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BIOFIN: what is it, and how can biodiversity specialists and experts get involved?
Posted 15th April 2024
Introduction
Biodiversity finance also known as BioFin refers to funding and financial mechanisms designed to support conservation and sustainable use of biodiversity through bridging national funding gaps, ensuring resources are efficiently and optimally allocated, and potentially avoiding imposition of future costs on society. The concept of BioFin is gaining popularity due to increasing recognition of the urgent need to address biodiversity loss and its impacts on ecosystems, economies, and societies. With the acceleration of biodiversity loss and degradation of ecosystems, there’s a growing realization that traditional conservation efforts alone are insufficient, and financial resources are required to implement effective conservation and sustainable use measures.
At a policy level, BioFin involves the development and implementation of strategies, policies, and instruments to mobilize, allocate, and manage financial resources for biodiversity conservation and sustainable use. This includes mechanisms such as payments for ecosystem services, biodiversity offsets, eco-taxes, conservation trust funds, and public-private partnerships. Policy frameworks often aim to integrate biodiversity considerations into various sectors, such as agriculture, forestry, fisheries, energy, and infrastructure, to mainstream biodiversity conservation into development planning.
Ten years ago, The Biodiversity Financial Initiative (BIOFIN) was formed from CBD COP11 by the United Nations Development Programme (UNDP) and the European Commission. Currently, it is managed by UNDP and the Global Environment Facility (GEF). Its role is to divert more finance from all possible sources towards global and national biodiversity goals (BIOFIN, 2021). BIOFIN does this through demonstrating how nature economies can work for people and the planet, i.e. through creating sustainable finance solutions.
BIOFINs focus is at country level (now over 40 worldwide) to help support and manage biodiversity management and this is achieved through governments, civil society and vulnerable communities. Private sector businesses also support and over 150 financial solutions can be drawn from. At the ground level, BIOFIN supports activities such as protected area management, habitat restoration, species conservation, sustainable land use practices, community-based conservation initiatives, and research and monitoring efforts. It also involves capacity building, technology transfer, and promoting sustainable business practices to enhance biodiversity conservation and sustainable development outcomes.
It all comes down to planning
Biodiversity finance works by mobilizing financial resources from various sources, including domestic budgets, international aid, private investments, philanthropic donations, and innovative financing mechanisms. These resources are then allocated to priority areas and activities based on conservation needs, socio-economic considerations, and the principles of equity and sustainability.
BIOFIN does this through the development of Biodiversity Finance Plans which incorporate a process involving three assignments (BIOFIN, 2021b):
1. Biodiversity Finance Policy and Institutional Review – in-country policy and institutional review and stakeholder mapping;
2. Biodiversity Expenditure Review – analysis of public and private expenditure aimed at supporting biodiversity (reviewing past, present and future commitments); and
3. Finance Needs Assessment – then looks to estimate financial requirements to deliver national plans, achieve targets and obtain results.
The Biodiversity Financial Plan is the development of a business case to list in priority the financial solutions necessary to optimize current, as well as future expansion of investments (across public, private, national, international, traditional, and innovative funding streams). Following development of the BFP, a further implementation stage leads to tangible finance results and positive outcomes for biodiversity management.
Financing Biodiversity
Did you know that US$143 billion is spent on biodiversity management worldwide? But with the current environmental crises at hand, the world needs to be spending $824 billion (BIOFIN, 2021c). A significant shortfall. Biodiversity financing comes in different forms:
• Grants – countries may make grants available;
• Debt/Equity – issuance of green bonds;
• Fiscal changes – governments may introduce reforms to support environmental improvements;
• Markets – may support society at large through development of payments for ecosystem services acquired, e.g. sourcing water for manufacturing;
• Regulatory – introduction of penalties to prevent pollution or poaching/hunting; and
• Risk Management – ensuring public guarantees to cover green investments (covered by the Multilateral Investment Guarantee Agency).
The source of financial solutions
BIOFIN has built up an extensive database of financial solutions for biodiversity and there is a large array of options available (150+). Some of these may include:
• Public or private sources
• Voluntary or compulsory sources
• Markets
• Regulatory
• Period (covering short, medium, long-term facilities)
• Linked Conditions
• Multiple currencies
As consultants, how can we support?
Biodiversity consultants play a critical role in bridging the gap between conservation priorities and business entities by providing technical expertise, strategic guidance, and capacity building support for all stakeholders involved in biodiversity finance initiatives. We can help mobilize and effectively utilize financial resources to conserve biodiversity and promote sustainable development by:
– Policy and Strategy Development: As expert intermediaries, IBC can help governments, NGOs, and other stakeholders develop comprehensive biodiversity finance strategies and policies by conducting research, analyzing existing frameworks, and identifying opportunities for innovative financing mechanisms that can mobilize resources for biodiversity conservation and sustainable use.
– Financial Planning and Management: We understand what it takes and what it costs to do conservation and so with this knowledge, we can assist organizations in developing financial plans and budgets for conservation projects. We also have sufficient experience and expertise to provide guidance on financial management practices, including resource mobilization, fundraising strategies, financial reporting, and risk management, to ensure the effective use of available funds.
– Project Design and Implementation: Leaning on our experience of managing conservation projects and working with various clients that aim to undertake such initiatives, we can support the design and implementation of biodiversity conservation projects by providing technical expertise across various themes. We can also help develop project proposals, establish monitoring and evaluation frameworks, and ensure compliance with relevant regulations and standards – something we work with on a daily basis.
– Impact Assessment and Reporting: Consultants such as IBC can conduct impact assessments to evaluate the effectiveness of biodiversity finance interventions in achieving conservation objectives and delivering socio-economic benefits. Monitoring & Evaluation (M&E) is one of the most crucial aspects of implementing any conservation initiative and it is important experienced personnel such as biodiversity consultants are hired to support organizations for undertaking assessments, preparing reports and communications materials to showcase the outcomes and impact of biodiversity finance initiatives to donors, investors, policymakers, and the public.
References
BIOFIN (2018) BIOFIN The Biodiversity Finance Initiative Workbook 2018. Accessed at: https://www.biofin.org/sites/default/files/content/publications/workbook_2018/ in April 2024.BIOFIN (2021a) The pathway to a green recovery. Accessed at: https//www.biofin.org/index.php/ in April 2024.