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How do we close the global biodiversity finance gap?

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The impacts of the climate crisis are widely known and have rightfully spurred international action, but the hastening collapse of global biodiversity receives far less attention.

Biodiversity is the life support system of our planet. We also depend on intact ecosystems for our food and water supplies, medical advances and disease prevention, climate stability, shelter and so much more.

In financial terms, a staggering 55% of global GDP depends on high-functioning biodiversity.

But nearly all species on earth are currently undergoing population declines, at speeds far quicker than scientists would expect.

Reversing the decline of nature depends on international cooperation. The Kunming-Montreal Global Biodiversity Framework represents a watershed moment for multilateral governance and action to conserve biodiversity and restore ecosystems. One of the goals of the framework is to "invest and collaborate", but currently, the biodiversity finance gap stands at $700 billion a year.

So what can be done to mobilise resources to ensure the conservation and sustainable use of biodiversity? Experts examine ways forward and reflect on what must be done to reduce the harmful incentives that fuel biodiversity loss.

Guests

  • Sara Pantuliano (host), Chief Executive, ODI
  • Laetitia Pettinotti, Research Fellow, ODI
  • Anaid Velasco, Environmental Lawyer and Mexico Director, Climate Finance Group for Latin America and the Caribbean
  • Jeremy Eppel, Co-Founder, Eppel Sustainability and Senior Adviser, Nature Finance

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0:00:09 - Sara Pantuliano

Welcome to Think Change. I'm Sara Pantuliano. The impacts of climate change are widely known and have been rightfully spurring international action, but the accelerating collapse of global biodiversity receives significantly less attention. Biodiversity is the life-supporting system of our planet. Our oceans, savannah, mangroves, our forests thrive on an abundance of life, and we also depend on intact ecosystems for our food and water supplies, for the medical advances and disease prevention, for climate stability, for shelter and for so much more species prevention, for climate stability, for shelter and for so much more. So if we consider this from a financial lens, a staggering 55% of global GDP depends on high functioning biodiversity. That equates to about $58 trillion being moderately or highly dependent on nature. Yet almost half of the species on Earth are currently undergoing population decline. The extinction of species is now happening between a hundred and a thousand times more quickly than scientists would expect and, like many other crises that we face today, reversing the decline of nature depends on international cooperation.

The coming Montreal Global Diversity Framework was adopted in 2022, and it represents a watershed moment for multilateral governance and for action to conserve biodiversity and restore ecosystems. One of the goals of the framework is to invest and collaborate, but currently the biodiversity finance gap stands at about 700 billion a year. So how do we reduce the harmful incentives that fuel biodiversity loss and how can we mobilize resources to ensure the conservation and sustainable use of biodiversity? Well, we're going to discuss all of this with a great group of colleagues I'm really pleased to welcome to Think Change, Anaid Velasco. Anaid is an environmental lawyer. She's also the Mexico director for the Climate Finance Group for Latin America and the Caribbean. Joining Anaid is Jeremy Eppel. Jeremy is the co-founder of Eppel Sustainability, a senior advisor in nature finance and a member of the Convention on Biological Diversity Advisory Committee on Resource Mobilisation and, last but not least, our very own Laetitia Pettinotti, Research Fellow in the Climate and Sustainability Team at ODI. 

0:02:36 - Jeremy Eppel

Jeremy, let me start with you, what is the current state of finance for biodiversity? Well, I think the thing to say about the state of finance for biodiversity is that, self-evidently, it's inadequate. That's been the case for a long time. The Convention on Biodiversity has always taken played, if you like, second fiddle. It's been seen as less important over the years, since it was agreed in 1992, than the Climate Convention. But I think that is really changing, and one of the encouraging signs I see at the moment is the recognition that climate and nature and the climate and nature crises, if you like are very, very interdependent and that you won't solve one without solving the other. So I think there's also, in the financial sense, recognition that addressing climate finance and addressing nature finance is something that has to be done together. 

