Goods and services derived from biodiversity (known as BioTrade) in Peru have grown by 20 per cent in the last five years, generating significant revenue and promoting sustainable development, while simultaneously supporting pro-poor development.
But despite these benefits, Peru's BioTrade sector still faces many challenges – from financing and value addition to certification and contamination from GMOs – which are preventing it from reaching its full potential.
These are among the findings of a new study released this week by the United Nations Environment Programme (UNEP) in collaboration with ProNaturaleza (Peruvian Foundation for the Nature Conservancy).
The study, BioTrade - A catalyst for transitioning to a green economy in Peru, shows that if the country could double its annual trade in biodiversity-based products to 40 per cent between now and 2020, it could increase sales from the 2009 level of US$ 110 million to US$ 2.7 billion. Such an increase would also add more than 250,000 new jobs over the next decade and increase carbon sequestration revenues from US$ 154 million to US$ 750 million.
Currently, there are more than 10,000 people working in Peru's BioTrade sector, mainly in rural areas, and they receive what is considered a fair price for their products. In general, prices for biodiversity products are 30 per cent above the average for other commodities in Peru, according to the study.
The study identifies several challenges facing the country's BioTrade sector. For example, financial institutions in Peru do not regard BioTrade businesses as competitive enough to warrant bank financing. While the average bank interest for small to medium enterprises (SMEs) in Peru is 9 per cent, it is above 25 per cent for biodiversity-based businesses.
Another major challenge cited is that, at the time of the study, no company in Peru was using a sustainability certificate to provide value added to its product. In addition, there is a concern that an eventual introduction of genetically modified organisms (GMOs) could compromise the country's native species.
Peru is recognized internationally as the leading exporter of organic coffee and bananas, and it is also the second largest producer of organic cocoa and various nutraceuticals and functional goods, such as maca, yacon, sacha and inchi.
Through the signing of Free Trade Agreements and other open market policies, Peruvian producers have access to more than 2.4 billion consumers around the world, a market that represents a more than US$ 38 trillion per year of its Gross Domestic Product (GDP).
The report sheds light on national and international regulations, certification and labeling processes and the role of the private sector and public-private partnerships. It also outlines specific areas for policy reforms and investments, in both the public and private sector, which can help the BioTrade sector realize its growth potential.
Recommendations include taking into account biodiversity and BioTrade in the on-going trade and economic partnership agreements; developing a national investment strategy for the BioTrade sector; enhancing research and development; building capacity and introducing economic and fiscal incentives.
The goal of the study, says José Luís Silva Martinot, Minister of Foreign Trade and Tourism, is "to guide these businesses under the framework and principles of sustainable BioTrade to ensure sustainability over time, as well as to promote better income generation throughout the entire value chain, working in coordination with the private sector and with the support of international organizations."
Recognizing the potential of the sector, Peruvian companies have aligned their business and investment strategies accordingly. Between 2007 and 2010, the private sector invested at least US$ 7 million in BioTrade, fuelling growth, employment and profitability for the sector.
Peru has 84 out of the world's 104 climate zones and is among the top 10 countries with the greatest biodiversity. This rich natural heritage offers many opportunities for expanding market linkages with BioTrade products.
Implemented by UNEP with financial support from GIZ, this study on Peru is part of the Capacity Building for BioTrade project, which covers three countries, including Namibia and Nepal. Based on the UNEP green economy approach, it aims to create decent jobs and livelihoods, stimulate sustainable economic development and reduce poverty, while conserving natural resources.
Peru is one of the most biodiverse countries in the world. It has a strong BioTrade sector. Peru has over 5,500 endemic plant species with 42 different known applications. BioTrade in Peru has experienced a steady annual growth of around 20 per cent over the last few years. Almost 95 per cent of all Peruvian BioTrade production is destined to the export market. In 2010, the sector recorded a growth of almost 200 per cent compared to 2009 and total exports valued over USD 320 million.
Ecotourism, an activity that is also based on the sustainable use of biodiversity, is one of the most profitable branches of the national tourism industry, contributing over USD 2 billion to the economy each year.
In 2009, the country exported USD 225 million in organic products.
Environmental degradation is increasing over time and damaging the natural capital of the country, posing a significant economic cost in the long run. Peru currently has 72 protected natural areas, covering 14 per cent of the country’s territory. Nevertheless, deforestation remains an important challenge. According to the Ministry of Environment (MINAM), seven million ha have been deforested, causing a USD 45 million loss for the Peruvian state.
Download the full report free of charge at http://www.unep.org/greeneconomy/Portals/88/documents/research_products/BioTrade_Peru.pdf .
United Nations Environment Program (UNEP) www.UNEP.org
Press Release dated February 28, 2013