Urgent action is needed to halt biodiversity loss and ensure the ongoing flow of ecosystem services vital to economies, human health and well-being. Building on the previous chapters, this chapter proposes ten priority areas where the G7 and other governments can focus their efforts to achieve more effective outcomes on biodiversity conservation and sustainable use.
Biodiversity: Finance and the Economic and Business Case for Action
Chapter 8. Opportunities to scale up action on biodiversity
Abstract
Biodiversity and ecosystem services underpin human well-being and the ability to ensure sustainable development. The planet’s ability to sustain people and prosperity can no longer be taken for granted. Addressing the multiple pressures on biodiversity requires actions across all fronts: government (national and subnational), the private sector, civil society and individuals. More co-ordinated, coherent and strategic approaches are needed to ensure that biodiversity and ecosystem services can continue to support all life on Earth. Ten priority areas have been identified where Group of Seven (G7) and other countries can focus their efforts.
8.1. Pursue a robust post-2020 global biodiversity framework with specific, measurable and quantitative targets
The 15th meeting of the Convention on Biological Diversity (CBD) Conference of the Parties (COP 15), to be held in Kunming, China, in December 2020, represents a critically important opportunity to put in place the framework and supporting mechanisms to halt and reverse biodiversity loss, and to scale up the conservation, sustainable use and restoration of ecosystem services. A robust post-2020 global biodiversity framework, featuring specific and measurable targets, will be fundamental to galvanising action at the national level, across both the public and private sectors. Specific and measurable targets at the global level, together with associated indicators, will enhance clarity and transparency on the actions required at the global, regional and national levels, and enable the assessment of whether progress is being achieved.
An effective structure of the post-2020 global biodiversity framework can also help communicate and clarify the overarching goals and objectives to the public, and engage civil society. The current framework comprises a long-term 2050 vision for biodiversity, together with 5 overarching goals for 2011-20 and the 20 Aichi Biodiversity Targets. New structures are being considered for the post-2020 global biodiversity framework, including a pyramid structure featuring a quantifiable “apex” goal, below which are: (i) quantified objectives on the state of biodiversity; (ii) priority actions (not necessarily quantified); and (iii) the necessary supporting and enabling conditions (Conservation International et al., 2018[1]).
A few iterations of the elements within the pyramid structure have since evolved. Figure 8.1 provides an alternative proposal for the three elements under the “apex” goal, that aligns more closely with the existing Aichi Targets, and which cover the well-established categories of biodiversity-related pressures, state and responses (see Chapter 6). The responses are, in effect, the actions taken to address the pressures and indirect drivers of biodiversity loss. The proposal places stronger emphasis on the need for quantified objectives, not only for the state of biodiversity, but where possible also on the pressures and actions taken. Actions include those on policies, governance and finance, among others. The proposal also incorporates the concept of headline indicators for all of the objectives (see Chapter 6). Identifying the relevant headline indicators would need to be driven by the recognised importance of the associated targets for policy making. The identification of a smaller set of headline indicators would enable efforts to be prioritised to improve the data underlying these indicators, to ensure they are comparable and consistent across countries.
A post-2020 global biodiversity framework that includes the concept of headline indicators would strengthen the alignment between the indicators proposed through the global framework and indicators used at the national level (Box 8.1. This would enhance transparency, accountability and comparability of data across countries (see also Chapter 6).
Figure 8.1. Possible elements of a post-2020 biodiversity framework, including headline indicators
Source: Adapted from (OECD, 2019[2]) (Conservation International et al., 2018[1])
Box 8.1. Stronger alignment between post-2020 national and international indicators for biodiversity through headline indicators
There currently exist about 98 indicative indicators under the CBD framework, which countries are encouraged to use to monitor progress on achieving the Aichi Biodiversity Targets. The Biodiversity Indicators Partnership (BIP) currently covers 64 indicators (see Chapter 6). Uptake of the BIP indicators at the national level remains limited, however, rendering it difficult to: (i) assess whether the national commitments, when aggregated at the global level, are sufficient to meet the 2011-2020 Aichi Biodiversity Targets; and (ii) monitor national progress in a comparable way across countries. A more robust monitoring and reporting framework, using indicators in a more consistent and comparable way across countries at the national, regional and global scales, is therefore essential to track progress towards the post-2020 biodiversity targets.