The figure you mentioned, though, of the 700 billion financing gap it's not a hard and fast figure. I was involved in analysis that was done before the COP15 in Montreal, which looked at the variety of figures, but it is in the right order of magnitude. We are talking about hundreds of billions rather than tens or trillions. So there is this significant shortfall between what is needed to meet the goals of the Kunming-Montreal framework and the amount of resources that are currently available from all sources. I'll come back to that point because I think that point about all sources is very important. 

0:04:06 - Sara Pantuliano

Thanks, Jeremy. Campaign for Nature reached out to ODI because they spotted a gap that could mean that nations fall short on achieving the targets that were set out for them in the global biodiversity framework. Laetitia, can you explain what this gap is?

0:04:22 - Laetitia Pettinotti

Yeah, basically, this is part of the gap in accountability. And, before I launch into that, if I can bring us back to the background of it, which is that in the global biodiversity framework that was agreed in 2022, so there are loads of targets. The most prominent one is to preserve, conserve, so 30% of terrestrial marine ecosystems by 2030. But obviously negotiators did their jobs well, because it also included some targets around financing these targets. So implementation of it, and basically one of them is targeted towards developed countries together are to provide so 20 billion per year by 2025, going up to 30 billion per year by 2030. 

But what C4N spotted and that's why they reached out to us is that there was no accountability mechanism per country so that we can know how much a country should contribute under that 20 billion. So, say you know, when the first round of pledges came round about the global biodiversity fund, each country said that they made a significant contribution by giving X million. This is great, but as civil society actors, we have, like almost a duty to think well, step back, is this enough? What should it be? And so that's what we've done in this research is actually first to estimate how much biodiversity finance has been provided by developed countries and then to benchmark that against what they should be providing, given their historic contribution to ecological depletion, their population as well as their economic capacity. 

0:06:02 - Sara Pantuliano

Thanks, Laetitia. I just want to bring Jeremy back into the conversation. Jeremy, you've researched and written extensively on biodiversity and this finance gap that you've both talked about. How do we bridge this gap and what are the challenges that are preventing adequate financing for biodiversity? 

0:06:21 - Jeremy Eppel

I think there are several. I mean, one of the key issues, the that nature is taken for granted or taken for free by most of the global economy. You mentioned a figure, uh, sarah, of 55. I mean I would actually say that the whole of the global economy is entirely dependent on nature indirectly. So I don't think we should get too hooked on saying, you know, there's 45% that doesn't depend on nature. Ultimately, everything depends on nature. Our whole life support systems come from nature one way or the other, but it's not properly valued in most cases and therefore it's mispriced and as a result of that, the economic system gets a lot of its services from nature for free or too cheaply, and that puts enormous pressures on it In terms of bridging that gap, which I think is very important to think about. 

Whatever the figure is, you have to bridge it, in my view, from both ends. You have to reduce the pressures that are causing the gap to be large and you have to try and increase the resources that are going into it. So I'd say, try and close the if there's a, try and bridge it from both sides and aim to meet in the middle as soon as you can, and that means looking at all the flows of finance in the global economy, both public and private, that are misaligned with what we're trying to do in the Kunming-Montreal framework. So how much in the way of resources in agriculture, in the food system, in energy, in transport, in infrastructure are being spent on things which are causing the gap to be even bigger, causing the problem to be even greater, giving us a bigger hill to climb to achieve our goals. So that's an important part of it. Subsidies are part of that, but they're not the only part. So misallocated, misaligned financial investments very, very significant. That's in the public sector and in the private sector, and it's a global issue. Then there are subsidies, many of which are perverse in the sense that they can cause harm to biodiversity, particularly in the agriculture sector. 

We've seen a lot of analysis of this, whether it's from the OECD or from other organisations looking at how big a problem that is. But then there's the question of where are the positive resources for biodiversity coming from to bridge the gap, as it were, from the bottom up. And I think there's three things to be said about that. Again, something we said in the work I was involved in before the Montreal meeting, and that is that you need to think about all sources of finance. You need to think about increasing all sources of finance public, private, international, as the new ODI report addresses, but also domestic. 

