Reflecting on the effectiveness of the Convention on Biological Diversity in local economic development

A case study of tourist infrastructure projects in Ohrid, Macedonia.

Internship Report 2014 66 Pages

Business economics - Economic Policy



1.1 Preface
1.2 Design of the study
1.3 Location of study area

2.1 Population
2.2 Economy of the Republic of Macedonia
2.3 Employment
2.4 Land use

3.1 Definition of biodiversity
3.2 Existing threats to biodiversity
3.3 Biodiversity in Macedonia and in the lake Ohrid region
3.4 Sectors affecting biodiversity in Ohrid region
3.5 Environmental Agreements
3.6 United Nations Convention on Biological Diversity (CBD)
3.6.1 Objectives of CBD
3.7 National environmental law and Protected Areas
3.7.1 Trans-boundary Watershed Treat
3.8 Reflecting on the effectiveness of CBD






1.1 Preface

It was once believed that achieving both economic growth and environmental protection simultaneously was nearly impossible. This belief was popularized by Simon Kuznets in 1992 in his concept reflected in the Environment Kuznets Curve (EKC). The EKC aimed to explain how indicators of environmental degradation tend to worsen as modern economic growth occurs until the average income reaches a point over the course of development. In Southeastern Europe, the EKC seems to hold an element of truth as natural resources over the past decade have been under pressure from urban and industrial activities. However, it is worth mentioning that Republic of Macedonia has taken significant steps towards solving environmental degradation through the formation of Ministry of Environment and Physical Planning (MEPP).

Environmental economics recognizes that the world’s natural capital underpins all development, and that it is becoming scarcer as human demands exceed earth’s long-term carrying capacity therefore sustainable development cannot take place unless environment and development policies are integrated in the decision making process. On the contrary, conventional economics aims at maximizing financial returns and often assumes that the environment is simply an externality. Conventional economics furthermore assumes that growth and technical progress will offset all resources and environmental limits. (Narasaiah, 2005)

Population is also an underpinning cause of environmental degradation particularly biodiversity.It is estimated that by 2015, approximately one billion people will be added to world’s totalpopulation. A rapid growth in population presents a great challenge to the economy andbiodiversity. Biodiversity is crucial to life on earth and continuous stress presents an imminentdanger to life itself. Since 1992, the international community has jointly been trying to curtail therate of biodiversity loss and ensure equitable use of genetic resources. In 1992, in Rio de Janeiro,Brazil, the United Nations Conference on Environment and Development (UNCED) passed anInternational Convention on Biodiversity (CBD) with targets were to be realized in 2010(Convention on Biodiversity (CBD, 2005).

The convention’s failure to achieve 2010 targets set in 1992 pushed for new targets thatestablished at the 2010 Conference of Parties (CoP) meeting in Nagoya, Japan. The new CBD targets were to form the basis for biodiversity conservation for a decade, until 2020. The aim ofthe new targets is to halve loss of natural habitats and increase nature reserves to approximately 17 percent of the world's land area by 2020 through the Programme of Work for Protected Areas (PoWPA); the targets also take into consideration addressing underlying causes of biodiversity loss across all sectors of society.


1.2.1 Rationale of the study

Reflecting on the words of Unilever Chief Paul Polman at Rio +20 (2012) "We have to bring thisworld back to sanity and put the greater good ahead of self-interest, economic or environment policies we implement today will affect future generations within and beyond our national boundaries. This interconnectedness was captured in Rachael Carson’s 1962 book Silent spring and later in the Brundtland report of 1987 which gave birth to the concept of sustainable development. After the Earth Summit in 1992, sustainable development has had growing importance in guiding several development policies and decisions.

The term “Sustainable Development ‘’has been defined in numerous ways, with consideration tothe Brundtland report, “Sustainable Development is development that meets the needs of thepresent without compromising the ability of future generations to meet their own needs.” (UnitedNations, 1987) According to the World Bank, to meet the needs of the future generationsdepends on the current balance between social-economic and environmental objectives duringdecision making.