Agreement on a smaller set of key headline indicators that are quantitative, consistent and comparable across countries could help achieve this goal. A strong emphasis of the headline indicators on responses, including on inputs (e.g. finance), outputs (e.g. positive incentives and their level of ambition), and outcomes (e.g. increase in PA coverage) (see Chapter 6) would allow a quantitative comparison of the actions put in place. Should the need arise to ratchet up national biodiversity commitments over time so as to achieve any of post-2020 global biodiversity targets, it is the targets associated with these action headline indicators that would be the most important to revise, as these are most policy-relevant.
8.2. Mobilise non-state actors through the Sharm El-Sheikh to Kunming Action Agenda for Nature and People in the lead-up to COP15 in 2020
The Sharm El-Sheikh to Kunming Action Agenda for Nature and People was launched by the Governments of Egypt and China, in co-operation with the CBD Secretariat, to mobilise action in the lead-up to COP15 in 2020. It aims to enhance implementation of the Strategic Plan for Biodiversity 2011-20 and the Aichi Targets, advance on the SDGs and support the post-2020 global biodiversity framework, by collecting, coordinating, and celebrating actions in support of biodiversity conservation and its sustainable (CBD, 2019[3]). All stakeholders across all sectors are encouraged to send and display commitments and contributions to biodiversity on an online platform launched in April 2019, to map biodiversity efforts, estimate impact and help identify key gaps.
8.3. Promote policy coherence to harness synergies and reduce trade-offs for biodiversity
Action on biodiversity will involve trade-offs and synergies with other policy areas. Developing a long-term vision (e.g. to 2050) at the national level can be a useful first step to identify priority areas for action. The long-term national visions can draw on and align with the global biodiversity vision, adapted to the national-level context.
The long-term national vision can be used to inform the establishment of clear, national biodiversity targets, for example to 2030, and embedded in the post-2020 National Biodiversity Strategies and Action Plans. Similarly to the post-2020 global biodiversity framework, national targets should be as specific, measurable, ambitious, realistic and time-bound (SMART) (and thus quantitative) as possible, accompanied by indicators for measuring progress (OECD, 2018[4]). By using nationally appropriate SMART targets for biodiversity, governments can clearly identify where trade-offs and synergies with other policy areas (e.g. agriculture, mining or trade) exist, and develop appropriate strategies to address or harness them.
To help ensure that policies are coherent across various sectors and areas of the economy, biodiversity targets should be reflected and mainstreamed into other relevant national strategies, e.g. on economic growth and development, agriculture, fisheries, urban development, climate change and trade. These strategies should also incorporate clear biodiversity-relevant strategic objectives, targets and indicators, so as to monitor progress.
Co-ordinating national-level response to multilateral environmental agreements (e.g. the Sustainable Development Goals [SDGs], the CBD, the United Nations Convention to Combat Desertification, the United Nations Framework Convention on Climate Change and the Sendai Framework on Disaster Risk Reduction) is important for harnessing the potential of biodiversity to deliver on multiple goals. For example, nature-based solutions can be used to improve outcomes for biodiversity and simultaneously deliver on several other international environmental goals, such as clean water and air, resilience to climate change and job creation through ecosystem restoration.
More stringent environmental provisions in regional trade agreements (RTAs) and product-specific agreements can help reduce the impacts of trade on biodiversity (see Chapter 2). Although most RTAs contain environmental protections of some kind, these are often too weak to mitigate fully the impacts of trade or address the pressures causing biodiversity decline. Provisions that directly address biodiversity issues – such as in the EU-Canada Comprehensive Economic and Trade Agreement – or to address deforestation and product-specific agreements – such as under the EU Forest Law Enforcement Governance Action Plan – can be used more frequently to mitigate the impacts of international trade on biodiversity.
8.4. Scale up policy instruments for biodiversity and get the economic incentives right
Governments will need to consider which mix of policy instruments is most likely to achieve their national post-2020 targets in the most environmentally and cost-effective manner. Table 8.1 summarises examples of possible policy instruments covering regulatory (command-and-control) approaches, economic instruments, and information and voluntary approaches. Other possible measures relate to research and development, and trade.
Table 8.1. Policy instruments for biodiversity conservation and sustainable use
Source: Adapted from (OECD, 2013[5]).
The full suite of available policy instruments are not implemented at the scale needed to halt and reverse biodiversity loss.1 Protected areas (PAs), for example, have long been the cornerstone of biodiversity conservation policy. While countries have made considerable progress in increasing the coverage of their terrestrial and marine PAs (in line with Aichi Target 11), management effectiveness in many PAs needs to be improved. More consistent use of spatial planning to improve the ecological representativeness and connectivity of PAs, also in light of ongoing climate change, and better monitoring of the effectiveness of the PA system in achieving the intended ecological impacts of PAs are essential.
