Financial Mechanism and Resources

Financial Mechanism and Resources // T19: Financial resources
Wednesday // 2.28.2024

T19 (National Biodiversity Finance Plan): How to Use GEF Funding

This page aims to provide information regarding the development and implementation of national biodiversity finance plans or similar planning instruments for recipient Parties and relevant stakeholders, including how to access funding of the Global Environment Facility in this regard. It is a work in progress and will be updated as necessary.

There have been increases in domestic resources for biodiversity in some countries, with resources remaining broadly constant for others over the past decade. Financial resources available for biodiversity through international flows and official development assistance has roughly doubled. However, when all sources of biodiversity finance are taken into account, the increase in biodiversity financing would not appear to be sufficient in relation to needs. Moreover, these resources are swamped by support for activities harmful to biodiversity. Progress on identifying funding needs, gaps and priorities and the development of national financial plans and assessments of biodiversity values has been limited to relatively few countries. Reported actions included: Efforts to increase domestic biodiversity financing; Organizing partnerships and programmes; Undertaking tax reforms and putting in place incentives to provide funding to biodiversity projects, such as a tourism tax to fund the operation of protected areas.

Financial support of the Global Environment Facility to national biodiversity financial planning

GEF-financed projects related to financial resources

  • Amazon, Congo, and Critical Forest Biomes
  • Food Systems
  • Eliminating Hazardous Chemicals from Supply Chains
  • Net Zero Nature Positive Accelerator
  • Circular Solutions to Plastic Pollution
  • BDFA: Objective One
  • BDFA: Objective Three
  • BDFA: Inclusive Conservation Initiative
  • CCFA: Objective 1.4
  • Blended Finance Global Program/NGI
  • GEF Small Grants Programme

During the fifth and sixth replenishment periods, the Global Environment Facility provided financial support to the revision and updating of national biodiversity strategies and action plans in support of the Implementation of the CBD 2011-2020 Strategic Plan, including the preparation of a strategy for resource mobilization for the implementation of the national biodiversity strategies and action plans with a baseline assessment of existing biodiversity finance, in many recipient Parties.

During the seventh replenishment period, the Global Environment Facility approved in 2022 a set of global biodiversity framework early action support grants to fast-track readiness and early actions to implement the post-2020 Global Biodiversity Framework by providing financial and technical support to GEF-eligible Parties to the Convention on Biological Diversity in their work to review and align their national targets, national biodiversity strategies and action plans, policy frameworks, monitoring frameworks and finance with the Global Biodiversity Framework. These early action grants include a component to enable recipient Parties to define biodiversity finance gaps and identify opportunities for resource mobilization through the following actions:
  • Conduct a biodiversity expenditure review, assessing spending related to biodiversity across all sectors (e.g., energy, transport, infrastructure, agriculture, forestry, fisheries, extractive industries);
  • Develop a cost estimate for KM-GBF-related actions in the GBF-aligned national biodiversity strategies and action plans, generating costing projections of new and updated GBF activities, and calculating national financing gap;
  • Identify, review and prioritize biodiversity-harmful subsidies, analyzing existing finance mechanisms, including why they are not working, and what key constraints and obstacles are;
  • Develop a plan for domestic resource mobilization /biodiversity finance plans, and a national action plan to fill the finance gap for the Kunming-Montreal Global Biodiversity Framework by 2030, and a clear monitoring system for finance and national reporting on finance;
  • Undertake other early actions related to biodiversity finance, such as conducting feasibility analyses of finance mechanisms, and/or early implementation of specific finance solutions.

For the eighth replenishment period (Annex I to Summary of Negotiations of the Eighth Replenishment of the GEF Trust Fund, GEF/C.62/03, June 15, 2022), objective 3 of the biodiversity focal area strategy will seek to increase mobilization of domestic resources for biodiversity, in in parallel to the revision of national biodiversity strategies and action plans and also leveraging synergies in domestic resource mobilization to support implementation across multilateral environmental agreements. The program will support three complementary components in each national-level country project. National projects focused on the development of domestic resource mobilization plans (or updates of existing plans) to support implementation of Kunming-Montreal Global Biodiversity Framework would be entirely funded through the biodiversity focal area set-aside. Implementation of these plans would be funded by the STAR.

(1). Diagnostics and planning (funded by the biodiversity set aside): policy and institutional review analyzing the root causes of biodiversity loss, identifying and costing harmful subsidies, capacity needs assessment; expenditure review assessing spending related to the biodiversity, across all sectors (e.g., energy, transport, infrastructure, agriculture, agriculture, forestry, fisheries, extractive industries); assessment of the national financial needs to implement the Kunming-Montreal Global Biodiversity Framework; the development and adoption of national domestic mobilization plans that set out a coherent and comprehensive national approach to domestic mobilization for biodiversity, including a mix of priority finance solutions.

