Biodiversity— an investment priority
Biodiversity is “nature” – life on Earth. Biodiversity includes living organisms and ecosystems that underpin human well-being and economies by providing the essentials to a healthy and productive human life, like clean air, food security and fresh water. Investments in biodiversity are investments in the Sustainable Development Goals (SDGs), contributing directly to poverty reduction, resilience and long-term economic growth and sustainability.1 Nearly half of all human beings are directly dependent on natural resources for their livelihood. Many of the most vulnerable people depend directly on biodiversity to fulfil their daily subsistence needs. By preserving biodiversity and ecosystems, we are retaining the ability of the planet to sustain our prosperity.
Biodiversity is in severe decline due to a combination of conflicting private and public interests, incoherent policy and governance, and insufficient financing. Although at least
US$52 billion is spent on biodiversity per year globally,2 this is against an estimated annual financing need of between US$150 billion and US$440 billion.3 This funding gap is a major challenge, hampering our achievement of both the Convention on Biological Diversity’s (CBD) Strategic Plan and the SDGs. However, it can be overcome – it is between just 0.2 percent and 0.6 percent of global GDP.4
We need a shift towards a new investment and policy paradigm that better incorporates the economic value and financial benefits of biodiversity. Companies and the financial sector are not investing adequately in biodiversity despite no shortage of liquidity in the world. The Biodiversity Finance Initiative (BIOFIN) and this Workbook will support this changing paradigm and the integration of biodiversity into public finance management, financial planning, and the financial system.
A new framework for biodiversity finance
Biodiversity finance5 is the practice of raising and managing capital and using financial and economic incentives to support sustainable biodiversity management. It helps leverage and effectively manage economic incentives, policies, and capital to achieve the long-term well-being of nature and our society.
BIOFIN is a UNDP-managed global partnership working with countries on biodiversity finance. Thirty-six countries already have started the process.6 BIOFIN uses detailed country-level assessments to develop a biodiversity finance plan, drawing on qualitative and quantitative data, innovative methodologies, and expert input. It provides an innovative, stepwise and adaptable approach that enables countries to:
-
Assess the policy, institutional, and economic context for biodiversity finance and map existing finance solutions;
-
Measure and analyse current biodiversity expenditures, from the public and private sectors, donors and non-governmental organizations (NGOs);
-
Make a reliable estimate of the finance needed to achieve a country’s biodiversity goals, and compare this to current biodiversity expenditures and other resources available; and
-
Develop a biodiversity finance plan that identifies and mobilizes the resources and policies required to implement the most suitable finance solutions.
BIOFIN starts with the deeper understanding of the drivers of biodiversity loss and ultimately leads to the identification, prioritization and implementation of actions—the finance solutions—that result in positive outcomes for biodiversity and our society. Many of the actions prioritized through the BIOFIN Process are framed as “finance solutions”. A finance solution is an integrated approach to solve a specific problem or challenge by the context-specific use of finance and economic instruments. It is built on a combination of elements that includes one or more finance instruments, financing sources, lead agent or intermediaries, beneficiaries or principal stakeholders, and the desired finance result. Thorough assessments and screening processes should build an evidence base from which to identify, prioritize and implement finance solutions. Meeting finance needs requires a complementary mix of solutions, adapted for every country, as shown in figure S.1.
-
Reforming subsidies harmful to diversity in Sri Lanka, where aligning fertilizer policy to environmental goals could save US$150 million per year.
-
Enhanced partnerships between private and public stakeholders in the Seychelles tourism sector for better redirecting Corporate Social Responsibility tax revenues to fund biodiversity programmes.
-
The development of partnerships and impact frameworks for issuing and managing green bonds in Costa Rica and green sukuk in Indonesia.
-
Avoid future expenditures through strategic biodiversity investments and policy changes;
-
Deliver betteron conservation through improved effectiveness, efficiency and synergies;
-
Generate revenuestargeted towards biodiversity; and
-
Realign expendituresto reduce negative impacts and improve positive outcomes.
BIOFIN actively seeks buy-in from finance and environmental stakeholders and decision makers (e.g. ministries of finance and environment, innovative corporations, leading NGOs) to identify and mobilize policies, resources and institutional capacities to implement biodiversity finance solutions that are:
-
Politically realistic, drawing on knowledge of relevant institutions and public finance management;
-
Financially sound, showing the returns on biodiversity investments, backed by an economic case considering the distribution of the costs and benefits; and
-
Integrated into the wider sustainable development agenda, contributing to more effective, efficient, and equitable sustainable biodiversity management and development.
Figure S.1: The BIOFIN Approach
Investing in the conservation and sustainable use of biodiversity is a fundamental determinant for achieving the SDGs. The successful uptake of finance solutions is strengthened by a convincing business case for investing in biodiversity, aimed at reaching both the public and private sectors. BIOFIN aims to be integrated into relevant country-level processes in order to influence and sustain change.
Endnotes
