Biodiversity loss is a major environmental challenge facing humankind. Biodiversity provides critical life-support functions and services to society, including food, clean water, genetic resources, flood protection, nutrient cycling and climate regulation. These services in turn are essential to human health, security, well-being and economic growth. However, these benefits are not fully reflected in market prices and are therefore undervalued and underprovided. Private decision makers do not always consider the social costs and benefits of natural resources and ecosystem conservation and sustainable use, but rather generally focus only their own private costs and benefits. As a result, biodiversity continues to be under-valued and lost.
This book considers the opportunities for scaling-up finance for biodiversity across six so-called "innovative financial mechanisms" as classified by the Convention on Biological Diversity (CBD). These are: environmental fiscal reform; payments for ecosystem services; biodiversity offsets; markets for green products; biodiversity in climate change funding; and biodiversity in international development finance. Drawing on literature and more than 40 case studies worldwide, the book addresses the following questions: What are these mechanisms and how do they work? How much finance have they mobilised and what potential is there to scale this up? And what are the key design and implementation issues – including environmental and social safeguards – that need to be addressed so that governments can help ensure these mechanisms are environmentally effective, economically efficient and distributionally equitable?
Global biodiversity loss
This chapter presents the current trends in global biodiversity loss, the drivers behind this loss, and the implications of continuing on a business-as-usual pathway. It makes the case for broader and more ambitious application of policies and incentives to address biodiversity conservation and sustainable use, including those that are able to mobilise finance for biodiversity. The chapter discusses recent policy developments relevant to biodiversity finance mechanisms, and highlights the aim, scope and approach taken in this book.
The role of finance mechanisms in biodiversity conservation and sustainable use
This chapter introduces the different components of biodiversity and ecosystem services and the benefits they provide to society. It presents estimates on the value of ecosystem services, the financing needs for optimal biodiversity and ecosystem service provision, and the existing financing flows. The chapter then proceeds by introducing the different policy instruments for biodiversity conservation and sustainable use that governments have at their disposal – regulatory, economic and information-based instruments – and the role of finance mechanisms.
Environmental fiscal reform
This chapter explores opportunities and challenges for raising biodiversity finance and promoting biodiversity conservation and sustainable use through environmental fiscal reform (EFR). It reviews a range of fiscal measures, including taxes and charges on natural resources use, pollution, and resource rents, and the reform of environmentally harmful subsidies. The key design and implementation issues for EFR are discussed, including environmental and fiscal effectiveness, social safeguards to address distributional impacts of EFR, and administrative and political feasibility.
Payments for ecosystem services
This chapter explores the opportunities and challenges for mobilising and scaling-up biodiversity finance using Payments for Ecosystem Services (PES). It examines some of the features that need to be considered for effective PES design, including clearly defined and enforced property and land tenure rights, environmental safeguards to manage risks such as leakage and non-permanence, social safeguards to prevent or address negative distributional impacts and a robust monitoring and reporting framework.
This chapter considers the size and scalability of biodiversity offset programmes and examines the key design and implementation features needed for biodiversity offsets to operate effectively and equitably. These include, for example, metrics to ensure that biodiversity benefits at offset sites are equivalent to losses at the impact site, a robust monitoring, reporting and verification framework, and safeguards to help manage environmental and social risks.
Markets for green products
This chapter considers the opportunities and challenges for scaling up biodiversity conservation and sustainable use with markets for green products, focussing in particular on the role of ecolabelling schemes. It examines the current size and potential growth of markets for green products, and discusses the key design and implementation issues, including environmental and social safeguards, that need to be considered for ecolabelling schemes to operate effectively. These include, for example, harmonisation of ecolabelling schemes; monitoring, reporting and verification; compliance and enforcement; and stakeholder participation.
Biodiversity in climate change funding
This chapter provides an overview of climate change mitigation and adaptation funding and examines the extent to which this delivers or could deliver biodiversity co-benefits. It identifies some of the tools and techniques for targeting biodiversity co-benefits within climate change funding and discusses the key environmental and social safeguards that need to be considered. These include, for example, environmental and social impact assessments, benefit-sharing mechanisms, and transparent, participatory approaches.
Biodiversity in international development finance
This chapter discusses the opportunities and challenges of scaling up biodiversity-related development finance. It focuses in particular on Official Development Assistance (ODA) and the importance of leveraging private investment with public funds, using capital markets, co-financing, public-private partnerships and risk mitigation instruments. The chapter also underscores the need to better mainstream biodiversity into general development flows – and offers examples of how this can be done at a donor, national, sectoral and project level – as well as the importance of environmental and social safeguards.
Comparing across the mechanisms
This chapter provides a comparative analysis of the six biodiversity finance mechanisms – environmental fiscal reform, payments for ecosystem services, biodiversity offsets, markets for green products, biodiversity in climate change funding, and biodiversity in international development finance – and summarises the circumstances and conditions under which they are most likely to be effective. It then examines crosscutting issues, such as environmental and social safeguards and capacity and governance needs for effectively implementing biodiversity finance mechanisms.
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