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FINANCING
NATURE:
Closing the Global Biodiversity
Financing Gap
Foreword and Executive Summary
II
Contents
Foreword 1
Executive Summary 4
The Economic Case for 8
Protecting Biodiversity
Current Global Biodiversity 11
Conservation Financing
Biodiversity Conservation 13
Funding Needs
The Biodiversity Financing Gap 15
Closing the Biodiversity 16
Financing Gap
Conclusion 28
Financing Nature: Closing the Global Biodiversity Financing Gap
1
FOREWORD
The world is in the midst of one of the most dramatic
extinction episodes in history.
The signs of biodiversity loss are everywhere. Tropical forests, our greatest
stores of biodiversity and carbon, are in retreat. Coastal wetlands, vital
to migratory birds and sheries and also a signicant global stock of
carbon, are deteriorating worldwide. Although extinction is a natural
phenomenon, scientists estimate that our planet is now losing species at
1,000 times the natural rate of one to ve per year. If we continue on the
trajectory we’re on, we face a future where 30–50% of all species may be
lost by the middle of the 21st century.
Climate change is exacerbating this loss, causing coral reef bleaching,
rampant growth of insect disease in forests, and severe expected loss of
Arctic species. And it is a vicious circle—biodiversity loss also aggravates
climate change. In the Amazon, hydrological changes caused by
deforestation may permanently dry out millions of acres of rainforest
and alter the entire Amazon climate. The resulting economic cost will be
staggering.
If there’s one lesson I’ve learned throughout all my years as a
conservationist, it’s that nature needs advocates. But advocates, for their
part, need a clear and compelling economic case that can be broadly
supported by the public and championed by political leaders. Today, the
case for action has never been clearer.
Biodiversity loss doesn’t just mean the loss of plants and animals. It
poses enormous risks to human prosperity and well-being. Science is only
beginning to understand and quantify the magnitude of this impact.
The worldwide loss of pollinators—including bees, butteries, moths,
and other insects—well underway due to our excessive use of pesticides,
would lead to an estimated drop in annual agricultural output of around
US$ 217 billion. Associated with this loss are the risks of famine and social
unrest, potentially more serious but harder to quantify.
The destruction of natural environments also brings people and wildlife
into contact in a way that presents public health risks through the
spread of zoonotic diseases. It may be no coincidence that we have seen
multiple outbreaks of zoonoses during this time of rapid biodiversity loss,
including SARS, Ebola, MERS, and SARS-CoV-2, the virus responsible for
HENRY M. PAULSON JR.
Chairman, Paulson Institute
2
the COVID-19 pandemic and its devastating impact across the world.
However, these examples are the tip of the iceberg. Given the complexity
and interdependencies of nature, there are many unknown risks.
Our political and economic systems and nancial markets have not done
enough to properly account for the services nature provides. For example,
recent research has argued for a value as high as US$ 600 per ton of CO2
captured, which would imply a value for forests in their role as carbon
sinks alone of well over US$ 100 trillion. Yet valuing forests on carbon
alone is akin to valuing a computer chip for its silicon. What we do have
is an idea of the scale of our economic reliance on nature. The World
Economic Forum estimates that US$ 44 trillion of global GDP—around
half—is highly or moderately dependent on nature.
In short, although we will never be able to calculate the full value of
nature, we know enough to know that its destruction presents profound
risks to human societies and, as with any serious risk we face, the rational
response is to hedge. In the case of biodiversity loss, this means taking
comprehensive, worldwide effort to appropriately value, protect, and
restore nature. The most cost-effective policies are those that would
prevent ongoing destruction of biodiversity for short-term economic
gains, while eroding and threatening the long-term prosperity and well-
being of current and future generations.
I’ve always believed that a healthy planet is good for business; it’s far
cheaper to prevent environmental damage than to clean it up afterward.
For much of my career, this was a lonely position in the corporate world.
But in recent years, something has changed. I’ve seen a new sense of
urgency around nature conservation issues, a rapidly growing interest
in the eld of green and sustainable nance, and a renewed sense that
collective effort can make a difference. Hopefully, investing in nature will
move into the mainstream of the nancial world soon enough to arrest
the alarming decline of our biodiversity.
Ultimately, this will require a transformational shift in the way markets
value nature. This shift needs to be reected across governments,
academia, the private sector, NGOs, media, and, most importantly,
the public. In the meantime, to tackle the risks of biodiversity loss, it is
important to identify and implement nancing and policy mechanisms
that can rapidly mobilize substantial amounts of capital for nature
protection and conservation.
While government must play a leading role, we know that governments
alone cannot deliver the nancing needed to protect our biodiversity.
The private sector is often touted—with good reason—as the great
hope for conservation because the nancial resources it could bring to
...a healthy
planet is good
for business;
it’s far cheaper
to prevent
environmental
damage than
to clean it up
afterward.
Foreword
Financing Nature: Closing the Global Biodiversity Financing Gap
3
3
bear far exceed those of governments and philanthropy. Unquestionably,
many CEOs in the private sector would like to protect nature. Some
donate personal funds to conservation NGOs, and the organizations they
run may make token investments and operating decisions to protect or
restore biodiversity if they don’t impact protability. However, they won’t
deploy capital for conservation or environmental projects that don’t
promise economic returns. The distinction is important. Philanthropy is a
way to distribute prots. Investing is a way that private sector generates
prot. Deliberately investing at a loss isn’t a realistic business model.
That is why, to realize the potential of private sector investment in nature
protection and conservation, governments must put in place policy
measures—such as tax breaks, de-risking guarantees, and regulatory
requirements—that induce the private sector to invest.
This report, a collaborative effort between the Paulson Institute, The
Nature Conservancy, and Cornell University, makes a broad economic
case for protecting and conserving nature and explores and highlights
nine policy and nancing mechanisms that, if implemented, will either
secure new funding for biodiversity conservation or, through the reform of
harmful subsidies, signicantly reduce the need for future spending.
As governments prepare to agree on a “new deal for nature” at the
15th Conference of the Parties to the UN Convention on Biological
Diversity, we offer this report as a contribution to help guide the
negotiations, particularly around nancial resource mobilization, and
to national governments as they consider the domestic policies and
measures required to implement the Post-2020 Biodiversity Framework
and put their economies on a more sustainable path. It should be noted
that investment in biodiversity will also contribute to reaching climate
change goals given that nature-based solutions are among the most
cost-effective climate mitigation strategies.
The economic case for protecting nature is compelling. However, we
should keep in mind that there is an overwhelming case for preserving
nature for its own sake. Nature is the greatest source of beauty,
inspiration, innovation, and intellectual interest—indeed of everything
that is good about life. In that sense, it is priceless.
Philanthropy is
a way to
distribute prots.
Investing is a
way that private
sector generates
prot.
4
Human activities are causing unprecedented and accelerating
global loss of biodiversity. Widespread land conversion
for infrastructure, agriculture and other development, and
overexploitation of natural resources are being driven by political
leaders’ prioritization of short-term economic gains and the
inability of our economic systems and nancial markets to
appropriately value and protect our natural capital.
To slow and stop the global loss of biodiversity, we must
fundamentally rethink our relationship with nature and
transform our economic models and market systems. The policy
and economic actions needed to achieve this require considerable
political will, broad public support, and substantial investment.
This will not happen overnight and, in the short to medium term,
there is an urgent need to scale up nance for nature.
... in the short to medium term,
there is an urgent need to scale
up nance for nature.
EXECUTIVE SUMMARY
4
Financing Nature: Closing the Global Biodiversity Financing Gap
5
The Financing Nature report addresses two important challenges.
First, the report lays out the broad economic case for protecting nature,
including an examination of the many known economic and social values of
biodiversity, while recognizing that the complexities and interdependencies
of nature mean that attempted economic valuations will almost certainly
be partial and underestimates. Biodiversity loss presents serious known
and unknown risks to human prosperity. The report further examines the
underlying market failures that hasten global biodiversity loss and indicates a
number of policy interventions and changes needed to halt biodiversity loss.
Second, the report focuses on a critical element related to protecting
biodiversity, namely the biodiversity nancing gap between the current
total annual capital ows toward global biodiversity conservation and the
total amount of funds needed to sustainably manage biodiversity and
maintain ecosystems integrity. Having gauged this biodiversity nancing gap,
the report identies a set of nine nancial and policy mechanisms that, if
implemented and scaled up, can collectively close this gap.
The report goes into detail about the enabling conditions for the
implementation and scaling of each of these mechanisms, and it makes
detailed recommendations for policy makers, business leaders, and other
stakeholders. It makes clear that all governments—from the biodiversity rich
nations that may have limited economic means to the established donor
countries—must take immediate actions to stem the loss of biodiversity.