(2). Early implementation (funded through each country’s STAR), including the prototyping and piloting of priority measures or mechanisms identified in the domestic resource mobilization plans. Countries will be encouraged to use the many possibilities offered in GEF-8 to implement their domestic resource mobilization priorities in full, such as through biodiversity mainstreaming interventions to reduce or redirect financial flows harmful to biodiversity, or the development of payment for ecosystem services, access and benefit sharing, offset schemes or other relevant financing mechanisms to generate new resources.

(3). Capacity building and institutional set-up for implementation and monitoring (funded through each country’s STAR): National project investments will support the development of capacity and expertise of staff responsible for domestic resource mobilization implementation, monitoring and reporting (e.g. green budget tagging) to increase transparency and accountability on environmental spending, including biodiversity spending (e.g. Green Budgeting Statement accompanying the budgets). Projects will also help establish national-level platforms to foster a whole-of-government approach and multi-stakeholder coordination to support implementation.

At its first meeting of the GEF-8 cycle, the Council of the Global Environment Facility approved the Umbrella Programme to Support Development of Biodiversity Finance Plans (Algeria, Armenia, Bahrain, Cabo Verde, Cameroon, Comoros, Dominican Republic, Haiti, Honduras, Jordan, Lao PDR, Maldives, Morocco, Palau, Panama, Samoa, Sao Tome and Principe, Serbia, Solomon Islands, Sudan, Suriname, Timor Leste, Uruguay, Vanuatu, Venezuela, and Zimbabwe), with the following components:

Component 1. National biodiversity finance policy and institutional reviews: This component will carry out a comprehensive analysis of the policy and institutional landscape, identify the most relevant stakeholders, map subsidies positive and harmful to biodiversity, identify barriers in the national budgeting process, and produce an inventory of existing finance solutions. The process will start with a national platform for improved coordination between line ministries, most notably Ministries of Finance and Environment. Subsequently, the second primary axis of partnerships to strengthen will be with the private sector and civil society. The policy and institutional analysis will be based on a clear sequence to:
  1. Identify the major drivers of biodiversity change;
  2. Relate these to existing policies;
  3. Map responsible institutions and agencies for those policies and use them as the starting point for further analysis.
A second chain of analysis will create a full inventory of all existing financing mechanisms/solutions in the country, highlighting opportunities for improvements. The budgetary process and subsidies positive and harmful to biodiversity will be examined in detail. The expected Outcome is that national biodiversity-related policy and institutional framework analyses are completed, including recommendations to optimize the current institutional structure and finance solutions.

Component 2. National biodiversity expenditure reviews conducted across all relevant sectors: This component will assess spending related to biodiversity across all relevant sectors to determine the biodiversity relevance of major programmes and organizations. This includes activities to determine accurate attribution levels and efforts to identify challenges for financial delivery. All public and private biodiversity related budget and expenditure data of the country will be collected. For these expenditures the biodiversity relevance will be determined through a system of co-efficient or attribution rates, thus including indirect expenditures, when biodiversity is not the primary objective. This component will provide insights into the extent of biodiversity mainstreaming into sectors and policies, identify issues of delivery, and underscore the role of various public agencies in biodiversity management. The expected Outcome is that national expenditure related to biodiversity across all relevant sectors is quantified and a synthesis with current and future trends is communicated to stakeholders for feedback. Under this component, countries that are more advanced in national environmental accounting can opt for further support in the development of natural capital accounting, using existing methodologies by UNSD, The Natural Capital Project and others as key baseline data.

Component 3. National assessments of the financing required to achieve the Global Biodiversity Framework targets: This component will revisit the country’s national Biodiversity Strategy and Action Plan to calculate how much finance is required to achieve all biodiversity goals. A key outcome under this component will be an assessment of the financial needs required to achieve the GBF targets at national level, including policies that define the national biodiversity needs, priorities, and costs of their activities vis-á-vis the targets of the GBF. Activities required to achieve these goals will be prioritized from the perspective of cost-effectiveness and will include detailed costing information. As most biodiversity plans have a limited range of activities, the scope of the financial needs assessment can be expanded to include additional policies such as national development plans and sectoral plans related to biodiversity.

Component 4. Development of national biodiversity finance plans: The national BFP summarizes all findings and recommendations of previous assessments, identifying the optimal mix of prioritized finance solutions and elaborating a business case for their adoption. The BFP will outline a range of financing options considered to have the strongest finance potential, feasibility, and biodiversity impact. All solutions will be “homegrown” and supported by a unique business case and operational plan. The plans will focus on long term sustainable financing, based on all possible public and private, national, international, traditional, and innovative sources of funds. This intervention will follow a multi-dimensional approach to working with the private sector, including actions to facilitate investments with a positive biodiversity impact, to generate additional funds for biodiversity conservation, and to develop green finance policies that reduce the negative impacts of existing investments. Civil society organizations including women’s groups will also be engaged. A wide number of financing mechanisms will be considered including actions to facilitate investments with a positive biodiversity impact, to generate additional funds for biodiversity conservation through Corporate Social Responsibility, to deploy effective offsetting mechanisms, and to develop green finance policies that reduce the negative impacts of existing investments. The completed BFPs will be reviewed and validated by diverse stakeholders including women and minorities to ensure they are well-grounded and accepted.