Economic instruments, such as taxes, fees and charges, tradable permits and payments for ecosystem services, provide incentives for more sustainable production and consumption patterns, and can also generate revenue. These instruments must also be scaled up. Yet the revenue generated from biodiversity-relevant taxes only amounts to 1% of the total revenue generated from environmentally relevant taxes, suggesting substantial scope to scale up the use and ambition of biodiversity-relevant economic instruments. Such measures should also be accompanied by other policy reforms, such as lowering taxes on public goods. Improved tracking and reporting on the use of biodiversity-relevant economic instruments is also important for monitoring and evaluating country progress (e.g. towards Aichi Target 3), facilitating analysis of the effectiveness of biodiversity policy responses and supporting lesson-sharing among countries (Box 8.2).
Reviewing, evaluating and enhancing the effectiveness of existing policy instruments can help governments tailor policy responses and enhance their cost-effectiveness. A recent inventory of impact-evaluation studies relevant to terrestrial and marine biodiversity suggests there still exist very few rigorous evaluation studies applied to the field of biodiversity (in contrast to, for example, economic development and health). While such studies are costly to conduct, they allow deriving a better understanding of what works, what does not, and why, and are therefore crucial to designing and implementing effective policies for biodiversity. Undertaken strategically and selectively, such studies could enhance the cost-effectiveness of public and private interventions (Karousakis, 2018[6]).
Box 8.2. Improve reporting and tracking of biodiversity-relevant economic instruments (i.e. positive incentives) and the revenue they generate
Countries could step up their efforts to provide regular, up-to-date and accurate data on the policy instruments in place, their ambition, and – to the extent possible – their effectiveness. The OECD database on Policy Instruments for the Environment (PINE) is a tool to track progress on the implementation of biodiversity-relevant economic instruments (i.e. the positive incentives in Aichi Target 3). While more than 100 countries currently report to the PINE database – e.g. on finance generated or mobilised, and whether or not the finance generated (e.g. from biodiversity-relevant taxes) is earmarked, – it is not yet comprehensive (see Chapter 7). G7 countries could showcase their leadership in this area by committing to strengthening their reporting to the PINE database.
8.5. Scale up and align finance for biodiversity from all sources
Scaling up finance from all sources – both public and private – is critical. The finance needs to ensure biodiversity conservation and sustainable use have been estimated at USD 150-440 billion per year, yet the estimates available on finance flows to biodiversity suggest these are between three and 10 times smaller. Domestic public expenditure on biodiversity and biodiversity-related ODA is an important part of this, but it is not sufficient on its own.
Governments, in close co-operation with financial authorities, banks and investors, also need to help align private investment decisions with biodiversity objectives and the mobilisation of private financial flows towards biodiversity-friendly investment. To mobilise private financial flows, policy makers can: strengthen economic incentives to get the prices right; strengthen domestic enabling conditions to improve the attractiveness of biodiversity-friendly investment, including by setting biodiversity-friendly policies and aligning broader investment conditions; encourage pipelines of biodiversity-friendly investment opportunities; and support de-risking instruments and transaction enablers and institutions, to provide channels for institutional investment and other sources of private finance towards biodiversity-friendly investment.
8.6. Establish consistent and comparable finance reporting and tracking frameworks, across countries and companies
Improving the consistency and comparability of finance reporting frameworks for both the public and private sector is important to track progress in scaling up biodiversity finance. While data availability on finance relevant to biodiversity is improving, a number of data gaps remain, and the available data are not always collected in a comparable and consistent way. For example, while data on bilateral biodiversity-relevant official development assistance are reported in a consistent way, data on finance flows from domestic public expenditures on biodiversity are generally not. The G7 could endorse France’s call for the OECD to conduct follow-up work to produce a comprehensive update on global finance for biodiversity, and to develop recommendations on how to resolve data gaps and inconsistencies, including through improved reporting and tracking frameworks.
8.7. Reform subsidies harmful to biodiversity
In addition to scaling up biodiversity finance, it is equally important to accelerate the reform of subsidies harmful to biodiversity. Progress towards Aichi Target 3 on reforming subsidies harmful to biodiversity by 2020 has been very slow, and efforts on this front must be scaled up. As the basis for reform, it would be useful to expand internationally comparable information on subsidies to more countries and types of support, e.g. through peer review. Countries could also share experience and lessons learned from identifying, assessing and reforming subsidies harmful to biodiversity and, more generally, subsidy reforms.