The immediate intent of this report is to inform the work of national
delegations and other negotiators in developing the resource mobilization
strategy for the Post-2020 Biodiversity Framework that will be agreed to at the
15th Conference of the Parties (COP15) of the UN Convention on Biological
Diversity (CBD) in 2021. The longer-term intent is to help political leaders,
country nance ministries, international institutions, and representatives of
companies, NGOs, and private philanthropy to better understand the economic
case for biodiversity conservation and to accelerate the transformation of
national economic models to those that appropriately value nature.
Given the magnitude of the biodiversity nancing gap identied by this report,
coupled with estimates of the relatively limited amount of funding that will
be available in coming years from traditional sources such as governmental
budgets, ofcial development assistance (ODA), and philanthropy, it is critical
that the biodiversity targets to be agreed to at COP15 incorporate a broad
spectrum of nontraditional mechanisms. Catalyzing private sector capital
must be a priority, given that it constitutes the largest available source of
nancing. However, the report makes clear that the potential for private
capital to support biodiversity conservation will only be realized if appropriate
governmental policies, regulations, and incentives are in place.
A detailed description of the methodologies used in this report, including data
sources and assumptions, can be found in Appendix A of the full report.
...governments...
must take
immediate
actions to stem
the loss of
biodiversity.
6
Central Insights
The report provides four central insights:
1. Closing the gap relies heavily upon government actions.
Governments need to do more to protect natural capital and put in
place a combination of policy reforms to reduce negative impacts on
biodiversity, such as reforming harmful agricultural subsidies and
reducing investment risk by public and private investors. Governments
must also develop new nancial innovations to increase available
funding for conservation, promoting green investments, and
supporting development of nature-based climate solutions, natural
infrastructure and biodiversity offsets.
2. The private sector can play a pivotal role, but governments need
to pave the way. Governments need to put in place the right
regulatory environment, smart incentives and market structures
to catalyze nancial ows from the private sector into biodiversity
conservation.
3. The only way to stop global biodiversity loss is to ensure that
nature is appropriately valued in all economies. This will require
bold political leadership and transformative policies, mechanisms and
incentives that discourage harmful actions and encourage large-scale
nance for nature.
4. The gap between the amount currently spent on biodiversity
conservation and what is needed is large, but it can be closed.
As of 2019, current spending on biodiversity conservation is between
$124 and $143 billion per year, against a total estimated biodiversity
protection need of between $722 and $967 billion per year. This
leaves a current biodiversity nancing gap of between US$ 598
billion and US$ 824 billion per year.
Financing Nature: Closing the Global Biodiversity Financing Gap
7
The text box below provides six overarching recommended actions
derived from the analysis underlying this report. Additionally, there is a set
of specic recommendations for each of the nine nancial and policy
mechanisms described in this report. These are described briey at the end
of this executive summary and in more detail in Chapter 6 of the full report.
OVERARCHING RECOMMENDATIONS
The key nding of this report is that governments must
undertake catalytic policy reforms to unleash biodiversity
funding. These six recommended actions will accelerate
the of each of the nine nancing mechanisms described
in the report and materially contribute to closing the
biodiversity nancing implementation gap.
Recommended Action 1: Countries must take immediate
policy actions to protect their natural capital and
expand biodiversity conservation nancing. This report
identies nine mechanisms with the highest promise
for resource generation and harm-prevention, including
prioritizing rural economic support that subsidizes
farmers to provide ecosystem services, avoiding major
infrastructure development impacts on critical habitats,
and investing in nature-based climate solutions.
Recommended Action 2: Government and philanthropic
donors should use their funds strategically to support
countries to implement the nancing mechanisms
identied in this report and to catalyze subsequent
public and private sector investment. This report calls
for a doubling of foreign aid for biodiversity with the
incremental resources being devoted to biodiversity-
rich countries and toward implementation of these
mechanisms.
Recommended Action 3: National and subnational
governments should strengthen their regulatory and
nancial enabling conditions to signicantly accelerate
private sector actions and nance for biodiversity
conservation. Governments should set policies and
take actions to de-risk and incentivize private sector
investment, build in-country support for sustainable
commodity production, and ensure needed legal
conditions including land tenure.
Recommended Action 4: Private sector actors should
implement the recommendations from the sections
on sustainable supply chains, harmful subsidy reform,
natural infrastructure, biodiversity offsets, nature-based
solutions and carbon markets, green investment, and
investment risk management to both increase their
opportunities to invest in biodiversity and minimize their
biodiversity-related nancial risks. In addition, major
companies should adopt science-based targets for
biodiversity within their operations and investments
consistent with the 2050 vision of the UN Convention
on Biodiversity.
Recommended Action 5: Governments and
international agencies should improve tracking and
reporting on biodiversity nance. Some of the best
data collection and analysis that are available are
spread across the OECD, UNDP’s BIOFIN initiative
and the CBD Secretariat. Additional public funding
should be secured to support these institutions to
enhance global nance data collection and build
capacity of governments to collect and share data.
Recommended Action 6: In the context of the UN
Convention on Biological Diversity negotiations,
Parties should agree to develop and implement
National Biodiversity Finance Plans (NBFPs) to guide
the implementation of their national efforts toward
the CBD’s new Global Biodiversity Framework. The
NBFPs should address opportunities to mobilize
resources at all levels—local, national, and global—
as well as from all sources—public, private, and
philanthropic. To achieve this outcome, this report
recommends the following Resource Mobilization
targets for the Global Biodiversity Framework by 2030:
• Global target: Financial ows to investments that
generate measurable and auditable improvements
in the status of biodiversity increase globally to
fully close the biodiversity nancing gap by 2030
(est. US$ 598–824 billion annually);
• Process target: 100% of Parties immediately
develop National Biodiversity Finance Plans
(NBFPs) and fully implement them by 2030;
• National targets: Each Party mobilizes 100% of
the necessary resources identied in their NBFPs
to fully and effectively implement their National
Biodiversity Strategies and Plans (NBSAPs); and
• Global target: International public funding for
biodiversity at least doubles by 2030 and at least
covers the costs, where needed, for developing
countries to develop NBSAPs and NBFPs.
8
THE ECONOMIC CASE FOR
PROTECTING BIODIVERSITY
Viewed through a traditional economic lens, our planet’s biodiversity and
natural systems are essentially a capital stock (similar to nancial, built, or
human capital) that provides a ow of services to people. These “ecosystem
services” include fertile soil and pollination that make food production
possible, forests and watersheds that sequester carbon and purify water, and
genetic diversity on which much of modern pharmacology and agriculture
depend, among many others.
While it would seem possible to view biodiversity and natural systems as
fundamental to human survival and economic prosperity, the tendency of
political systems is to prioritize immediate economic gains while threatening
the prosperity and well-being of current and future generations. The
tendency of current economic models and nancial markets is to view
natural systems simply as assets available for immediate use or, worse,
abuse and destruction. Such a view leads to the overuse and abuse of nature
for short-term gains and without regard for the full value of the assets lost or
the long-term costs to society of their loss.
Natural capital is complex and difcult to measure. Financial markets do
not recognize the value of natural capital unless it has a dened cash ow or
asset value that can be measured by current economic systems. As a result,
the full value or costs of using, or destroying, natural systems are poorly
understood. In contrast to other forms of capital, natural capital does not
depreciate. Instead, it is to a certain extent self-regenerative. However, once
ecosystem degradation reaches a tipping point, the self-regenerative properties
of natural capital are lost, and ecosystem collapse may be irreversible.
Despite weaknesses in the models and tools to measure the value of natural
capital, there are several studies that hint at its potential full value. Recently,
researchers have estimated that approximately US$ 44 trillion of global GDP
is dependent on nature and its services.1 For example, the worldwide loss of
all pollinators would lead to a drop in annual agricultural output of about
US$ 217 billion.2 Recent climate research has argued for a value as high as
US$ 600 per ton of CO2 captured, which would imply a value for forests in their
role as carbon sinks alone of more than US$ 100 trillion.3 As many as one
third of the pharmaceuticals in use today were originally found in plants and
other natural sources or were derived from substances occurring naturally.4
a fundamental
shift in the
way markets,
and economics
more broadly,
value and
protect nature is
imperative.
The Economic Case for Protecting Biodiversity
1 C. Herweijer et al. (2020), Nature Risk Rising: Why the Crisis Engulng Nature Matters for Business and the Economy, World Economic Forum, http://www3.weforum.org/docs/WEF_New_
Nature_Economy_Report_2020.pdf.
2 Helmholtz Association of German Research Centres (2008, September 15), Economic Value of Insect Pollination Worldwide Estimated at U.S. $217 Billion. ScienceDaily. Retrieved March 1,
2011, from http://www.sciencedaily.com/releases/2008/09/080915122725.htm.
