Results for Biodiversity Financing in Latin America and the Caribbean: A Decade of Implementation of UNDP's BIOFIN Initiative in the Region

By: Ana Lucía Orozco Rubio, Edited by Mariana Bellot (LAC BIOFIN UNDP Team). With the contributions of: Francis Arzu, Mayra Casas, Xavier Gordillo, Alonso Martínez, Miguel Martínez, Natalia Meza, Arturo Mora, Diego Olarte, Isabel Rodriguez, Nicolas Xanthopoulos (BIOFIN UNDP National Coordinators) and Esteban Delgado (UNDP Chile)

Introduction

Latin America and the Caribbean (LAC) are home to some of the most diverse ecosystems on the planet and they in turn provide endless ecosystem services, such as the regulation of the hydrological cycle that influences other continents from the Amazon Basin, carbon sequestration, soil fertility and breeding areas for all types of marine fauna from the Pacific and Atlantic coasts. Since 2010, UNDP has recognized the LAC region as a Superpower in Biodiversity [1] , since in addition to the largest stock of natural capital worldwide, it contains a very valuable intangible heritage associated with it, such as sustainable practices for biodiversity from the Indigenous peoples of the region and the knowledge associated with the millenary cultures of the region and their descendants such as the Aztecs. Mayans, Mexicas, Incas; as well as Afro-descendant groups such as the Garifuna people (Honduras, Belize, Guatemala, Nicaragua), Afro-Colombian and Afro-descendant communities of Colombia, and Quilombolas (Brazil) who have developed production systems and livelihoods that are friendly to nature.

However, we are losing and deteriorating biodiversity drastically and at an unprecedented rate (the extinction rate is between 10 and 100 times higher than it has been in the last 10 million years). The global economic impact of this loss is estimated at US$2.7 billion annually by 2030 according to the World Economic Forum, and this implies substantial losses for agriculture, fisheries, and tourism that depend directly on biodiversity and its ecosystem services essential for our survival on our planet, such as the provision of water for human consumption, agricultural use and energy, and climate regulation.

The Finance for Biodiversity BIOFIN initiative was proposed by UNDP at the 10th Conference of the Parties (COP-10) to the Convention on Biological Diversity (CBD), as a global response to the growing need for biodiversity finance. BIOFIN is a global collaborative network managed by UNDP to develop and implement an evidence-based methodology that improves biodiversity outcomes using finance and economics. Its approach is based on identifying financial gaps and containing and reducing them through the optimization of the use of existing resources, avoiding future costs and reducing negative costs, as well as mobilizing new financing flows. BIOFIN's comprehensive methodology enables countries to develop a Biodiversity Financing Plan and resource mobilization solutions, thereby directly addressing Target 19 of the Kunming Montreal Strategic Plan for Biodiversity 2021-2030 and indirectly the other 22 Targets that require financing to facilitate the implementation of National Biodiversity Strategies and Action Plans (NBSAPs) and other relevant policy instruments national level. The Initiative works with governments, the private sector, and civil society to integrate biodiversity into financial and policy planning.

Of the pioneering countries in BIOFIN in LAC were Chile, Costa Rica, and Peru, and later Belize, Brazil, Colombia, Cuba, Ecuador, Guatemala, Mexico, Peru, and more recently Argentina (in 2022). These countries developed the BIOFIN Methodology that culminates in the development of a Financial Plan for Biodiversity where in most cases, the BIOFIN National Steering Committee prioritized financial solutions for the implementation stage (as of 2018). The Principal/Advisory Committee is formed by the Representation of the Ministry of Finance or Finance, the Ministry of the Environment, Planning, and, in some cases, the Central Banks and National Institutes of Statistics and the UNDP Representation in the country, and is a body that allows for the timely and effective appropriation and implementation of the Initiative in the countries.

Through the implementation of these experiences, results have been achieved such as the mobilization, catalyzing, and alignment of financing for biodiversity in the order of US$948 million. There are also results in strengthening the enabling framework of policies and the institutionalization of biodiversity finance promoted by BIOFIN.

In the framework of COP16 of the Convention on Biological Diversity, we would like to share some of these results to expand them and pave the way through the lessons learned to contribute to the achievement of the goals

Results by Country

Below are some of the most prominent results following the implementation of financial solutions in several countries in Latin America and the Caribbean, with an emphasis on the strategies adopted, the achievements made, and the challenges that remain.

Common efforts

Under partnership with the Task Force on Nature-related Financial Disclosures - TNFD, UNDP through its BIOFIN initiative carried out a study in 2022-3 an assessment to establish the baseline for nature-related financial disclosures in Colombia, Costa Rica, Ecuador, Peru and Mexico for this sector. This report or action plan that some countries delivered will allow these countries to advance in the disclosure of nature-related financial information according to the TNFD criteria and recommendations.

