those outside the
environmental sector. In addition, fnancial plans are
instrumental for:
n Clarifying key operational defnitions (for example,
feasibility studies, fnancial plans, and business
plans).
n Linking fnancial plans at the level of individual
protected areas with the plan for the protected
area system.
n Strengthening fnancial management capacity.
n Strengthening informed decision-making by adding
fnance and economic information to science.
n Incorporating adaptive business practices from the
corporate sector.
The questions this chapter will help to answer include:
n What does a fnancial plan consist of and what are
its elements?
n What does a business plan consist of and what are
its elements?
n Why should protected areas fnancial management
be based on business principles?
n What are the differences and links between feasibil-
ity studies, fnancial plans, and business plans?
n What are the necessary conditions and steps for
developing fnancial plans?
n What does the expected product look like?
4.1. The Financial Plan
A system-level fnancial plan establishes lines of stra-
tegic action to mobilize fnancial resources and build
fnancial management capacity to support a network
of protected areas. In this sense, a fnancial plan evalu-
ates the fnancial condition of protected area opera-
tions, provides information on current and future
needs, and defnes options for leveraging resources
from both the public and private sectors.
It is important to emphasize that a system-level
fnancial plan does not replace a protected area
master or strategic plan, but rather complements it
Chapter IV
The System-Level Financial Plan Based on
Business Principles
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 48
with strategic fnancial guidelines. The formulation
of the system-level fnancial plan based on business
principles facilitates transition away from a tradi-
tional funding approach that is highly dependent on
international support (projects and trust funds) and
often incipient central transfers to a more operational,
market-based model that focuses on fnancial auton-
omy, realistic needs, diversifcation of funding sources,
self-generation of income, cost optimization, and
strategic resource allocation, among other elements.
Table 10 compares the main characteristics of these
approaches.
The transition from a traditional approach to one
based on business principles is not simple or easy.
Beyond the technical challenges, the adoption of
fnancial plans based on business principles poses
institutional and management challenges. One of
the most important institutional challenges is the
legal and regulatory reform required to create a more
autonomous and investment-friendly protected area
system. Thus, two management challenges are the
need to develop leadership abilities, and promote a
more entrepreneurial approach among protected area
managers and government decision makers.
Although the foregoing aspects are not solely fnan-
cial in nature, these challenges affect progress toward
fnancial sustainability. Therefore, fnancial plans
should include clear strategies to address and over-
come these barriers during their implementation.
4.2. Business Principles
The continuous decline of international funding and
the limited growth of government allocations and
protected area endowment funds are increasing gov-
ernments’ attention to use business principles when
formulating fnancial plans. For instance, Ecuador,
Peru, Costa Rica, Belize, and Grenada are in the pro-
cess of implementing such plans. In the United States,
there is substantial experience with business plans
for national parks, implemented by the National Park
Service and the Center for Park Management at the
National Parks Conservation Association.
34
When formulating a fnancial plan, the use of clear
operational terms (see Box 9) can facilitate adapting
and applying key business sector principles to increase
the opportunities for fnancial success. These prin-
ciples are illustrated in Figure 9 and include:
n Realism: Accurate and verifiable costs, needs and
gaps are defined by applying accounting methods
Table 10. Approaches to Financial Plans
Traditional approach
1. Short-term approach and unclear fnancial goals.
2. Undefned fnancial needs.
3. Based on international donations, trust funds, and
central government funding.
4. Focus on “what should be done.”
5. Doesn’t provide incentives for the self-generation of
resources.
6. Mainly focuses on ecological objectives.
7. Limited support to resolve institutional capacity issues.
8. Discourages the development of laws for the develop-
ment and retention of resources.
9. Generates dependence on international donors and the
public sector.
10. Undefned implementation responsibilities and follow up.
Market-based approach
1. Defned short-, medium-, and long-term fnancial goals.
2. Realistic fnancial needs and gaps.
3. Based on diversifcation of income, cost reduction, and
strategic allocation.
4. Focus on “how to do it.”
5. Promotes self-management and the use of supply and
demand analysis to attract resources.
6. Seeks to link conservation with fscal and social objectives.
7. Identifes and resolves fnancial capacity problems.
8. Promotes fscal reform and regulation to generate and
retain resources at protected areas level.
9. Promotes fnancial mechanisms supported by the pri-
vate sector, and public-private partnerships.
10. Dedicated staff and clear implementation and follow
up responsibilities.
34 . Developed through the Business Plan Initiative, Center for Park Management, National Parks Conservation Association, www.npca.org/cpm.
The Nature Conservancy 49
that include the use of metrics to connect the goals
of conservation programs with actual costs for
minimum and optimal levels of protection. Costs
are directly linked to what is required (for exam-
ple, staff and equipment) to achieve the goals of
each conservation program; and the financial gaps
are determined by comparing available resources
with financial needs.
n Supply and demand approach: Seeks to improve the
relation between providers of ecosystems’ goods
and services with the needs of customers, both the
public and the business sector, in order to gener-
ate sustainable fnancial resources. The supply and
demand approach helps to better determine the
price and quantity of goods and services sold in a
competitive market (for example, tourism). It aims
Box 9. Financial Planning – Key Operational Definitions
Financial sustainability: The government’s ability to en-
sure suffcient and stable long-term fnancial resources,
to allocate them in a timely and appropriate manner,
and to cover the total costs of protected area manage-
ment. Financial sustainability is not possible without
solid and effective institutions for protected area man-
agement (IUCN, 2006). Sustainable fnance implies the
“supply” issue of generating more revenue, but just as
importantly, the “demand” side challenge of managing
PA fnancing needs (UNDP, 2007).
Financial planning: For protected areas systems and
individual protected areas, we consider fnancial planning
a working framework. It includes interactive processes
with many stakeholders. Ideally, it creates broad ownership
across constituencies, systematizes actions, and attracts
suffcient resources to fund the protected area system in a
stable long-term manner. It includes the different processes
related to (a) assessing fnancial needs, income, expenses,
and fnancial gaps, (b) selection and feasibility assessment
of fnancial mechanisms and cost reduction strategies, and
(c) formulation of fnancial plans supported by defned
business principles and business plans. Financial planning
may also include assessment of the legal and institutional
framework to enable the establishment of diverse fnancial
mechanisms and implementation of the fnancial plan.
Financial plan (also known as sustainable fnance plan):
A business-oriented management tool that summarizes the
protected areas’ fnancial history (income, expenditures,
fnancial needs and gaps) and describes feasible fnancial
mechanisms and cost reduction strategies to address the
needs and reduce gaps. A fnancial plan may include sum-
maries of the feasibility analyses and business plans to
guide the implementation of specifc fnancial mechanisms.
Additionally, this plan may include strategic reforms to
improve the legal and regulatory framework related to
protected areas fnancing, and capacity building aspects.
Feasibility study: An analysis tool that determines whether
a given fnancial mechanism is feasible (see Chapter 2). A
feasibility study defnes different alternatives or models to
make the given mechanism operational and facilitate selec-
tion of the best operating model for implementation. If a
fnancial mechanism is not feasible, consideration may be
given to corrective measures to eliminate shortcomings or,
in extreme cases, the mechanism may simply be dropped.
A feasibility study is not a business plan.
Business plan: A management tool that outlines the
necessary actions to implement a fnancial mechanism
and maximize economic returns. Thus, based on the
best operating model defned in the feasibility study, the
business plan presents the steps and activities needed
for the most effcient implementation of the fnancial
mechanism. This should be developed only when the
fnancial mechanisms selected in the fnancial planning
process are determined to be feasible. In summary, a
business plan provides a “roadmap” for the strategy that
will be used to implement the fnancial mechanism.
Figure 9. Business Principles Relevant to Financial Planning in the Conservation Sector
Protected Area Financing
Foundations for Financial Success
Supply-
demand
approach
Efficiency Innovation
Transparency
and
accountability
Diversifcation
Pro-
investment
laws
Realism
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 50
at balancing the quantity demanded by consumers,
and the quantity supplied by providers (producers).
The use of business plans is critical in the supply
and demand approach.
n Operational effciency: Making best use of the
resources available. In practice, this means adopting
standards, reducing costs without reducing quality,
improving processes, implementing quality control
initiatives, and establishing incentives to improve
performance. Operational effciency is measured
through an effciency ratio “expenses as a percentage
of revenue.” A lower percentage is optimal because
it means that expenses are low and revenue is high.
Operational effciency looks at maximizing proft by
minimizing costs, taking external factors and envi-
ronmental and social aspects into account.
n Pro-investment policies: Demonstrating the friend-
liness of policy (business legislation and regulation
practice) to carry out business, especially for inves-
tors from the private sector, but also for the public.
It includes a wide range of policies that are appli-
cable to the conservation sector. For example, in the
2008 issue of the “Doing Business” report of the
World Bank and the International Finance Cor-
poration, countries received scores in ten specifc
policies: starting a business; dealing with licenses;
employing workers; registering property; getting
credit; protecting investors; paying taxes; trading
across borders; enforcing contracts and closing busi-
ness (see www.doingbusiness.org).
n Innovation: This is a key element in both cultural
and fnancial terms. The frst focuses on promot-
ing a culture of change, creativity, and continuous
improvement, thinking how things can be done
differently and more effectively, developing new
services, providing better attention to visitors, etc.
The second focuses on connecting change with
increase value (customer or producer value) and is
a major driver to increase revenue. Innovation also
includes adoption of processes and technologies to
enable the development of unique and comparative
advantages.
n Diversifcation: Consisting of the selection of a
varied portfolio of fnancial mechanisms used to
fnance all the costs related to the management
of the protected areas network, both market and
non-market-based mechanisms. Diversifed income
sources are indispensable to maximize economic
returns and manage risk through risk distribution.
See Chapter 2 for a more detailed discussion of
diversifcation.
n Transparency and Accountability: Both are central
to good governance in protected area management
and particularly in fnancial management. For the
purpose of this publication, transparency implies
fnancial openness and good communication. In this
sense, budgets and fnancial statements are considered
to be transparent when available for public review
(for example, through the Internet). Accountability
refers to responsibility, account-giving (obligation to
report), and liability of public offcials in their posi-
tions, for their actions, decisions, and the resulting
consequences. Transparency and accountability are
indispensable elements to minimize opportunity for
authorities to abuse the system in their personal inter-
est, both in the public and corporate sectors. There-
fore, it is necessary to introduce mechanisms that gen-
erate timely and accurate information, facilitate public
access to fnancial information, transparency, and
accountability standards and designate clear responsi-
bilities for fnancial management. The management of
public funds requires dedicated and responsible staff,
effcient fnancial and accounting systems, accurate
and timely reports, and communication of results.
A great deal of useful indicators for transparency can
be found at the IFI Transparency Resource webpage
www.iftransparencyresource.org, including indicators
for governance, policy and strategy formulation, evalu-
ation and audits, accountability mechanisms, disclosure
policies, public information and websites. Advanced
transparency indicators are commonly used at inter-
national fnancial institutions (IFI) such as the World
Bank and the International Monetary Fund.
The Nature Conservancy 51
As more protected areas and protected area systems
adopt the aforementioned business principles in their
fnancial planning, the possibilities of attracting more
funds in a sustainable manner will increase.
4.3. Components of a Financial
Plan for a System of Protected Areas
35
The essential components of a fnancial plan may vary
from one country to another, due to differences that
exist between protected area systems, the legal and
institutional frameworks, and the fnancial needs and
options available. In general, a fnancial plan should
include the following elements:
36
Protected Areas System Background
This section of the fnancial plan provides a concise over-
view of the protected area system. The main topics should
include: a description of the areas that make up the system
(geographic extension, natural and cultural resources,
and infrastructure), current legislation (summary of the
legal framework and legal challenges), historical evolu-
tion (increase or reduction in the number and size of the
areas), mission of the agency responsible for managing
the protected areas (functions and operational structure),
description of the program areas in the management plan,
contributions made by the system of areas to the develop-
ment of the country, maps of the protected area system,
and other information that facilitates understanding the
characteristics, challenges, and opportunities of the system
of protected areas.
Financial Background
This component of the plan presents the historical
evolution of income, expenditure, and investments
(consolidated for all areas of the system). The fnancial
background should list income according to sources
(national, international, private, public, etc.) and type
(transfers, self-generated income, donations, etc.). Infor-
mation on expenditures should specify the expenditure
structure (staff, materials, services, etc.) and break down
costs by functional area, according to categories in the
management plan. In terms of investment, the fnancial
background should include the types of capital goods
and studies that have been fnanced and their relations
to the protected area fnancing. It is very important for
the fnancial background section to also include a brief
description of the impact of the lack of fnancial resources
on the natural resources in the protected area system.
Objectives
The fnancial plan should clearly specify the objec-
tive and the action lines to achieve such objective. The
plan will guide the process of obtaining the necessary
resources to implement all of the programs of the
management plan of the protected area system. The
objective and actions should produce concrete and
lasting changes such as initiatives for self-generation of
income, diversifed income sources, cost reduction, and
standards for transparency and accountability.
Summary of Financial Needs and Gaps
This section presents a summary of the evolution,
current status of, as well as fnancial projections for,
the projected area system through the analysis of total
income, conservation needs (basic and optimal levels),
associated costs (operational and investment), and
fnancial gaps (see Chapter 1).
The “gap” analysis of the fnancial situation makes it
possible to determine the necessary fnancial resources
and establishes a framework for selection of the fnancial
mechanisms that will help to cover the system’s needs.
The summary of the fnancial gap analysis conducted at
the program-area level provides a complete picture of
the cost of current operations and the material, fnancial,
and human resources used. For example, the summary
for the tourism and recreation program area may include
subprograms related to collection of entrance fees, inter-
pretation centers, and visitor security and protection.
Investment Priorities
The investment priorities section should specify the
program areas that should receive more attention and,
therefore, more fnancial resources. The defnition of
priorities should consider two levels of analysis: a) a
review of the results of the fnancial analysis showing
each program area’s fnancial situation and needs, and
b) the determination of key program areas included in
the management plan essential for conservation.
The results of the investment priority analysis provide
a basis for selection of program areas where resources
35. Business Plans for Parks and Protected Areas, The National Parks Conservation Association (NPCA), 2005, has been referenced to develop this section.
36. Annex 15 illustrates the components of a fnancial plan based on the experience achieved in Ecuador.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 52
obtained with the fnancial plan should be allocated.
A good prioritization of program areas will make it
possible to allocate resources strategically and to attract
complementary resources.
Market Analysis
A market analysis provides an overview of who the cli-
ents, competition, and different stakeholders are, from
the social, economic, and political context in which the
protected area system functions.
The analysis of clients (such as investors, visitors, local
communities, and donors) focuses on a client pro-
fle (number, origin, preferences) and historic trends
(for example, over the last fve years). Analysis of the
competition focuses on businesses or institutions that
provide products and services similar to those existing
in the protected areas. For example, in the case of the
tourism sector, it identifes and profles other service
providers of activities such as white-water rafting, kaya-
king, adventure camping, sport fshing, and hunting.
The competition can be analyzed at the local, national,
and international level.
Summary of Financial Mechanisms (Mechanisms,
Feasibility Analysis, and Business Plans)
Based on fnancial needs and priorities, and the market
analysis, this “strategy” section presents a summary of
available and feasible mechanisms. It is important to
include a summary of the selection process and the
alternatives chosen, together with their respective
operating models.
The description of the fnancial mechanisms chosen
should be associated with the program areas where
resources are allocated. In this way, if the fnancial plan
includes the use of debt swap mechanisms, trust funds,
or tourism initiatives, it is important to make clear
where the funds generated will be allocated.
37
That is,
this section should specify the management programs
or sub-programs to be supported with these resources,
the level of reduction of fnancial gaps, the scope of
the fnancing (covering the whole system of protected
areas or some areas in particular), whether or not a
connection exists with other fnancial mechanisms,
and the need for legal reforms and capacity building
activities, among other aspects. It is also important to
Table 11. Options for Diversification of National Park Entry Passes and Fees
(Market-oriented fees are determined by considering the type of entry, service, number of people, and duration of pass.)
n General admission to a na-
tional parkk
n General admission to several
national parks (cluster, re-
gional and/or provincial)^
n General admission to all
parks in a system^^
n Diving pass
n Hunting pass
n Camping pass
n Special event pass
n Guided tour pass
n Horseback riding pass
n Fishing pass
n Kayaking pass
n Research pass*
n Individual
n Group
n Family
n Corporative
n Schools (primary and
secondary)**
n Vehicles pass: small-
vehicle (up to 7 people)
and large-vehicle (more
than 7 people)
Passes and services Number of people Duration of pass Payment type Point of purchase
n Daily
n Multiple entries
n Weekend
n Weekly
n Monthly
n Annual (valid
one year from
date of sale)
n Seasonal***
n Cash
n Credit card
n Debit card
n Airline miles
n Credit card
points
n Electronic
(e.g., Paypal-
type)
n Exchange for
goods or services
n Gift cards
n Supermarkets
^ For example, South Africa’s Wild Card, a smart card that records infor-
mation on use frequency. See www.sanparks.org/tourism/wild/
^^ Can be marketed as National Parks Passport (for example, Mexico’s
Conservation Passport). See www.conanp.gob.mx/pasaporte.
* Paid by academic or research institutions, public or private.
** Paid by the Ministry of Education, private schools, and/or private
companies.
*** Spring, summer, fall, and winter.
n Banks
n Internet
n Protected
areas
n Government
agencies
n Tourist
agencies
n Consulates
37. It is worth pointing out that not all fnancial mechanisms have the same fexibility for the allocation of funds. For example, there is less fexibility in the case
of park entrance fees; it is important for this income to be allocated primarily to services for visitors (water fountains, paths, signage, restrooms, cabins, etc.).
The Nature Conservancy 53
indicate the procedure that will be used to evaluate the
fnancial plan and its impact. This topic will be dis-
cussed in section 4.4.