3 Umberto Llavador, John Romer, and Joaquim Silvestre, Sustainability for a Warming World (Harvard University Press, 2015).
4 D. J. Newman and G. M. Cragg, Natural products as sources of new drugs over the 30 years from 1981 to 2010. J Nat Prod. 2012;75(3):311–335. doi:10.1021/np200906s
Financing Nature: Closing the Global Biodiversity Financing Gap
9
While these estimates demonstrate a potentially
huge value of biodiversity to society, a major
challenge lies in the fact that, for every contribution
of nature that can be measured and imputed a
dollar value, there are many more that cannot. In
other words, when assessing the cost of biodiversity
loss, there are “partly-known unknowns” and
“unknown unknowns.” Given this lack of exact
knowledge, any estimate of the economic cost of
biodiversity loss, even when based on a worst-case
scenario, likely understates the cost of such losses.
The current failure of our nancial markets and
economic models and institutions to correctly
value biodiversity lies at the intersection of several
market failures. To start, many of the benets of
biodiversity are public goods that are non-excludable
and non-rivalrous in nature, which means that
markets will likely undervalue them. In addition,
the benets from biodiversity conservation and
costs from biodiversity loss impact third parties in
the form of external benets and costs, which are
another standard market failure where actors who
conserve biodiversity are not adequately rewarded
nancially and perpetrators of biodiversity damage
are not nancially penalized. Finally, market failures
in biodiversity are compounded by the lack of well-
dened property rights of environmental goods and
services, and as a result no one has any nancial
interest in, or can derive direct nancial benet from,
conserving them or ensuring that they are allocated
to their highest-value use.
Another comparison that can be made is in our
understanding of the science and economics of
climate change. Climate change science is far more
advanced than the science of biodiversity loss, but
climate change scientists nevertheless have greatly
underestimated the rate and impact of warming,
in part due to the challenge of incorporating the
impacts of negative feedback loops in the warming
process, such as accelerating glacial melt or methane
releases from thawing permafrost. Likewise, while
our global economic models and systems do a
reasonably good job tracking markets and nance
in normal times, these same systems often fail in
times of economic crisis. These models and systems
are unable to value our planet’s deeply intertwined,
dynamic, and complex climate, ecological, and
human interrelationships.
A critical lesson is that we cannot rely on economic
models, market forces, or the private sector alone to
solve the problem of unprecedented global biodiversity
loss. Instead, policy intervention is essential. Aside
from the time-tested laws and policies that create
protected areas and shelter endangered species, a
host of policy instruments and mechanisms must
be implemented to capture and derive economic
benets from nature in a sustainable manner or
through a market-based approach, such as ecotourism,
biodiversity-friendly products, and payment for
ecosystem services. In addition, reforming agricultural
and shery subsidies harmful to biodiversity and
promoting sustainable farming and shing practices
through well-designed policies will also help mitigate
the impact of agriculture and sheries, two of the
largest drivers of global biodiversity loss.
Overall, a fundamental shift in the way markets,
and economics more broadly, value and protect
nature is imperative. Countries must implement new
nancing and policy mechanisms that more fully
value natural capital, reduce harmful practices that
destroy biodiversity, and rapidly mobilize substantial
amounts of capital for biodiversity conservation.
10
10
Although the ultimate aim must be to appropriately
value nature in our economic models, in the near-
term there is an urgent need to scale up investment
in biodiversity. This report determines that, in
2019, the total global annual ow of funds toward
biodiversity protection amounted to approximately
US$ 124–143 billion per year against an estimated
annual need of US$ 722–967 billion to halt the
decline in global biodiversity between now and 2030.
Taken together, these gures reveal a Biodiversity
Financing Gap of US$ 598–824 billion per year.
Signicantly, this report shows that annual
governmental expenditures on activities harmful to
biodiversity in the form of agricultural, forestry, and
sheries subsidies—US$ 274–542 billion per year
in 2019—are two to four times higher than annual
capital ows toward biodiversity conservation.
Although this report addresses harmful subsidies
from agriculture, forestry, and sheries, it does not
address the impacts of fossil fuel subsidies due
to their indirect nature. This does not mean that
fossil fuel subsidies are unimportant; the potential
impacts of these subsidies on biodiversity, resulting
from widespread conversion of natural vegetation
for energy development and transmission and from
increases in atmospheric and ocean temperatures
associated with fossil fuel use, are highly likely to
exacerbate and accelerate global biodiversity loss in
addition to driving human-induced climate change.
CURRENT GLOBAL BIODIVERSITY
CONSERVATION FINANCING,
BIODIVERSITY CONSERVATION
FUNDING NEEDS, AND THE
BIODIVERSITY FINANCING GAP
Financing Nature: Closing the Global Biodiversity Financing Gap
11
Current Global Biodiversity
Conservation Financing
The estimate of current global biodiversity conservation nancing of
US$ 124–143 billion per year is broadly consistent with other recently
published estimates. For example, in early 2020 the OECD estimated5
global biodiversity nance at US$ 78–91 billion per year based on available
2015–2017 data. In addition, BIOFIN estimates6 that global annual public
investment in biodiversity has increased from around US$ 100 billion in
2008 to about US$ 140 billion in 2017, with an average of US$ 123 billion
deployed annually over this period. This report builds on the OECD’s
ndings on public domestic, international public, and private mechanisms
by providing a complementary assessment for private and public-private
biodiversity nance.
57%
20%
6%
5%
5%
4%
2%
1%
Ofcial development
assistance
(US$4 – US$10)
Domestic budgets and tax
policy (US$75 – US$78)
Natural infrastructure
(US$27)
Biodiversity offsets
(US$6 – US$9)
Philanthropy, conservation
NGOs (US$2 – US$3)
Nature-based solutions
and carbon markets
(US$0.8 – US$1.4)
Green nancial products
(US$4 – US$6)
Sustainable supply chains
(US$5 – US$8)
FIGURE 1. Global biodiversity conservation nancing in 2019: Summary of nancial ows into
biodiversity conservation. (in 2019 US$ billions per year)
5 OECD, 2020, A Comprehensive Overview of Global Biodiversity Finance. Final report prepared by the Organization for Economic Cooperation and Development (OECD), available at https://
www.oecd.org/environment/resources/biodiversity/report-a-comprehensive-overview-of-global-biodiversity-finance.pdf.
6 A. Seidl, K. Mulungu, M. Arlaud, O. van den Heuvel, and M. Riva, Pennies for Pangolins: A global estimate of public biodiversity investments (United Nations Development Programme, forthcoming
2020).
Total
US$124 – US$143
12
Figures 1 and 2 break down the sources of nancial ows into biodiversity
conservation and show the scale of harmful subsidies in 2019. The categories
and numbers were drawn from a pool of more than 160 biodiversity nance
mechanisms in the BIOFIN Catalogue of Finance Solutions.7 Some of these
mechanisms were not incorporated into the current global biodiversity
nance estimate, as they do not generate signicant nancial ows for
biodiversity conservation or because the annual funding data have not been
tracked or collected by the range of clearinghouses for economic information
consulted and analyzed for this report. As such, Figure 1 represents a close
approximation of the total annual public and private expenditures globally
for biodiversity protection and conservation. The estimates of harmful
subsidies used in Figure 2 correspond to OECD’s “most harmful” category of
subsidies.8 Note again that this report excludes fossil fuel subsidies.
FIGURE 2. Harmful subsidies and global nancial ows towards biodiversity conservation.
(upper estimates, in 2019 US$ billion per year)
$(500) $(400) $(300) $(200) $(100) $0 $100
Agriculture subsidies
Forestry subsidies
Fishery subsidies
Domestic budgets and tax policy
Natural infrastructure
Ofcial development assistance
Biodiversity offsets
Sustainable supply chains
Green nancial products
Philanthropy and conservation NGOs
Nature-based solutions and
carbon markets
$(451)
$(55)
$(36)
$78
$27
$10
$9
$8
$6
$3
$1
Note: The estimates of agricultural, forestry, and sheries harmful subsidies correspond to OECD’s “potential biodiversity
harmful” category of production subsidies. This graph excludes the estimated additional US$ 395–478 billion in fossil
fuel production subsidies.9
Current Global Biodiversity Conservation Financing
7 UNDP BIOFIN, BIOFIN Catalogue of Finance Solutions, available at: https://www.biodiversityfinance.net/finance-solutions.
8 OECD, 2020, A Comprehensive Overview of Global Biodiversity Finance. Final report prepared by the Organization for Economic Cooperation and Development (OECD), available at: https://
www.oecd.org/environment/resources/biodiversity/report-a-comprehensive-overview-of-global-biodiversity-finance.pdf.