Better understanding the domestic public expenditures that may harm the environment, in addition of those that contribute to environmental protection, is an objective of the Paris Collaborative on Green Budgeting.2 The OECD launched the Collaborative at the One Planet Summit in 2017, with the support of France and Mexico. It aims to design new, innovative tools to assess and drive improvements in the alignment of government budgets and fiscal policy with environmental objectives, including on climate and biodiversity.
8.8. Facilitate mainstreaming of biodiversity by business and financial organisations
Policy makers need to commit to strengthening business incentives for action on biodiversity. International and co-ordinated efforts to this aim will also help ensure a level playing field. Multiple opportunities exist for policy makers to encourage business and financial organisations to scale up action on biodiversity, in co-operation with other stakeholders.
Political leadership (e.g. under the G7) could spur a consensus among stakeholders on a common approach for measuring and mainstreaming biodiversity factors across business and investment decisions. The G7 could notably create a multi-stakeholder advisory group on biodiversity, business and finance, to advise on the adoption of a common approach for measuring and mainstreaming biodiversity in business and investment decisions in support of post-2020 biodiversity goals. Such an approach could address biodiversity-related factors (i.e. impacts and dependencies, and associated risks and opportunities) and develop methodologies, metrics and guidelines relevant to business and investment activities. In particular, a common approach could be based on:
A methodology for assessing biodiversity factors across operations, supply chains and portfolios: this would build on common ground across existing accounting approaches, to aggregate the measurement of biodiversity impacts at the corporate level and harmonise it at the portfolio level. A common protocol with harmonised metrics for measuring biodiversity factors is missing and more challenging to establish than metrics for greenhouse gas emissions. The advisory group could establish a few agreed metrics to start (e.g. ecosystem degradation, land-cover change, species loss, pollution or carbon footprint), before scaling up ambition and improving the measurement over time through learning-by-doing.
A framework to mainstream biodiversity factors in business and investment decisions: this would apply not only to metrics and targets, but also to strategy, governance, risk management, due diligence and disclosure. Such a framework would need to consider business activities across supply chains and organisational levels. Most biodiversity impacts are generated in the supply chains (e.g. for the agriculture, food, beverage, garment and footwear sectors). Key organisational levels include product and service, project, site or facility, corporate, portfolio, supply-chain segments, and sectors.
In particular, the advisory group could build on the OECD Due Diligence Guidance for Responsible Business Conduct to develop a set of practical actions on due diligence and biodiversity in support of efforts by businesses (OECD, 2018[7]). All G7 members have adhered to the guidance. They have committed to asking businesses to follow it in order to identify, prevent and address adverse impacts on biodiversity, and to regularly report on these efforts and their outcomes. The G7 could call on the OECD to develop this work as part of the proposed multi-stakeholder advisory group on biodiversity, business and finance, or independently.
Policy makers can also harness the momentum and visibility of the SDGs and climate action among business and financial organisations to raise awareness on biodiversity and ecosystem services. A multidimensional approach across policy areas (e.g. biodiversity, climate change and water) can be particularly important in sectors such as food and land-use, including forests (WBCSD, 2018[8]). The EU Action Plan on Sustainable Finance for instance looks at priorities to promote sustainable finance across a number of environmental and social areas. Linking biodiversity and climate change pressures in measurement approaches and reporting is particularly critical to avoid trade-offs between business investment decisions with climate-mitigation benefits and negative impacts on biodiversity (e.g. land-use impacts of biomass for fuels or plastic use).
8.9. Assess and communicate socio-economic dependencies and impacts on biodiversity at the national level
At the national level, all sectors and stakeholders – including the government, private sector and civil society – need to scale up action on biodiversity, and take steps to ensure more sustainable production and consumption patterns. The government in particular has a key role to play in developing the information and evidence base needed to inform policy, and in providing the regulatory and policy frameworks to maximise social welfare. A comprehensive, co-ordinated and strategic approach is needed to this end – one that is environmentally effective, cost-efficient and distributionally equitable, including across generations.
Governments can strengthen their policy responses by developing a clear understanding of socio-economic dependencies, pressures and impacts on biodiversity, and how these may evolve. Mapping, assessing and valuing ecosystems and their services, for example through national ecosystem assessments (NEAs), can increase the economic visibility of biodiversity and ecosystem services. Not only do analyses of existing NEAs highlight their potential utility in shaping policy, they also stress the importance of designing NEAs to respond to specific policy questions and communicate targeted messages to key stakeholders (e.g. agriculture, fisheries and other sectoral ministries). Sharing experiences on NEAs (e.g. objectives, scope, design and policy application) could help refine future NEAs and their ability to influence policy making.