To the extent that the selection of fnancial mecha-
nisms is based on analyses and research, it is impor-
tant to attach summaries of the feasibility studies
38
that substantiate the fnancial viability of each of the
selected mechanisms, and a summary or summaries of
the business plans
39
that facilitate implementation of
market-based mechanisms requiring a business plan.
The business plan can be formulated to support a spe-
38. Feasibility studies are critical elements of a fnancial plan. Such studies make it possible to reduce the uncertainty associated with fnancial mechanisms
and facilitate the best selection of fnancial alternatives for a protected area system.
39. Within a fnancial plan, business plans focus on all aspects related to implementation of the most appropriate operating model for a selected fnancial
mechanism. Business plans are a useful management tool to ensure that the fnancial goals of the selected mechanism are met.
Box 10. Key Elements of a Business Plan
In developing a business plan, it is important to consider
the following criteria:
n Impact and socioeconomic benefts: Job creation,
positive environmental benefts, and resource genera-
tion, for example.
n Technical feasibility: Having mastery of the techni-
cal process (for example, ecotourism) in order to
achieve the proposed goals through the optimal use of
resources.
n Implementation capacity: Assignment of adequate
staff for management, administration, and operations.
Adapted from: Estrategia de Generación de Ingresos Propios:
Planes de Negocios. Training Materials. G. Rivero, Pact, 2004.
Component
Description of the
mechanism
Market analysis
Marketing plan
Operations
Investment and return
(cost effciency)
Legal and adminis-
trative aspects
Description
Identifes the characteristics of a business opportunity (good or service) and the value added.
Analyzes the main characteristics of the market (size, trends, etc.) and evaluates the distinctive
elements of the product or service with respect to its competitors. Also evaluates whether there
are barriers to its acceptance.
Includes price setting, positioning of the product or service, and its promotion and distribu-
tion, consistent with market conditions.
Describes the key activities to develop and offer the selected product at a competitive price.
Determines the total investment (fxed assets, intangible assets, and working capital), proj-
ects the income and costs throughout an evaluation period, and estimates the level of return.
Focuses on the legal and institutional aspects required for implementation of the business
plan. Also defnes the functions and responsibilities of the necessary staff.
Figure 10. Components of a Financial Plan for a Protected Area System
Business Plan
n Description of
the mechanism
n Value added
n Operations
n Investment
and return
n Marketing
n Administration
System-level
Master Plan
System-level Financial Plan
n PA System background
n Objective
n Financial background
n Summary of fnancial needs and gaps
n Investment priorities
n Summary of fnancial mechanisms
n mechanisms
n feasibility analyses
n fnancial goals and gap reduction
n business plans*
n Economic impact
n Implementation program (action plan)
* The busisness plan(s) can be either part
of the document’s main text, annexed,
or a separate document.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 54
cifc mechanism, or could include various mechanisms
in a protected area. See Box 10 for the key elements of
a business plan and the link to the fnancial plan. In the
case of tourism, for example, it is essential to have busi-
ness plans. These plans help to improve or establish the
link between supply and demand. A very specifc case
is that of the collection of payment for tourism services
offered by national parks (entry fees), which are too
often, due to limitations in the regulatory framework,
based on a single and rigid entry fee payable only at
the parks’ entrance. An example of the different ele-
ments (for example, type of pass and service, number
of people, duration of pass, payment method, and point
of purchase) to consider when designing market-based
entry fees is available in Table 11.
As noted at the beginning of this chapter, there is
no single recipe for how fnancial plans and business
plans should be formulated; recall that for purposes
of this publication, the business plan is subordinate to
the fnancial plan. Figure 10 illustrates how the busi-
ness plan(s) is included within the broader framework
of a fnancial plan, and Box 11 summarizes the process
of linking Ecuador’s fnancial plan and business plan.
Economic Impact
This section describes the economic impact of the
protected area on the community, the region, and the
country, as well as the external benefts of protected
areas, such as watershed protection and clean air. Like
the marketing plan, the economic impact analysis sec-
tion can be as detailed as desired or can be summarized
in a table. However, as a general rule, the shorter and
more concise, the better. The process of economic
impact analysis is, in fact, very specialized and complex,
generally involving a separate assessment. The goal of
this section is to provide readers with a summary of the
economic impact of the protected area. This section is
useful to mobilize political will to support implemen-
tation of your fnancial plan by focusing on the how
monetary and non-monetary benefts fow, where these
benefts are generated, and who the ultimate recipients
of such benefts are. For example, the economic impact
analysis can illustrate how protected areas help to gen-
erate spending (for example, from visitors), both inside
and outside protected areas. Table 12 illustrates how
this information can be presented.
Table 12. Economic Impact of Foreign Visitors to Laughing Bird Caye National Park (LBCNP), Belize (in US$)
Total Foreign Visitors to LBCNP 2004 6,980
Number of non-dive visitors 5,809
Average tour price $90
Value to tour operators $522,810
Number of scuba divers 1,171
Average dive-trip price $170
Value to dive operators $199,070
Direct revenue to tour operators $721,880
Average hotel price in Placencia per person — shared (2003) $90
Value of hotel for night of LBCNP visit $631,097
Meals and miscellaneous expenses day of visit $30
Value meals and miscellaneous expenses $209,400
Total value 1-day LBCNP visit to Placencia $1,562,377
The Nature Conservancy 55
Implementation Plan
This plan refers to the programing of all the actions
necessary to carry out the fnancial plan. The imple-
mentation plan should cover the following key topics:
n Program of activities: Inclusion of all actions related
to market and non-market-based fnancial mecha-
nisms, including business plans and all institutional,
legal, and regulatory aspects.
n Budget: Clear determination of the resources needed
to implement the plan and its fnancing.
n Decision-making structure: Determination of levels
of decision making and their functioning.
n Assignment of staff: Identifcation of necessary staff
(quantity and quality) and determination of their
roles and responsibilities.
n Communications plan: Defnition of actions aimed
at disseminating fnancial information to internal and
external stakeholders of the system of protected areas.
The components of a fnancial plan can be adjusted
according to the context of each country or region
(in the case of fnancial plans being developed at the
subsystem level, such as the federal, state, or munici-
pal level). In turn, every fnancial plan should include
elements such as a preface (by the director of the
protected area system), an executive summary, and
other elements needed, depending on the specifc
context (bibliography, annexes, fnancial tables, etc.).
Finally, it is worth remembering that a fnancial plan
is essential because it:
Box 11. Financial Plan and Business Plans in Ecuador
From 2004 to 2007, the Ministry of Environment
of Ecuador led a process aimed at improving the
fnancial sustainability of the 36 areas that make up
the National System of Protected Areas of Ecuador
(SNAP). The process began with the formation of a
working group representing nine organizations that
share an interest and specifc capabilities for sup-
porting the Ministry of Environment with technical
and fnancial resources.
The frst stage of the process consisted of a system-
wide fnancial needs analysis, which produced valu-
able information on the current fnancial status of
SNAP, as well as a 10-year projection of fnancial needs
and gaps. This information was obtained through an
analysis of the main barriers and structural limitations
to increasing the amount of resources SNAP currently
receives. These analysis inputs made it possible to ad-
equately gauge the requirements of fnancial planning.
Based on the analysis, the planners developed specifc
instruments on three levels.
The frst instrument, the fnancial sustainability strat-
egy, consisted of macro-level strategic planning for
the whole SNAP, including the analysis of supply and
demand for resources. This strategy proposed alterna-
tive fnancing mechanisms and identifed a set of legal,
political, and institutional elements that created an
enabling environment for fnancial sustainability. At
the second level, specifc business plans were devel-
oped for each of the most promising alternatives and
for mechanisms that were considered in the fnancial
sustainability strategy. Finally, at the third level, steps
were taken to operationalize different instruments at
the level of implementation plans and specifc evalua-
tion systems, in order to measure the progress of each
priority line of action. This planning made it possible
to differentiate a hierarchy in terms of the existing
planning instruments. This planning also facilitated
organizing the participation of different stakeholders
who have committed their support for implementation
of each instrument. Annex 15 contains extracts from
these plans.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 56
n Promotes a shift toward attitudes that support the
adoption of business strategies.
n Aligns fnancial opportunities with protected area
conservation objectives.
n Promotes informed decision making supported by
fnancial information.
n Anticipates funding cuts and proposes solutions.
40
n A feasibility analysis, part of the fnancial planning
process, determines whether a fnancial mechanism
is worth the investment of time, effort, and resources
(see Chapter 2).
n A market analysis helps to understand the strengths
and weaknesses of the market, and enables planners
to make adjustments to achieve the fnancial goals.
The fnancial plan is the protected area’s “business
card.” Thus, the government, donors, the private sec-
tor, and the general public see protected area manag-
ers as business professionals who know their fnancial
situations, have clear fnancial goals, and know how
to reach them.
4.4. Measuring of Progress
Traditionally, implementation of fnancial plans at the
protected area system level has not had mechanisms
to evaluate progress and facilitate timely feedback.
As part of the effort to fll this gap, the United
Nations Development Program (UNDP), in coor-
dination with members of the Conservation Finance
Alliance (CFA), has developed a scorecard
41
to
measure progress of protected area systems toward
fnancial sustainability. This tool is discussed below,
and Box 14 contains basic principles on how to evalu-
ate a fnancial plan.
The UNDP’s Scorecard was offcially launched in
October 2007 in Bariloche, Argentina, during IUCN’s
Second Latin American Congress on National Parks
and Other Protected Areas. This tool is already being
implemented widely, and the results have helped to
identify the strengths and weaknesses of those systems
of protected areas needing more support. The results
also demonstrate to government agencies the impor-
tance of providing greater fnancial support and pro-
moting legal reforms to improve the fnancial systems
of protected areas.
The Scorecard makes it possible to evaluate both the
available funding supply and the demand for funds to
satisfy fnancial needs at both the site and the protected
area system levels. At the same time, the tool allows the
assessment of protected area fnancing on two levels:
a) analysis of the fnancial system of protected areas
(what amount of resources is being used and how much
is needed for effective management), and b) analysis of
the structural basis established to improve long-term
fnancing. A summary of the main aspects of the Score-
card tool is presented below.
Objective: To aid governments, donors, and NGOs
in evaluating different aspects of a protected area
system’s fnancing by analyzing its current perfor-
mance and progress toward a better fnancial situa-
tion. The tool is designed for protected area systems
but can be used at other levels (such as departmental
and regional levels).
Structure: The tool has three parts:
n Part I requires fnancial information to analyze costs,
income, and both current and projected fnancial
gaps. It facilitates quantitative analysis and provides
information to determine fnancial objectives and the
amount of additional funds needed.
n Part II includes three components: a) the gover-
nance structure for sustainable fnancing (covering
legal, policy, and regulatory issues, among others), b)
business plans and cost-analysis tools for effective
management (addressing such aspects as fnancial
planning, accounting, business plans, levels of expen-
diture, increased income, cost control, cash fow,
etc.), and c) tools and systems for resource genera-
tion and mobilization (focused on maximizing exist-
ing or potential income mechanisms and diversifying
income sources in order to reduce vulnerability).
n Part III covers the scoring process and the measure-
ment of progress.
Scoring: The scoring system makes it possible to
compare the year-by-year progress of a given country
40. Business Planning for Protected Areas, Center for Park Management, 2002.
41. Financial Sustainability Scorecard for Nacional Systems of Protected Areas, Bovarnick, PNUD. June 2007.
The Nature Conservancy 57
Box 12. Evaluation of Performance and Impact of Financial Plans
Generally, the impact of fnancial plans is measured
in terms of their effect on biodiversity conservation
objectives. While this is adequate from a conservation
perspective, it has many limitations from the point of
view of the mobilization of fnancial resources and the
diversifcation of income sources.
An appropriate measure of the performance and impact
of fnancial strategies focuses on analyzing the reduction
of fnancial gaps and the fulfllment of fnancial sustain-
ability goals. In particular, a measure of fnancial impact
should cover such matters as increased revenues, cost
reduction, diversifcation of sources, strategic resource
allocation, and other relevant matters. A set of aspects
that can be considered in evaluating the impact of a
fnancial plan is presented below.
Once the targets for the assessment have been estab-
lished, it is important to develop performance indica-
tors, which may be qualitative, quantitative, or behav-
ioral.* It is important for these indicators to consider
the following aspects: a) target group (for whom), b)
quantity (how much), c) quality (how well), d) time
(when), and e) place (where). For example:
Indicator: “Ten high-mountain national parks in the
National System of Protected Areas (whose income from
entrance fees has been reduced to less than US$30,000)
increase their income by 50% between January 2009 and
December 2011, recovering the income level recorded
in the period from 1990-1995, in accordance with the
standards, fnancial mechanisms, and goals defned in
the 2009 Business Plan.”
Finally, in order to support the process of evaluating
the impact of fnancial plans, it is necessary to have
external audits performed by the national comptroller’s
offce or specialized private frms. These audits provide
revised information on the level of transparency and
responsibility in accountability for one protected area
and/or the system of protected areas.
What Do We Want to Measure?
Direct impacts: For example, results related to the
funds generated to close fnancial gaps.
n The performance of specifc fnancial mechanisms
(for example, how much income an endowment
generates or what revenues are generated by
park entrance fees).
n Whether the funds generated by the fnancial
mechanisms contribute to covering the needs of
priority program areas and to reducing
fnancial gaps.
n The growth of fnancial resources at the
level of protected area systems or individual
protected areas.
Indirect impacts: For example, results related to
other matters that contribute to the achievement of
the goals of the fnancial plan.
n Increased fnancial management capacity of the
protected area system.
n Effciency in the use of fnancial resources.
n Effciency of the legal framework.
* Annex 16 describes the steps to formulate performance indicators based on the NORAD (Norwegian
Agency for Development Cooperation) approach.
or group of countries. It is important to consider that
certain variables may not be applicable to all of the
countries evaluated. At the same time, some aspects
may be more relevant in some cases. Due to these
factors, it is possible to change the relative weight
assigned to the variables in order to better refect local
and assessment conditions.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 58
Application: The Scorecard should be applied by a
working team from the protected area system. Mem-
bers of the team should have extensive knowledge of
the system’s fnances and be supported by experts,
donors, and NGOs. The time needed to fll out the
Scorecard depends on the availability of fnancial data
for Part I. Using this information, the staff can fll out
Part II and obtain the score (Part III) in one day’s
work. The time needed for Part I will depend on the
available data, but since much fnancial information is
often not available, additional assistance may be needed
to generate and compile the fnancial data for Part I.
The Scorecard is available online in English and Span-
ish: www.undp.org/gef/05/kmanagement/newpublica-
tion.html. Also see: www.conservationfnance.org.
In addition, Box 12 presents basic criteria to assess the
performance and impact of fnancial plans.
4.5. Lessons Learned
n The development of a system-level fnancial plan is
a process that requires implementation of a set of
activities that should be framed within the general
guidelines established by the national authority for
the protected areas system. It is important to note
that the existence of a system-level fnancial plan will
make it possible to generate a macro strategy for all
areas of the system, including those with less fnan-
cial potential that may require subsidies from central
funding or wealthier protected areas.
n Rather than emphasize the differences between
a market objective and a conservation and devel-
opment objective, which may present conficting
interests, the market approach should be considered
a useful tool to achieve the conservation and develop-
ment objectives. It is critical to internalize this link to
all conservation stakeholders.
n Among the most important risk factors that should
be considered in planning for implementation of
a system-level fnancial plan is the resistance to
change in some governmental levels that are inclined
to maintain the status quo, avoiding changes that
can affect the form and structure of their current
operations.
n A key problem to overcome is the lack of confdence
in the public sector. This situation becomes an entry
barrier for potential fnancial opportunities offered
by the private sector. In order to build trust in the
public sector, attention should be given to improving
transparency and accountability during planning and
implementation.
n It is critical to improve the understanding of the
importance of financial information to support
decision making, so that government officials will
support the implementation of financial plans.
n A fnancial plan is a tool that builds on a series of
already existing planning instruments. It is not
intended to replace a strategic plan for a system
of protected areas; on the contrary, the fnancial
plan strengthens the strategic plan from a fnancial
perspective.
n The development of a fnancial plan is a dynamic
process that should be continuously reviewed and
updated based on newly available information, situa-
tions, new opportunities, etc.
The Nature Conservancy 59
Activity-Based Cost Accounting (ABC)
This method assesses revenues, expenditures, and
financial needs and gaps related to protected area
operations. It can be used at site or system level.
This method has been successfully used by the US
National Park Service; and by the Center for Park
Management (CPM) and the Nature Conservancy in
collaboration with various national governments. Ac-
tivity-based costing is part of the business planning
process used by the National Park Service’s Business
Management Group.
ABC accounting is an easy to use results-oriented
method that makes a link between conservation goals
with actual costs. It is based on the organization of the
activities carried out in protected areas through func-
tional areas and programs. The functional areas consist
of the different categories of operational activities
required to manage protected areas (including the cost
of the central protected area agency), which include
programs and subprograms, with programs being the
parts of the operation that require separate manage-
ment. Using metrics, costs are allocated to each pro-
gram and subprogram for basic and optimal levels of
conservation; fnancial gaps are determined by compar-
ing available resources with fnancial needs (basic and
optimal). This method makes it possible to arrive at
actual and reliable costs since the allocated costs are di-
rectly linked to the goals of each of the protected areas
conservation programs.
In addition, this tool is very useful for defning invest-
ment priorities and reducing costs. Above all, activ-
ity-based costing introduces realism into conservation
fnance. The information produced by the fnancial
analysis is fundamental to the development of fnancial
plans and mechanisms to close the gaps detected. For
more information on this method, visit: www.npca.
org/cpm/, www.conservationfnance.org, and www.con-
serveonline.org/workspaces/patools/resources/fnance/
fnanceresources. The Nature Conservancy in collabo-
ration with members of the CFA offers a comprehen-
sive On-line Training Program on Business Planning
for Protected Areas which includes a module on ABC
accounting. For details and programming please visit
www.conservationfnance.org.