9 OECD, 2020, Rising fossil fuel support poses a threat to building a healthier and climate-safe future, available at https://www.oecd.org/fossil-fuels/.
Financing Nature: Closing the Global Biodiversity Financing Gap
13
Biodiversity Conservation
Funding Needs
For the purposes of projecting future annual funding needs for biodiversity
protection, natural and human landscapes were divided into three
broad categories of protected areas, productive landscapes, and urban
environments, and the costs were estimated for their sustainable
management:
1. Protected areas: This report incorporates the proposed global target for
increasing both terrestrial and marine protected areas to reach 30% by
2030, consistent with proposals by several conservation NGOs and many
governments, in anticipation of the new set of global biodiversity targets to
be negotiated at the CBD COP15. Waldron et al. (2020)10 propose a suite
of six scenarios for protecting biodiversity. The lower estimate for future
needs has been taken as a scenario that allows for a compromise between
biodiversity protection and productive landscapes, thereby aligning with the
category described in this chapter of productive landscapes and seascapes.
The upper estimate is that of the scenario that prioritizes broader
ecosystem integrity and viability.11 The range of these cost estimates is US$
149–192 billion per year.
2. Sustainable management of productive landscapes and seascapes:
The costs in 2030 of sustainably managing the world’s most productive
landscapes and seascapes for the protection of biodiversity and key
ecosystems were estimated as follows:
a. Transitioning the agricultural sector to conservation agriculture
practices in croplands by 2030 is estimated at US$ 315–420 billion per
year.
b. Transitioning global rangelands to sustainable rangeland management
practices by 2030 is estimated at US$ 81 billion per year.
c. Transitioning the forestry sector to sustainable forest management
practices is estimated to be US$ 19–32 billion per year.
d. Transitioning the global sheries sector to sustainable sheries
practices is estimated at US$ 23–47 billion per year.
e. Minimizing and mitigating the biodiversity impact of invasive species
is estimated at US$ 36–84 billion per year.
f. Restoring degraded coastal ecosystems (mangroves, seagrasses,
and saltmarshes) that provide multiple, vital benets for coastal
communities is estimated at US$ 27–37 billion per year.
...a global
biodiversity
funding need of
US$ 722–967
billion annually
by 2030.
10 A. Waldron et al., 2020, Protecting 30% of the planet for nature: Costs, benets and economic implications, available at
https://www.conservation.cam.ac.uk/files/waldron_report_30_by_30_publish.pdf
11 The 2020 Waldron et al. paper uses a set of six scenarios to estimate a range of spending required to develop and manage biodiversity protected areas. This report establishes a range for
protected area financing needs using two scenarios that dovetail with other estimates of future biodiversity needs, such as productive landscapes and seascapes.
14
3. Urban areas and areas of high human impact: Urban expansion will
result in the conversion of some 290,000 km2 of natural habitats by 2030
and has the potential to degrade 40% of strictly protected areas globally
expected to be within a short distance of urban areas, if this expansion
is not managed or mitigated for these impacts. The cost to protect
biodiversity in the peripheries of cities is estimated at US$ 14.1–543
million per year. The impact of polluted water from urban environments
on water quality and subsequently on biodiversity in marine and riverine
ecosystems downstream of cities stems from untreated sewage. The cost of
safeguarding biodiversity against the impact of polluted water from urban
environments is estimated at US$ 73 billion per year.12
Aggregating these gures leads to a global biodiversity funding need of
US$ 722–967 billion annually by 2030, shown in Figure 3, representing
approximately 0.7–1.0% of global GDP in 2019.
These estimates, while sobering, should be viewed as initial approximations
of what is needed for biodiversity conservation. Estimates of this nature
are not precise as they are affected by the limited biodiversity nance data
available and inconsistencies between reporting frameworks.13
Biodiversity Conservation Funding Needs
FIGURE 3. Global biodiversity conservation funding needs. (in US$ billions per year)
Forests
Fisheries
Coastal
Invasive species
Urban environments
Rangelands
Protected areas
Croplands
$1,000
$900
$800
$700
$600
$500
$400
$300
$200
$100
$0
$315
$149
$81
$73
$36
$27
$23 $19
$420
$192
$47
$81
$73
$32
$37
$84
Lower Limit Upper Limit
Total: $722
Total: $967
12 G. Hutton and M. Varughese, 2016, The costs of meeting the 2030 sustainable development goal targets on drinking water, sanitation, and hygiene. The World Bank., available at https://
www.worldbank.org/en/topic/water/publication/the-costs-of-meeting-the-2030-sustainable-development-goal-targets-on-drinking-water-sanitation-and-hygiene.
13 OECD, 2020, A Comprehensive Overview of Global Biodiversity Finance, Final report prepared by the Organization for Economic Cooperation and Development (OECD), available at:
https://www.oecd.org/environment/resources/biodiversity/report-a-comprehensive-overview-of-global-biodiversity-finance.pdf.
Financing Nature: Closing the Global Biodiversity Financing Gap
15
The Biodiversity Financing Gap
When the estimates of global biodiversity funding needs (US$ 722–967 billion
annually) are compared to the existing ows of biodiversity nancing
(US$ 124–143 billion), a global Biodiversity Financing Gap can be
estimated in the range of US$ 598–824 billion per year. This means that
current levels of funding cover only 16–19% of the overall need to halt
biodiversity loss. Figure 4 demonstrates the annual nancing gap by
comparing the average amounts of upper estimates of current funding and
future need. The average gap is US$ 711 billion per year.
FIGURE 4. Global biodiversity conservation nancing compared to global biodiversity
conservation needs. (US$ billions)
$1,000
$900
$800
$700
$600
$500
$400
$300
$200
$100
$0
Global biodiversity conservation
financing in 2019
Global biodiversity conservation
financing needs by 2030
Biodiversity Financing
Gap
US$ 711 billion
Lower Limit
Upper Limit
Middle Point
Note: Using midpoints of the current estimates and future needs, current global biodiversity conservation nancing
(left graph) may need to increase by a factor of 5–7X to meet the estimated global need for biodiversity conservation
(right graph).
These estimates of future needs and the biodiversity nancing gap, although
reasonable, are not exact, and thus ranges are used to show the variability
in the estimates. As such, these estimates should be considered indicative of
the scale of the need and represent a reasonable and ambitious target for
which to plan and aim.
16
CLOSING THE BIODIVERSITY
FINANCING GAP
The report outlines a set of nine nancial and policy mechanisms that,
if scaled through appropriate public policies and private sector action,
have the potential to collectively make a substantial contribution to
closing the global biodiversity nancing gap over the next decade.
Analysis and selection of the nine nancial and policy mechanisms
is based on the UNDP BIOFIN Catalogue of Finance Solutions and
screened mechanisms against the following three criteria:
• The mechanism is currently in use at a signicant scale (more than
US$ 0.5 billion per year);
• The mechanism, if scaled, has the potential to deliver substantial
amounts of new funding on a consistent basis (more than US$ 5
billion per year and a potential compound annual growth rate of at
least 2.5%); and
• The mechanism has a realistic policy and/or market pathway to
scaling in order to meet its potential.
The nine mechanisms address the closing of the biodiversity nancing
gap in one of two ways. Two of the nine decrease the overall need for
funding to be spent on biodiversity conservation. The remaining seven
increase funding ows into biodiversity conservation.
Table 1 shows the current and potential future scale of nancing
owing through these mechanisms to support biodiversity
conservation. The estimates are expressed in ranges, reecting the
degree of uncertainty.
The analysis underlying this report yielded a numerical value for
eight of the nine mechanisms, which collectively have the potential
to contribute US$ 446–633 billion per year by 2030 toward meeting
the estimated US$ 722–967 billion annual funding needs for global
biodiversity conservation over the next decade. It was not possible to
determine either current or future estimated numbers for the category
of Investment Risk Management. Nonetheless, the report includes this
category as it reects a critical area of biodiversity impact and needs
attention in the CBD Resource Mobilization Strategy as mainstreaming
biodiversity in the nancial sector will be critical to the success of the
Global Biodiversity Framework.
Closing the Biodiversity Financing Gap
16
Financing Nature: Closing the Global Biodiversity Financing Gap
17
TABLE 1. Estimated Positive and Negative Flows to Biodiversity Conservation.