Lessons Learned and Best Practices

The implementation of financial solutions in the region has provided valuable lessons that can guide future efforts and the development of the next generation of Financial Plans for Biodiversity in LAC and other countries:

The generation of information, analysis, and data (such as the analysis of expenditure and financial needs, BER, and FNA) relevant to understanding, raising awareness of, and managing biodiversity financing is essential.
Seek the diversification of sources of financing both in the Financial Plan and for the attention of issues and financial solutions for biodiversity. The combination of public, private, and international cooperation resources has proven to be effective in various contexts, especially when there are changes in development policies in countries.
For a robust biodiversity financing plan that generates results, short-, medium- and long-term solutions must be identified, such as Cuba's BFP.
Integrating biodiversity into national development financing and sectoral policies: Including biodiversity in the planning of sectors such as agriculture, forestry, tourism and mining has improved the effectiveness of financial policies and allows financial resources to be redirected from these portfolios that can be transformed from negative to neutral and/or positive for nature. Such is the case of Finagro in Colombia, Programa Más Mujeres Mas Natura-PSA Mujer in Costa Rica and works for taxes in Peru.
Related to the previous one, the mobilization of financing from banks for national development, the popular economy, as a strategic actor to finance a transition to sustainable finance that integrates climate and nature and allows dispersion through first-tier instances such as cooperatives, microfinance institutions or accredited organizations for its implementation. Such is the case of CONAFIPS in Ecuador and RAICES in Costa Rica.
Optimization of management and investment strategies of sub-national, sectoral, environmental, or protected area funds. For example, in the Mexico City Fund, FONACON in Guatemala, and the Environmental Fund in Cuba.
Use of analysis, innovation, and technology, for the development of portfolios that are positive for nature and people, risk reduction, inclusion, etc. Online training course and software of SARAS of Peru and Ecuador, the Footprint of the Future campaign in Costa Rica, with a traceability system of the trees planted and donations.
Improve the efficiency of existing financial resources, including strengthening results-based budgeting and management processes, such as subnational (departmental and municipal) budgeting in Guatemala to include biodiversity.
Strengthen enabling conditions of the national, subnational, and local policy framework, and the financial system to promote the redirection of sustainable financing from various sources.
Design multipurpose instruments that allow both addressing and improving biodiversity, climate and economic resilience, and fair inclusion.
Co-creation and participation of users in the design of financial instruments at each stage and decision-making, especially for stakeholders due to their importance for the conservation and sustainable use of biodiversity such as indigenous peoples, local communities, and women.
Incorporate from the beginning of processes and in the design of financial plans interest groups from the financial sector, primary of the economy, and civil society, particularly in the face of analysis of subsidies and incentives that affect people directly.
Strengthening governance schemes: The participation of multiple actors, including local governments, indigenous communities, and the private sector, has been crucial to the success of the initiatives; For effective participation and institutionalization of efforts, existing governance schemes (national, sectoral) are often an important space for improving and strengthening the issue of finance for biodiversity.
Development of customized financial solutions, understanding the portfolio, and starting point where it starts, there is no single recipe for all needs.

Conclusion-Closing

The BIOFIN Initiative has been a crucial catalyst for the mobilization of financial resources in Latin America and the Caribbean, promoting biodiversity conservation through innovative approaches. Although the challenges are considerable, the experiences in the region offer important lessons and opportunities to advance the integration of biodiversity into economic and financial planning. With continued engagement and the implementation of strategic recommendations, countries in the region can consolidate their progress and contribute significantly to the global conservation of biodiversity.

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Sources:

BIOFIN-UNDP, 2024. Semi-annual report for donors.
UNDP. 2010. Latin America and the Caribbean: A Superpower Biodiversity. UNDP in collaboration with UN Environment, ECLAC, and the Secretariat of the Convention on Biological Diversity.
Johnson, Justin Andrew; Ruta, Giovanni; Baldos, Uris; Cervigni, Raffaello; Chonabayashi, Shun; Corong, Erwin; Gavryliuk, Olga; Gerber, James; Hertel, Thomas; Nootenboom, Christopher; Polasky, Stephen; Gerber, James; Ruta, Giovanni; Polasky, Stephen. 2021. The Economic Case for Nature: A Global Earth-Economy Model to Assess Development Policy Pathways. © World Bank, Washington, DC. Retrieved October 23, 2024, from http://hdl.handle.net/10986/35882 License: CC BY 3.0 IGO

[1] In a report developed by UNDP in collaboration with UN Environment, ECLAC, the Secretariat of the Convention on Biological Diversity, and others

Results for Biodiversity Financing in Latin America and the Caribbean: A Decade of Implementation of UNDP's BIOFIN Initiative in the Region

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