Threshold of Sustainability
The “Threshold of Sustainability” is the minimum level
of investment required in tourism management to
ensure that the protected area’s natural capital does not
decline. The threshold of sustainability is reached by
ensuring adequate investment in key management pro-
grams such as: impact monitoring, basic infrastructure,
security, and interpretation and information. These
costs could be built into a sustainable fnance plan for
protected areas where tourism is suitable, and must be
an integral part of annual park budgets. For more infor-
mation on the “threshold of sustainability”, please visit:
www.conserveonline.org/workspaces/
tncecotourismprogram/publications.
Financial Analysis of the National System of
Protected Areas (SNAP), Ecuador
This analysis includes a description of the methodology
and scope of the study and the results. The methods
focus on analyzing sources of funding, fnancial, re-
source fows, spending trends, defning fnancial needs
for basic and optimal (integral) management scenarios,
and defnition of fnancial gaps. The analysis used the
SNAP’s database to organize the fnancial information.
The analysis was supported by MAE, TNC, CI, KfW,
Annexes
Annex 1. Methods for Protected Area Financial Analysis
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 60
Environment Fund, Ecociencia, Fundación Natura,
USAID, IUCN, Mentefactura, and CEC. The study
and the database can be downloaded from the follow-
ing link: www.ceda.org.ec/descargas/biblioteca/
analisis_necesidades_snap.pdf.
Financial Needs Analysis of the SINANPE, Peru:
2005–2014
The method includes the selection of representative
protected areas for the fnancial analysis, the analysis
the PA system’s fnance (revenue and expenditure)
from both a historical and a current perspective, and
the defnition of funding needs and gaps for basic and
optimal conservation. This analysis was used to de-
velop a 10-year projection (2004-2014) of revenues
and expenditures in order to determine the long-term
fnancial needs. The analysis also includes (in annexes)
detailed information on revenues, expenditures, projec-
tions, and the fnancial gap for each national protected
area in SINANPE (National System of State-Protect-
ed Natural Areas). This method required a comprehen-
sive feld study in 19 highly representative natural pro-
tected areas of the SINANPE, selected using a set of
agreed-upon management indicators; and included the
management cost of the central protected area agency.
The analysis was fnanced by the World Bank fnanced
project “Participatory Management in Natural Areas”
(GPAN), and the SINANPE II project, fnanced by
KfW, provided technical support. The complete ver-
sion of the analysis and the database can be downloaded
from the following link: www.inrena.gob.pe/ianp/ca/
downloads/Documentos%20de%20interes/El%20
fnanciamiento%20del%20SINANPE/Estudio%20
de%20necesidades%20y%20brecha%20fnanciera%
20SINANPE_web.pdf.
MYCOSIS
This model uses Excel sheets to record recurrent costs
(staff, vehicles, etc.) and necessary investments. Myco-
sis also offers a set of key benchmark indicators or vari-
ables for management of natural reserves. This method
has been used for global studies, in Federal Conserva-
tion Units in Brazil and Honduras. The version applied
in Honduras can be downloaded from the following
link: www.birdlist.org/cam/honduras/hn_parks_
study1.htm.
MARFUND
This method used by the Coastal and Marine Protected
Areas Fund of the Mesoamerican Reef. Protected
areas are classifed according to country, type (coastal
or marine), size (small, medium, or large), and phase
of operation (start-up, consolidation, full operation).
The fnancial part of the model uses Excel, provides
information on operating expenses, investments, and
revenues at the protected-area level. This method has
been used in Belize, Honduras, Guatemala, and Mexico.
The category of regional-level expenditures is also con-
sidered in order to refect the demands of coordination
and control by member countries, and the process of
adding information. Additional information, including
the fle downloadable version, can be found at: www.
marfund.org/indexingles.html. This method was devel-
oped with support from WWF and MARFUND.
Long-term Financial Planning for Parks and
Protected Areas
The method connects long-term strategic programs
and fnancial planning. It also uses Excel spread sheets.
It includes detailed steps to estimate the resources
needed to implement conservation programs and cov-
ers key areas such as: threats, activities, fundraising
strategies, personnel, land acquisition, expense details
and summary, and revenue allocation. This method is
useful to determine the different levels for informa-
tion gathering and analyses. It was developed by TNC
with support from USAID. The manual can be down-
loaded from: www.parksinperil.org/resources/art18405.
html#consfnance.
The Nature Conservancy 61
Goals and Objectives
The primary objective of this initiative was to provide
the government of Jamaica with a roadmap to address
two concerns: fnancial sustainability for the protected
area system, and improved fnancial management of
protected areas through the formulation and imple-
mentation of business plans. This roadmap will include
the necessary steps to establish the proper institutional
framework and identify the fnancial mechanisms that
can be implemented.
The frst phase of this initiative include three compo-
nents: 1) identify the system-level fnancial needs and
gap, thereby establishing a target funding amount that
will meet the conservation goals and objectives of the
system, and will close the gap; 2) identify the policy
barriers to fnancial sustainability and recommend
steps to break down those barriers, and, then, identify
appropriate and viable fnancial mechanisms to achieve
fnancial sustainability; and lastly, 3) develop a fnancial
sustainability plan for the system.
The implementation aspects of this initiative are not
included in this proposal but will immediately follow
completion of this fnancial sustainability plan. The
development of the fnancial plan will train protected
area managers in business planning principles and
strategy development (including feasibility assessments
of potential fnancial mechanisms). With this added
capacity and business plan analysis, protected area
managers will be able to make more informed decisions
that have an impact on their developing realistic goals
and objectives.
The specifc objectives of this initiative (Phase I) are
the following:
n The CBD Programme of Work requirements for
Phase I are met.
n Have an integrated biodiversity gap and capacity gap
assessments in their fnancial planning for the pro-
tected area system.
n Defned the funding gap based on cost accounting
methods and a tested methodology.
n Key protected area staff and administrators will have
a fundamental understanding of fnancial sustainabil-
ity planning and both sustainable fnance theory and
application.
n External local capacity has been built for fnancial
planning and for the possible establishment of a pro-
tected area fnancial management curriculum at the
local university.
n Several fnancial strategies are identifed that will
broaden the diversity of funding for the protected
area system.
n An action plan is in place to implement several of
these fnancial strategies.
n Protected area stakeholders maintain a high degree of
buy-in to the fnancial plan.
n The ideal political and legal framework is identifed
to promote and facilitate fnancial sustainability for
the protected area system.
In Phase II, the fnancial sustainability initiative will
address formulation of site-level business plans and im-
plementation of site- and system-level fnancial strate-
gies to improve the fnancial sustainability and manage-
ment effectiveness of the protected areas system.
Annex 2. Draft Proposal for the Development of a Financial
Sustainability Plan for the System of Protected Areas
1
1. A similar structure was used to develop the draft for the Financial Plan of the PA System of Jamaica, currently being discussed.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 62
Timescale and Work plan for Phase I
A
Financial
analysis
B
Screening and
feasibility of
fnancial
mechanisms
C
Formulate
fnancial
sustainability
plan for the
PA system
Start Date
July – September
2006
August – September
2006
September – November
2006
Details
n Meet with government offcials to kick off project and defne key
stakeholders
n Draw up a detailed work plan and share it with key stakeholders
n Set deadlines for data required by Government / NGOs
n Work with Government and partners to identify biodiversity and
capacity goals and objectives for the system
n Collect fnancial and administrative data from Government and NGOs
managing PAs
n Research fow of funds from source to expenditure
n Analyze budgeting and accounting principles and methodology for PA
system and sites
n Research system and site-level fnancial mechanisms
n Identify protected area goods and services (biodiversity, recreation,
etc.), drawn from management plans and conservation plans
n Conduct market analysis and quantify demand
n Identify political, legal, and market barriers to fnancial sustainabil-
ity for the system
n Draft cost-beneft analyses for each fnancial mechanism
n Work with stakeholders and Government to create a framework for
the fnancial sustainability plan
n Draft outlines of implementation plans for key fnancial strategies
n Complete draft fnancial sustainability plan for review
n Finalize plan
The Nature Conservancy 63
I. Objectives
1. Identifcation of budgeted costs of the SNAP for the
applicable years and at the three administrative levels
of the Ministry of Environment (MAE): central,
regional, and protected area levels.
2. Identifcation of actual (implemented) annual
expenditures, including resources from the central
government budget and contributions from other
institutions and international cooperation.
3. Determination of self-generated funds at the pro-
tected area level.
4. Defnition of fnancial needs to cover basic and inte-
gral (optimal) management cost of the SNAP.
5. Analysis and defnition of the gap between real
baseline expenditures (2003) and the estimates of
fnancial needs to cover the basic and integral man-
agement costs of the SNAP, in coordination with the
Protected Area Management Team. The analysis will
include different levels such as: budgets at district
and individual protected areas; budgets of protected
areas with similar geographic distribution; budgets of
protected areas supported by the National Environ-
mental Fund (FAN); and groups of protected areas
grouped by management categories.
II. Key Tasks
1. Coordinate actions with the Financial Plan Work-
ing Group (known as Promoting Group) to obtain
information from the Headquarters and Provincial
Districts of MAE, as well as from NGOs and the
international cooperation.
2. Review and adjust the proposed methodology and
tools for information gathering.
3. Support the Protected Area Management Team in pre-
paring a “working folder” for information gathering.
4. Carry out visits to Regional Districts as necessary to
gather information.
5. Collect information and data using different in-
formation sources whenever possible (NGOs and
cooperation agencies, among others).
6. Systematize and analyze the information according
to the objectives, scenarios and hypotheses.
7. Define financial performance criteria and indica-
tors based on the basic and integral management
cost of the SNAP, using the 2003 expenditure
baseline as a reference.
8. Produce information on the 2003 actual expen-
ditures and present it and validate it in Regional
District workshops.
9. Participate in analyzing information on basic and
integral management costs with the Protected Area
Management Team.
10. Develop a budget projection for protected areas
considering baseline data and the needs to cover
basic and integral management costs.
11. Prepare interim reports and presentations for dis-
cussion with the Promoting Group, MAE, donors,
and other key actors.
12. Work with the Protected Area Management Team
to develop a fnal document with the results of the
Financial Analysis of the SNAP, including: method,
opportunities for replication, systematization and
analysis of the fnancial information, conclusions,
and recommendations.
13. Present the Final Report to different stakeholders.
III. Expected Products
1. A document describing the methodology, scope of
work, limitations, and information sources used to
calculate the baseline.
Annex 3. Terms of Reference for the
Financial Analysis of the SNAP, Ecuador
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 64
2. Matrices with information on actual 2003 expendi-
tures and self-generated revenues.
3. Analysis of the fnancial gap between 2003 baseline
expenditures and the fnancial needs to cover basic
and integral management costs, including fnancial
indicators.
4. Financial projection to 2010 based on the results of
the study and income assumptions.
5. A fnal study document integrating the results pro-
duced by the Protected Areas Management Team and
the Financial Team, based on the objectives of the
study, including conclusions and recommendations,
methodology, and process.
6. PowerPoint presentations on the results of the study
to be used in presentations to different stakeholders
and donors.
7. Communications material on the results of the study
to be used by protected area managers.
Source: Ministry of Environment of Ecuador / TNC, 2005.
The Nature Conservancy 65
Before Visits
n Communicate to the protected area (PA) staff the
objectives, scope of work, and work plan for the
study.
n Send PA staff the forms, explain how to complete
them, and specify the type of information needed.
n Review the travel itinerary, coordinate logistical as-
pects, agree on a visit schedule, and confrm PA staff
attendance.
n Review secondary information from the PA on f-
nance, administration, and management.
During Visits
n Hold a workshop with selected PA staff to inform
them of data collected, analyze the fgures, and ex-
change opinions.
n Conduct interviews, as necessary, with key PA staff
and local entities that support the PA.
n Determine cost management diffculties to be con-
sidered in the recommendations.
n During the process, always ask: Why is this resource
needed? How can the costs of this activity be reduced
while maintaining quality?
After Visits
n Consult with PA staff on any doubts and/or gaps in
the information received.
n Validate the information with protected area staff.
n Analyze and systematize the validated information.
Source: F. León, Of?ce of Protected Natural Areas (IANP), 2006.
Annex 4. Key Actions to Gather Information
During Visits to Protected Areas
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 66
A variety of methods can be used to collect data.
Some of the most important include:
n Interviews:
Conducting interviews is an effective way of ob-
taining qualitative information. Interviews can be
structured or semi-structured; i.e. scripted or con-
versational. For example, interviews with protected
area staff in charge of specifc programs are useful
to gather information on expenses, investments, and
revenues.
n Surveys:
Surveys are a very useful tool to collect qualitative
information and can be in printed form or on the
Internet. The Internet is recommended, and less
expensive, because there are service providers with
existing platforms and easy to format surveys that
automatically compile and process survey results.
n Workshops with Focus Groups:
These meetings bring together relevant actors to
exchange ideas about a specifc topic. For example, a
workshop can be held with cooperating institutions
to discuss issues related to fnancing, donations, and
commitment periods. Likewise, government authori-
ties can be called on to analyze the fow of funds
(revenues and expenditures) in the protected area
system; and key protected area staff can be brought
together to discuss the elements that make up each
management program.
n Workshops:
These meetings may include different actors and are
particularly useful for defning joint action agendas,
reviewing results, and validating information.
Annex 5. Methods for Data Collection
The Nature Conservancy 67
Annex 6. Validation of Information Gathered through Workshops —
Experiences in Peru, Ecuador, and Costa Rica
System of Protected Areas
Costa Rica
n The technical team pre-
sented the information to
the working group the day
after the workshop. The
working group reviewed
the information and made
the necessary corrections.
n The information produced
by each protected area
was consolidated and
analyzed.
n The information was sub-
mitted in CD-ROM format
to staff in each conserva-
tion area for daily use.
Ecuador
n Information obtained in
the different workshops
was refned by conduct-
ing interviews with area
managers as a means of
correcting imprecision and
errors in completion of the
matrices and addressing
inconsistencies in the in-
formation on the inventory
of protected areas assets.
Peru
n The information was
analyzed in a participatory
manner taking into account
the experience and knowl-
edge of area coordinators
and thematic coordinators
from the Offce of Protected
Natural Areas (IANP).
n Information collected during
on-site visits was refned
through coordination meet-
ings and telephone inter-
views with area directors
to adjust data on the forms
and validate information on
the inventory of protected
area assets.
Actions
performed
during the
Workshops
Sources: Financial Strategy for the National System of Conservation Areas of Costa Rica. Phase 1: Financial Needs Plan 2004-2006; Process of Developing the Long-term
Financial Plan for the SINANPE. Phase 1: Analysis of the Financial Needs of the SINANPE 2005-2014 (Peru); and Analysis of the Financial Needs of the SNAP in Ecuador.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 68
Annex 7. Financial Gaps of Laughing Bird Caye National Park, Belize (in US$)
Functional Areas E
Source: Business Plans for Parks and Protected Areas, Center for Park Management, National Parks Conservation
Association, 2005, United States.
I II III IV
Available Resources Scenarios Financial Gap
Sources Total Basic Optimal Basic Optimal
Gov’t Int’l Local Own Funds Funds Funds Funds Funds
NGOs NGOs Revenues
A B C D F G H I
(A+B+C+D) (F-E) (G-E)
RESOURCE MANAGEMENT & PROTECTION
Patrolling and Enforcement - 7,315 - 12,562 19,877 25,310 30,244 5,434 10,367
Wildlife Mngmt. & Habitat Restoration - - - - - - - - -
Zoning and Boundaries - 356 - 681 1,037 5,740 9,649 4,703 8,612
Wildland Fire Management - - - - - - - - -
Cultural Resource Management - - - - - - - - -
Subtotal - 43,115 - 19,154 62,270 92,787 127,353 30,518 65,083
TOURISM & RECREATION
Visitor Safety and Protection - 1,721 - 5,050 6,771 5,888 7,486 (883) 715
Recreation Fee Collection - 2,432 - 4,453 6,885 4,386 5,184 (2,499) (1,701)
Visitor Education and Interpretation - 4,334 - 5,206 9,540 11,063 16,308 1,523 6,768
Concession and Recreation Special Uses - - - - - 5,460 22,838 5,460 -
Subtotal - 8,486 - 14,709 23,196 26,797 51,817 3,601 28,621
COMMERCIAL PRODUCTS & USES
Fishing (Marine Resources) - - - - - - - - -
Timber and Forest Products - - - - - - - - -
Non-Renewable Resources - - - - - - - - -
Special Commercial Uses - - - - - - - - -
Subtotal - - - - - - - - -
MANAGEMENT & ADMINISTRATION
General Management and Administration - 16,587 - 682 17,270 14,385 16,385 (2,884) (885)
Financial Management and Administration - 16,035 - 193 16,228 14,485 16,035 (1,743) (193)
Planning - 12,678 - 872 13,550 15,115 17,315 1,565 3,765
Partner Relations - 13,251 - 898 14,150 34,712 66,816 20,563 52,666
Information Technology - 4,945 - 157 5,102 9,997 30,161 4,895 25,059
Subtotal - 63,496 - 2,802 66,299 88,694 146,712 22,395 80,413
COMMUNITY DEVELOPMENT & OUTREACH
Formal Environmental Education - 7,603 - 388 7,991 104,216 106,166 96,225 98,175
Public Outreach and Info. Dissemination - 21,134 - 436 21,570 13,741 24,485 (7,828) 2,915
Alternative Livelihoods - 9,818 - 214 10,032 4,566 7,466 (5,466) (2,566)
Subtotal - 38,555 - 1,038 39,593 122,522 138,117 82,930 98,524
FACILITY OPERATIONS & MAINTENANCE
Buildings, Grounds, and Utilities - 11,406 - 2,504 13,909 13,123 15,623 (787) 1,714
Roads - - - - - - - - -
Trails - 972 - 2,221 3,193 3,783 6,049 590 2,856
Docking Facilities (Marine) - 631 - 1,097 1,728 3,219 4,168 1,492 2,440
Transportation and Vehicle Fleet - 9,340 - 855 10,195 8,580 9,237 (1,616) (958)
Campgrounds and Picnic Facilities - 666 - 1,228 1,894 2,079 2,808 185 914
Subtotal - 23,014 - 7,904 30,919 30,783 37,884 (136) 6,965
TOTAL - 176,667 - 45,608 222,276 361,584 501,883 139,308 279,607
The Nature Conservancy 69
The previous table shows the results of the fnancial
analysis in the case of Laughing Bird Caye National
Park. The information in this table has improved the
understanding of the protected area’s fnancial situ-
ation and makes possible the identifcation of prior-
ity investment areas. The information in the table is
organized into four blocks:
I) Functional Areas: This information shows resource
allocation organized by program activity instead of the
typical breakdown by expenditure item (such as staff,
rent, supplies, etc.).