Financial and Policy Mechanisms 2019
US$ billion / year
2030
US$ billion / year
A. Mechanisms that decrease the overall need for funding to be spent on biodiversity conservation
Harmful subsidy reform (agriculture, sheries, and forestry sectors) (542.0) – (273.9) (268.1) – 0*
Investment risk management N/A
B. Mechanisms that increase capital ows into biodiversity conservation
Biodiversity offsets 6.3 – 9.2 162.0 – 168.0
Domestic budgets and tax policy 74.6 – 77.7 102.9 – 155.4
Natural infrastructure 26.9 104.7 – 138.6
Green nancial products 3.8 – 6.3 30.9 – 92.5
Nature-based solutions and carbon markets 0.8 – 1.4 24.9 – 39.9
Ofcial development assistance (ODA) 4.0 – 9.7 8.0 – 19.4
Sustainable supply chains 5.5 – 8.2 12.3 – 18.7
Philanthropy and conservation NGOs 1.7 – 3.5 Not Estimated**
Total Positive Financial Flows 123.6 – 142.9 445.7 – 632.5
Note: All gures in this table are reported in 2019 US$.
* Assumes a global subsidies reform scenario that phases out by 2030 the most harmful subsidies as described by OECD (2020)14.
** While future ows for philanthropy and conservation NGOs are seen as highly catalytic for mobilizing private sector nancial
ows, it was determined that they did not pass the threshold for inclusion in this report as a main mechanism for scaling up to
close the biodiversity nancing gap.
These estimates, and the resource mobilization challenge they represent by
2030, may appear inordinately large. However, the nancial resources that
will be needed to close the biodiversity nancing gap are comparable in
magnitude to the capital committed to global climate-related investments
of US$ 579 billion in 2017–2018, as estimated by Buchner and colleagues
in 2019.15 For context, this amount is less than the world spends on soft
drinks in a year.16
Even when factoring in the maximum estimate of increased funding ows
toward biodiversity conservation of US$ 446–633 billion per year, the
2030 global biodiversity nancing gap will not be closed unless there are
signicant efforts to scale up the reform of subsidies harmful to biodiversity
and improve investment risk management practices by the nancial sector.
These harmful subsidies were due to be eliminated, phased out, or reformed
by 2020 under target three of the Aichi Biodiversity Targets agreed to in
2010, but little progress has been made. To continue to delay meaningful
action on reducing harmful subsidies will cause extensive damage to
14 OECD, 2020, Rising fossil fuel support poses a threat to building a healthier and climate-safe future, available at: https://www.oecd.org/fossil-fuels/.
15 CPI, 2019, Global Landscape of Climate Finance 2019 [Barbara Buchner, Alex Clark, Angela Falconer, Rob Macquarie, Chavi Meattle, Rowena Tolentino, Cooper Wetherbee]. Climate Policy
Initiative, London, available at https://www.climatepolicyinitiative.org/wp-content/uploads/2019/11/2019-Global-Landscape-of-Climate-Finance.pdf
16 Statista, 2020, available at https://www.statista.com/outlook/20020000/100/soft-drinks/worldwide?currency=usd [accessed 11 August 2020].
18
FIGURE 5. Estimate of growth in nancing resulting from scaling up proposed mechanisms by 2030.
(in 2019 US$ billion per year)
Existing
Flow
$1,000
$900
$800
$700
$600
$500
$400
$300
$200
$100
$0
Agriculture subsidies
Forestry subsidies
Fishery subsidies
Domestic budgets and
tax policy
Green nancial products
Natural infrastructure
Biodiversity offsets
Nature-based solutions
and carbon markets
Sustainable supply chains
Ofcial Development
Assistance (ODA)
biodiversity and dilute the effectiveness of conservation efforts. Under a
2030 scenario in which subsidies harmful to biodiversity have not been
reformed, the remaining global biodiversity nancing gap will be US$ 210–
239 billion per year (Figure 5).
Financing
Gap
Closing the Biodiversity Financing Gap
Financing Nature: Closing the Global Biodiversity Financing Gap
19
Each of the nancial and policy mechanisms recommended for closing
the biodiversity nancing gap are summarized below and are described in
greater detail in Chapter 5 of the full report. The following brief descriptions
include the estimated positive or negative funding ows into biodiversity
conservation for each mechanism and the recommended actions needed to
implement and scale up each mechanism.
• National and subnational governments should
immediately begin the process of redesigning,
reducing, or redirecting existing subsidies away
from incentivizing actions that harm biodiversity to
those that explicitly support it or, in the very least,
result in no harm to biodiversity.
• Governments should consider the impacts on the
poor and marginalized groups in society when
designing subsidy reforms, ensure a phased and
equitable transition where negative social impacts
of subsidy reform are mitigated as much as
possible, and ensure that groups that benet from
the status quo understand and support the impetus
behind subsidy reform.
• International organizations (including academia
and NGOs) should implement a coordinated
research program that delivers a common
understanding of what constitutes a harmful
subsidy and the ways in which it can be realigned
to achieve positive outcome for biodiversity. The
OECD methodology on identifying, assessing, and
reforming subsidies provides a good starting point
for this exercise.
• Donor governments and multilateral development
banks should provide nancial and technical support
to the governments of less developed economies in
reforming harmful subsidies.
• Businesses should recognize the global momentum
and support behind harmful subsidy reform and
should review, identify, disclose, and implement their
commitments to transition away from dependence
on harmful subsidies. They should also engage with
and actively support government efforts to reform
and redirect harmful subsidies.
1. Harmful Subsidy Reform
2019 Estimated Harmful Flow: US$ 273.9–542.0 billion per year17
2030 Potential Harmful Flow: US$ 0–268.1 billion per year
(assuming most harmful subsidies reform scenario)
Subsidies are scal policy tools used by governments
that aim to benet a specic population or sector
through production support, income support, or
reduced costs of inputs. Subsidies deemed harmful
to biodiversity are those that induce production
or consumption activities that exacerbate
biodiversity loss, particularly important within the
agriculture, sheries, and forestry sectors. Some of
these damaging activities include deforestation,
overexploitation of sh stocks, and pollution from
excessive fertilizer use. Agricultural subsidies that
focus solely on increasing crop output have led to
actions that are degrading natural resources and
biodiversity. This report does not take a position on
whether subsidies are inherently positive or negative
for the economy or for the functioning of markets.
Instead, this report focuses on proposing pathways
that allow governments to reform existing production
subsidies and deliver them in a manner that has a net
positive effect on biodiversity rather than damaging
biodiversity, while at the same time meeting the
government’s other social and economic objectives.
RECOMMENDATIONS
Agriculture subsidies Forestry subsidies Fishery subsidies
17 Flows denoted as positive as they are listed as harmful to biodiversity.
20
2. Investment Risk Management
As described in a previous section and in the full report, this report does not provide either
current or future estimates in this area due to the lack of available data.
• Financial institutions should take a lead role in
understanding and avoiding harm to biodiversity
from the deployment of private investment
capital. They should recognize the reputation,
regulatory compliance, and investor demand risks
from continuing to operate under the status quo,
as well as the potential revenue opportunities
from proactive biodiversity risk management.
They should manage these risks through systemic
changes to internal structures, incentives, policies,
and metrics to ensure that biodiversity conservation
is integrated into all investments.
• Financial institutions should disclose the biodiversity
impacts of their investments via appropriate
disclosure frameworks and require the same of
companies in their investment portfolio.
• Financial institutions should build their capacity
to assess how investment decisions can lead to
biodiversity loss and manage the associated
biodiversity risks.
• Financial regulators and duciaries should adopt
a broader understanding of duciary duty that
is not narrowly limited to maximizing short-
term nancial returns, but that also accounts for
the positive and negative collateral effects of
investments on those to whom a duciary duty
is owed. A revised understanding should allow for
consideration of nonnancial benets to clients,
including the value of biodiversity, as proper
components of the duciary’s analysis of the
merits of competing investment choices.
• Governments should develop and implement
policies and legislation that require nancial
institutions to implement and report on
biodiversity risk disclosure frameworks.
• International organizations, nancial institutions,
and NGOs (including academia) should develop
metrics, methodologies, and platforms for
sharing data on the impacts of investments on
biodiversity.
RECOMMENDATIONS
investments that may have negative impacts on
biodiversity, or to invest in areas that have positive
biodiversity impacts. Given the enormous scale of
global capital markets and the trillions of dollars
invested in infrastructure, energy, transportation,
extractives, and other potentially damaging projects,
the mainstreaming of these biodiversity-related risk
management practices in conventional nancial
markets presents an enormous opportunity to
prevent negative impacts to biodiversity.
Investment risk management described in this report
involves actions taken by nancial institutions to
understand and manage the risks to biodiversity
from their investments. The report reviews a range
of both mandatory and voluntary investment risk
management practices, many of which are becoming
more established in mainstream investing. These
include a number of screening tools and standards
that investors are adopting that enable them to
review risks and make informed decisions to avoid
Closing the Biodiversity Financing Gap
Financing Nature: Closing the Global Biodiversity Financing Gap
21
3. Biodiversity Offsets
2019 Estimated Flow: US$ 6.3–9.2 billion per year
2030 Potential Flow: US$ 162.0–168.0 billion per year
• Governments with existing biodiversity offset and
mitigation hierarchy policies should strengthen
enforcement using supporting tools such as
regulation, planning processes, and legislation.
