Market signals are not adequate to motivate market participants to protect biodiversity, which is a public good, or an externality, so biodiversity conservation can’t be left up to the marketplace. Regulatory actions can be taken, which simply disallow certain types of activities for taking place, such as clearing patches of forest for more pastureland and forestland in certain areas, such as a natural reserve. Regulatory policy can also ensure that the supply chain of a product is sustainable and not associated with deforestation, or be moratoria on the use of certain resources. Mobilization of financial resources by giving incentives for biodiversity conservation or public investments, such as government investment in degraded land, is a more market-mediated approach. Permit systems are also more market-mediated and can be successful in limiting the use of resources. Government usually uses financial resources to induce certain kinds of conservation activities. There are a variety of ways to internalize the externality of ecosystem services that are under threat, and this can be done through bioprospecting or eco-labeling. Losses and damages is a category of funding in which rich countries compensate poor countries for human-induced climate change issues.
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