Further efforts are also required to scale up and refine the use of natural capital accounting. Although an increasing number of countries are experimenting with natural capital accounting, few have comprehensive accounts. Furthermore, challenges remain in integrating non-market ecosystem service values and linking natural capital accounts to decision-making. G7 countries could continue to play a leading role in developing and refining tools and methodologies for integrating the values of ecosystem services and the costs of ecosystem degradation into national accounts. The ongoing revision of the System of Integrated Environmental and Economic Accounting provides an important opportunity to drive these efforts.
8.10. Ensure inclusive and equitable transformative change
Any actions to foster biodiversity conservation, sustainable use and restoration, should imperatively consider the distributional implications on more vulnerable groups of society and future generations. A package of policy measures is needed, including targeted measures to address potential regressive impacts on income distribution. The evidence suggests that the distribution of costs and benefits (real or perceived) can be fundamental in defining the ambition and pace of reforms, policy choice and design. Recycling the revenue from biodiversity-relevant taxes, for example, or putting in place transitional measures, can help minimise the cost to lower-income groups (OECD, 2017[9]).
Developing a robust evidence base – including on the costs and benefits of action and who stands to win or lose – is therefore essential to build support for reform and help anticipate and address any unintended impacts and consequences of policies. This is especially true for conservation and restoration actions in the developing world, where many vulnerable groups – particularly indigenous people – rely daily on biodiversity for food and fuel.
Targeted information and awareness-raising campaigns can also help stakeholders better understand how their everyday actions can have a positive impact. Digital technology – including citizen-science platforms, online dashboards and communication channels – can help disseminate information rapidly, and maintain the connections between society and biodiversity (OECD, 2019[10]). Further digital technology, combined with processes such as deliberative polling can help better engage individuals, civil society and other stakeholders in the policy-making process, and facilitate efforts to reconcile trade-offs between environmental and economic concerns. Transformative change is needed to prevent further declines, and ensure the benefits of biodiversity and ecosystem services are equitably shared throughout society today and for many generations to come.
References
[3] CBD (2019), Sharm El-Sheikh to Kunming Action Agenda for Nature and People: An agenda for action, https://www.cbd.int/action-agenda/ (accessed on 26 April 2019).
[1] Conservation International et al. (2018), Key Elements and Innovations for the CBD“s Post-2020 Biodiversity Framework: A Collaborative Discussion Piece, https://www.conservation.org/publications/Documents/Post-2020-Discussion-Paper-October-2018.pdf.
[6] Karousakis, K. (2018), “Evaluating the effectiveness of policy instruments for biodiversity: Impact evaluation, cost-effectiveness analysis and other approaches”, OECD Environment Working Papers, No. 141, OECD Publishing, Paris, https://dx.doi.org/10.1787/ff87fd8d-en.
[10] OECD (2019), Going Digital: Shaping Policies, Improving Lives, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264312012-en.
[11] OECD (2019), Paris Collaborative on Green Budgeting, http://www.oecd.org/environment/green-budgeting/.
[2] OECD (2019), Summary Record from the OECD International Workshop on The Post-2020 Biodiversity Framework: Targets, indicators and measurability implications at global and national level., http://dx.doi.org/oe.cd/post-2020-biodiversity-workshop.
[4] OECD (2018), Mainstreaming Biodiversity for Sustainable Development, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264303201-en.
[7] OECD (2018), OECD Due Diligence Guidance for Responsible Business Conduct, http://mneguidelines.oecd.org/OECD-Due-Diligence-Guidance-for-Responsible-Business-Conduct.pdf (accessed on 19 April 2019).
[9] OECD (2017), The Political Economy of Biodiversity Policy Reform, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264269545-en.
[5] OECD (2013), Scaling-up Finance Mechanisms for Biodiversity, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264193833-en.
[8] WBCSD (2018), The Business Case for Investing in Soil Health, https://docs.wbcsd.org/2018/12/The_Business_Case_for_Investing_in_Soil_Health.pdf (accessed on 12 April 2019).
Notes
← 1. This includes action to counter illegal poaching and trade in biodiversity, as well as action to address the risks from invasive alien species.
← 2. For more information on the Paris Collaborative see OECD (2019[11])