II) Available Resources: This section provides informa-
tion on the protected area’s current fnancing, orga-
nized by type of source.
III) Scenarios: These show the resources needed to
implement program activities in basic and optimal
scenarios.
IV) Financial Gap: This block brings together results
of the fnancial needs and gaps analysis, and shows the
existing fnancial gap between available resources and
those resources needed for basic and optimal scenarios.
A review of the table shows a fnancial gap of 62%
between the total expenditure covered in the current
situation (US$222,276) and the projected expendi-
ture for the basic scenario (US$361,584). This gap
increases to 125% when expenditures in the current
situation (US$222,276) are compared with those
projected for the optimal scenario (US$501,883).
The programs showing the largest fnancial gaps are:
Community Development and Outreach, Manage-
ment and Administration, and Resource Manage-
ment and Protection. These results make clear that,
depending on the level of threats, these programs
require a greater level of investment.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 70
Annex 8. Identifcation, Prioritization, and Selection of Financial
Mechanisms for the System of Protected Areas of Ecuador
The methodology used for identifcation, prioritization,
and selection of fnancial mechanisms is based mainly
on the collection of information from primary and
secondary sources, the establishment of prioritization
criteria, an analysis of the feasibility of implementing
the prioritized mechanisms, and fnally, grouping the
identifed mechanisms. The steps followed in this pro-
cess are presented below.
a) Review of secondary information sources:
1
This step
focused on identifying fnancial mechanisms at national
and international levels. The information gathered pro-
vided a clear description of the mechanisms, how they
work, and the results of their application.
2
b) Prioritization: The prioritization was based on the
criteria and indicators presented in Table A.
This criteria was supported by a rating system (1-3)
where 1 indicated that the mechanism is performing
inadequately and 3 that the mechanism is performing
satisfactorily. Based on these criteria and the scale ad-
opted, 11 of the 59 mechanisms identifed were selected
as high priority. The mechanisms selected were: SNAP
logo, SNAP Fund, concessions in protected areas, fees
for infrastructure in protected areas, sale of carbon
bonds, water-use rates, donation of 25% of income
tax to the system, other donations, volunteer work in
protected areas, SNAP Passport, and presentation of
projects for funding through the Special Account for
Table A: Criteria and Indicators for the Prioritization of Financial Mechanisms
Criteria Indicators
1. Management capacity a. Capacity for control of payment and use.
b. Administrative capacity of the MAE.
c. Capacity to promote the mechanism.
2. Financial aspects d. Degree of complexity of information requirements and/or previous studies.
e. Level of investment required to develop the mechanism.
f. Financial appeal of the mechanism.
3. Environment compatibility g. Degree of adaptation to local values.
and risk h. Degree of consistency of the mechanism with local and national
conservation objectives.
i. Risk that the mechanism may threaten biodiversity.
j. Risk of generating perverse incentives to carry out other activities.
4. Policy and legal feasibility k. Existence of a law or rule to regulate the mechanism.
l. Existence of policy support for implementation of the mechanism.
m. Time frame for implementation of the mechanism.
Source: Prepared by Mentefactura, 2006.
1. The main sources of information used were experiences and documents available on the Internet primarily from institutions involved in environmental
conservation.
2. Fifty-nine mechanisms were initially identifed.
The Nature Conservancy 71
Table B: Legal Scenarios Considered in Ecuador
Scenario Defnition Time Frame
“ No changes in current
regulations”
“ Minor changes in
current regulations”
“ Profound changes in
current regulations”
Mechanisms whose implementation only requires direct enforcement
of the current legal system.
Mechanisms whose implementation requires reforms to secondary
norms contained in Ministerial Agreements and/or Executive Decrees.
Mechanisms whose application requires reforms to legal norms, such
as organic and ordinary laws.
Short-term
Medium-term
Long-term
Source: Prepared by Mentefactura, 2006.
3. The results were validated by a group of legal experts from different institutions.
Productive and Social Revitalization, Scientifc and
Technological Development, and Fiscal Stabilization
(CEREPS).
d) Conducting in-depth interviews: The purpose of the
interviews was to determine the current perception of
prioritized mechanisms, their feasibility, their attrac-
tiveness to investors, key actors, and also other mecha-
nisms. The interviews were conducted with actors that
currently fnance or may potentially fnance the SNAP.
e) Feasibility: In order to identify the most viable
fnancial mechanisms, the prioritized mechanisms
were analyzed from a legal perspective considering the
changes or reforms needed in the current legislation
to allow their operation. This analysis considered the
legal scenarios presented in Table B and included an
in-depth review of the existing regulations for each
mechanism identifed.
3
Finally, the time and money required for the necessary
changes were estimated for each mechanism.
f) Selection of fnancing categories: Based on the
above steps, the selected mechanisms were grouped in
three categories: corporate social responsibility (SNAP
logo and corporate donations), tourism (SNAP Pass-
port and fees) and personal donations/contributions
(donation of 25% of income tax and donations by
Ecuadorians and foreigners), as well as fnancing from
government sources and international cooperation.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 72
Annex 9. Prioritization and Description of Financial Mechanisms, SNAP Ecuador
First Priority
1 SNAP logo
2 Service concessions
3 Antenna installation fee
4 Sale of carbon credits
5 SNAP Passport (for tourists and/or
operators)
6 Public sources
(other than central budget)
7 Personal and/or corporate
donations
8 Donation of 25% of the
income tax
9 Water use and/or watershed
protection fee
10 SNAP Endowment Fund
11 Volunteer work
Second Priority
12 Annual permits for installation/
operation of towers for electric
power lines
13 Scientifc research licenses
14 Debt-for-nature swaps
15 Airport surcharge fees for tourists
16 Annual infrastructure permits
Description
Creation of a logo that facilitates private funding of protected areas in exchange
for rights to use the logo to promote commercial products and/or services.
Service or infrastructure concessions in protected areas; the concession permit-
ting process should take less than 17 months.
Payment for installation of cell phone and television antennas in protected areas.
Revenues for the system from carbon offsets generated by planting new forests
and implementing deforestation reduction projects.
Annual payment for a Passport allowing yearly unlimited entry to protected areas
in the system.
Public funding from various sources, such as the CEREPS.
Donations from individuals and/or the corporate sector; this may be implemented
through “adopt-an-acre” or “adopt-an-animal” programs.
Donation of part of the income tax to support conservation.
Payment from users to ensure the future provision of water through conservation
of the watershed.
Creation of a fund to fnance conservation with contributions from cooperation
agencies and the private sector.
Capitalize on people’s environmental concerns and involve them in performing
volunteer activities in protected areas.
Description
Annual permits for installation and operation of towers for electric power lines in
areas of the system, with authorization of the MAE.
Licenses to conduct scientifc research activities.
Assess opportunities for new transactions with mechanisms such as the Tropical
Forest Conservation Act/U.S. Treasury
Fees collected from all tourists entering the country and a commission
percentage from all cruise ship passengers.
Permits for oil companies to develop and/or use infrastructure in areas of the
System.
The Nature Conservancy 73
Second Priority (continued)
17 Fuel subsidies
18 Tourism entrance fees to
protected areas
19 Hotel surcharges
20 Aermits for pipelines
operation
21 Bioprospecting permits
22 Environmental compensation
and mitigation (offsets)
Third Priority
23 Payment of mooring or
anchorage fees
24 International fnancing
25 Governmental budget allocations
26 Fishing licenses
27 Diving permits
28 Taxes to polluters
29 Private grants
30 Management cost reductions
31 VAT surcharge
32 Fees for extraction of
natural resources
Description
Establishment of subsidies for the use of diesel and gasoline for patrolling
protected area systems.
Review of the tourist fee system based on realistic potential supply and demand
for each individual protected area.
Surcharges to hotel guests in or near protected areas.
Annual permits for the installation and operation of multipurpose pipelines in and
across protected areas (natural gas, crude oil).
Sale of permits to specialized commercial interests marketing health benefts of
marine or terrestrial protected area products.
Payments for damages to the environment. A direct payment to support protected
areas or to create similar ecosystems to offset those damages; for example, im-
pacts from an oil pipeline, hotel, or hydroelectric infrastructure.
Description
Fees paid by vessels in protected areas within or around marine
protection zones.
Financing from multilateral or bilateral sources.
Increasing central government funding for conservation.
Commercial and sport fshing licenses in marine and freshwater protected areas.
Fee paid by divers and instructors in marine or freshwater systems, with different
fees for nationals and foreign visitors.
Establishment of taxes in sectors that damage the environment.
Donations from individuals, foundations, and NGOs.
Strategic partnerships with other sectors connected with the system; for
example, tourist dive boats could support the task of patrolling, thus reducing
conservation costs.
Establishment of a VAT surcharge to support conservation.
A percentage of revenues derived from the fees for extraction of products from
protected areas. This mechanism may include revenue from fees for registration
of the designation of origin of these products.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 74
Annex 10. The Legal and Institutional Framework of the SINAC, Costa Rica
Costa Rica’s National System of Conservation
Areas (SINAC) includes three directorates,
11 conservation areas, 32 regional offces, and
160 protected areas. It has specifc powers and
multiple relations with state and private enti-
ties at local, national, and regional levels. The
legislation that currently regulates SINAC is
one of the most complete, and is the result of a
process of evolution and fexible adaptation of
both programming and fnancial aspects (see
Annexes 11 and 12).
Evolution of the System
The SINAC was created in the 1980s with the
establishment of the model of Regional Con-
servation Units, which grouped national parks
according to similar regions; however, each
national park maintained a degree of autonomy
through its management units.
In the following years, SINAC continued to
evolve and Costa Rica’s national parks became
core areas of absolute protection and included
buffer zones (territories adjacent to national
parks with restrictions on natural resource use
that would enhance park protection). Only three na-
tional parks – Corcovado, Guanacaste, and Palo Verde
– were included in this plan. This model did not have
broad coverage because it was based on national parks
and their surroundings, leaving several areas of national
territory at the “margin” of protection and conservation
efforts since these adjacent areas were not given park
status.
SINAC’s management model was restructured begin-
ning in 1994. The new structure involved merging the
three directorates directly managing natural resources
at the Ministry of Natural Resources, Energy and
Mines (MIRENEM), namely, the General Forestry
Directorate (DGF), the National Parks Service (SPN),
and the General Wildlife Directorate (DGVS). The
purpose of this merge was threefold: to ensure that
the entire system would operate under the managing
unit, to improve coordination of interventions, and to
optimize resource administration. The responsibility
for control of this process was assigned to the Higher
Directorate of Natural Resources.
Initially, the process of integrating the three branches
of DGF, SPN, and DGVS was complex due to differ-
ences in each branch’s territorial distribution, organi-
zational cultures, and working methods. However, the
integration process has gradually taken shape as a result
of a clear defnition of the strategic framework.
Strategic Framework of SINAC
Vision: SINAC is the leading conservation organization
which provides quality services and implements conser-
vation programs for protection of biodiversity and man-
agement of natural resources. The SINAC vision has
three elements: active participation of society, resource
mobilization, and the development of innovative ideas
for responsible environmental management.
SINAC - COSTA RICA
National Coun-
cil on Natural
Resources
Minister/
Vice-Minister of
the Environment
National Envi-
ronmental Impact
Commission
Tech.
Operations
Adminis-
tration
Cent.
Volc.
R.O.
Are-
nal
R.O.
Amis-
tad
R.O.
Cent.
Pac.
R.O.
Osa
R.O.
Coco
Island
R.O.
Guan.
R.O.
Tort.
R.O.
Temp.
R.O.
National Parks
Service
Wildlife
Directorate
Forestry
Directorate
Higher Directorate of
Natural Resources (SINAC)
Internal
Auditors
Planning and Interna-
tional Cooperation
Civil Society
Commission
Public and
Press Relations
The Nature Conservancy 75
Mission: To conserve biodiversity, ensure the sustainable
use of natural resources, and promote a fair sharing of
the benefts and costs of biodiversity use.
Operational Principles, represented by the “3 D’s”:
n Democratization: Participation and gradual incorpo-
ration of civil society in decision making.
n Deconcentration (redistribution): Transfer of admin-
istration of human, fnancial, material, and adminis-
trative resources to conservation areas.
n Decentralization: Complete fnancial autonomy and
the gradual transfer of decision-making authority to
conservation areas.
Regulatory Framework for Administrative and
Financial Matters
SINAC is governed by the following laws: Planning
Law (No. 5525), General Law of Public Administration
(No. 6227), Fiscal Contingency Law (No. 8343), Ad-
ministrative Contracting Law (No. 7494), Law of the
Comptroller General of the Republic (No. 7428), Law
on Financial Balance of the Public Sector (No. 6955),
Law of Tax Simplifcation and Effciency (No. 8114),
Law on Financial Administration and Public Budgets
(No. 8131), Internal Control Law (No. 8292), and the
Law against Corruption and Illegal Enrichment in Pub-
lic Administration (No. 8422).
The Comptroller General of the Republic supervises
SINAC and is also responsible for approving, control-
ling and monitoring its fnancial operations.
Current Situation
SINAC currently represents “a model of decentral-
ized and participatory institutional management that
integrates powers over forestry, wildlife, and protected
areas in order to plan and execute processes to achieve
the sustainable management of the country’s natu-
ral resources.” Administratively, SINAC is a system
consisting of conservation areas and a central head-
quarters.
SINAC is a decentralized agency with instrumental
legal status and great fnancial autonomy, although it re-
ceives administrative supervision from the Ministry of
Environment and Energy (MINAE) for management,
planning, coordination, and control. In the future, it is
expected that SINAC will be a decentralized agency
with its own legal status and fnancial autonomy. Also,
SINAC will delegate resource administration to con-
servation areas and protected wildlife areas. The advan-
tages of making SINAC an autonomous agency are:
n Eliminate the ‘single account’ principle established
in article 66 of the Law on Financial Administration
and Public Budgets.
n Autonomy for budgeting and resource
administration.
n Transfer of decision making powers from MINAE to
SINAC.
n Full implementation of SINAC’s operating principles
– democratization, deconcentration, and
decentralization.
n Powers would be deconcentrated from SINAC to the
conservation areas.
Source: SINAC, 2007.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 76
Annex 11. Evolution of the Legal and Institutional
Framework for Conservation in Costa Rica
Law 4465 (1969)
Purpose: Provide for the protection, use, conserva-
tion, and promotion of the country’s forest resources
according to the principle of multiple use of renewable
natural resources. This law created the General For-
estry Directorate (DGF), which made possible the es-
tablishment of protected areas, forest reserves, national
parks, and biological reserves, as well as measures to
conserve and increase wild fora and fauna. The es-
tablishment of wildlife refuges was not considered. To
deal with these responsibilities, the DGF established
regional offces distributed throughout the country ac-
cording to a territorial division similar to that estab-
lished by MIDEPLAN.
Law 6048 (1977)
Purpose: Promote the development and management
of national parks for conservation of the country’s natu-
ral heritage. At the same time, this law moved the Gen-
eral Subdirectorate of National Parks into the General
Forestry Directorate within the General Directorate of
the National Parks Service at the Ministry of Agricul-
ture and Livestock. The main focus of this law was the
protection and control of national parks and biological
reserves. Other aspects related to communities next to
protected areas were not addressed.
Law 7317 (1992)
Purpose: Ensure wildlife conservation by introducing
three management subcategories: national state-man-
aged wildlife refuges, privately-managed reserves, and
mixed public-private managed reserves. This law also
created the General Directorate of Wildlife, an inde-
pendent unit of the Forestry Directorate, with respon-
sibility for administering Wildlife Refuges.
Law 7575 (1996)
Purpose: Adapt the functions of forestry law to cur-
rent demands of Costa Rican society by introducing
updated conservation concepts. This law also autho-
rized transformation of the General Forestry Director-
ate into the State Forestry Administration and created
other entities related to the forestry sector. Among
these, the Forestry Financing Fund is responsible for
raising funds from forestry-based payments for envi-
ronmental services, and for obtaining fnancing from
other activities related to the natural resources sector.
The Nature Conservancy 77
Annex 12. Evolution of the Legal and Institutional Framework
for Conservation, Financial Aspects, Costa Rica
Law 4465 (1969)
Aspects related to fnancial support for the forestry
sector and the Forestry Fund include:
n Fees charged for forest use in forest reserves,
national reserves, and state-owned farms under
DGF management.
n Revenues from all fnes and forfeitures received in
accordance with the law.
n Revenues from fees charged for exploitation of
secondary products such as vegetable charcoal, chicle,
rubber, roots, mangrove bark, and other similar
products.
n Tariff revenues from the export of forestry products
and by-products.
n Voluntary contributions from conservation organiza-
tions and other physical or legal entities as may exist
or may be created in the future with an interest in
natural resource conservation.
n Legacies, donations, and, in general, all kinds of goods
and fees that are deposited in the Forestry Fund by
law or individual choice.
n Contributions from international organizations or
foreign governments in accordance with agreements
entered into for the development of forestry pro-
grams in particular and of renewable natural resourc-
es in general.
n Revenues from a tax on the extraction of timber (i.e.,
per-cubic-meter).
The Comptroller General of the Republic is in charge
of overseeing of the Forestry Fund.
