Fines and penalties are included in the OECD PINE database as part of “Fees and Charges” but are separated in this taxonomy due to their importance as conservation finance tools. Fines and penalties in conservation are charges for “unplanned” damage to nature. In comparison to offsets, license fees, and other charges, fines and penalties are used to economically punish actors who have damaged nature (illegal hunting, forestry, etc.), to discourage a repeat of harmful actions (i.e. charging economic damages following an oil spill), and to collect revenue that can then be used to remediate the impacts on nature and on the economy. Because the primary goal of fines is to discourage certain illegal behaviors, the enforcement of the fines and penalties are as important as the prices or levels set for payment. One example for conservation is the use of Natural Resource Damage Assessment (NRDA) in the USA. For example, the Deepwater Horizon oil spill in the Gulf of Mexico resulted in fines and penalties of approximately $65 billion for BP (The Guardian, 2018).
Bonus Malus
Incentive mechanism that awards biodiversity friendly behavior or decisions a bonus payment and non-friendly a malus payment. Has been applied on private land owners to encourage establishment of spatially adjacent (or for certain species spatially dispersed) protected areas to existing protected areas by awarding the land owner a bonus payment (or to pay a malus) when the conservation is adjacent to existing protected areas. Oregon's Conservation Reserve Enhancement Program (CREP), used malus payments to assist the recovery of salmon and trout species through the creation of riparian buffers along stream habitat.
Penalties and other compensation for unplanned environmental damage
Compensation paid by a company and/or individual condemned for an environmental crime and/or unintentional damages to the environment. Prevalent environmental crimes include illegal wildlife trade, illegal waste, manmade disasters and spills, etc. Charges can include fixed fines, remediation costs, and economic damages. The compensation is usually determined by the law. The amount of the compensation might be determined by an assessment of economic loss and remediation costs.
The 2010 Deepwater Horizon oil spill in the Gulf of Mexico has been described as the worst environmental disaster in the United States, releasing about 4.9 million barrels of crude oil making it the largest marine oil spill. The area of the spill impacted approximately 8,332 species, including 1,200 fish, 200 birds, 1,400 mollusks, 1500 crustaceans, 4 sea turtles, and 29 marine mammal species.
In 2016, British Petroleum, the owner of the site, agreed to settle out of court and pay more than $20 billion USD in damages. The funds were directed to restore the local area where the spill took place. Read about the restoration efforts here.
Penalties and fines for under performance
Improved fisheries equipment and associated laws and regulations
Regulations, rules, and laws including associated fines and penalties for non-compliance are a market-based policy to incentivize fisherfolk and commercial enterprises to reduce their direct and indirect impact on the fisheries and related ecosystems by directing fishing activities towards less damaging or more sustainable equipment use. Revenue collected through penalties are less important than changing the incentive structure for the fishery actors.
There are several law outfits that help guide the creation and enforcement of legal and management frameworks needed for sustainable management of wild and farmed fish and shellfish resources. The Environmental Law Institute takes an interdisciplinary approach to understanding compliance and enforcement that combines legal and enforcement expertise with quantitative analysis of fisheries surveys and enforcement data. Read about how the Environmental Law Institute is helping to ensure compliance and the development of sustainable fisheries here.
Penalties for illegal hunting and collecting
Any penalty or fine charged for illegal hunting and collecting. Well controlled hunting and collecting of valuable species can reduce uncontrolled losses (i.e. through poaching) and generate revenue for management of natural areas if adequately priced, managed and enforced. Over-exploitation can lead to species endangerment or extinction and broader ecosystem damage. revenues from penalties and fines can be allocated to habitat and biodiversity protection.
India’s Wildlife Protection Act of 1972 is a comprehensive piece of legislation that regulates sanctuaries, national parks, and zoos among other protected locations. Its primary aim is to curb the illegal trade in wildlife and the derivative parts.
Penalties for illegal hunting and collecting in India range from 7 years imprisonment and a monetary penalty of not less than Rs 10,000 to 3 years imprisonment and a fine not less than Rs 10,000 for the killing of a Schedule 1 species. Examine the Wildlife Protection Act of 1972 here.
Fees, Penalties and Management Expenditures for Environmental (and Social) Impact Assessment
Environmental (and Social) Impact Assessments (EIA) are conducted to evaluate the environmental and social risks of a development project including mining, hotels, and other large infrastructure projects. A range of expenditures and investment to preserve nature are associated with the EIA process including permitting fees, expenditures for implementation of the environmental and social management plans, performance bonds, insurance products, biodiversity offsets, etc. Additionally, penalties may be directly triggered by non-compliance to the EIA and its associated management plans.