Governments without existing policies should
immediately develop, implement, and enforce
them to, rst, avoid and minimize impacts to
critical natural habitat and, second, implement
biodiversity offsets to achieve no net biodiversity
loss or, where possible, net gain.
• National and subnational governments should
conduct (and make public to authorities,
developers, and communities) spatial
landscape planning to identify areas of critical
habitat, made publicly available, to inuence
development planning processes and underpin
the effective application of the mitigation
hierarchy.
• National and subnational governments should
require project developers to conduct long-
term monitoring and reporting on biodiversity
offsets to ensure they are achieving the desired
outcomes.
• Financial institutions should strengthen
the implementation of biodiversity-related
performance standards within their investments
and mandate that projects they invest in should
demonstrate, via reporting and verication, no
net loss of biodiversity or, where possible, net
gain. Investments should be designed to allow
adequate funding for long-term monitoring of the
offset after the development has been completed.
RECOMMENDATIONS
Biodiversity offsets are the last option in the
mitigation hierarchy (avoid, minimize, restore, and
offset), a biodiversity protection policy mandated
by governments to compensate for unavoidable
damage to biodiversity by a development project
when the cause of damage proves difcult or
impossible to eliminate. The CBD has adopted a
decision calling for the universal application of
the mitigation hierarchy and biodiversity offsets.18
Offsets should be implemented once development
projects have done their utmost to avoid and
minimize adverse environmental impacts. Given the
rapid expansion of urban centers and the associated
development of infrastructure, biodiversity offsets
are a way for biodiversity to receive increased
nancing and protection. Under an offset policy,
any biodiversity lost to development must be
compensated for such that there is a net gain or,
at least, no net loss of biodiversity. Currently, 42
countries have biodiversity offset policies in place,
but there is evidence of enforcement from fewer than
20% of these countries. Estimates for scaling up
biodiversity offsets in this report are based on both
full implementation of existing policies by these 42
countries and expanded application of offset policies
in countries based on an analysis of anticipated
development impacts globally by 2030.
18 Conference of the Parties to the UN Convention on Biological Diversity, 14th meeting, Sharm El-Sheikh, Egypt, 2018, available at https://www.cbd.int/decisions/cop/?m=cop-14.
22
4. Domestic Budgets and Tax Policy
2019 Estimated Flow: US$ 74.6–77.7 billion per year
2030 Potential Flow: US$ 103.0–155.4 billion per year
• Governments should develop and implement
new scal policies or increase the effectiveness
of existing ones that increase domestic spending
on biodiversity conservation and disincentivize
activities that are harmful to biodiversity. Such
policies should be designed and supported by,
and embedded within, multiple departments of
government—particularly nance, environment,
and natural resource ministries and other
government agencies.
• National and subnational governments must
improve the efciency, effectiveness, tracking, and
reporting on the deployment of revenues raised
for biodiversity conservation.
• International nance institutions (such as the
World Bank, IMF, and others) should increase
nancial support for biodiversity and lend their
support to countries’ efforts to establish taxes and
fees whose revenue is allocated to conservation
activities.
Governmental budgets are currently the main
source of nancing for biodiversity conservation,
representing 54–60% of total funding recorded and
presented in this report. However, while prioritizing
government budget expenditure for biodiversity,
raising revenue from taxation may be insufcient
to close the biodiversity nancing gap in 2030. This
report describes several categories of special taxes,
fees, levies, and other innovative scal measures that
both national and subnational governments can
impose to either increase revenue to fund biodiversity
protection or to incentivize or disincentivize activities
that benet or degrade biodiversity. To ensure that
these additional revenues are devoted directly to
biodiversity conservation (and not just diverted to
the general budget), the report further recommends
that governments restrict or “earmark” these funds
to the biodiversity conservation uses for which they
were created.
RECOMMENDATIONS
Closing the Biodiversity Financing Gap
Financing Nature: Closing the Global Biodiversity Financing Gap
23
5. Natural Infrastructure
2019 Estimated Flow: US$ 26.9 billion per year
2030 Potential Flow: US$ 104.7–138.6 billion per year
The protection of natural infrastructure serves a dual
purpose. First, it maintains healthy ecosystems for
the long term; second, it delivers ecosystem services
to human populations, supporting livelihoods and
communities. In this report, natural infrastructure
investments are described through the lens of
watershed protection programs. In recent years,
urbanization and the resulting increase in demand for
resources from cities have elevated the importance
of water supply and watershed protection, while the
growing risk from extreme weather events and sea-
level rise has highlighted the importance of coastal
protection. Natural infrastructure funding is almost
entirely provided by public entities through grants
and contracts for watershed protection, but there are
emerging areas that include both public and private
sector investment, including user-driven watershed
investments, water quality offset trading, and others.
Additionally, there is growing evidence that the
relative costs of protecting and managing natural
water supplies and ood control can be cheaper than
traditional engineering approaches.
• National, subnational, and local governments
should require the evaluation of natural
infrastructure alternatives in all infrastructure
projects and, where feasible and cost-effective,
they should require its use in public and private
development projects through contracts and
concessions, procurement processes, and
regulation.
• Private sector corporations operationally
dependent on water should, along with national
and subnational governments, participate
in developing, nancing, implementing, and
maintaining natural infrastructure for the
watersheds they operate in.
• Insurance companies and nancial institutions
should incorporate the benets of ecosystem
services provided by natural infrastructure in their
risk modelling. The results should be factored into
decisions about capital costs and be reected
in premiums that incentivize the use of natural
infrastructure in line with risk modelling as well
as international and national standards and
processes.
• International organizations, such as research
institutions, NGOs, and standard setting
bodies, should develop robust evidence on the
costs and performance of different forms of
natural infrastructure. This should be carried
out in tandem with the process of developing
international standards, tools, metrics, and data
collection processes for natural infrastructure.
• Entities engaged in curriculum development,
professional certication, and continuing
education of engineers, planners, and other
professionals should require appropriate training
that builds awareness and capacity of how
to assess both the cost effectiveness and the
environmental benets of designing, developing,
and maintaining natural infrastructure projects to
meet human needs.
RECOMMENDATIONS
24
• Governments should work with private investment
organizations to develop, implement, and
enforce clear guidance, incentives, penalties,
and disclosure requirements that enable and
encourage investments that protect biodiversity.
Governments can do this through two pathways:
rst, by creating opportunities for new markets
using policies, structures, and regulation; second,
through incentivizing ows of additional, new
investment of private capital.
• National and regional governments should
leverage their ability to raise capital from private
markets, via issuance of green debt, as a way to
increase the amount of upfront capital available
for investment in biodiversity conservation.
• Investment organizations and private nance
institutions should develop and enforce internal
policies establishing internal performance metrics
that incentivize the structuring, offering, and
use of nancial products with explicit benets to
biodiversity.
• Governments and private nancial institutions
should, as a means to catalyze the ow of
capital to biodiversity, develop and implement
industry standards and mechanisms that ensure
accountability, transparency, and verication for
nancial transactions that are meant to positively
impact biodiversity.
• Multilateral development banks, development
nance institutions, and private foundations
should provide early-stage, concessionary, or
risk mitigating nancing that catalyzes the
development of projects and that complements
local conservation efforts.
RECOMMENDATIONS
6. Green Financial Products
2019 Estimated Flow: US$ 3.8–6.3 billion per year
2030 Potential Flow: US$ 30.9–92.5 billion per year
Green nancial products are a collection of nancial
instruments, primarily debt and equity, that facilitate
the ow of investment capital into companies
and projects that can have a positive impact on
biodiversity. This report discusses a range of green
nancial products that can channel nancing toward
green investments that produce environmental
benets. The report discusses the role of green bonds,
sustainability-linked loans, and private equity funds
in supporting biodiversity. The report also notes
emerging and innovative new developments in
green nance such as environmental impact bonds,
insurance products, and the growing roles that
governments are playing through nance facilities
and specic efforts to incentivize increased private
investment.
Governments can play important roles through
nance facilities and specic efforts to incentivize
increased private investment.