Law 6084 (1977)
The creation of the National Parks Fund was based on
the following articles:
Article 6: The National Parks Service (SPN) shall be
allocated resources from the ordinary and extraor-
dinary budgets of the Republic. The National Parks
Service shall also receive the following revenues, which
shall be deposited in the National Parks Fund:
n Donations made by the State or any physical or legal
person, to be administered by the SPN. These dona-
tions are exempt from payment of Charity Taxes,
University Stamp Taxes, and Public Registry fees; it
is necessary to formalize these exemptions according
to the Civil Code and related laws.
n Entrance fees to national parks as determined by
the SPN.
n Such resources as may be generated by the SPN pur-
suant to exercising the functions and powers legally
conferred upon it.
n Revenues from the sale of national park stamps,
established in the following article.
Article 7: A national park stamp shall be established
and issued by the Central Bank of Costa Rica, which
will collect its revenues. The denominations of the
stamp are:
n One-colón stamp, which shall be included on all
types of municipal permits; and
n Five-colones stamp, which shall be paid for:
- Passports and safe conducts issued to leave the
country, not applicable to those persons exempted
from taxes and fees by current treaties and laws.
- The necessary documents for the frst-time regis-
tration of a motor vehicle in the Public Registry of
Motor Vehicle Ownership.
- Authentications of signatures performed by the
Ministry of Foreign Affairs.
n One-hundred-colones stamp, which shall be paid
annually by all social clubs, public dance halls, and
similar for-proft facilities, as well as upon applica-
tions to open this type of business.
Law 7317 (1992)
This law includes the creation of the Wildlife Fund, as
provided for in the following article:
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 78
Article 11: In order to ensure that the objectives of
this law are achieved and to meet the expenses arising
from this law, the General Wildlife Directorate of the
Ministry of Natural Resources, Energy, and Mines shall
receive resources from the Wildlife Fund, consisting of:
n Revenues generated by the wildlife stamp tax (Ar-
ticle 124 of Law 7317).
n Amounts received from permits and licenses (estab-
lished in articles 31, 38, 53, and 64 of Law 7317).
n Legacies and donations by physical and legal persons,
as well as national and international organizations,
both public and private, and contributions from the
State or its institutions.
n Revenues from fnes and forfeitures received in ac-
cordance with Law 7317.
Law 7575 (1996)
The purpose of this Law is to diversify revenue sources
and clarify revenue allocation. Article 39 establishes the
following concepts related to revenue generation:
Article 39: The resources of the Forestry Fund shall
consist of the following:
n Amounts collected from the tax on wood.
n Legacies and donations received by the Ministry of
Environment and Energy.
n Contributions from national and international
organizations, both public and private, according to
agreements or donations.
n The issuance of forestry bonds already approved or
which may be issued in the future. These bonds may
be used to pay all kinds of taxes or fees.
n Revenues the State receives from fnes and forfei-
tures according to this law.
n Revenues from the sale of trees from forest nurser-
ies and of wood of unknown ownership, as well as
income from forfeitures, as appropriate.
n Revenues from the sale of forest seeds.
n Revenues from the sale of publications and other
documents as necessary to meet the purposes of
the law.
n Amount from fees or rates that the Ministry of Envi-
ronment and Energy establishes for natural resource
use permits granted in protected wildlife areas com-
prising the State’s natural heritage, regardless of their
management category.
n Resources from other revenues related to the for-
estry sector.
The Protected Wildlife Areas Trust was created as a
more fexible instrument of management that merges
the National Parks Fund and the other two funds
(Forestry and Wildlife) into one trust fund. This law
also updates the costs of national park entrance fees
(fscal stamps) and authorizes the charging of different
entrance fees to protected wildlife areas for residents
and non-residents, as well as the charging of different
fees for different protected areas based on the services
provided.
Finally, this law authorizes the SINAC to grant conces-
sions for non-essential services in protected areas,
as provided in article 39 of this Law.
The Nature Conservancy 79
ANNEX 13. Evaluation Tool for the Legal and Institutional Framework of the
System of Protected Areas, used by the SINAC in Costa Rica
Instructions
For sections 1 and 2:
n Each question should be carefully considered, and the
facilitator should take notes of the main points made.
n The benchmark responses to each question should be
read carefully; the frst benchmark in the boxes is the
ideal state while the last benchmark represents a less
desirable state. Next, the most appropriate answer to
the question should be marked with an “X.”
n Finally, specifc areas requiring more attention will be
identifed in order to develop a feasible plan of action
to achieve structural changes in the legal system.
For section 2:
n Consider the aspects discussed in section 1 as input
to identify the ideal, the legal, and the institutional
framework.
Public institutions exist with administrative and fnancial autonomy to establish their own internal
mechanisms for regulatory and administrative control and implementation of their resources.
The operations of some state institutions are administratively and fnancially separate from operations
of the Single Account, but not from the directives issued by public resource regulatory agencies.
Through operation of the Single State Account, the legal and institutional framework allows some institu-
tions to use their resources in accordance with the specifc purposes for which the allocations were made.
The State legislation establishes that all directorates, organizations, and institutions shall administer
their resources under the concept of a Single State Account; the Treasury Department or Ministry of
Finance defnes the corresponding budget for each agency.
1. Legal and Institutional Framework:
1.1. Does the State’s legal and institutional framework allow for creation of autonomous institutions capable of
adjusting their structures to the changes needed to achieve the fnancial sustainability of the System of Pro-
tected Areas?
Based on the selected benchmark, briefy explain the current situation and analyze options to improve the legal and
regulatory framework for the System of Protected Areas.
Benchmarks
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 80
The State’s legal structure allows for the generation, approval, and retention of specifc revenues
including, but not limited to, taxes, and the collection of these revenues by the institutions interested
in managing them.
Intermediary agencies exist to manage or approve incorporation of new revenue items by
the institutions.
The State’s legal structure retains the power of approval over any revenue items institutions may
incorporate.
Benchmarks
Based on the above benchmark, indicate the Protected Area System’s opportunities for generating its
own revenues.
1.3. Is there a budget preparation and approval process for protected areas?
The State’s legal structure allows for incorporation of all self-generated resources into an
institution’s budget.
The Treasury Department or Ministry of Finance defnes the spending limits of institutions;
additional resources can only be incorporated through negotiation with this institution.
The State’s legal structure allows institutions themselves to prepare and approve their
own budgets.
Other government institutions exist with the authority to approve institutional budgets.
The State structure has legislation providing that budgetary management of fnancial resources shall
only be managed in accordance with the Budget Law of the Republic.
Benchmarks
Explain the current situation and indicate opportunites for improving the budget preparation and
approval process.
1.2. Does the State’s legal structure allow for the generation and retention of an entity’s own revenues, for
example, either taxes or self-generated resources (like the sale of goods and services)?
The Nature Conservancy 81
Benchmarks
Current legislation allows for the generation and management of revenues by non-governmental
organizations.
The legislation considers the possibility of creating alternative revenue generation mechanisms.
The legislation on the System of Protected Areas considers revenue generation through taxes or other
own revenue sources.
The revenues of the System of Protected Areas come directly from State contributions/funding.
Explain the current legal situation and indicate opportunites for improving legislation on revenue generation for
the protected area system.
1.5. Are there adequate mechanisms for the participation of the civil society (NGOs, associations, clubs, and
others) in protected areas revenue-generation?
Benchmarks
The State’s legal and institutional framework allows for total participation of civil society through con-
cessions, the creation of alliances, and other mechanisms for management of all protected areas.
The State’s legal and institutional framework allows for participation of civil society through the con-
cession of some services considered non-essential, the creation of strategic alliances, and other mecha-
nisms for management of some protected area services.
The legal and institutional framework of the System of Protected Areas allows for participation of civil
society only through administrative contracting mechanisms established by the State (requests for bids,
direct contracting, or others).
The legal and institutional framework does not allow the participation of civil society in the fnancial
affairs of the System of Protected Areas.
Explain the current situation and indicate opportunites for improving revenue management with the participa-
tion of civil society.
1.4. Does the current legal and institutional framework of the System of Protected Areas contain all of the requi-
red elements to ensure revenue generation and promote long-term fnancial sustainability?
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 82
1.6. Are protected area revenues managed in a centralized manner?
Benchmarks
Each protected area has its own account and is responsible for managing its own resources.
Protected area revenues may be deposited directly into a single account or fund managed by the System
of Protected Areas.
Revenues from the sale of goods and services may be deposited into a special subaccount or fund in the
Single State Account.
Not all revenues generated, but only taxes, need to be deposited into the General Fund accounts of the
Single State Account.
All revenues generated by the System of Protected Areas must be deposited into the General Fund
accounts of the Single State Account.
Explain the current situation and indicate opportunites for improving it.
1.7. How are budget allocations made for protected areas and the System of Protected Areas?
The System of Protected Areas allocates its budget based on the operating costs of each protected area.
The System of Protected Areas has designed a budget distribution method with variables applicable to
all protected areas.
The System of Protected Areas allocates to each protected area a portion of the budget equal to what
that protected area generates.
The System of Protected Areas allocates a percentage of the budget to each protected area.
The System of Protected Areas allocates the same fxed budget to each protected area.
Explain the current situation and indicate opportunites for improving budget allocations for protected areas.
Benchmarks
The Nature Conservancy 83
1.8. Is the fnancial structure appropriate for fnancial resource management?
Benchmarks
There is a solid fnancial structure that allows revenues, expenditures, and investments to be managed
in a transparent, timely, and responsible manner, including the generation, management, implementa-
tion, and control of resources.
There is a somewhat solid fnancial structure that may allow revenues, expenditures, and investments
to be managed in a transparent, timely, and responsible manner.
The protected areas have a minimum, required fnancial structure.
The existing fnancial structure is not suffcient for revenue management (generation, administration,
implementation, and control of resources).
Explain the current situation and indicate opportunities for improving the fnancial structure of protected areas.
1.9. Are adequate staff resources dedicated to management of fnancial resources and the fnancial plan?
Benchmarks
The System of Protected Areas has suffcient human resources well trained dedicated to management of
fnancial resources and the fnancial plan.
The System of Protected Areas has suffcient human resources with basic skills for management of fnan-
cial resources; but there is no fnancial sustainability plan or staff responsible for it.
The System of Protected Areas has no staff trained to manage fnancial resources; there is no fnancial
sustainability plan or staff responsible for it.
The protected areas do not have a person on staff knowledgeable about fnancial management.
Explain the current situation and indicate opportunities for improvement.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 84
1.11. What role do specialized NGOs play in the strengthening of the System of Protected Areas?
Level of participation:
High-medium-low
Level of impact:
High-medium-low
Decision-making:
High-medium-low
Comment on and/or explain your choices.
1.10 Is a fnancial sustainability plan being developed for the System of Protected Areas? Indicate the state of the
process or the reasons why it is not being done.
1.12. Is there community participation in fnancial management of protected areas? If so, indicate
how and what its benefts are; if not, indicate the reasons.
The Nature Conservancy 85
Description
Responsible for effcient fnancial management, including tasks
such as the keeping and preparation of fnancial records and
reports and the development and maintenance of fee collec-
tion and resource management systems, among other tasks.
Responsible for formulating, implementing, updating, and
evaluating both a long-term fnancial strategy and business
plans for the protected area system.
Responsible for providing maintenance services for vehicles,
infrastructure, general equipment, and other such items.
Responsible for contracting for goods and services, processing
various acquisitions, and managing inventory control.
Responsible for the processes of hiring, induction, training,
and human resource development in general.
Responsible for the development of fnancial, accounting, and
management systems and databases.
Areas
Financial Management –
Accounting – Budgeting
Long-term Financial
Sustainability
General Services
Administrative Contracting
and Inventory Control
Human Resource
Management
Information and Technologi-
cal Support Systems
Does it exist?
Yes No
2.1 What are the biggest challenges to imporve effciency in the existing structures?
2. Ideal Financial Structure for a System of Protected Areas
Inter-institutional commissions
Governmental negotiation
(lobbying, legal reforms)
Participation of other actors (private
sector, academia, civil society)
Conclusion
What priority actions are needed to bring about changes in the legal and institutional framework? Consi-
der the following levels:
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 86
Annex 14. Guidelines for Facilitators of the Assessment of the Legal
and Institutional Framework of the Protected Area System
General Aspects
An assessment is most effective and objective when
facilitated by an outside professional. The facilitator as-
sists in designing an appropriate assessment process for
the specifc situation. Assessments can be conducted
using a variety of approaches, which may include per-
sonal interviews, work in small groups, and/or a work-
shop. The main goal is to promote a general discussion
on the current stage of development, as well as future
directions. The facilitator acts as a moderator through-
out the process, documenting the assessment process
and helping to identify the best approaches to develop
an action plan for improvement. Objective refection
and clear direction are the result of a well-planned and
well-facilitated assessment. When choosing a facilitator,
keep in mind that institutional development profes-
sionals are best suited to perform this task because
they have the necessary skills to plan and implement
institutional strengthening processes.
More so than with any other type of intervention, the
facilitator must build trust and confdence in partici-
pants to conduct an effective assessment. Also impor-
tant is defning the degrees of confdentiality that will
be used with the resulting information. Finally, every
effort should be made to ensure that the assessment
is not being conducted only to comply with donor
requirements.
Before the Assessment
It is important to work very closely with key actors
involved in the protected area system to clarify the pur-
poses of the assessment and jointly design an imple-
mentation process that fts the organizational culture.
During the preparation process, the facilitator should:
n Coordinate the appropriate time for and carefully
plan the assessment.
n Establish contact with public organizations (Ministry
of Finance or Treasury, Planning, Comptroller) and
specialized private institutions having information on
protected area fnancing (TNC, WWF, CI, IUCN).
n Ensure that key actors understand the process, ben-
efts, and expected results.
n Allow the National System of Protected Areas
(SNAP) to determine who should participate in the
assessment (including internal and external partici-
pants) and formally convene the assessment.
Before beginning an assessment process, the use of the
information generated during the assessment should
be discussed to determine the degree of confdentiality
required to satisfy all stakeholders.
During the Assessment
At the beginning of the assessment, the facilitator
should explain to participants the background and
objectives of the exercise and describe the process that
will be used. In addition, the facilitator should cover the
following topics in the introduction:
n Specify the potential benefts offered by conducting
an assessment: identifcation of gaps and priorities,
improved effectiveness, demonstrated professional-
ism to donors, promotion of access to fund, monitor-
ing and documentation of progress, and highlighting
areas of disagreement that can lead to rich discussion
and learning.
n Indicate if an international NGO or other external
organization is in any way involved and its objectives
in participating in the self-assessment.
n Explain why the assessment is most effective if the
process is externally facilitated.
n Emphasize the value of mutual learning and of the
shared vision the assessment can provide.
n Explain the format of the assessment.
n Indicate that discussions should focus on the future.
The goal is to identify and solve problems, not to
dwell on past complaints.
The Nature Conservancy 87
After the Assessment
What happens after the assessment is as important as,
or more important than, the exercise itself. Aspects to
consider:
n The assessment should establish a baseline for
measuring progress over time. Based on assessment
results, an action plan should be developed that will
include the goals to be achieved within a specifc
timeframe. The action plan should also identify the
individuals responsible for meeting those goals.
n Ideally, the facilitator should provide follow-up
support to monitor the progress of the action plan
periodically.
n The aggregate results and recommendations from
the assessment should be used as key input to carry
out initiatives to reform the legal and institutional
framework; ideally, these initiatives should be incor-
porated into the overall fnancial strategy.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 88
Annex 15. Development of a Financial Plan: The Case of Ecuador
This section presents the main components of a fnan-
cial plan based on experience gained in Ecuador.
1
The
information included in this annex has been drawn
mainly from the following documents: a) Financial Sus-
tainability Strategy for the National System of Protect-
ed Areas: 2007–2016
2
and b) Financial Sustainability
Plan for the National System of Protected Areas of
Ecuador.
3
The fnancial plan contains the following ten
sections, summarized below.
1. General Framework of the National System
of Protected Areas
The Constitution of Ecuador states that the Na-
tional System of Protected Areas (SNAP) is a mat-
ter of public interest to ensure conservation of the
protected areas, their biodiversity and the ecological
services they provide in accordance with international
treaties and agreements (article 86, number 3, and
article 248). Further, the Constitution provides that
the State has sovereign rights over biological diver-
sity, natural reserves, protected areas, and national
parks. Their conservation and sustainable use shall be
conducted with the participation of the communities
involved and by private initiative.
According to its Strategic Plan (2007–2016), the
SNAP promotes integrated management of Ecua-
dor’s protected areas through administration of four
of its subsystems: the State Natural Areas (PANE),
Protected Areas of Sectional Governments (APGS),
Community, Indigenous, and Afro-Ecuadorian
Protected Areas (APC), and Private Protected Areas
(APPRI). Of these subsystems, the PANE has the
greatest geographic coverage (see Box A).
1. The fnancial sustainability process of Ecuador’s protected areas was supported by: the Promoter Group (led by the MAE, see Annex 17), the Coalition
to Advance the Implementation of the Program of Work on Protected Areas of the Convention on Biological Diversity, G9 (a group of international
NGOs that coordinates actions and allocates funding), and the Donor Working Group (bilateral and multilateral donors that coordinate investment
priorities for the MAE).
2. Developed by the Ministry of Environment of Ecuador and other agencies, 2007.
3. Prepared by Mentefactura. Ecuador, 2007.
Box A. The State Natural Areas (PANE)
The PANE currently protects 4,757,986 hectares of
land surface (18.7% of Ecuador’s national territory) and
14,110,000 hectares of sea surface that contain bio-
logical and ecological elements of importance to the
current and future well-being of the Ecuadorian people.
PANE contains natural resources of national interest,
such as water sources that supply population centers
and both extensive crop and livestock production areas.
In addition, this territory provides scenic beauty to
the tourism industry, Ecuador’s fourth largest revenue
source. The protected areas are also home to signifcant
cultural diversity represented by the presence of many
indigenous peoples and nations, and Afro-Ecuadorian
populations.