A number of tourist infrastructure projects mainly hotels built along the shoreline of the LakeOhrid, in its Macedonian part, present an interesting example of the current confrontation,between diverging interests and needs, ultimately between different models of economicdevelopment; on one hand, those focused purely on capital accumulation and financial growthand, on the other hand, those inspired by the sustainable development principles - possible lessimpactful tourist activities to be proposed as alternatives to foster local economic development inan internationally known region in the Macedonia. Economic pressures and profit maximization have motivated the construction of tourist infrastructure projects along the shoreline of LakeOhrid, in a location of particular naturalistic value. Lake Ohrid is one of the oldest lakes inEurope and is habitat to several relic and endemic species; it is shared by Macedonia andAlbania, about two-thirds and one-third respectively. Macedonia’s side of Lake Ohrid was in1979 inscribed as World Heritage Natural site by the World Heritage Committee at UNESCO.The following year, the town of Ohrid was listed as Cultural Heritage, and the ensemble becomethe current mixed site.

Lake Ohrid is protected by National Law; additionally, the governments of Albania andMacedonia signed an agreement (Lake Ohrid Conservation Project (LOCP) for the protectionthrough management of Lake Ohrid in 2004. The realization of the large tourist infrastructureprojects along the shoreline of Lake Ohrid may soon have far-reaching ecological implications inMacedonia and beyond national boundaries. The tourism industry in itself is based onconsumption, which produces waste. Pollution (chemical and solid waste), deforestation, landdegradation are potential effects of the tourist infrastructure projects that may eventually lead toirreversible loss in biodiversity. My thesis intends to examine the possible consequences of themost recent tourist infrastructure projects (hotels and apartments) by primarily using theconceptual and operational tools given by the CBD.

1.2.2 Objective of the study

This thesis aims to be a starting point from which to generally understand how local economic development especially local tourism affects biodiversity, it intends to analyze the relationship between selected local economic activities (tourist infrastructure projects in particular) and the biodiversity loss in the Ohrid region of Macedonia.

There is a strong and mutual relationship between economic development and biodiversityconservation; both biodiversity conservation and economic development have an element ofimproving of well being of citizens. In most developing countries land is the single mostimportant factor of production-torn between land use for economic development and biodiversityconservation, there is no mechanism or remedies to internalize the consequences of the loss inbiodiversity. According to the UNEP report “state of the planet’s biodiversity, Key Finding from the Millennium Ecosystem Assessment, ”biodiversity worldwide is on the decline at anunprecedented rate and scientists estimate that between 150 and 200 species become extinctevery 24 hours thus approximately 1,000 times higher than the natural rate of extinction”(UNEP, 2010).

The social-economic phenomena such as unemployment, lax environment legislationenforcement in Macedonia have been the main drivers of biodiversity loss; there is overlap andduplication among bodies responsible for the enforcement of environment legislation, inmanaging forests, especially in protected areas, and there is an overlap of duties between theMinistry of Environment and Physical Planning and Ministry of Agriculture, Forestry, andWater. Tourism is a growing sector of country’s economy employing over 10,000 people andgenerating a significant portion of Ohrid’s regional GDP and it will account for approximately 1.5% of the National Gross Domestic Product (GDP) in 2021 rising to 6.1%. (Dimoska & Petrevska, 2012) The unsustainable construction of tourist infrastructure in the Lake Ohrid region has accelerated biodiversity loss through pollution air, noise and waste disposal and change in land use (encroachment of natural habitats).

The overall objective of this study is to understand whether and how the ratification of CBD has impacted the decision making process in Macedonia, in relation to the realization of economic development initiatives.

1.2.3 Specific objectives of the study

The study is intended to further investigate the conceptual and operational links betweenMacedonia’s National Development Strategy and the country’s National Biodiversity Strategy.

Ultimately, try to assess citizen participation and the impact of the tourist infrastructure projectson biodiversity in the Ohrid region, especially in the light of CBD (Articles 3, 6, 8 (a) and 13)

1.2.4 Hypothesis

Developing of tourist infrastructure projects has contributed to loss of biodiversity in the OhridRegion.

Local communities concerned are not consulted or encouraged to participate in tourist infrastructure development decisions.

Local communities face a dilemma between economic gains from tourist infrastructure projects and biodiversity conservation.

