This chapter provides some conclusions on the key challenges and opportunities related to biodiversity and development co-operation. These include increasing finance for biodiversity; using development finance more strategically, coherently and effectively; and, improving the quality and consistency of reporting on biodiversity-related development finance by all donors.
A Decade of Development Finance for Biodiversity
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5. Conclusions and recommendations
Abstract
This report has used a novel and comprehensive methodology to identify biodiversity-related activities in the OECD DAC Creditor Reporting System (CRS) in order to estimate biodiversity-related development finance from bilateral DAC and non-DAC members, providers of South-South and triangular co-operation, multilateral development institutions, and private philanthropy, as well as flows mobilised from the private sector. Official development finance (ODF) flows for biodiversity-related objectives, which include both official development assistance and other official flows, almost doubled over 2011-20 – from USD 5.4 billion in 2011 to USD 10.4 billion in 2020 (based on the more conservative estimate using coefficients). This is an increase of 94% over the period, which is faster than the increase in ODF overall. This growth was primarily driven by bilateral DAC donors, which accounted for 73% of ODF flows, followed by multilateral donors (22%). Multilateral institutions also saw their role increase, providing USD 1.6 billion on average over 2011-20 in biodiversity-related development finance outflows. Non-DAC, South-South and triangular co-operation’s biodiversity-related finance represented 0.1% of total development finance over 2011-20. Private finance mobilised by public ODF adds a relatively small contribution to biodiversity funding (USD 165 million in 2020), while private philanthropies provided an increasingly important contribution over 2017-20, reaching USD 686 million in 2020.
The analysis also finds that, collectively, DAC members that are Parties to the Convention on Biodiversity (CBD) have achieved Aichi Target 20 of doubling their total biodiversity-related international financial resource flows by 2015, from the baseline of their annual average funding over 2006-10, and at least maintaining that level until 2020. This holds true under several scenarios (e.g. using full values or applying a coefficient to a portion of the flows).
Key challenges
Despite this progress, the overall biodiversity financing gap, estimated at USD 700 billion in the Kunming-Montreal Global Biodiversity Framework, will not be met by ODF, even if ODF were to increase substantially. Further, there are multiple sources of finance that are likely to be increasingly significant, including in the area of biodiversity, as countries climb up the income ladder. The amounts of private sector finance leveraged/mobilised by ODF remain low, calling for an urgent assessment of the situation, as well as for an exchange among DAC members on lessons learnt, challenges and good practices. It will also be important to evaluate how ODF can better support the transformational changes necessary to transition to more sustainable pathways (OECD, 2021[1]). As a scarce resource, ODF will need to be strategic and targeted to leverage other sources of finance.
Moreover, the analysis shows that, overall, most ODF is unrelated to biodiversity, including in nature-dependent sectors (with the exception of the general environmental protection and forestry sectors). This trend is observable for both bilateral and multilateral donors and does not match recent commitments, such as those by the G7, multilateral development banks and the OECD (G7, 2022[2]; Multilateral Development Banks, 2021[3]; OECD, 2021[4]). This places donors in a situation in which they can endanger nature (with consequent risks of litigation, reputational damage and changing governance/legal frameworks) and/or be themselves vulnerable to the risks of collapsing biodiversity. Such nature-related risks are already visible in the form of water shortages and droughts, dead zones for fishing, pandemics, and forest fires – all with great pressures to ODF budgets.
Looking beyond development co-operation, the mismatch between actions to conserve and sustainably use biodiversity and the actions leading to loss of biodiversity needs to be addressed (OECD, 2020[5]; OECD, 2021[1]). Globally, a central priority will be for governments to stop incentivising the degradation of biodiversity through environmentally harmful support (by at least USD 500 billion annually by 2030 according to the GBF target 18) (CBD, 2022[6]) and unsustainable production and management of natural resources. Even well-intentioned investments in climate change mitigation and adaptation could be detrimental when biodiversity is not accounted for.
Recommendations
Building upon these findings, the report makes several recommendations for moving forward.
Increase development finance for biodiversity
DAC members, as well as other providers, including South-South and triangular providers, would need to increase their ODF for biodiversity-related activities in line with the recent resource mobilisation strategy of the Global Biodiversity Framework. DAC members should also grow ODF for biodiversity as a core or principal objective and ensure that flows balance marine and terrestrial biodiversity hotspots, balance finance to middle-income countries, on the one hand, with finance for least-developed, small island developing states and fragile contexts, where nature underpins sustainable development, on the other hand.
Multilateral institutions can also increase their biodiversity activities, also in line with recent requirements put forward by the Global Biodiversity Framework, and mainstream biodiversity more actively into their policies and operations, in line with the MDB Joint Statement on Nature, People and Planet and the Global Biodiversity Framework.