At present, the PANE consists of 35 areas, 13 of which
are larger than 100 thousand hectares (Galapagos Marine
Biological Reserve; National Parks: Yasuní, Galapagos,
Sangay, Llanganates, Sumaco-Napo-Galeras, and Podo-
carpus; Cuyabeno Fauna Production Reserve; Ecologi-
cal Reserves: Cayambe Coca, Cotacachi-Cayapas, Los
Illinizas, Antisana, and Mache-Chindul); and 11 areas with
extensions greater than 5,000 hectares (Limoncocha Bio-
logical Reserve; Wildlife Reserves: Muisne River Estuary
Mangroves, El Zarza, La Chiquita, Isla Corazón, Pasochoa,
Santa Clara Island, and Pululahua Geobotancial Reserve;
El Condor National Park; and National Recreation Areas:
El Boliche and Parque Lago). The remaining 11 areas
(Fauna Production Reserves: Chimborazo and Manglares
El Salado; National Parks: Machalilla, Cotopaxi, and El
Cajas; Ecological Reserves: Cofán-Bermejo, Cayapas
Mataje, Manglares-Churute, Arenillas, and El Ángel; and
El Quimi Biological Reserve) are less than 5,000 ha. The
oldest protected area in Ecuador is Galapagos National
Park, created in 1936, and the newest is El Quimi Biologi-
cal Reserve, created in January 2007.
Source: MAE, 2007.
The Nature Conservancy 89
4. Based on studies conducted by Mentefactura (2007), Villacrés (2005), and others.
Although the Constitution and several laws declare
the SNAP to be of public interest, this recognition is
not included in all sectoral policies and practices. The
legal framework for the management of the System of
Protected Areas is summarized in Table I.
Ecuador’s protected areas play a critical role, not only
because they are guardians of biodiversity so that fu-
ture generations can enjoy natural resources and their
potential uses, but also because these protected areas
generate environmental goods and services that cur-
rently contribute to the economic growth of Ecuador’s
cities and local communities. Table II shows illustrates
some the benefts provided by protected areas.
In Ecuador, 227,986 people (1.75% of the population)
live inside or on the borders of protected areas. These
people depend directly on protected areas for their
livelihood and the maintenance of their traditional
ways of life.
Policy Framework
n Convention on Biological Diversity - OR 647 of
March 6, 1995. (OR: Offcial Governemt Bulletin)
n Millennium Declaration (2000).
n National Biodiversity Policy and Strategy
2001-2010 - ED 2232 of January 9, 2007.
n Forestry Strategy.
Legal Framework
n Laws: on Environmental Management (Law 37, OR 245
of July 30, 1999), on Water (OR 687 of May 18, 1987),
on Tourism (and Regulation of Tourism in Protected Ar-
eas - OR 733 of December 27, 2002), on the Electricity
Sector (and the Environmental Regulation for Electric-
ity Supply - ED 1761, published in OR 396 of August
23, 2001), on Tax Reform (OR 325 of May 14, 2001),
on the Stock Market (OR 367 of July 23, 1998), and on
the Modernization of the State and of Public Sector
Budgets.
n Codifcation of the Forestry Law - OR 418 of
September 10, 2004.
n Statute of the Legal-Administrative Regime of the
Executive Function – ERJAFE.
n Civil Code - OR/ Sup 104 of November 20, 1970.
n Regulations: General Regulation of the Law of Pub-
lic Sector Budgets and Substitute Regulation to the
Regulation of the Organic Law on Fiscal Responsibility,
Stabilization, and Transparency.
Table I. Policy and Legal Framework for the Financial Sustainability of the SNAP
Benefts Description
Table II. Benefts Provided by Protected Areas
4
Recreation and develop-
ment
Generation of water
supply
Tourism is the country’s fourth largest industry. In 2003, Ecuador hosted a total of
403,000 visitors (68% were domestic tourists). Of this number, 260,745 visited mainland
protected areas (Ministry of Tourism, 2003).
34% of the Ecuadorian population (4.5 million people) receive water in their homes
from resources provided by protected areas.
The country’s capital city alone consumes more than 17 billion liters of water per
month to meet the needs of its population (1.5 million people), industry, and
surrounding irrigation areas.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 90
A general picture of the contributions protected areas
make to the livelihoods of these populations was devel-
oped by Lascano and others in 2007.
5
The key aspects
identifed by the study were:
n Provision of food and medicinal plants. Although these
benefts vary by region, the average family beneft is
US$127 per month (an average of US$200 per month
in the highlands, and of US$83.30 per month on the
coast). In the highlands, 80% of these revenues are
attributable to natural resource extraction.
n Signifcant non-monetary contribution. This con-
tribution is evident in the use of resources for home
construction, the manufacture of household articles,
the construction of means of transportation, and the
use of frewood and water.
n The contribution of tourism activities are low in
comparison to extractive activities that put pressure
on protected areas (only 5-7% of households have one
member employed in tourism activities).
2. Financial Background
A frst aspect identifed in the Analysis of Financial
Needs of the SNAP is the signifcant difference in fund-
ing between the Galapagos National Park and Marine
Reserve and the continental protected areas (MAE,
2005):
n Total investment in State Natural Areas in 2003 was
US$8,718,650 (0.05% of the State budget). Of this
amount, 70% was allocated to the Galapagos National
Park and Marine Reserve and only US$2,705,788 to
State Natural Areas in the mainland.
n Taken together, the State Natural Areas in the
mainland have an inventory of goods and equipment
valued at US$1,610,373, equivalent to 38% of the total
inventory of protected areas of the Galapagos. This
situation is partly explained by the high capacity of
the Galapagos National Park to self-generate rev-
enues. In 2003, this area produced 4.8 times more
self-generated revenues than all of the 31 continental
areas combined (MAE, 2006).
n In 2003, 306 people worked in protected areas of
the Galapagos (30% were offcials of the Ministry
of Environment), while 277 people worked in the
continental SNAP (158 were direct employees of
the MAE and 119 were fnanced by project and
donor resources). The Amazon areas have the least
staff in relation to size (Yasuní and Cuyabeno have
a ratio of over 80,000 hectares per employee) and
there are fve areas with no staff assigned to them
(MAE, 2005).
Another key fnding of the fnancial analysis is the defni-
tion of the fnancial gaps.
n The results of the analysis established that the re-
sources available to State Natural Areas on the main-
land only cover 45% of the required funds for a basic
conservation scenario. This shortfall has led to limited
investment, a small number of park guards, and insuf-
fcient equipment to meet each area’s demands and
needs (MAE, 2005).
n Of the amount allocated to State Natural Areas on the
mainland, US$215,741 correspond to investment expen-
ditures and US$1,733,706 to recurrent expenditures
(72% of the latter amount is allocated to personnel).
n The current fnancing of State Natural Areas includes
donor participation, the Protected Areas Fund, and
funding through agreements (see Figure A). The
largest percentage of funding comes from fscal
resources (35%).
n Self-generated revenues in protected areas of the
mainland come almost exclusively from the sale of
Figure A. Funding Sources for State
Natural Areas in Ecuador
Source: MAE, 2005.
5. For this study, 939 surveys were conducted in 21 protected areas with a 5% margin of error.
The Nature Conservancy 91
park entrance tickets (fiscal stamps). Some 87% of
revenues were generated by five areas: Cotopaxi,
Machalilla, Cuyabeno, Chimborazo, and Cotaca-
chi-Cayapas. At the other end of the scale, 13 areas
generated less than 5% of self-generated revenues
in 2006.
3. Objectives
The Financial Sustainability Strategy for the
National System of Protected Areas of Ecuador
(2007–2016) has one general objective and five
specific objectives.
General Objective:
Achieve long-term fnancial sustainability for the
PANE by implementing strategies to generate funds,
ensure effectiveness of expenditure, and establish
structures for participation in the management of the
areas, as well as implementation of communication
strategies and policy advocacy for the SNAP.
Speci?c Objectives:
n Objective 1: Increase funding: the state’s contribu-
tion to the SNAP; contributions from public and
private actors (both national and international) and
self-generated revenue.
n Objective 2: Generate a clear regulatory and insti-
tutional framework to promote participation of pri-
vate and community actors in funding mechanisms
for the SNAP.
n Objective 3: Position the SNAP as a strategic sector
for Ecuador’s economic development, as well as in
public opinion and with decision makers.
n Objective 4: Strengthen the capacity of the National
Park Authority for management and administration
of State Natural Areas and consolidation of other
subsystems of the SNAP.
n Objective 5: Ensure that public, private, and commu-
nity actors participate actively in implementation of
the fnancial sustainability strategy.
4. Determination of Financial Gaps
According to the Analysis of Financial Needs (MAE,
2005), the 31 continental protected areas require
a total of US$6,293,455 per year for the basic sce-
nario and US$12,211,681 for the integral scenario.
The current annual gap is US$3,587,667 for the basic
scenario and US$9,505,893 for the integral scenario
(see Figure B). The results of the 2005 Financial
Analysis indicate that the State Natural Areas have
not improved their financial situation compared to
the level of financing achieved in 1998.
5. Analysis of Investment Priorities and
Funding Strategies
This analysis identified barriers to improving the
system and described the current situation with re-
gard to 13 critical aspects affecting financial viabil-
ity of the system. The process established specific
strategies to address the challenges of the system.
These strategies were grouped into two categories:
a) resource generation (fiscal resources, self-gen-
erated revenues, individual and business dona-
tions, capitalization of the national environmental
fund, international donations, sustainable tourism,
third-party administration, and site-based manage-
ment), and b) consolidation of the SNAP (legal
and institutional framework, social recognition of
the SNAP, positioning of the SNAP, and strength-
ening administrative and financial management
capacities). Table III summarizes the main chal-
lenges and strategies identified to promote financial
sustainability of the National System of Protected
Areas of Ecuador.
Figure B: Financial Needs and Gaps of State
Natural Areas in Ecuador (in millions of US$)
Source: MAE, 2005.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 92
Table III. Matrix of Problems and Strategies: SNAP — Ecuador
Problems
State investment is
insufcient to cover the
fnancial needs of the
SNAP.
Inadequate mechanisms
to increase current
revenues and limited
diversifcation.
There is a lack of involve-
ment of private-sector
actors in the fnancing of
State protected areas.
Few areas are covered by
the protected areas fund
(FAN).
Funding from interna-
tional cooperation has
declined in recent years
and investments often
overlap.
Insufcient investments
to increase and improve
the quality of services
and number of visitors to
the SNAP.
Lack of clarity regarding
participation and joint
administration.
Coordination mecha-
nisms are lacking
involvement by diferent
actors and interest
groups.
Current Situation
State funding only covers 16.4% of the
basic needs of the SNAP. In addition,
there is limited capacity to infuence
budget allocations.
The SNAP is currently fnanced by four
stable revenue sources: the State Budget,
tourism revenues, the protected areas
fund, and other agreements. There is
insufcient investment in the SNAP due
to the limited capacity to generate and
manage resources from diferent sources.
There are few experiences with private
sector support for the management and
fnancing of PAs in the PANE.
The FAN supports only 11 PAs in the
PANE with limited funds for each.
The trend of international cooperation
funding has been declining in Ecuador
since 1998, and there is often overlap
between investments in the same areas
and issues.
Lack of fnancing to improve the qual-
ity of PA services for tourism activities,
such as infrastructure and guide service,
among others.
There is no concerted policy on partici-
pation, joint administration, or delega-
tion. A concession is being developed
as a pilot case study in El Boliche
Recreation Area.
Lack of coordination and participation
in the management of the SNAP, with
limited involement of other actors in
fnancial management.
Strategies
Increase fscal resources
by reorienting State
investment.
Apply and diversify self-
funding mechanisms,
including reinvestment
instruments.
Develop donation instru-
ments to channel resources
from individuals and private-
sector enterprizes.
Capitalize the protected
areas fund.
Coordinate a strategy with
international cooperation
agencies to scope out and
increase funding streams.
Implement the sustain-
able tourism strategy in
protected areas.
Implement the strategy of
third-party administration.
Promote coordination of
actors at the local level,
where they can have an
impact on generating
benefts for communities
(Management Plans).
Expected Situation
The fnancial requirements of the Basic
Scenario have been covered and prog-
ress is being made toward achieving the
Integral Scenario in a signifcant number of
protected areas in the PANE.
Multiple funding strategies are being used
for the SNAP. Innovative fnancial mecha-
nisms are being applied to the manage-
ment of other subsystems of the SNAP.
Companies and individuals recognize the
importance of the PNAs in the PANE and
contribute to their management.
All protected areas in the PANE are in-
cluded in the fap cycle with funds assigned
to support their management.
Coordination channels exist for cooperat-
ing agencies to invest in the SNAP and
their fnancing has increased.
Sustainable tourism management models
involving visitors in PA conservation have
been implemented in the protected areas
and generate revenues for the System.
Local actors are incorporated in the SNAP
through successfully managed third-party
administration strategies.
National, international, and local actors
are involved in management of the SNAP
and participate in fnancing the System.
Local communities receive direct benefts
from the SNAP and are familiar with it.
The services provided by protected areas
are recognized and valued by authorities,
communities, and direct and indirect users.
The Nature Conservancy 93
Table III. Matrix of Problems and Strategies: SNAP — Ecuador (cont.)
Problems
The regulatory and inter-
institutional framework
does not respond to the
fnancial sustainability
needs of the SNAP.
The fnancing of the
SNAP is not a strategic
priority for the State, the
private sector or the civil
society.
Decision makers do not
consider the SNAP to
be an essential factor
for the well-being of
the country’s cities and
development.
Limited autonomy and
few incentives for PA
administrators to
achieve adequate levels
of funding.
Limited capacity for
implementation,
control, and monitoring
of fnancial resources.
Current Situation
Ambiguities in the legal framework hinder
diversifcation of revenue mechanisms. The
current legal framework does not recognize
the possibility of developing new instru-
ments and mechanisms, and there is no clear
process for inclusion of other sectors. There is
confusion about responsibilities at the level
of NPA managers, Regional Directorates,
and the National Directorate for Biodiversity,
Protected Areas and Wildlife (DNBAPVS). This
situation also afects collaboration by diverse
organizations such as local governments and
international cooperation.
There are no mechanisms to disseminate
the contributions the SNAP makes to the
national economy and the development
of the country.
Few decision makers know about the
SNAP and, consequently, have not incor-
porated it into their agenda.
PA managers have limited fnancial
management authority. There are no
incentives for introducing new
fnancial planning models and tools.
Financial management links between the
diferent levels of the MAE are weak or
nonexistent, especially between Ministry
Headquarters and the PA Administrative
Units. This situation creates problems
for fnancial and administrative man-
agement. The government’s capacity
to make strategic fnancial decisions is
limited by the lack fnancial information.
Strategies
Strengthen the regula-
tory and interinstitutional
framework to develop and
introduce a coherent and
simplifed legal basis for
the raising, management,
and efcient reinvest-
ment and expenditure of
resources generated in the
SNAP.
Promote social recogni-
tion of the contributions
protected areas make to
national development,
thereby motivating sup-
port and commitment by
the State, the private sec-
tor, and the civil society.
Position the SNAP in State
policies as a key element in
the country’s development
in order to infuence deci-
sion makers.
Strengthen the national
Environmental Authority
and protected areas for the
implementation of the FSS
of the SNAP.
Restructure administrative
and fnancial management
of the SNAP, simplifying
the planning hierarchy and
generating explicit links
with other management
areas.
Expected Situation
The Environmental Authority has a coher-
ent and simplifed legal basis for the
raising, management, and reinvestment of
resources generated in the SNAP, as well as
their efcient expenditure. There is a solid
structure for the implementation of the
Financial Sustainability Strategy (FSS) of
the SNAP; this structure involves diferent
management actors and allows them to
interact directly with each other.
The SNAP has been positioned in State
policies as a key element for the country’s
development. There is social recognition
of the contributions that protected areas
make to national development.
Political support exists in various State
agencies to apply the FSS of the SNAP.
The Ministry of Environment has a struc-
ture (the DNBAPVS) that implements and
monitors the FSS of the SNAP, providing
incentives for protected area revune gen-
eration. The protected area managers have
fnancial management authority.
The administrative and fnancial manage-
ment of the SNAP is closely related to plan-
ning for the System. The Andean Guaran-
tee System (SAG) has been implemented
throughout the PANE and has resulted in
greater transparency of fnancial informa-
tion on expenditures and contributions to
protected areas from public and private
organizations.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 94
6. Financial Sustainability Strategies
Ecuador has made important progress in implement-
ing a national fnancial sustainability strategy for its
system of protected areas. For example, establishing
clear guidelines for fnancial management, international
cooperation, and policy advocacy (see Box B).
In addition, the process of implementing the strat-
egy of self-generated revenue is presented below,
together with the results achieved. This strategy
focuses on three markets: 1) the corporate and busi-
ness sector, 2) the public at large, and 3) incoming
(international) tourism.
6
The process followed in the
analysis of the above-mentioned markets has includ-
ed four stages: identification of actors, conducting a
market study on the financial mechanisms, develop-
ment of a marketing strategy, and development of
the mechanisms.
6. Foreigners who visit the country.
Fiscal Management Strategy:
1
This strategy aims to
identify whether the barriers that hinder increas-
ing financial resources for the PA system are of an
economic, structural, and/or legal nature. This
strategy will help to determine the best operation-
al model and indicators to manage public funding.
2
For example, revenue and expenditure flow. This
strategy will help to identify reforms to increase
resources such as: administrative reform, informa-
tion management, and legal reform.
International Cooperation Strategy: This strategy
seeks to promote a better articulation amongst in-
ternational cooperation agencies and organizations
in order to optimize efforts and generate synergies
between organizations involved in the financing of
the PA system though a coherent “Country Agenda;”
and improve coordination with the MAE, SNAP, the
Directorate of International Affairs at MAE and
INECI. Particularly, coordination beyond the Gala-
pagos National Park and Marine Reserve, which is
the protected area of greatest interest to interna-
tional cooperation agencies.