And you need to think about how those resources are used. So the three kind of pillars, if you like, of a strategic approach to mobilising resources to bridge that gap are reducing the harmful flows, which are very significant, increasing all resources and, finally, using them all more efficiently, making sure that how they are used, that countries have resources, a good strategy for how they will finance their national biodiversity strategies and action plans, so that they have national biodiversity finance plans covering not just conservation finance that's the tip of the iceberg, in a way but covering the whole of the economy, so that they can draw resources from agriculture and other sectors where, if they're misapplied, the gap will be bigger. 

0:10:09 - Sara Pantuliano

The report the title, let bigger the report. The title, let's you know, share with our listeners, is a fair share of biodiversity finance, and it's really intended to mitigate the risk of wealthy nations evading their fair share. Um, can you tell us which countries are paying the fair share and how do we can? How do we get more countries to pay up? 

0:10:30 - Laetitia Pettinotti

Well, unfortunately, there are not that many that actually pay their fair share. So let's start with the good news. So Sweden does pay its fair share. Norway actually is really leading top of the chart. They are paying twice as much as what they should pay, as per our index. So this is great. They're showing leadership and really, we know, praise those two countries, um, but the reality is that, in terms of absolute amount that they have given, this is like less than a billion. So this is great, but actually the target is 20 billion and the shortfall, as we have estimated it was 11.6 billion in 2021. Um, because the reality is that even some of the countries you know, like Germany, like France, you know, like Germany, like France, you know also have shown that, like they're very close to meeting their fair share. They're paying together like something like around 4 billion, but the reality is that 23 countries out of 28 are paying less than half of what they should pay. So this is really poor. I mean, this is like the baseline, right, because this is 2021. So this is our baseline year. 

Then we want to assess every single year up to 2025 how each country is performing against our benchmark. So it really countries should be stepping up, and what we would want to see is clear delivery plans, as Jeremy was talking about, is transparent delivery plans about how much is going to be given to what geographies, what sort of instruments? So, is it going to be loans, is it going to be grants? Then you know also, is there is going to be any provisions around gender equality, any synergy with climate objectives as well, et cetera. So just very clear when is the money going to come, at what point, for what? And really that seems like just a very basic tagline of just show us your plans, show us what you're planning to do to deliver. 

0:12:19 - Jeremy Eppel

What we've seen increasingly over the last few years and I remember a few countries including the UK were sort of on the front foot about this was committing to a significant proportion like 30 percent, of their climate finance supporting biodiversity outcomes. 

That makes quite a difference potentially to this set, to this analysis you've got in the report. 

And of course you know I say this is a former government official, so I'm not defending one country particularly or another, but countries have different priorities for how they spend their official development assistance. Not everybody would necessarily put biodiversity and they should all put it high, but they wouldn't all necessarily give it exactly the same proportion of their total budget as others. So in one sense, I mean I think it's very interesting what you've done and I applaud you for doing it, but to say that every country necessarily needs to be on exactly the same position on that table isn't necessarily a kind of political reality and how policy will work in terms of countries. Some will prioritise health a bit more than biodiversity, but you know these things all help. So I'm just thinking that the climate piece is very important and if you ran that analysis again, looking at climate finance and the commitments to the proportion of climate finance going to biodiversity. I wonder how different it would look?

0:13:42 - Sara Pantuliano

You raise a really important point and, in reality, a lot of you know the conversations we’ve had on Think Change point to the need for more finance for this thing or the other, and in reality, we're dealing with very fiscally constrained countries that struggle. As you say, they need to identify what is more important for them in terms of priorities for other, but it isn't a useful way to attract attention to important issues that are not part of public policy or not enough. You know, particularly in the context of so much attention to climate policy, we tend to forget nature. So completely agree with what you say in terms of not everyone may need to pay the same, but this is a useful way to focus minds on the public support that we need, you know, to protect nature. Laetitia, you want to come in on this? 