1.2.5 Scope of the study

This study focuses on the city of Ohrid, in the southwest of Macedonia, and its surroundingterritories. The main focus of this thesis is to analyze local economic development - with aparticular focus on tourist infrastructure and their effects on the biodiversity - in Lake Ohridregion of Macedonia. Weak environment law enforcement combined with the current land usepatterns (habitat encroachment) directed towards unsustainable economic development activitiesare the major drivers of biodiversity loss at a global scale; economic activities ranging fromagriculture to tourism that rely on biodiversity are also negatively impacting on the sameresources.

1.2.6 Methodology

This section explores the approach and methodology used in data collection, to operationalise the research questions. The process began with problem identification and the intention to address threats to biodiversity as a result of local economic development.

The second step involved developing a research proposal supported by secondary data-studies carried out on the topic1.

This thesis uses internet-based qualitative literature review in sustainable development andbiodiversity. It also takes into account some of the studies conducted in the region such as the country study for biodiversity and data from the United Nations Convention of Biological Diversity Handbook, Global Biodiversity Outlook, Biodiversity Strategic Action Plan of Macedonia, World Bank development indicators, and several journals and articles.

To acquire in-depth information on the relationship between tourist infrastructure projects and biodiversity, qualitative interviews and an online survey were carried out to support the literature review. In addition, semi-structured face to face interviews were conducted using a voice recorder for the purpose of confirming existing secondary data. Face to face interviews were also used for the face validity advantage. In cases where interview prospects were unavailable, structured questions were sent to them by e-mail and Skype interviews were organized. Interviews were targeted towards members in the local government (Municipality of Ohrid), academic institutions (St Kliment University), citizens of Ohrid, and members of international organizations (GIZ). During the primary research process the seven stage interview method as described by Kvales was used in the following order: themazing, designing, interviewing, transcribing, analyzing, verifying, and reporting. (Kvales, 1996)

1.2.7 Limitations

- Availability of information: Limited information is published about the particular topic. Secondly, some experts were unavailable for consultation.
- Time and cost factor: The process of research was short due to time and cost constraints.

Table 1: Framework and timeframe

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1.3 Location of study area

1.3.1 Description and Geography

In order to develop this thesis a case study area was selected. The study was undertaken in Ohrid region (shown on the map in figure 1), situated in the Southwestern part the Republic of Macedonia. For the purpose of this thesis Macedonia instead of the Former Yugoslav Republic of Macedonia (FYROM) is used for matters of simplicity. Greece heavily contested the name Macedonia, as it is also the name of Greece’s northern territory.

Greece views the Republic of Macedonia’s use of the name as a claim on its northern territory known as Macedonia. The Republic of Macedonia is located in the heart of the Balkan Peninsula between 40°50' and 42°20'N.L. and 20°27'30"and 23°05'E with total surface area of 25,713 square kilometers bordered by Serbia to the North, Greece to the south, and Albania to the West and Bulgaria to the East.

Figure 1 Map of the republic of Macedonia

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Source: Macedonia Atlas:www.infoplease.com

The territories of the Republic of Macedonia consist of several geological formations. Thelandscape is mostly undulating hills, mountains and valleys; Rhodope ranges lie in the east andthe Sar-Pindus group of mountains (Mount Sar) in the west which consists of several mountains including Korab, Galicica, and Baba (Pelister) mountains. The land is mainly nourished by the river Vardar, Lakes Djoran, Prespa, and Ohrid.

Culturally, the Republic of Macedonia has a rich cultural heritage and history. HistoricallyMacedonia was the crossroad between several civilizations and influences from Byzantine to theOttoman empires. The legacy of the different influences is reflected in the architectural remains;for example Byzantine architecture with St.Naum monastery being one of the most prominent

Figure 2: Greek amphitheatre and Roman Basilica

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Photo by Kinywamaghana

Politically, Macedonia’s history was a turbulent one characterized by a constant struggle amongBalkan powers to possess the territory (Macedonia) for its economic wealth. Invadedsuccessfully by Romans, Byzantine, and Ottomans until the San Stefano Treaty (1878) where alarge part of the country was given to Bulgaria. During the Second Balkan war, in 1913, onceagain Macedonia was divided and parts distributed among Greece, Serbia, and Bulgaria. Later,the remaining part of Macedonia joined the union and eventually formed the Kingdom of Serbs,Slovenes, and Croats in 1918 at the end of the First World War. After World War II theMacedonian territory of Vardar which was initially under Serbia was declared as the independentYugoslavian Republic. President Tito soon recognized Macedonians as a population with their own right and a distinct language and culture. In 1991, Macedonia gained its independence and became a UN member state two years later under a provisional name the Former YugoslavRepublic of Macedonia (FYROM). The name Macedonia has since then been a point of contention between Greece and the republic of Macedonia, as Macedonia is also a name of the northern Greek territory resulting in trade embargoes from Greece and delayed approximation process towards the European Union.