Policy Advocacy Strategy:
3
The aim of this strategy
is to ensure that the different initiatives and mech-
anisms proposed to achieve the financial sustain-
ability of the System are known and adopted by key
actors. To this end, decision makers must support
the objectives of the Financial Sustainability Strat-
egy for the SNAP in order to improve co-financing,
accomplish legal reforms, and build capacity. The
development of a policy advocacy strategy requires
identifying actors involved in the implementation
of each financial mechanism. Thus, the strategy
will develop tailored approaches to engage actors,
including specific timing and the key messages to
be conveyed. In addition, the products developed
in the FSS for the SNAP will be interconnected and
linked to other related national and local processes
that can provide additional support.
Notes:
1. Work in progress, only information on the proposed working methodology is available.
2. Annex 18 shows the operation model of public fnance planning in Costa Rica, Colombia, Ecuador, and Panama
3. Work in progress, only information on the proposed working methodology is available.
Box B. Strategies for Fiscal Management, International Cooperation, and Policy Advocacy
The Nature Conservancy 95
7. A cluster is a group of actors from different sectors or industries..
8. This time frame was the agreed upon period for assessing the investments in the SNAP.
9. In addition to the actors involved in the fnancing of the SNAP, other actors that could provide services to the System were also identifed. These
included administrative, fnancial, training and consulting services.
Table IV. Example of Information on Projects Financed by International Cooperation
(Bilateral, Multilateral, and South-South)
Donor Counterpart and/or Name Start End Amount Source
Implementing Agency of Project Date Date Allocated (US$)
U.S. Gov- MAE/TNC/Fund. Parks 2001 2007 1,152,103 INECI
ernment Antisana/Ecociencia/ in Peril (2006)
Rumicocha Foundation 2000
Source: Prepared by Mentefactura, 2006.
7. Identifcation of Actors
The first step was to carry out the “Mapping of Ac-
tors Associated with Conservation Finance.” This
activity consisted of conducting in-depth inter-
views and systematizing the results together with
other relevant information from studies and other
sources. The aim of this activity was to generate a
project matrix showing the sources, amounts, and
uses of cooperation funds for the SNAP, and to de-
velop a proposal for a conservation finance cluster.
7
In Ecuador, the cluster approach has been used to
show the current operation of the sector on a na-
tional level, providing a description of the different
financing actors, their scope of work and how they
are related. This process demonstrated the need for
a variety of communication channels and allowed
the development of proposals involving new actors,
mechanisms and institutions to promote greater
interaction within the cluster. The steps taken in
this stage were:
a) Collection and analysis of information on actors:
This consisted of systematizing information on the
investment lines of cooperating agencies, consider-
ing the amounts invested and the projects in which
they participated from 1991 to 2005,
8
as well as the
cooperation agencies’ priority areas, main activi-
ties, etc. Examples of the information collected are
presented in Tables IV and V.
b) Classifcation of actors identifed: Actors were
classifed as current or potential based on whether
or not they were currently participating in fnancing
9
the SNAP, as well as by activities they carried out and
their area of work. Actors include cooperation agen-
cies, service provider companies (consulting, advis-
ing, etc.), public sector (local governments, the State,
ministries, etc.), private sector (actors with which
strategic alliances could be established), and commu-
nity organizations.
c) Analysis and grouping of actors: Information gen-
erated in the previous step was used to develop the
conservation finance cluster. This approach simpli-
fied mapping of actors and their relations, making it
possible to clarify which actors were needed for the
cluster to operate efficiently. The groups of actors
in the financial cluster included potential clients,
direct suppliers, promoters, the government sector,
and other support sectors (national and international
organizations).
d) Validation and consolidation of donor informa-
tion: Information collected from secondary sources
(including studies by the government agency respon-
sible for international cooperation – the Ecuadorian
Institute for International Cooperation, INECI)
had to be validated with different donors in order
to agree on the level of investments and project
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 96
10. Surveys were administered to Ecuador’s major private companies and to foreigners visiting the country (incoming tourists). Tourism fees were assessed
using information generated by a study of on-site demand from eight protected areas. These survey forms may be requested from [email protected].
11. Steps b, c, d, e, f and g may be outsourced to a company with experience conducting market studies in order to speed up the process and allow the working
team to focus primarily on process design and review and analysis of the results.
Table V. Example of Forms of Operation of the Main Donors
Donor
United States
Government,
through
USAID
Source: Prepared by Mentefactura, 2006.
Operation
The bilateral programs of tech-
nical and economic assistance of
the United States Government
to the Government of Ecuador
offcially began in 1942.
USAID-Ecuador works in areas
of technical and economic
cooperation, coordinating most
of its international environmen-
tal programs and activities with
various national and interna-
tional counterparts, both public
and private.
Scope of work
Five priority areas on a
national level:
- Development of Northern
and Southern Border Areas
- Biodiversity Conservation
- Poverty Reduction
- Strengthening of
Democracy
USAID’s environmental
programs focus on
long-term projects
addressing national and
global environmental
challenges.
Funds (US$)
Analysts estimated
that by 2003 the
funds channeled into
USAID’s biodiversity
conservation program
in protected areas
(through different
NGOs) amounted to
3.8 million dollars.
Source
Ecumenical
Projects Committee
(2001).
programing. Thus, with support from the MAE,
a month-long validation process was conducted
through which input was obtained from 9 of the 31
organizations. One of the key findings was the need
to systematize information regarding the operation
of international cooperation.
8. Conducting a Market Study on
Financial Mechanisms
A market analysis was conducted involving design
and application of surveys and in-depth inter-
views, according to the financial mechanisms and
target audiences
10
identified. The steps taken were
as follows:
11
a) Conceptualization of priority funding mechanisms:
The prioritized mechanisms were conceptualized by
considering the different audiences to which they
were directed (product differentiation approach).
Table VI shows the products and markets analyzed.
b) Defnition of the sample: This was determined
according to the population size of each target audi-
ence and the required sampling error. The market
Products
Corporate/Business
Sector
Conservation logo
Donation of 25% of income
tax to the SNAP
SNAP Passport (gift for clients)
Ecuadorian
Population
“A minute of clean air”
“ Donate your change for a
condor’s nest”
Collection of entrance fees
from Ecuadorians
Incoming
Tourism
Incoming tourist
donations
SNAP Passport
Entrance fees
Table VI. Markets and Products
Markets
The Nature Conservancy 97
study targeted tourism companies and was based on
207 surveys. Additionally, 406 surveys were taken
with incoming tourists, and 500 surveys were taken
by the public at large. Table VII summarizes the
characteristics of the survey process.
c) Defnition of areas for survey administration: In
accordance with geographic distribution of the target
audience, surveys were conducted with companies on a
national level. These surveys focused on higher density
areas (the coast and highlands of the country), while
surveys of incoming tourists were administered in the
preboarding room at Mariscal Sucre International
Airport (Quito).
d) Design of surveys/questionnaires for each target
audience: The sections and questions included
on the surveys were tailored to the mechanisms
to be evaluated and the working hypotheses. The
surveys have four parts: a) an introductory section
explaining the objectives of the survey and other
relevant information, b) a general section focused
on identifying the respondent’s interest in financial
mechanisms and conservation of the SNAP, c) this
section focuses on the financial mechanisms to be
evaluated, aimed at learning the respondents’ per-
ceptions of these mechanisms, the most appropriate
means of implementation, the characteristics of the
service, and willingness to pay, and d) a final section
dedicated to the socio-economic background of the
respondents.
The surveys of companies took 15 minutes to admin-
ister and were conducted by phone using the CATI
System (Computer Assisted Telephone Interviewing),
while the surveys of incoming tourists involved their
taking no more than 20 minutes to independently
complete the questionnaires.
e) Training of survey administrators: The survey ad-
ministrators
12
were trained through a thorough review
of the survey and the required management process.
f ) Processing information: Cross-tabulation tech-
niques were used to determine relations and dif-
ferences in each sampling segment and in the total.
The key results of the market research are shown in
Figures C, D, E, and F.
g) Analysis of results by target audience:
13
The
results of the study were analyzed and used to
develop “General Market Guidelines for Sustain-
able Financing of the SNAP” (see Box C). These
guidelines were organized from two perspectives
aimed at: a) generating strategic guidelines for sus-
tainable financing of the SNAP, and b) providing
strategic market guidelines for prioritized finan-
cial mechanisms.
12. The number of survey administrators varied depending on the sample being considered as well as the length of time allocated to conduct the surveys.
13. One of the most important fndings was the limited level of positioning of the MAE and the SNAP in the national context. This research showed that
development of strategic alliances with institutions from other sectors, together with a clear communication strategy on resource use and its effects, could
improve the positioning of the MAE and the SNAP.
Type of
Study
Corporate/Business
Sector
Surveys and interviews. Sample of
207 respondents drawn from the
Superintendence of Companies,
the Internal Revenue Service, and
the Ecuadorian Consortium for
Social Responsibility.
Ecuadorian
Public at Large
500 surveys of mid- to
high-income shoppers at
Supermaxi Supermarkets and
Fybeca Pharmacies in Quito,
as well as in-depth interviews
with organizations conducting
donation campaigns.
Incoming
Tourism
Administration of surveys in
preboarding rooms at the inter-
national airport. Sample of 406
respondents (tourists over age
17, residents of North America,
Latin America, and Ecuador).
Table VII. Markets and Type of Study
Markets
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 98
F
i
g
u
r
e
C
.
A
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The Nature Conservancy 99
9. Development of a Marketing Strategy
After formulating the guidelines mentioned in the pre-
vious activity, a “marketing plan” was developed for the
different products identifed. The steps followed were:
a) Identifcation of different product lines: This
step involved identifying the specific actions needed
for each mechanism, including the characteristics of
the target groups, and the potential product portfo-
lio. Table VIII shows an example of a product line
aimed at corporate or business donations.
b) Development of strategic guidelines for the promo-
tion of different products: These guidelines were used
to develop a communications campaign and purchase
media space to help position and promote the products
(see Table IX).
c) Development of a media plan: For each product,
media were selected and time frames established for dis-
semination of promotional messages. The communica-
tions media to be used varied depending on the different
target groups. Table X shows suggested media outlets for
dissemination of promotional messages to each segment.
d) Determination of product prices: This step con-
sisted of estimating costs and analyzing the results of
the willingness to pay for each prioritized product (see
Table XI).
e) Strategy for distribution: Different strategies
were developed based on the market segment to
be served. For example, in the corporate sector the
strategy developed consists of employing a sales force
to make door-to-door visits to offer the products of
Box C. General Market Guidelines for Financing the SNAP
The guidelines presented below focus on improving the
image and capacity of the MAE and the SNAP:
n Build a team of people in the MAE to professionalize
resource management and fundraising for the System.
This will be accomplished by strengthening the MAE’s
capacity for marketing, sales, and promotion of new
fnancing mechanisms.
n Promote MAE’s contribution to sustainable develop-
ment in Ecuador through the improvement of natural
resources management. Special attention should be
put on promoting the MAE as a highly qualifed and
effciently managed institution with transparent ma-
nagement of its funding mechanisms.
n Strengthening accountability and communications
mechanisms of the Environmental Authority. This
can be achieved through the development and use
of effcient administrative and fnancial mechanisms
capable of generating periodic fnancial reports.
n Demonstrate and communicate how additional fun-
ding is helping to achieve conservation goals.
n Establish a systematic public relations and commu-
nication process as part of a social responsibility
strategy to facilitate positioning of the MAE and the
SNAP as mechanisms for national development.
n Raise the political profle of the SNAP to improve
national public opinion and in the market in general.
n Prioritize diversifcation of stable, long-term funding
sources for the protected area subsystems.
n Implement mechanisms to effectively allocate funds
and measure the effectiveness and cost-effciency of
expenditure on conservation.
n Promote alignment and harmonization of the interna-
tional cooperation agencies that support the SNAP in
order to avoid duplication of efforts.
n Design and propose strategies to increase State
budget allocation to the SNAPP and promote develop-
ment of new mechanisms and economic instruments.
n The revenues generated through the implementation
of the additional fnancial mechanisms identifed in
this study should be complemented and not replaced
by the State’s budget allocation to the SNAP.
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 100
Media Used to
Communicate
Promotional
Messages
Corporate/Business Sector
Business and airline magazines,
direct mail campaigns, public
relations, national TV, environ-
mental sustainability and business
seminars, high-level events and
advertisements in newspapers of
national circulation.
Ecuadorian Public at large
Specifc to each project to be
implemented jointly with a
retail consultant specialized in
mass communications strate-
gies using TV, radio, newspa-
pers. Promotional messages
should be linked to ongoing
publicity for the SNAP.
Incoming Tourism
Airline magazines, pro-
jection of a video on the
SNAP, airport stands and
collection boxes, use of
billboards, bilingual websi-
te, publicity on Google and
Yahoo.
Table X. Media Used to Communicate Promotional Messages
Markets
Product Line
Corporate dona-
tions for pro-
tection of the
country’s natural
capital
Message
Clearly communicate what
is being offered and appeal
to the sensitivity of the
target groups to motivate
their participation.
Objective
Appeal to the sensitivity of
the target groups, report on
activities carried out, and
account for funds received.
How to Achieve this Aim?
Select an endangered animal
from Ecuador that has been
globally “humanized” and
inspires tender feelings to
be a symbol of the need for
protection.
Table IX. Example of Product Promotion
Source: Prepared by Mentefactura, 2007.
Product Line
Corporate
donations for
protection of
the country’s
natural capital
Positioning
“By helping to protect the SNAP, your
company is having a profound impact on
the protection of some of the most biodi-
verse natural areas in the world. You will
be periodically updated on the use of your
contribution and its impact on conservation.
In addition, the MAE will recognize and pro-
mote your efforts for habitat protection.”
Target Group(s)
Large and medium-
sized companies
that actively sup-
port their com-
munities through
donations or direct
investment in
matters of social
or environmental
interest.
Product Portfolio
Logo for Conservation of
the SNAP.
Contribution of 25% of
income tax to the con-
servation of the SNAP.
SNAP Passport.
Table VIII. Example of the Identifcation of a Product Line
Source: Prepared by Mentefactura, 2007.
the SNAP to different company executives. The po-
tential customers are cultivated through a Customer
Relations Management System (CRM). Table XII
shows the suggested distribution strategies for each
market analyzed.
f ) Operational structure: The structure is central to
the operation of the marketing plan and will be the
“resource-generating machine” for the SNAP. The
suggested structure consists of a business unit which
includes three sections: 1) marketing, in charge of
designing and implementing activities to enhance
The Nature Conservancy 101
Proposed Organizational Structure
Business
Unit
Public Relations and Media
Purchasing Services
Marketing
Marketing
Assistant
Quito Guayaquil
Sales Management
the image of the SNAP and its products, 2) sales,
in charge of fundraising, and 3) public relations
and media, in charge of promotion and dissemina-
tion. (See diagram below on Proposed Organiza-
tional Structure.)
g) Collection of fnancial information: This step fo-
cused on quantifying the market and involved esti-
mating the potential demand for each type of product
offered. This information was then used to determine
associated revenues and costs. Table XIII presents
details on the size of each market segment.
Table XI. Prices Used for the Financial Analysis (US$)
To estimate the demand for
different fnancial strategies,
respondents were asked about
their interest in each of the
products.
In order to establish the level
of demand for the price that
would generate the most fund-
raising proft, the demand for
each product was determined
using top-box responses, and
the willingness to pay for each
product was analyzed.
SNAP Passport
Domestic Tourists 6
Foreign Tourists 40
Donation of 25% of Income Tax
Large companies 24,000
Employees of large companies 50
Medium-sized companies 1,875
Employees of medium-sized companies 25
SNAP Logo
Large companies 15,000
Medium-sized companies 1,300
Tourist Donations
Incoming Tourists 23
Incremental Revenues from Fees
Foreign Tourists 4
Domestic Tourists 1
Distribution
Strategy
Corporate/Business Sector
Door-to-door sales force,
use of a customer relation-
ship management system
(CRM), and public relations
activities.
Ecuadorian Public at Large
The channels used will be those
chosen by the consultant select-
ed as the partner for each proj-
ect. The relationships developed
through sales to the corporate
sector will provide access to
donations from the employees of
the companies visited.
Incoming Tourism Market
Website of the SNAP; points of en-
try to the protected areas; points
of sales and collection boxes in
the country’s main airports; travel
agencies and qualifed tourism
operators; tax on domestic fights;
and a sales team for the corpo-
rate sector.
Table XII. Markets and Distribution Strategy
Markets
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 102
Table XIII. Size of Market Segments
10. Development of Financial Estimates
Based on the information collected, revenue and
expenditure estimates were developed for each mecha-
nism in order to analyze the required levels of invest-
ment and the returns associated with different sce-
narios, recovery periods, etc. The steps involved in this
activity were:
n Identifcation of all operating costs.
n Calculation of initial and additional investments.
n Determination of types and levels of revenues.
n Defnition of the time frame for evaluation.
n Determination of the capital cost to update revenue
and cost fows.
n Calculation of performance measures (net present
value, internal rate of return, etc.).
A comparison of the costs and benefts of different
fnancial mechanisms facilitated choosing those offer-
ing the greatest returns and impact.
Tables XIV and XV show a breakdown of total pro-
jected sales and the consolidated cash fow.
As the tables show, the experience of the National Sys-
tem of Protected Areas of Ecuador provides important
information on both process and outcomes, which can
serve as valuable benchmarks to support the fnancial
sustainability of other protected area systems.
Including the conducting of an annual
campaign generating net revenue of
US$100,000.
