As governments and financial institutions respond to the economic impact of covid-19, it is crucial to ensure that an increased portion of future stimulus and investments serve to protect and restore the natural environment.
2020 was supposed to be the “super year” for biodiversity. Building on the Aichi strategic plan adopted in 2010, the release of the “ZERO DRAFT OF THE POST-2020 GLOBAL BIODIVERSITY FRAMEWORK” was well underway until the COVID-19 pandemic disrupted the remaining schedule for the rest of the year.
However, this delay in the scheduled rollout has allowed for more time to contemplate the post-2020 framework. Additionally, recent economic stimulus packages could provide new funding opportunities for ecological and environmental conservation projects. With this newfound time, we must ask how finance has traditionally played a role in protecting biodiversity and how it will support the conservation and restoration of biodiversity in the future? Many financial tools already exist in the market that can be employed to help achieve the goals of the overall strategic plan.
As governments and financial institutions respond to the economic impact of covid-19, it is crucial to ensure that an increased portion of future stimulus and investments serve to protect and restore the natural environment. To do so, policy makers, regulators and investors must consider and utilize the financial tools available in biodiversity finance.
Why Biodiversity Finance?
Conserving biodiversity is paramount for our planet. The myriad of benefits stemming from a healthy ecosystem and rich biodiversity, such as climate stability, carbon sequestration, freshwater resources and food sources, all require considerable funding to achieve, which is why biodiversity finance is a critical lever we must pull for our fight against climate change and protect biodiversity.
Biodiversity finance is a new concept that has been mentioned more frequently by academia in recent years. It generally refers to the practice of raising and managing capital to support and conserve biodiversity. Funding for biodiversity projects can come from public sources such as government subsidies, private sources such as impact investments, or a mixture of the two.
An Enormous Funding Gap Exists to Conserve Biodiversity.
Despite a diverse array of financial instruments and products, there is still an enormous funding gap for biodiversity conservation. A preliminary report “estimated that the global investment (in biodiversity conservation) required amounts to between US$130 and $440 billion annually. However, the current global expenditures for biodiversity conservation amount at US$52 billion.”1 Instruments such as debt-for-nature swaps, biodiversity business incubators (venture capital) and wetland banking are some of the more prevalent financial mechanisms used today, but there are many other avenues to help minimize the funding gap.
Leverage Financial Tools to Channel Capital into Biodiversity.
Currently, biodiversity financial tools generally fall under two categories: government-related and market-related mechanisms. The following table is not an exhaustive list, but it does cover many common types of funding mechanisms in use today.
Although many funding options already exist, we will need to explore policy incentives and practical solutions to channel funding from economic stimulus packages into environmental conservation efforts. Moreover, private, public, and third sector organizations must collaborate to develop financial incentive programs that prioritize biodiversity in any economic recovery and our collective goal of mitigating climate change. In pursuit of accelerating the adoption biodiversity finance mechanisms, the NRDC has been and will continue to work with researchers, financial institutions, and other stakeholders to discuss and encourage innovative solutions to promote ecological and environmental conservation.
1. CBD High-Level Panel (2014). Resourcing the Aichi Biodiversity Targets: An Assessment of Benefits, Investments and Resource needs for Implementing the Strategic Plan for Biodiversity 2011-2020. Second Report of the High-Level Panel on Global Assessment of Resources for Implementing the Strategic Plan for Biodiversity 2011-2020. Montreal, Canada
By Alfonso Pating
This article was originally shared by NRDC.