1.3.3 Description of the Study Area

Lake Ohrid covers an area of 358.2 kilometers squared with an 87.5 kilometer shoreline. It is the deepest and geologically the oldest lake in Europe that formed approximately four million years ago. The lake is located in the Balkan Peninsula, shared between the republic of Macedonia in the southwest and Albania in the east. Two thirds of the lake’s surface belongs to Macedonia and the remaining third to Albania.

Lake Ohrid lies at the foot of the Galicica Mountain and Lake Prespa is located behind Galicica,east of Lake Ohrid. According to hydrological analysis, lakes Ohrid and Prespa are linked bysmall channels that run through the Galicica Mountain. It is estimated that forty to sixty percentof water in Lake Ohrid comes from Lake Prespa which is 150 meters above the former and waterfrom Prespa flows into Lake Ohrid through underground springs and channels in GalicicaMountain. On the Macedonian side, the Sateska and Koselska Rivers are the largest contributorswhile Pogradec and Verdova Rivers are the largest contributors on the Albanian side.

The water flows out of Lake Ohrid through the Black Drin River located in Struga, which flowsnorth into Lake Skhodra and the Adriatic Sea through Albania. Every 11 years, all the water inLake Prespa is replaced by new water and it takes about 70 years for all the water in Lake Ohridto be replaced.

There are three large cities and smaller villages that lie on the shores of the Lake; two cities inMacedonia and one in Albania, Ohrid, Struga, and Pogradec respectively. These cities are alsomajor tourist destinations in summer. The study area of the thesis covers the Macedonian side ofthe Lake Ohrid, cities of Ohrid and Struga. Ohrid and Struga receive the highest number of tourists accounting for 58.2% and at 25.5% respectively (Ministry of Environment and Physical Planning, 2008)

Figure 3 A map showing Lake Ohrid and the three major cities (Ohrid, Struga, and Pogradec)

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Source: Google maps


2.1 Population

Macedonia’s population is experiencing an upward trend bringing the total population of 2.1 million people with a growth rate of 0.23% in 2012. A significant percentage of inhabitants live in the urban areas; according to the 2012 census 59% of the population live in the cities with the highest concentration in the capital Skopje. This factor has left the rural areas depopulated. Skopje is the most densely populated region with approximately 333 inhabitants per square kilometer; this is ten times higher than the Vardar region which is the least populated. (State Statistical Office, Republic of Macedonia; 2011)

Ethically the population comprises of Macedonians, Albanians, Turkish, Romas, and Serbs.Macedonians are Slavic people who are mainly eastern orthodox Christians. Other religions inMacedonia include Islam, Buddhism, Hinduism, and ethnic religions. The population of thestudy area, the Ohrid region is mainly comprised of Macedonians, Turkish, and Albanians.

2.2 Economy of the Republic of Macedonia

After the disintegration of Yugoslavia in 1991, the Republic of Macedonia as an independent and landlocked country suffered an economic downturn and soon followed by positive economic growth in the mid 1990s. The government dedicated efforts to tightening its monetary policy stabilizing inflation and consolidating its fiscal policy. In 2001 during the Albanian insurgency and later during the Euro zone financial crisis in 2009 due to strong economic ties between Macedonia and the EU, total output of Macedonia fell drastically. According to the 2009 Preaccession Economic Programme report 2009-2011, 60% of Macedonia’s export is to the European Union (Government of the Republic of Macedonia, 2009).