0:14:30 - Laetitia Pettinotti

Yeah, I guess I have three points on that, and you're quite right pointing out the intricacies of how to account for biodiversity finance, for climate finance, I guess one is that it is an obligation that developed countries have taken. So we know that the grounding in terms of legal obligation and how tight it can be, etc. Like it's very hard to uphold, but it is an obligation that they negotiated and agreed on. So you know, different donors have different strategies, but they have committed, so I think it's important that they're held accountable for it and I'm sure this is not a point you're contesting. And on the climate finance, so we have accounted for it. So, in the sense that if and this is getting a bit into the weeds of the data but if the finance had been tagged as so significant on biodiversity but principal on climate, we accounted it. So we really have worked really hard. This is like really months of like data weeding with the team but to ensure that we have a complete picture so that we can take into account these synergies. 

0:15:36 - Sara Pantuliano

Let me bring in Anaid, who has been waiting patiently. Anaid, you co-authored one of the policy briefs that has been unpacking the experience of developing countries as recipients of biodiversity finance. Can you tell us about Mexico's experience? 

0:15:51 - Anaid Velasco

of biodiversity finance. Can you tell us about Mexico's experience? Sure, well, I would like to start by saying that Mexico I think it's a very interesting country in terms of policy, laws, social elements and, of course, biodiversity, because Mexico is one of the 17 countries that are called megadiverse. So while that makes us like very lucky because we can have access to all these different types of mammals, amphibians, reptiles, plants and so on, it's also like a very big responsibility to take care of all this mega diversity right. So we nowadays have like more than 200 natural protected areas just at the federal level. Only this year, 20 new natural protected areas have been detected by government, so that, in terms of financing, brings a lot of challenges. 

To begin with, Mexico is one of those cases where the environmental funding in general not just for biodiversity, but for the whole environment sector has been reduced for the last decade. Environment sector has been reduced for the last decade, like we have seen nowadays, like less more money in the public budget than it was 10 years ago, and even though we had like in 2020, let's say, a government decided to give a little bit more money to the natural protected Areas Commissions, for instance it's still in the big picture, it's not enough. So there have been studies made where they said, if we divide the public budget for the surface of the Natural Protected Areas, government is assigning like less than a dollar or an hectare of natural protected area, which that is almost nothing or is not good enough to take care of all this nature and all the environmental services that are provided by nature. And so, in this context, international cooperation has played a big role. Mexico yeah, we have been lucky to receive interesting grants from France, from international finance institutions, but we still have a challenge because, yeah, we still deal with the problem or issues on transparency, issues on whether the indigenous communities are receiving directly the benefits of the, of the funding, for instance, or if the money is just going to strengthen, like administrative expenses or salaries, or or to be spent on gas and fuel to operate within this territory. So that's like the big context, and also there is, I would like to highlight as well, like the composition of our society. 

We also have a lot of indigenous communities, communities different among them, many of them, in which their territories are not very specifically defined right. So that brings a lot of challenges in terms of defining property, whether recognizing the original property of indigenous peoples, or to have it as the one is framed in our national constitution, that all nature belongs to the state and so, therefore, the state decides how to protect nature, and that creates a lot of tension with the indigenous peoples, because, at the end, there are some decisions of the state that does not, are not consulted as they should be, and, even though they are with good intentions, you have to take into account the local stakeholders. So that's what's going on now in Mexico, and right now we are in the middle of a new government we have our first woman president. She comes from science, but still she's a scientist. There are big challenges in terms of policy, because biodiversity doesn't seem to have a big role in the public policy thanks. 

0:20:29 - Sara Pantuliano

I'll come back to you on some of these policies and the challenge around problematic policies, but I want to ask Laetitia we've talked a lot about this 20 billion goal by 2025 or the goal by the biodiversity framework, which actually is supposed to become 30 billion by 2030. And clearly that's important for international trust and critical to help reverse biodiversity loss. But there are other finance targets in the global biodiversity framework, like removing harmful incentives or improving disclosure of nature-related financial risks. Can you tell us a bit more about that? 

