This chapter presents the step-by-step BIOFIN methodology (see Figure 2.5) as well as activities required to frame a national overarching implementation structure. The BIOFIN methodology has five technical steps. Each of these steps are interrelated and may overlap:

• The Biodiversity Finance Policy and Institutional Review (Chapter 3) analyses the policy and institutional context for biodiversity finance in the country, to establish the baseline for the BIOFIN Process. This analysis examines the relationship between the state of nature and a country’s fiscal, economic, legal, policy, and institutional framework. This helps identify how biodiversity and ecosystem services support national SDG goals and visions and the key policy and institutional drivers of biodiversity change; and catalogue existing biodiversity finance mechanisms.
• The Biodiversity Expenditure Review (Chapter 4) uses detailed data on public, private, and civil society budgets, allocations and expenditures to inform and promote improved biodiversity policies, financing, and outcomes. The assessment accounts for “direct” expenditures, where biodiversity considerations are the principal concern; and examines and estimates the value of “indirect” expenditures, where biodiversity considerations are a secondary concern.
• The Financial Needs Assessment (Chapter 5) makes a comprehensive estimate of the financial resources needed to achieve the national and subnational biodiversity targets articulated in national biodiversity plans and other key national planning instruments. The assessment clarifies the “costable actions” in these instruments and links them to biodiversity results; generates budgetary data that can be used to advocate for biodiversity investments; helps prioritize biodiversity strategies and actions based on biodiversity and cost criteria; and estimates unmet biodiversity financing needs.
• The Biodiversity Finance Plan (Chapter 6) is the guiding document for implementing the most optimal finance solutions to reach national biodiversity targets. It uses the evidence gathered throughout the entire BIOFIN Process to prioritize the most feasible and impactful finance solutions. The plan is a national document engaging the public sector, private sector, and civil society. It goes beyond the mobilization of additional resources to address all four finance results: generate revenues, realign expenditures, deliver better, and avoid future expenditures.
• Implementing Finance Solutions (Chapter 7) guides countries on how to continue the BIOFIN Process once the Finance Plan concludes. This chapter shifts the focus to the implementation of individual finance solutions, to help promote institutionalization of biodiversity finance functions in countries, and ensure adequate safeguards and sound M&E frameworks.

Figure 2.5: The BIOFIN Methodology

Section 2.3 elaborates on the establishment of the BIOFIN Process in countries in a manner that ensures the technical work feeds into policy development. It reviews the requirements and strategies to start the process in countries, as well as the modalities to engage and communicate with stakeholders and decision makers. From the start, the BIOFIN approach and methodology should be calibrated to the national context, and help create an environment conducive to exploring new and scaled finance solutions.