Fiscal Sustainability and Biodiversity of Ecuador

Abstract

With Ecuador's Constitution of 2008, a series of legal and institutional instruments have recognized the role of the natural heritage for the sustainability of the economic system and society's welfare. However, these regulatory developments do not have a financial counterpart in the long term. This article explores the fiscal sustainability regarding environmental matters based on the financing needs for biodiversity conservation during the period 1970-2015. Based on the analysis of public environmental expenditure and the budget for Management of biodiversity, and estimating the investment costs in biodiversity foreseen for the implementation of the National Biodiversity Strategy, we generate an indicator that allows the measurement of the financial gap for the protection, restoration and proper management of biodiversity. According to the results, the resource gap needed to protect biodiversity from 1970-2015 is equivalent to 190.34% of GDP in 2015, representing US$ 191 billion in 2015. The article concludes with policy recommendations.