Public interventions (bilateral and multilateral) will need to work harder to mobilise more private finance, which will be key for filling the funding gap. This can be achieved by leveraging existing and developing new financing tools, resources and partnerships.
Private philanthropic actors could increase their role further by joining forces with public providers of development finance for biodiversity, thus enhancing their impact and learning.
More finance can be mobilised from the private sector. This can be achieved by building upon and leveraging existing financing tools and resources, and developing new partnerships.
Use development finance more strategically, coherently and effectively
Donors can do more to mainstream biodiversity across the full range of their activities. In addition, donors could consider moving to longer-term, more flexible modalities of development co-operation, in line with the functioning and needs of natural ecosystems and biodiversity.
Donors need to find ways to assess the volume of ODF that is potentially harmful to biodiversity and to evaluate how ODF can better support the transformation towards net zero, climate-resilient and nature-positive pathways.
Donors should minimise trade-offs and maximise synergies across biodiversity, climate and other environmental dimensions. Failure to do so could lead to resource inefficiencies and impaired outcomes.
Governments worldwide will need to identify and reform potentially environmentally harmful support across a range of sectors, including fossil fuels, agriculture and fisheries – and all providers will need to help partner countries to do so through capacity development.
Donors need to be more rigorous at monitoring development finance interventions to support biodiversity and their outcomes. It is essential to understand when, where and why interventions have been successful in the past to pave the way to scaling them up.
Reinforce the quality and consistency of reporting on biodiversity-related ODF
Resolve inconsistencies in how the Rio Markers and the SDGs are applied and interpreted by countries.
Address the transparency, data gaps and inconsistencies in the tracking and reporting of development finance for biodiversity beyond the DAC. Many multilateral institutions still need to identify their biodiversity-related flows to the OECD and strengthen public reporting more widely. Non-DAC, South-South and triangular co-operation providers could also report to the OECD on biodiversity. While work is ongoing to enhance the quality and scope of data available on biodiversity, further guidance for bilateral donors may be necessary for them to track mobilised private finance and for multilateral donors aiming to target biodiversity-related activities.
Increase transparency and unify standards across reporting obligations to the OECD and CBD; and provide more disaggregated information when reporting. This will improve data quality and comparability, simplifying data exchange and scrutiny, as well as communication.
References
[6] CBD (2022), Kunming-Montreal Global biodiversity framework, https://www.cbd.int/doc/c/e6d3/cd1d/daf663719a03902a9b116c34/cop-15-l-25-en.pdf.
[8] CBD (2022), Resource Mobilization, https://www.cbd.int/doc/c/22fb/be2c/02e31154c4d4429de03caefe/cop-15-l-29-en.pdf.
[7] da Silva, A. and M. Bueno (2017), The Amazon Protected Areas Program (ARPA): participation, local development, and governance in the Brazilian Amazon, https://www.researchgate.net/publication/319159187_The_Amazon_Protected_Areas_Program_ARPA_Participation_Local_Development_and_Governance_in_the_Brazilian_Amazon.
[2] G7 (2022), G7 Climate, Energy and Environment Ministers’ Communiqué, https://www.bmwk.de/Redaktion/DE/Downloads/G/g7-konferenz-klima-energie-umweltminister-05-2022-abschlusskommunique.pdf?__blob=publicationFile&v=14--.
[9] GPEDC (n.d.), The Effectiveness Principles, https://www.effectivecooperation.org/landing-page/effectiveness-principles.
[3] Multilateral Development Banks (2021), Joint Statement by the Multilateral Development Banks: Nature, People and Planet, https://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=EZSHARE-1729984378-40.
[1] OECD (2021), “Biodiversity, Natural Capital and the Economy: A Policy Guide for Finance, Economic and Environment Ministers. Prepared by the OECD for the G7 Presidency of the United Kingdom, 2021”, OECD Environment Policy Paper, Vol. Policy Perspectives/26, https://www.oecd.org/environment/biodiversity-natural-capital-and-the-economy-1a1ae114-en.htm.
[4] OECD (2021), OECD DAC Declaration on a new approach to align development co-operation, https://www.oecd.org/dac/development-assistance-committee/dac-declaration-climate-change-cop26.pdf.
[10] OECD (2021), Tracking Economic Instruments and Finance for Biodiversity, https://www.oecd.org/environment/resources/biodiversity/tracking-economic-instruments-and-finance-for-biodiversity-2021.pdf.
[5] OECD (2020), A Comprehensive Overview of Global Biodiversity Finance, https://www.oecd.org/environment/resources/biodiversity/report-a-comprehensive-overview-of-global-biodiversity-finance.pdf.