As growing experience from around the world suggests, the preservation of biodiversity can only be achieved by taking environmental issues into the heart of economic and financial decisionmaking, particularly into the public budgeting processes and within the wider financial sector – Nik Sekhran, Director, Sustainable Development Bureau for Policy and Programme Support, UNDP.
What's at stake:
Biodiversity includes living organisms and ecosystems which underpin human well-being and economies by providing the essentials to healthy and productive human life such as clean air, food security and fresh water. Investments in biodiversity are investments in sustainable development, contributing directly to poverty reduction, economic sustainability and the full range of Sustainable Development Goals. By maintaining biodiversity and ecosystems, we are retaining the ability of the planet to sustain our prosperity.
But biodiversity is in severe decline. The Millennium Ecosystem Assessment (2005) states that all ecosystems have been transformed by human actions, with the loss of 35 per cent of mangroves, 20 per cent of coral reefs and around half of tropical forests. The June 2012 version of the IUCN Red List named 19,817 threatened species, including: 41 per cent of amphibians, 33 per cent of reef-building corals, 25 per cent of mammals, 13 percent of birds, and 30 per cent of conifers. Persistent overfishing has a severe impact on marine biodiversity and reduced the total biomass of predator fish species by 52 per cent between 1970 and 2000.
Biodiversity provides humanity with innumerable benefits. The diversity of wild plants and animals holds the key to continued food diversity, nutrition, vitamins and economic resilience. But because these benefits are mostly provided without any monetary cost, they are generally taken for granted.
Nature’s services provide enormous value few examples include:
- Pollinator dependent crops contribute 35% of global crop production volume, and an annual market value of US$235-577 billion (in 2015) worldwide.
- Global benefits from coral reefs including tourism, fisheries and coastal protection are estimated at US$30 billion per year (2010).
- The market for Chinese herbal medicine was estimated at US$83 billion (2012).
Biodiversity finance is the practice of raising and managing capital and using financial incentives to support sustainable biodiversity management. It includes private and public financial resources used to conserve biodiversity, investments in commercial activities that produce positive biodiversity outcomes and the value of the transactions in biodiversity-related markets such as habitat banking.
As shown in the figure below, most currently identified biodiversity financing sources are derived from public funds, in particular domestic public budgets, biodiversity-positive agricultural subsidies, and international transfers of public funds. Neither the current level of investment in biodiversity, nor the resource mobilization needs have been well articulated at national scales. Moreover, lacking concrete information on recipient country expenditures, needs, aspirations and priorities, development partners have been reluctant to commit support to reach biodiversity management goals and objectives.
The CBD has supported the calculation of the global need for financial resources to fulfil the 2020 strategic plan. The analysis, conducted by the High-Level Panel on the Global Assessment of Resources for Implementing the Strategic Plan for Biodiversity 2011-2020, was based on the 20 Aichi Biodiversity Targets (adopted in 2010) and pointed the way to identifying financing gaps and ultimately mobilizing finance. The top down costing exercises were conducted at global and national levels and estimated the global financing needs for achieving the CBD Strategic Plan at between U$S150-440 billion per year by 2020. This implies investment requirements ranging from 0.08 to 0.25 per cent of global GDP. The need for more accurate assessments through a bottom up approach of biodiversity finance flows, was one of the reasons why BIOFIN was developed.