Incentive and Market Based Mechanisms (IMBMs)

Financial mechanisms can provide incentives for farmers, communities and private companies to invest in SLM practices. Fiscal instruments or market based mechanisms like payment for environmental services (PES), compensation for climate change mitigation, eco-tourism or eco labelling of sustainably produced products, can directly generate or influence the flows of funds by attracting or redirecting them. Negative externalities caused by land degradation can be internalized through the use of such mechanisms, thus providing an efficient channel to mitigate and tackle these externalities.

When land degrades, it sets off a series of impacts that go beyond its geographical location and the costs are often borne by society in general. In order to avoid these costs, it is necessary for the society to provide incentives for land users to implement measures that prevent land degradation. Incentive and market based mechanisms can be used to facilitate such incentives and compensations and payments and have been recognised as promising incentive systems to encourage the restoration of degraded land. A list of fourteen mechanisms suitable to promote and provide incentives for SLM and UNCCD implementation has been identified:

Type	Mechanisms
Public payment schemes to private land and forest owners who implement sustainable land management practices that maintain or enhance ecosystem services.	1. Permanent conservation easements 2. Contract farmland set-asides 3. Co finance investments 4. Payments for proven investments in land conservation 5. Subsidies and tax incentives 6. Environmental or green taxes
Open trading between buyers and sellers under a regulatory cap or floor on the level of ecosystem services to be provided. The regulation created by the government creates a demand and allows buyers and sellers to trade.	7. Conservation Banks 8. Tradable development rights 9. Trading of emission reductions or removals
Self-organized private deals in which individual beneficiaries of ecosystem services contract directly with providers of those services. These are direct deals between off site beneficiaries and land users responsible for providing the services.	10. Purchase of development rights 11. Direct payments for environmental services 12. Conservation concession
Eco-labelling of products that assures buyers that production processes involved have a neutral or positive effect on ecosystem services. These products are sold to consumers who are willing to pay a higher price.	13. Marketing labels 14. Certification schemes