Nature For Sale But Who s Buying? Biodiversity Banking in Malua, Sabah.

Abstract: There is a growing shift in environmental management tools from the traditional command and control approach to market mechanisms where environmental goods and services are assigned market values to generate incentives for environmental protection. In November 2007, the Sabah state government announced a joint venture with New Forests Pty. Ltd. to set up a Wildlife Conservation Bank at Malua Forest Reserve. In doing so, Malaysia will be the first country to sell biodiversity credits in Southeast Asia. Targeting oil palm businesses, energy companies and the biofuel sector as potential buyers of credits, it is a presumed move to improve the palm oil industry s environmental portfolio by engaging them in conservation initiatives. This study seeks to understand how the Malua bank will be established, local stakeholder perceptions and the potential challenges and benefits of implementing biodiversity banking in Malaysia. The study was conducted based on literature review and interviews with identified stakeholders. Although there is great potential and interest for the adoption of market mechanisms in Malaysia, it was found that there are still concerns regarding the transparency, credibility and permanence of the scheme owing to a lack of legislative support and obligation for biodiversity offsets at a national or state level. Furthermore, the newness of the scheme meant that there are gaps in knowledge and expertise among local conservation groups and government agencies which may affect the outcome of the Malua bank. The final details on the bank set up are still under deliberation and will only be finalised in June 2008. As such, the conclusions of this study remain preliminary. Further work needs to be done on whether voluntary or regulatory offset schemes would work best in Malaysia and how benefits from market schemes can be passed on to local and indigenous communities in an equitable manner.