Closing the Biodiversity Financing Gap
Financing Nature: Closing the Global Biodiversity Financing Gap
25
7. Nature-Based Solutions and Carbon Markets
2019 Estimated Flow: US$ 0.8–1.4 billion per year
2030 Potential Flow: US$ 24.9–40.0 billion per year
As countries move toward development of new
programs to support delivery of their national
climate goals (specically through their Nationally
Determined Contributions, or NDCs), there is a
growing emphasis on the protection and restoration
of forests and other biodiversity-rich ecosystems in
what are called Nature-Based Solutions (NBS) and
Natural Climate Solutions (NCS). Indeed, recent
science indicates that NCS can provide up to a third
of the cost-effective, near-term mitigation potential
needed by 2030 to stay below 1.5 degrees Celsius
of warming. The report describes several pathways
countries might take to develop one or more NBS/
NCS strategies as part of meeting their NDC goals,
and it provides estimates of the amount of funding
these efforts could generate that will have direct
biodiversity benets. Additionally, a number of
countries are developing national (or, in some
countries, subnational or jurisdictional) policies that
use carbon pricing as part of their overall climate
strategies. These policies typically take the form of
direct carbon taxes or the creation of a regulated
cap-and-trade program in which greenhouse
gas emitters are capped and regulated through
programs that allow the creation and trading of
carbon credits. The active trading of these credits
(which are issued in metric tons of carbon dioxide
equivalent [tCO2e]) enables creation of a robust
carbon market. When countries allow the creation of
carbon offsets from forest practices or other natural
and land-based projects, the sale of these credits can
create an important source of funding for forest and
biodiversity conservation.
• National governments should include one or more
nature-based solution (NBS) strategies, such as
reforestation, within the next round of Nationally
Determined Contributions (NDCs) commitments
under the Paris Agreement.
• Governments with existing carbon markets
should allow the use of offsets from agriculture,
forests, and other land uses. Governments without
existing carbon markets should enact new carbon
pricing programs that include carbon taxes, cap-
and-trade programs, or other climate policies that
price carbon emissions and allow for the use of
carbon offsets from agriculture, forests, and other
land use practices.
• Governments of forest-rich and biodiversity-
rich countries should enact policies to increase
implementation and scalability of national and
jurisdictional REDD+ programs, including the
opportunity to nest existing REDD+ projects to
maximize scale.
• The governments and standard-setting bodies
that govern both compliance (cap-and-trade)
and voluntary carbon markets should require
the use of, and adherence to, standards that
include biodiversity and social safeguards for all
forestry and land use projects, and for NBS. These
bodies should also improve the transparency and
quantiability of biodiversity within all existing
and new standards that apply to forests and
natural systems.
RECOMMENDATIONS
26
• Foreign aid donors should recommit to double
ODA ows again by the year 2030 relative to 2019
levels to support the implementation of the post-
2020 Global Biodiversity Framework. Provision of
ODA should include biodiversity conservation as
criteria, alongside existing ones such as economic
development, in prioritizing countries that receive
ODA ows.
• Donor governments should better deploy the
increased aid to focus on the in-country enabling
conditions to unlock other mechanisms discussed
in this report, including the development of
National Biodiversity Strategies and Action Plans
(NBSAPs) and National Biodiversity Finance Plans.
• Bilateral and multilateral aid agencies should
strengthen their efforts at mainstreaming
biodiversity across their grant and lending
portfolios.
• Bilateral donors and multilateral development
banks should require reporting of results
from biodiversity projects, as well as be more
accountable for their application of IFC
Performance Standard 6, especially with respect
to the application of the mitigation hierarchy and
biodiversity offsets.
RECOMMENDATIONS
8. Ofcial Development Assistance (ODA)
2019 Estimated Flow: US$ 4.0–9.7 billion per year
2030 Potential Flow: US$ 8.0–19.4 billion per year
Ofcial development assistance (ODA) is broadly
dened as aid, either disbursed by countries directly
or through multilateral institutions, designed to
support and promote the economic development
and welfare of developing countries. It includes
concessional nance, grants, and the provision
of technical assistance. In the context of the
Convention on Biological Diversity (CBD), the 2010
Aichi Targets called for a “substantial increase” in
resources available from all sources to support the
implementation of the Convention. In 2012, the
Parties adopted a decision calling on donor countries
to double foreign aid ows for biodiversity by 2015
relative to 2010 levels, and at least maintain them at
that level through 2020. That target has essentially
been met by donor countries. The report recommends
that ODA funding to biodiversity-rich countries
double again between 2020 and 2030, with the new
funding primarily targeted to supporting country
efforts to develop National Biodiversity Finance Plans
and implement the nationally appropriate suite of
mechanisms described in this report to ensure that
each country meets its biodiversity nance needs.
Closing the Biodiversity Financing Gap
Financing Nature: Closing the Global Biodiversity Financing Gap
27
9. Sustainable Supply Chains
2019 Estimated Flow: US$ 5.5–8.2 billion per year
2030 Potential Flow: US$ 12.3–18.7 billion per year
Supply chain sustainability relates to the management
of environmental, social, and governance aspects of
the movement of goods and services along supply
chains, from producers to consumers. The historical
impact of global supply chains on biodiversity has
been largely negative, driven by land use change and
unsustainable agricultural, forest, sheries, and other
practices associated with commodities. However, a shift
toward more responsible supply chain management
practices offers an opportunity to avoid harm and
positively affect biodiversity, including signicant
corporate pledges to get deforestation out of supply
chains over the last few years. This report explores
a range of options to reduce negative supply chain
impacts on biodiversity, including improved corporate
policies and internal standards, the use of third-party
sustainability standards and certications, and direct
corporate funding of sustainability improvements
within their supply chains including in producer
countries. The report also examines options to achieve
positive impact, such as sustainable jurisdiction/
landscape-level sourcing initiatives and conservation-
focused management of naturally sourced ingredients.
Although the report puts forth some estimates on
current and projected future funding for sustainability,
much of the nancing on sustainable supply chains is
by companies and by nature is not publicly available
information. As such, the amount spent by companies
on increasing sustainability of supply chains might be
higher than estimated here.
• All actors engaged in supply chains should
collaborate to foster the green transformation of
supply chains, with an immediate focus on soy,
palm oil, cattle, and forest products, including
developing and implementing production
standards and improving the means of tracking
products and impacts from producer to consumer.
• Governments in supplier (exporting) countries
should improve the land use planning and enforce
legislation and measures to reduce deforestation
and conversion of other natural ecosystems.
Governments should also provide both nancial
and technical support, including agricultural
extension services, and facilitate market access for
compliant producers to incentivize the sustainable
production of commodities.
• Governments in buyer (importing) countries should
leverage their market and diplomatic powers to
encourage exporting country governments to
enforce sustainable practices.
• Consumers should, with support from governments
and companies, educate themselves about the
environmental impact of their consumption behavior
and subsequently use their spending power to
demand greater transparency and improved
practices, such as deforestation-free products,
via increased use of ecolabels and certication
systems by companies and brands to support
biodiversity-positive practices in supply chains.
• Large buyers with signicant inuence in
supply chains should develop and implement
green procurement policies and standards;
work within the supply chain to monitor,
track, and verify biodiversity impacts to assure
that primary producers are adhering to the
required sustainability standards; and work with
governments to incentivize, support, and require
local producers and intermediaries in the supply
chain, who operate at a more local or jurisdictional
scale, to transition away from unsustainable
practices toward those that support biodiversity.
• Countries should increase efforts through the
international architecture, specically the WTO,
to develop green trade agreements that facilitate
and incentivize increased trade in commodities
produced without conversion of natural habitats.
RECOMMENDATIONS
28
CONCLUSION
This report highlights the risks associated with biodiversity loss, makes a
compelling case for appropriately valuing nature in our economies, and
delivers a specic contribution to the negotiations on a resource mobilization
strategy as part of the Post-2020 Global Biodiversity Framework under the
UN CBD process. It focuses foremost on the need for all countries to take
increased actions to adopt environmental and economic policies aimed
at protecting biodiversity and reducing harmful practices. The report
further highlights the potential for the private sector to make a major
contribution to nancing nature conservation but is clear that this potential
will only be realized if governments create the conditions that make that
investment protable.
The analyses underlying this report are based on best available data
but recognize that, due to the complexities and interconnectedness of
nature, the scale of the risks we face due to biodiversity loss are impossible
to fully measure, and any valuations of natural capital are likely to be
underestimates. Thus, the range of nancial estimates presented in this
report are imperfect. However, these uncertainties should not be an excuse
for inaction. The case for protecting biodiversity, its urgency, and the policies
and mechanisms needed are sufciently clear; the sooner governments
begin to take out the insurance policy of lling the biodiversity nancing gap
and appropriately valuing nature, the cheaper the premium will be.
... the sooner governments begin to take out
the insurance policy of lling the biodiversity
nancing gap and appropriately valuing
nature, the cheaper the premium will be.