0:21:05 - Laetitia Pettinotti

It's a very interesting structure. Interesting structure it's a multilayered goal so that we can indeed, you know, draw on all sources, as Jeremy was saying earlier. So if we start again from that, like there is 700 billion gap per year. So the target of 20 billion obviously is very small, but that's because public, and then the overall target of positive flows supporting biodiversity is 200 billion. So that includes international public finance. So that's 20 billion, soon to be 30, but also a whole range of other ways to mobilise resources. So domestic finance plays a big part.

The report that Anaid co-wrote really points the finger at this issue is that actually most of the biodiversity finance that is supported in developing country comes from domestic budget and we see it in the case of Nepal as well, which is another country report that we've done, and the sums are really large for countries that are also struggling with developmental issues.

So another aspect of that target is actually to think through innovative finance mechanism and leveraging private finance. So there is a whole suite of different options that they are saying could be explored, et cetera, and actually should be explored, but we're yet to see what modalities, how this is really going to take off and deliver for these 200 billion, Because the idea of the GBF is that we have the 700 billion gap we provide in terms of positive flows. So 200 billion provide mobilised money from all different sources, but then we reduce the harmful incentives by 500 billion a year, so that then you bridge that 700 billion gap right that we were talking about earlier. And that's an interesting thing because actually, if you think about the 20 billion, it's equivalent to about four days of subsidies that are harmful to biodiversity, so that's a drop in the ocean. So hence having this like two prong approach. 

0:23:13 - Jeremy Eppel

That very attractive concept of you know you reduce it by 500 and increase it by 200, job done. The problem is that you know, we know there's a lot more than 500 billion a year of harmful subsidies, 1.8 trillion or whatever figure you want. If you look at the food system, I think the world bank report that actually shows that the, the um, the kind of externalities caused by the food system, exceed the global value of the food system. So you know, there's some very big numbers here in the harmful, on the harmful side of the equation. I think it's unrealistic and perhaps naive to think that by reducing subsidies by 500 they're all going to go to buy to reducing the pressures on biodiversity, because individual countries, if they do choose to change the regime for subsidies, whether it's, you know, an agriculture regime like in the uk or the eu or an energy regime somewhere else, that money isn't just going to go from, you know, energy subsidies into biodiversity. So conceptually it makes sense, but as a kind of arithmetical exercise, I'd caution thinking that, oh, you reduce, 500 million of billion of subsidies are reduced, we get 500 billion for biodiversity. It ain't that simple, unfortunately, but conceptually, yes, it makes sense to definitely do a lot of that. 

And also I want to come back to the alignment point. The point is if we can identify how far investments, whether it's in private capital markets or in sovereign debt flows, are misaligned with these goals, these very significant goals in the global biodiversity framework. Just like people are looking at Paris alignment, we need to look at montreal, or could mean montreal alignment. Then that can really help us think about how to shift the harmful expenditure, not just the harmful subsidies. So I think I'd encourage that. And on what what's it's like? It's called innovative financial instruments. I mean, we've been talking about these instruments for at least a decade. I was at meetings in 2014,. I remember in Quito on the innovative financial instruments and they weren't that innovative. They're innovative in the biodiversity space, that's all. Let's call them new financial solutions. The key thing is to make them the projects and the programs to support biodiversity conservation, sustainable use and restoration really bankable for the private sector. There needs to be a return on the investment and they need to deliver for nature. 

0:25:51 - Sara Pantuliano

Thanks, Jeremy. I think we all agree that it's not a matter of simple financial flows one way or the other matter of simple financial flows one way or the other. In fact, a big part of the conversation is also about reforming problematic policies and regulations, which is a whole other challenge. And if you've worked on the effective application and improvement of environmental law for nearly 20 years, do you see a link between this access in biodiversity finance and actually the policies that countries are developing around these national biodiversity strategies? 