Source for Tables XIII-XV: MAE, 2005
Segments Estimated Size Unit
and Products of Segment Description
Large companies 500
Passports 380 employees/companies
Contribution of 25% of Income Tax 380 companies
Employees 128 employees/companies
‘Diamond’ Conservation Logo 48 companies
Medium-sized companies 2,000
Passports 1,360 employees/companies
Contribution of 25% of Income Tax 1,360 companies
Employees 21 employees/companies
‘Gold’ Conservation Logo 375 companies
Incoming Tourism 203,998
Donations 64,780 # of tourists per year
Passports without Galapagos 41,387 # of tourists per year
Passports with Galapagos 25,825 # of tourists per year
Incremental Revenues from Fees 261,738
Foreign Tourists 82,633 # of foreign tourists per year
Domestic Tourists 179,105 # of domestic tourist per year
Ecuadorian Donations
Campaign # 1
Campaign # 2
Campaign # 3
The Nature Conservancy 103
Table XIV. Projected Sales by Product for the First Five Years in US$
Table XV. Cash Flow Summary for the Proposed Projects
CASH FLOW SUMMARY – FSS FOR THE SNAP
YEARS/BUDGET ITEMS YEAR 0 YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
1. REVENUES
SNAP Passport - 348,944 602,517 858,538 858,538 858,538
Donation of 25% of Income Tax - 394,050 624,900 921,030
SNAP Logo - 300,992 601,985 902,977 1,203,969 1,203,969
Tourist Donations - 364,388 728,775 728,775 728,775 728,775
National Donation Campaigns - 100,000 100,000 100,000 100,000 100,000
Total Revenues 1,114,323 2,033,276 2,984,340 3,516,182 3,812,312
2. SALES COSTS - 16,407 28,105 40,264 43,962 43,962
3. SALES EXPENSES - 1,036,207 885,236 1,142,663 1,122,080 1,190,821
4. ADMINISTRATIVE EXPENSES 60,000 60,000 60,000 60,000 60,000
5. GENERAL EXPENSES - 42,000 42,000 42,000 42,000 42,000
6. PRE-TAX PROFIT - -40,290 1,017,935 1,699,413 2,248,140 2,475,528
7. TAXES - -10,073 254,484 424,853 562,035 618,882
8. NET PROFIT - -24,174 610,761 1,019,648 1,348,884 1,485,317
9. PLUS DEPRECIATION 11,480 11,480 11,480 11,480 11,480
10. PLUS AMORTIZATION
11. OPERATING CASH FLOW - -12,694 622,241 1,031,128 1,360,364 1,496,797
12. INVESTMENTS -47,800
13. WORKING CAPITAL - -1,606,827
14. NET CASH FLOW -47,800 -1,619,521 622,241 1,031,128 1,360,364 1,496,798
Segments and products Units Year 1 Year 2 Year 3 Year 4 Year 5
SNAP Passport
Large companies Annual transactions 1,615 2,423 3,230 3,230 3,230
Average revenue per transaction 6 6 6 6 6
Medium-sized companies Annual transactions 1,360 1,428 1,904 1,904 1,904
Average revenue per transaction 6 6 6 6 6
Incoming Tourism Annual transactions 8,277 14,485 20,693 20,693 20,693
Average revenue per transaction 40 40 40 40 40
Subtotal US$ 348,944 602,517 858,538 858,538 858,538
Donation of 25% of Income Tax
Large companies Annual transactions 8 15 23
Average revenue per transaction 24,000 24,000 24,000
Employees of large companies Annual transactions 969 1,938 2,907
Average revenue per transaction 50 50 50
Medium-sized companies Annual transactions 68 68 95
Average revenue per transaction 1,875 1,875 1,875
Employees of medium-sized companies Annual transactions 1,428 1,428 1,999
Average revenue per transaction 25 25 25
Subtotal US$ 394,050 624,900 921,030
SNAP Logo
Large companies Annual transactions 12 24 36 48 48
Average revenue per transaction 15,000 15,000 15,000 15,000 15,000
Medium-sized companies Annual transactions 94 187 281 375 375
Average revenue per transaction 1,300 1,300 1,300 1,300 1,300
Subtotal US$ 300,992 601,985 902,977 1,203,969 1,203,969
Tourist Donations
Annual transactions 16,195 32,390 32,390 32,390 32,390
Average revenue per transaction 23 23 23 23 23
Subtotal US$ 364,388 728,775 728,775 728,775 728,775
National Donation Campaigns
Subtotal Average revenue per campaign 100,000 100,000 100,000 100,000 100,000
Total US$ 1,114,323 2,033,276 2,984,340 3,516,182 3,812,312
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 104
Annex 16. Guide to Formulating Performance
Indicators
1
for Financial Sustainability
Performance indicators are used to define how to
measure the results or changes achieved in the dif-
ferent stages of a project or activity. Indicators can be
of different types:
n Quantitative,
2
for example, the number of fnancial
instruments that have been established in a protected
area or system of protected areas.
n Qualitative, for example, how effectively the fnancial
mechanisms are working.
n Behavioral, for example, protected area systems will
give priority to developing business plans and estab-
lishing fnancial mechanisms.
When direct quantitative indicators are used, yet have
a “general” quality, it may be necessary to include in-
direct indicators that carry more specifc information,
such as the following:
Defning How to Verify the Results
Indicators show the performance standard an activity
must reach in order to achieve a general or specifc objec-
tive, and the desired results associated with that objec-
tive. Thus, indicators provide a basis for carrying out
monitoring and evaluation, which should
specifcally address the following aspects:
n Target group (for whom)
n Quantity (how much)
n Quality (how well)
n Time (by when)
n Location (where)
Fomulating Indicators
A good indicator is:
n Substantial, i.e., the indicator refects an essential
aspect of an objective or result, in very precise terms.
n Independent, at different levels. The same indicator
should not be used for more than one objective, result,
or activity.
n Factual / Objective. The indicator should refect
fact rather than subjective impression. The indicator
should have the same meaning for people involved in
the activity as for outside observers.
n Plausible, i.e., the changes recorded can be directly
attributed to implementation of the activities
undertaken.
Indicators should be based on data that can be obtained
and verifed. Indicators should draw on data from readily
available, reliable sources or data that can be collected
without too much effort.
The measures provided by indicators should be accurate
enough for the indicators to be objectively verifable.
An indicator is “objectively verifable” when different
persons using the same measuring mechanism indepen-
dently of one another obtain the same result.
In the early stages of implementing an activity, indicators
are only “guiding values” with which to analyze the ratio-
1. Adapted from “The Logical Framework Approach”, NORAD.
2. As much as possible, quantitative measures should be formulated in such ways that they can be measured (quantifed).
Expected
Result
Increased
revenues in
all areas of
the National
System of
Protected
Areas.
Direct
Indicator
Entry fees
to pro-
tected areas
(national
parks).
Indirect
Indicators
Purchase of
equipment for
park rangers.
Park administra-
tion offces have
zinc roofs.
Park trails are
marked with
treated wood
signs.
The Nature Conservancy 105
nale of the activity. Indicators must be reviewed when
activities have progressed and the review fnds it neces-
sary to replace the indicators with more specifc ones.
Example of the Development of a Financial
Sustainability Indicator
Expected result
“Increased fnancial resources”
1. Identify the indicator
For example, entry fees to national parks.
2. Determine the target group
For example, national parks where annual revenues from
visitor entrance fees have fallen to less than US$30,000.
3. Defne the quantity
For example, 10 national parks will increase their
revenues from entrance fees by 50%.
4. Defne the quality
For example, maintaining an acceptable level of revenues
at least equivalent to the amount raised in the 1990-
1995 period (over US$50,000 per year).
5. Defne the time frame
For example, between January 2006 and December 2007.
6. Establish the place
National parks close to urban areas in the National Sys-
tem of Protected Areas (SNAP).
7. Integrate the above-defned elements
Indicator: “Ten national parks, close to urban areas, in the National System of
Protected Areas (where annual revenues from visitor entrance fees have fallen
to less than US$30,000) increase their revenues by 50% between January 2006
and December 2007, recovering the level of revenues recorded in the 1990–1995
period in accordance with the standards, fnancial mechanisms, and goals in the
2007 Business Plan.”
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 106
Annex 17. The Promoter Group and the System of
Protected Areas of Ecuador
The process of moving toward the fnancial sustainability
of the SNAP is led by the Ministry of Environment of
Ecuador (MAE) through its National Directorate for
Biodiversity, Protected Areas, and Wildlife, with support
from a broad group of NGOs and cooperation agencies.
Within this institutional framework, a Promoter Group
was formed in 2004 to provide technical, fnancial, and
policy support for the fnancial sustainability planning
process. The Promoter Group consists of: Ministry of
Environment, The Nature Conservancy, Conservation
International, USAID-Ecuador, IUCN, KfW, Nation-
al Environmental Fund, Ecociencia, Fundación Natura,
SNAP-GEF Project, and Mentefactura (a consulting
frm hired to develop the fnacial plan).
The promoter group has been instrumental in sup-
porting the development of the fnancial plan, and has
produced four important outcomes.
a) Creation of awareness of the fnancial sustainability
challenges of the SNAP.
b) Positioning and visibility of the problem on interin-
stitutional agendas.
c) Provision of basic information on the fnancial needs
and current state of the System.
d) As a result of the above achievements, the national
system of protected areas has begun to capitalize on
the results of the project through additional revenue
generation for the System by different sources.
It is recommended that other key non-tradi-
tional actors be strategically involved, such as
the Ministry of Economy (Finance or Treasury),
Ministry of Planning, Ministry of Tourism, the
Comptroller General of the State, and repre-
sentatives from the private business sector and
academia. This includes government actors, in
particular those that have a great infuence on
fnancial decisions in the planning process, as
shown in Annex 18.
The Nature Conservancy 107
Annex 18. Planning and Budgeting Hierarchies in Selected Countries
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Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 108
Annex 19. Sample of Financial Mechanisms:
Market and Non-market Based
Non-market based options
n Government’s budget allocations
n Private capital donations
n Corporate long-term contributions
n Debt-for-nature swaps
n Trust funds
Market based options
“User-pays principle” options: fees and taxes which are
directly based on renewable use of natural resources in
and outside protected areas:
Tourism-based fees and taxes
n Park entry fees
n Recreational activity fees (dive fees, hiking fees,
boat and mooring fees)
n Concession fees
n Hotel taxes
Payments for environmental services
n Watershed protection
n Carbon sequestration
“Polluter-pays principle” options: compensation fees,
earmarked taxes and fnes based on natural resource use
n Fines and damage awards, pollution charges, fuel
taxes
n Environmental compensation
n Natural resource extraction fees (leases, concessions,
royalties, and severance taxes) for: timber, minerals,
oil and gas, commercial-scale fshing
Earmarked revenues which are NOT related to environ-
ment, for instance:
n “Sin taxes” (for example, on cigarettes, alcohol,
gambling)
n Sales tax surcharge on green labeled or non-labeled
products
n Special license plates and postage stamps
Options based on activities outside PAs that could be
earmarked for conservation: Land use taxes, forestry
taxes, grazing fees, mining fees and severance taxes,
oil concessions, lease payments and royalties, sand and
gravel excavation charges
n Real estate taxes
n Water supply, hydropower, and sewage charges
n Pesticide and fertilizer taxes
n Fines (for example, for pollution, illegal logging,
illegal fshing)
n Environmental compensation
n Carbon taxes
n Biodiversity offsets
n Profts from green venture capital funds and
eco-enterprises
The Nature Conservancy 109
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Proyectos. Universidad del Pacífco. Peru. 1999.
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Boyd, Richard, et al. Environmental Fiscal Reform – What
should be done and how to achieve it? World Bank.
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Brealey, Richard A., and Myers, Stewart C. Principios de Finan-
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Bruner A., et al. How Much Will Effective Protected Area
Systems will Cost?
Centro de Derecho Ambiental y de los Recursos Naturales
- CEDARENA. Evaluación del marco legal que afecta el
manejo del Sistema de Áreas Protegidas de Costa Rica.
Costa Rica. 2006.
Chan, Guillermo, and Jiménez, Sandra. Sistema Nacional
de Áreas de Conservación, Estrategia Financiera: Fase 2,
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Brechas Financieras del SINAC 2004-2006. Impresos Ruiz.
Costa Rica. 2007.
Charpentier, Silvia, Dada, Juan José, y Jiménez, Sandra. Siste-
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Financieras 2004-2006. Serviprensa, S.A. Costa Rica. 2005.
The Conservation Finance Alliance. The Conservation Finance
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Coto, Carmen. Diagnóstico para determinar el proceso de
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Devine, Richard, et al. Institutional Self-Assessment: A Tool for
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Francke, M., and Morgan, M.L. La sistematización: Apuesta por
la generación de conocimientos a partir de las Experiencias
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Fundación para el Desarrollo del Sistema Nacional de Áreas
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Financiero del SNAP. Bolivia. 2005.
Gutman P., Davidson S., A Review of Innovative International
Financial Mechanisms for Biodiversity Conservation, WWF,
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Induni Alfaro, Gustavo. Estudio de caso: Sobre gestión de-
scentralizada de las áreas protegidas en Costa Rica, SINAC,
MINAE. Costa Rica. 2005.
Instituto Nacional de Recursos Naturales y Sociedad Peruana
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Naturales Protegidas. Peru. 2002.
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Instituto Nacional de Recursos Naturales. Intendencia de Áreas
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Websites of Interest
Ministry of Environment of Ecuador. Agency responsible for establishing na-
tional environmental policies and coordinating conservation interventions.
National System of Protected Areas of Ecuador (SNAP). Agency responsible
for controling and monitoring conservation and preservation activities.
The Spider is a leading resource for biodiversity economists that allows
searches on a selection of sites on environmental economics, and is spon-
sored by IUCN and WWF.
The Business and Biodiversity Offset Program (BBOP) is a partnership to
explore biodiversity offsets benefts.
Conservation Finance. This site provides information and resources on
fnancing for conservation. It also promotes cooperation and learning about
fnancing strategies among governments, international agencies, and NGOs.
Fundación EcoCiencia. Ecuadorian Foundation for Ecological Studies. Pro-
vides information on the programs and activities it implements in Ecuador.
Environmental Management and Law Corporation (ECOLEX). This site pro-
vides information and research resources.
Fundación Natura. Ecuadorian Foundation for the Protection and Conserva-
tion of Nature.
Detailed information on the feasibility study approach and its applications.
Also presents a clear distinction between feasibility studies and business plans.
National Environmental Fund (FAN). Private, non-proft that supports fnanc-
ing of environmental management for sustainable development of Ecuador.
National Forestry Financing Fund. Data on reforestation processes and
Payment for Ecosystem Services.
Foundation for the Development of the Central Volcanic Mountain Range.
Provides information on forest certifcation processes, coverage maps, etc.
National Biodiversity Institute. Important information on conservation,
biology, and the state of biodiversity in Costa Rica.
National Institute of Statistics and Information. The National Institute of
Statistics and Information (INEI) is the governing body of the National
Systems of Statistics and Information in Peru.
National Institute of Natural Resources. Peru’s public authority responsible
for carrying out and promoting the necessary actions for sustainable use of
renewable natural resources, conservation of biodiversity, and sustainable
management of rural environments.
Situational Analysis of Jamaica’s Protected Area System.
International Katoomba Group gatherings are events for sharing ideas and
developing the implementation of Payments for Ecosystems Services (PES).
Ministry of Agriculture and Livestock of Costa Rica. This site contains infor-
mation on sustainable production processes and an extensive virtual library.
www.ambiente.gov.ec
www.ambiente.gov.ec/paginas_espanol/
4ecuador/areas.htm
http://biodiversityeconomics.
org/the_spider.html
http://www.forest-trends.org/
biodiversityoffsetprogram/
www.conservationfnance.org
www.ecociencia.org
www.ecolex-ec.org
www.ecuanex.net.ec/natura
www.extension.iastate.edu/agdm/
wholefarm/html/c5-65.html
www.fan.org.ec/
www.fonaffo.com
www.fundecor.org
www.inbio.ac.cr
www.inei.gob.pe
www.inrena.gob.pe
www.jpat-jm.org/netcentr/refibrary/pdfs/
SitAnalJaPASystem.pdf
www.katoombagroup.org
www.mag.go.cr
Financial Planning for National Systems of Protected Areas: Guidelines and Early Lessons 112
Ministry of Economy and Finance of Peru. The MEF designs, proposes, and executes
economic and fnancial policies to promote economic growth.
Mentefactura. A private organization that has worked on and supported the develop-
ment of the Financial Sustainability Strategy for the SNAP – Ecuador.
Ministry of Agriculture of Peru. MINAG promotes competitive, proftable, and sustain-
able agricultural, and the appropriate use of sustainable natural resources.
Ministry of Environment and Energy. Governing body for matters related to the envi-
ronment, energy, and telecommunications, in Costa Rica.
Ministry of Environment of Peru. MINAM is the national environmental authority of Peru.
System of Sustainable Development Indicators (SIDES), Costa Rica.
The Nature Conservancy (TNC), Ecuador. This website describes the conservation
programs and activities TNC is involved in.
Peruvian Trust Fund for National Parks and Protected Areas. PROFONANPE provides
stable, long-term fnancing for biodiversity conservation in Peru.
The Latin American and Caribbean Environmental Funds Network (RedLAC). The web-
site contains current tools for improving management of environmental funds.
National Service for Protected Areas. SERNAP maintains representative samples of
Bolivia’s biogeographic provinces through the implementation of policies, strategies,
plans, and programs, and the development of regulations.
National System of Conservation Areas of Costa Rica. The Directorate of the MINAE re-
sponsible for overseeing conservation and protection of Costa Rica’s protected areas.
National System of Conservation Areas of Costa Rica (SINAC). Information and docu-
ments related to the fnancial sustainability process for Costa Rica’s protected areas.
Forest Resources Information System of Costa Rica. Relevant information on timber
extraction permits and sustainable forest exploitation.
The World Conservation Union. IUCN provides opportunities for discussion and the
exchange of information on conservation issues.
World Wildlife Fund. This site presents innovative tools to promote conservation
fnance, as well as extensive information on Debt-for-Nature Swaps, Trust Funds, etc.
www.mef.gob.pe
www.mentefactura.net
www.minag.gob.pe
www.minae.go.cr
www.minam.gob.pe
mideplan.go.cr/sides/ambiental/
www.nature.org/wherewework/
southamerica/ecuador/
www.profonanpe.org.pe
www.redlac.org
www.sernap.gov.bo
www.sinac.go.cr
www.sinaccr.net
www.sirefor.go.cr
www.iucn.org
www.worldwildlife.org/
conservationfnance/
doc_827232269.pdf