Conclusion
28
Financing Nature: Closing the Global Biodiversity Financing Gap
29
AUTHORS
Andrew Deutza, Geoffrey M. Healb,
Rose Niuc, Eric Swansonc, Terry
Townshendc, Zhu Lic, Alejandro Delmard,
Alqayam Meghjid, Suresh A. Sethid, and
John Tobin-de la Puented
CONTRIBUTING AUTHORS
Global biodiversity background for Foreword
and Executive Summary: Tom Lovejoy
Biodiversity offsets: Bruce McKenney,
Jessica Wilkinson, Joseph Kiesecker,
Christina Kennedy, and James Oakleaf
Financing for biodiversity conservation
in urban environments: Robert McDonald
Green nancial products: Patricia De
Pauw, Sebastián Molina Gasman, and
Alekhya Mukkavili
Harmful subsidy reform: Kara Guse
Investment risk management: Marie-
Justine Labelle, Alekhya Mukkavilli, and
Yasomie Ranasinghe
Natural-based solutions and carbon
markets: Kelley Hamrick
Natural infrastructure: Alekhya Mukkavilli
Ofcial development assistance: Marie-
Justine Labelle, Yasomie Ranasinghe,
Everett Sanderson, and Jim Stephenson
Sustainable supply chains: Kara Guse,
Yasomie Ranasinghe, and Jim Stephenson
TECHNICAL ADVISORY GROUP
Marco Albani (Independent Advisor),
Frank Hawkins (International Union
for the Conservation of Nature), Onno
van den Heuvel (UNDP Biodiversity
Finance Initiative), Katia Karousakis
(Organisation for Economic Cooperation
and Development), Margaret Kuhlow
(WWF International), Kenneth Lay
(Rock Creek Group), Aileen Lee (Gordon
and Betty Moore Foundation), David
Meyers (Conservation Finance Alliance),
Andrew Mitchell (Global Canopy),
Mark Opel (Campaign for Nature), and
Kyung-Ah Park (Goldman Sachs)
REVIEWERS/CONTRIBUTORS
Justin Adams (Tropical Forest Alliance,
World Economic Forum), Géraldine Ang
(Organisation for Economic Cooperation
and Development), Ulrich Apel (Global
Environment Facility), Marco Arlaud
(UNDP Biodiversity Finance Initiative),
Mohamed Imam Bakarr (Global
Environment Facility), Larry Band
(Independent Consultant), Andrea Barrios
(Rockefeller Foundation), Rafaello Cervigni
(The World Bank), Gretchen Daily (Stanford
University), Nick Dilks (Ecosystem
Investment Partners), Mafalda Duarte
(Climate Investment Funds, The World
Bank), Yasha Feferholtz (UN Convention
on Biological Diversity), Monica Filkova
(Climate Bonds Initiative), Charlotte
Kaiser (The Nature Conservancy), Kerry
ten Kate (Natural England), Amanda
Kelsten (Bloomberg), Sean Kidney
(Climate Bonds Initiative), Linda Krueger
(The Nature Conservancy), Gemma
Lawrence (Loan Market Association),
Richard Lawrence (Overlook Investments),
Winsor J. Lee (Bloomberg NEF), Li Nuyun
(China Green Carbon Fund), Lu Xiankun
(LEDECO Centre), Pascal Martinez
(Global Environment Facility), Adam
C.T. Matthews (The Church of England
Pensions Board), Tom Mitchell (Cambridge
Associates), Jen Molnar (The Nature
Conservancy), Stefano Pagiola (The World
Bank), Edward Perry (Organisation for
Economic Cooperation and Development),
Alexandra Pinzon-Torres (London School
of Economics), Kelly Racette (The Nature
Conservancy), Massimiliano Riva (United
Nations Joint SDG Fund), Giovanni Ruta
(The World Bank), Lynn Scarlett (The Nature
Conservancy), Hugh Searight (The World
Bank), Andrew Seidl (UNDP Biodiversity
Finance Initiative), Priya Shyamsundar
(The Nature Conservancy), Krista Tukiainen
(Climate Bonds Initiative), Hannah
Vanstone (Loan Market Association),
Kurt Vogt (HPL LLC), Mike Wironen (The
Nature Conservancy), Tracy Wolstencroft
(National Geographic), and Zhao Xiaolu
(Environmental Defense Fund, China)
DISCLAIMER
The authors would like to thank the
Technical Advisory Group members,
contributing authors, and reviewers
for their valuable contributions that
strengthened the report. The content
and positions expressed are, however,
those of the authors and do not
necessarily reect the perspectives
of those who provided input, nor
the organizations to which they are
afliated.
SUGGESTED CITATION:
Deutz, A., Heal, G. M., Niu, R., Swanson,
E., Townshend, T., Zhu, L., Delmar, A.,
Meghji, A., Sethi, S. A., and Tobin-de
la Puente, J. 2020. Financing Nature:
Closing the global biodiversity nancing
gap. The Paulson Institute, The Nature
Conservancy, and the Cornell Atkinson
Center for Sustainability.
GRAPHIC DESIGN:
Jonathan Tsao
PHOTO CREDITS:
Cover (trees/waterfall): © Ken Geiger/TNC
Page 04-05 (redwoods): © Patrick
McDonald/TNC Photo Contest 2018
Page 06 (baby turtle): © Carlton Ward Jr.
Page 16: © Michael Gallagher/TNC
Photo Contest 2019
Page 18 L to R: © Yaron Schmid/TNC
Photo Contest 2019, © Junqiu Huang/
TNC Photo Contest 2019, © Jennifer Adler
Page 22: © Tyler Schiffman/TNC Photo
Contest 2019
Page 10, 22 (egret): © Jianmin Wang
Page 28: © Harvey Locke
Copyright © 2020 The Paulson
Institute, The Nature Conservancy,
and the Cornell Atkinson Center for
Sustainability
a The Nature Conservancy; b Columbia University; c The Paulson Institute; d Cornell University.
The authors are grateful to the many individuals, in addition to the members of the Technical Advisory Group, who
contributed to this report as reviewers, advisors, supporters, communicators, or sources of information, including Katie
Baildon, Divina Baratta, Kristin Gomez, Sara Levin Stevenson, Alan Martínez, Bianca Shead, and Eve Wang. The Paulson
Institute authors would like to thank Henry M. Paulson Jr. for his leadership and vision, Deborah Lehr for her inspiration
and guidance, and Tom Lovejoy and Larry Linden for their wise counsel. The Nature Conservancy authors would like to
thank Jennifer Morris for her support and vision. The Cornell University authors are grateful to the leadership and staff
of the Cornell Atkinson Center for Sustainability for logistical, nancial, and communications support.
About the Paulson Institute
The Paulson Institute is a non-partisan, independent “think and do tank” dedicated
to fostering a US-China relationship that serves to maintain global order in a
rapidly evolving world. Our focus on US-China is dictated by the reality that it is
the most consequential bilateral relationship in the world. We often operate at
the intersection of economics, nancial markets, environmental protection, and
policy advocacy, in part by promoting balanced and sustainable economic growth.
Founded in 2011 by former Treasury Secretary Henry M. Paulson, Jr., the Institute is
based in Chicago with ofces in Washington and Beijing.
Address: 625 North Michigan Avenue, Suite 2500, Chicago, IL 60611
Website: www.paulsoninstitute.org; Twitter: @PaulsonInst
About The Nature Conservancy
The Nature Conservancy is a global conservation organization dedicated to
conserving the lands and waters on which all life depends. Guided by science, we
create innovative, on-the-ground solutions to our world's toughest challenges
so that nature and people can thrive together. We are tackling climate change,
conserving lands, waters and oceans at an unprecedented scale and providing
food and water sustainably. Working in 79 countries and territories, we use
a collaborative approach that engages local communities, governments, the
private sector, and other partners.
Address: 4245 North Fairfax Drive, Suite 100, Arlington, VA 22203-1606
Website: www.nature.org; Twitter: @nature_org
About the Cornell Atkinson Center for Sustainability
Cornell Atkinson Center for Sustainability is the hub of collaborative sustainability
research at Cornell University, forging vital connections among researchers,
students, staff, and external partners. We build new and unexpected connections
that catalyze extraordinary change. We know that bold ideas and powerful new
models will ensure that people and the planet not only survive, but thrive. With
Cornell University’s deep and broad knowledge base as our foundation, we bring
together passionate experts and innovators, theorists and practitioners, business
leaders and philanthropists to deliver large-scale, long-term sustainability
solutions. Together, we’re building a resilient tomorrow.
Address: 200 Rice Hall | 340 Tower Road, Cornell University, Ithaca, NY 14853
Website: www.atkinson.cornell.edu; Twitter: @AtkinsonCenter
Acknowledgments
