The biodiversity finance landscape is changing. Both domestic and international financial flows have grown and the range of financing instruments, providers and delivery mechanisms now available is significantly wider than ever before. At the same time, biodiversity projects have started to be funded by the private sector, which is leading to the creation of new and unfamiliar asset classes and instruments, such as impact investing, and green and blue bonds. One of the key challenges for practitioners is selecting the most appropriate and effective solutions out of the growing list of consolidated, emerging and non-traditional mechanisms to fund nature and better align interest of various actors. This online “catalogue” is the beginning of a comprehensive list of these instruments, tools and strategies that are applicable to the field of biodiversity finance. Each catalogue entry is a mechanism or “finance solution” and includes a brief description as well as links to guidance material or case studies.
Finance solutions provide strategies and means to effectively unlock and direct multiple sources of finance toward national and local biodiversity finance plans and projects. They can be used alone or in combination to structure new products that can increase the impact of biodiversity interventions. Sources of financing flows can come from national and international public revenues (taxes, grants), short- and long-term private capital (bank lending, bonds), or combinations of both (public guarantees, public-private partnerships), and delivered through various public, private and blended institutions. A diversity of financial instruments can be effective independently or used in combination: debt and equity, fiscal, grants, market, regulatory, or risk management. In this evolving landscape, solutions can be categorized into four non-exclusive groups according to the financial results they aim to achieve namely:
- Generate revenue: mechanisms (e.g. environmental taxes, etc.) that can generate or leverage additional financial resources from or for biodiversity.
- Realign current expenditures: measures that can re-orient existing financial flows towards biodiversity or away from harmful activities (e.g. by eliminating perverse agriculture subsidies and using the proceeds to fund biodiversity friendly businesses).
- Avoid the need for future expenditures: any measure that can prevent or reduce future investment needs by reducing or amending counter-productive policies, expenditures and behaviors (e.g. taxes on fertilizers or targeted investments avoiding or combatting alien invasive species).
- Deliver biodiversity management effort more effectively: measures or strategies that can enhance cost-effectiveness/efficiency, synergies and/or favor a more equitable distribution of resources (e.g. enterprise challenge funds, national conservation funds, effective procurement, etc.).
The searchable catalogue provides an alphabetical listing of all solutions profiled, but they can also be searched by the financial result they produce, the financial instrument they rely upon, whether they are public or private finance, and the economic sector in which their use is most prevalent.
The catalogue should also be used in conjunction with the following companion products:
- The Biodiversity Finance Initiative Workbook, which guides the identification, development and implementation of finance plans and solutions for nature and it describes how to use the catalogue in the context of BIOFIN implementation.
- The Financing Solutions for Sustainable Development online platform, which provides a technical review of finance solutions’ potential, advantages, disadvantages, risks and characteristics.
- The Conservation Finance Alliance online guide [upcoming-2018], which provides detailed and step by step guidance on a sub-set of finance solutions.
The catalogue is a living document and will be continuously updated to reflect the emergence and refinement of finance solutions.