0:26:27 - Anaid Velasco

Yes, of course there is like a very direct link. In the case of Mexico, for instance, even though we have these national public policies, like the National Strategy on Biodiversity, which to begin with is like a document that in our domestic law is not recognized, even though it comes from the international legal framework and therefore it's mandatory, having it within the law would help, because then the Mexican legal system works on the public budget. For instance, whenever you have it in the law, then it's easier to ask for public budgeting for that strategy or for that policy. So that's like the first challenge. The second is that we still still and I think it's not just mexico, it's just what we just said is, um, even though, like we have in the, in our national constitution, the, the human right to a healthy environment, which helps a lot, we also have a lot of laws and policies that promote extractivism, like all these, not just like agriculture, because we do not have a lot of subsidies in agriculture in Mexico, but we do have a lot of subsidies for fossil fuels, and so we all know that mining fossil fuels industry generates a huge impact on biodiversity in territory and also in communities. So, yeah, of course the framework has to do. The legal framework has to do a lot in protecting biodiversity and also in applying the national strategies Right now as well. 

The national institution that created this strategy, which is the CONABIO, which is the acronym for the National Commission no, inter-secretary Commission for the Use and Knowledge of Biodiversity, it's that long. They just fire people that have been working there for more than 20 years and there is this national interest in changing the nature of this scientific authority. It has been recognized a lot because they generate a lot of scientific knowledge. They make, like the mangrove inventory. They also are the scientific authority for the CDB and so on, and so, like, the national institution that holds all the knowledge and experience on making policy and applying the policy is being weakened. So, yeah, the environmental legal framework at the end has to do a lot. But my point is like it's not only the environmental. What about the other sectors? The mining, the agriculture, even fisheries? The mining, the agriculture, even fisheries Also, when they are not done correctly, they undermine all the purposes of the national strategies. 

0:29:45 - Sara Pantuliano

Thank you so much, Anaid. Final thoughts Laetitia, Jeremy. 

0:29:51 - Laetitia Pettinotti

I would say that, you know, if we don't manage to get the financial resources. I mean, we're literally facing a world where we would have accepted that there won't be any North Atlantic whale. We would have just been accepting that, and that saddens me a lot. 

0:30:08 - Jeremy Eppel

The one thing I think we haven't touched on that's relevant both relevant to ODA, but also to the wider finance picture is multilateral institutions. It's really important that those multilateral institutions prioritise biodiversity, prioritise biodiversity finance, think about it in an integrated way. The GF, in the current funding round, gf8, has integrated programmes that look across outside an individual sector to try and recognize the need for this mainstreaming, the need for this integration of biodiversity into other policies, and I think that is essential and I think we should all, as civil society, if you like, be pushing to make sure that those institutions fully play their part. They are, after all, owned by us. 

0:30:59 - Anaid Velasco

It is public money that goes into them we have been talking a lot on the finance for protecting nature and from the perspective of all the services that nature is providing us in terms of economy and productiveness, but there is also one very important value that highlights this international framework the CDB on the value per value of nature by itself, which it's even more difficult to assign, but still there have been studies and I think we also need to look at that, because that also helps to to protect nature by itself, regardless the use we we made of it but thank you so much, Anaïd. 

0:31:57 - Sara Pantuliano

Jeremy Laetitia, I think you made a very cogent case for the importance of finding ways to ensure that our biodiversity is better protected. 

We don't want to live in a world without a North Atlantic whale. We don't want to live in a world where nature can sort of fulfill its full potential. It would be a very sad and unsafe world to live in. But to do that, as we've heard from the three of you, we clearly need to push for the right resources to be put on the table, whether from the public, from the private leveraging the MDBs, you know, domestic resourcing is really that push that civil society is very good at doing to make sure that, you know we can get more support but also, looking at the policies, environmental regulations, as we heard, getting the right political will from the likes of, you know, G7, G20 and other multilateral spaces. That's certainly something we are committed to doing at ODI and we'll continue to push for. Thank you, everyone for listening to our episode. Don't forget to like and rate it and subscribe to Think Change, and I hope you will join us again next time. 

 

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