Introduction

The problem of global biodiversity decline derives from the failure of states to consider the impacts upon global stocks when taking national resource regulation decisions. When stock depletion generates substantial externalities, as is the case with diverse biological resources, then decentralised (i.e., multinational) regulation of these global stocks will be necessarily inefficient. The biodiversity problem is, in effect, the predictable result of an imperfection in the existing global regulatory system with regard to diverse resources; decentralised decisions regarding diverse resources do not take into account the effect they are having on global stocks of biodiversity.

The statement of the solution to the global biodiversity problem is straightforward: decision-making in regard to diverse resources must take these stock externalities into consideration. However, this solution concept runs into the same difficulties as the underlying biodiversity problem, because it also must proceed through the same decentralised regulatory system. As natural resources are national resources, the mere recognition of these regulatory imperfections goes little further toward their solution. It is instead necessary to construct global incentive mechanisms which induce national regulatory actions consistent with the global object.

This chapter outlines the general nature of the global incentive mechanism required to internalise the value of biodiversity, but not until Section 8.6. First, it is necessary to provide a clear depiction of the nature of the problem to be solved; this description will then suggest the nature of its own solution.