Today, Macedonia is an upper middle income country that relies heavily on foreign investment.In the World Bank’s ease of Doing Business Report 2013 Macedonia is ranked in 23rd positionout of 185 economies (World Bank Group, 2013). Over the years the Republic of Macedonia hasgone through a transition and implemented market-based economic reforms to foster economygrowth and improve the standard of living. According to the International Centre for Settlementof Investment Disputes, in order to create a favourable environment for investors, Macedonia isparty to approximately twenty one bilateral investment treaties and a member of World TradeOrganisation (WTO), since 2003. Furthermore, Macedonia is signatory to three Free TradeAgreements (FTA) namely Central European Free Trade Agreement (CEFTA), Stabilization andAssociation Agreement, and European Free Trade Agreement (EFTA). Despite all efforts tocreate a friendly investment atmosphere, Foreign Direct Investment remains low in Macedoniawhen compared to other countries in the region.

Macedonia has one of the lowest GDP per capita in Europe with average growth rate of 3.3 %.Services contribute to the biggest share of the country’s GDP approximately 50% followed byindustry at 30% of total GDP. A big percentage of Macedonia’s exports are destined for the Eurozone markets.To this effect, developments in the Euro Zone are crucial to Macedonia’s economy.For example in 2012, the country experienced a sharp drop in exports by 10.2% and GDPstagnated with meager growth of 0.3% as a result of the Euro zone crisis. (Kotevska, 2013)

Table 2: Growth rate of real GDP per capita

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Source:State Statistical Office,Republic of Macedonia

The approximation to the European Union has been a strong incentive for reform andachievement of goals in the National Development Plan. The Republic of Macedonia is in theprocess of harmonizing the national legislation with the European Union Aquis Communautaire, that is the cumulative body of European Community laws, comprising the EC’s objectives,substantive rules, policies and, in particular, the primary and secondary legislation and case law - all of which form part of the legal order of the European Union (EU) (European Union, 2007).

2.2.1 Local economy in Ohrid

Ohrid’s economy as of today is a mixture of both the traditional sectors, based on agriculture andfishing and modern or transition sector, tourism and previously manufacturing. The modernsector as devised by Solow experiences sustainable economic growth, it depends less on land andhas constant returns to capital and labour. On the contrary, traditional sector as devised byRobert Thomas Malthus, land is the main factor of production with diminishing returns to capitaland labour. (Stern 2010)

In Yugoslavia, Ohrid was an economically prosperous city with flourishing tourism, electrical,and textile industries (modern sector) which employed approximately half the city’s population.During the transition era, it was a matter of time before countries in the former Soviet bloc(Communist) caught up with Yugoslavia (Socialist), confronting the same unintendedconsequences of economic reforms required to bring socialist states into the world economy.(Woodward, 1995) Privatization of state-owned industries eventually led to their closure including Ohrid’s major textile industry. As a result there was prevalence of large scale unemployment not only in Ohrid but in Macedonia as a whole.

Ohrid’s economy has mainly been based on tourism and fishing until very activities heavilypolluted the Lake Ohrid. Pollution of Lake Ohrid partially contributed to the risingunemployment in the Ohrid region; as fish stocks and tourism declined. To solve the pollutionissue the Government of Macedonia commissioned the construction of a purification plant.

The Ohrid administration debt is a major challenging facing the purification plant. About eight years ago the Municipality of Ohrid inherited a 33million Euros debt from the previous administration which the current administration has since been trying to pay off. In 2005 the Balkan Traveller published a new article that Lake Ohrid was endangered because of electricity debt the administration owed to ESM-EVN. The electricity company turned off the power supply to the purification system on Lake Ohrid.2

2.3 Employment

In this study I describe the employment statistics of Ohrid in order to understand how this haspartly contributed to environmental degradation, loss of biodiversity. Republic of Macedoniaexperiences a high proportion of long term unemployment due to structural factors and outflowof skilled labor force. Despite growth in GDP between the periods 2006 to 2012, unemploymenthas not improved. The rate of unemployment is estimated at over 30%. (KPMG, 2012) (SIDA,2009). In Ohrid, population stands at 25,000 permanent inhabitants with an estimated 30% rateof unemployment. The growing rate of unemployment has consequently put pressure onbiodiversity; as people tend to overlook the sustainable use of biological resources to fend fortheir livelihood.


1 The proposal was reviewed and approved by the supervisor after necessary changes were implemented.

2 “The Ohrid Lake in Macedonia Endangered Because of Electricity Debt and Political Squabbles.” Balkan Travellers, March 24, 2005, http://www.balkantravellers.com/en/read/article/463


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Title: Reflecting on the effectiveness of the Convention on Biological Diversity in local economic development