Investment in Natural Capital: Organizational Form and Consequences on the Characteristics of Biodiversity Restoration Projects

Abstract: Experts claim that half of the world’s wetlands have disappeared since 1900. This increasing erosion of natural capital and biodiversity can be explained by two phenomena: the importance of degradation and the lack of investment in green infrastructures. However, institutional devices are emerging to encourage investment in biodiversity, at international level (e.g. Convention on Biological Diversity) and national levels (e.g. mitigation banking legislation in the USA). To explain this lack of investment, scientists endeavor to bring up evidence of the ecological efficacy of biodiversity restoration or try to raise the question of cost and benefits of restoration projects. We think that organizational and institutional constraints can also prevent investment in biodiversity restoration. In order to study this assumption we conducted four field studies of restoration projects in France and an analysis of the emergence of the market for wetland mitigation in the US. These analyses allowed us to study different governance devices to frame transactions involving investment in aquatic ecosystem. We insist here on the problem of specificity of biodiversity and the problem of uncertainty associated to biodiversity management. Firstly, because the design of restoration projects has to take into account the great complexity and diversity of ecosystems. Secondly, because the uncertainty is high when partners try to anticipate the outcomes of ecosystem restoration. We show that biodiversity restoration projects are usually governed by hybrid forms that offer coordination devices more adapted than markets or hierarchies and that the elements associated to the ecological performance of projects are linked to the organizational efficiency of the system by transaction cost issues. In this way we show that there is a tension between an objective of high environmental expectation for conservation and an objective of increasing incentives to invest in biodiversity restoration.