Component 5. Global knowledge and technical assistance platform: A global knowledge sharing and technical support platform will be established to share knowledge and experiences across participating countries and with the participation of partner organizations. The platform will offer dedicated expert technical advice to support processes and address technical financial issues. This will enable beneficiaries in countries to participate in recurring virtual and onsite trainings, experience sharing, and benefit from tailored knowledge products and best practices. The platform will consolidate global finance sources and mapping of available financial sources for biodiversity, including the development of an impact investment and private sector knowledge and capacity development stream to facilitate the creation of national impact investment platforms and related project pipelines. This platform will be one of the most essential resources and act as an experience sharing mechanism for participating countries as well as other countries with similar experiences. Each country will benefit from an initial training on the full methodology for key stakeholders, on the job support for national teams and peer review for outlines, draft, and final versions of each product. The platform will share guidance on gender mainstreaming in line with experiences in gender-positive practices from different countries.

Component 6. Project monitoring and evaluation plan: The project will implement an M&E Plan that adheres to GEF and UNDP requirements, enables effective evaluation of project progress and impact, reflects the needs of women, indigenous peoples, and other vulnerable groups, and will effectively monitor social and environmental safeguards risks. These activities will ensure that the project monitoring system operates effectively, systematically provides information on progress, and informs adaptive management to ensure that the intended outcomes are achieved.

Guidance to the financial mechanism

During the review of implementation of Articles 20 and 21 (decision IX/11), the Conference of the Parties adopted in 2008 the strategy for resource mobilization in support of the achievement of the three objectives of the Convention and included, as objective 2.2, the provision to “prepare national financial plans in the context of national biodiversity strategies and action plans that can be implemented by local, national, regional and international stakeholders”. Subsequently, in X/25 (Additional guidance to the financial mechanism), paragraph 6, the Conference of the Parties “Requests the Global Environment Facility to provide timely and adequate financial support to updating national biodiversity strategies and action plans, which may include the development of country-specific resource mobilization strategies”.

In annex IIB (Additional Guidance to the Global Environment Facility) of decision 15/( CBD/COP/15/L33), paragraph 8, the Conference of the Parties, in 2022, “Invites the Global Environment Facility to support the development and implementation of national biodiversity finance plans or similar planning instruments to support efforts by recipient countries to mobilize domestic and international resources to reach their national goals as defined in their national biodiversity strategies and action plans and to contribute to the global biodiversity framework.” Decision 15/(CBD/COP/15/L29) provides the following further guidance to relevant Parties:

“22. Encourages Parties to develop, update, and implement national biodiversity finance plans or similar instruments, based on an assessment of biodiversity expenditures and finance needs, and based on national biodiversity strategies and action plans, to support adequate and timely mobilization of international and domestic, public and private financial resources for the effective implementation of the post 2020 global biodiversity framework;

”24. Encourages developing country Parties, as appropriate, to provide information in their national biodiversity finance plans, on financial, technology development and transfer, and capacity-building support needed, received, and used, to implement their national biodiversity strategies and action plans;”

Projects and activities to improve synergies among relevant multilateral environment agreements; (Decision XI/5, para. 20; XII/30, para. 1, 2, 3, 4, and 14; XI/6, para. 16; XIII/21, annex II, para. 29)

Accordingly, recipient Parties are expected to develop, update, and implement national biodiversity finance plans or similar instruments, and provide information in their national biodiversity finance plans to the Convention Secretariat in the coming years.

Guidance to Parties

Planning
  • Increase efforts to achieve funding targets; (XIII/20, para. 5; IX/11B, para. 3; IX/11B, para. 6; VIII/13, para. 2)
  • Develop and implement national resource mobilization strategies and/or national finance plans for the effective implementation of revised national biodiversity strategies and action plans, addressing funding needs, gaps, and priorities, undertaking institutional mapping/analysis covering the whole range of biodiversity resourcing options, and including collective action of indigenous peoples and local communities for the conservation and sustainable use of biodiversity; (XIII/20, para. 7, 20, 12; XII/3, para. 4 and annex IV, para. 27 and 43; XI/4, para. 17;)

Statistics
  • Establish or improve cooperation with national or regional statistical offices and authorities, with a view to generating synergies with national information generation processes, and undertaking analyses of the values of biodiversity and ecosystem services, including economic costs of the loss of biodiversity and its associated ecosystem services and of the failure to take measures to fulfil the three objectives of the Convention; (XIII/20, para. 15, 16; XII/3, para. 25; XI/4, para. 5, 6, 25; IX/11A, para. 1; VII/21, para. 5; VI/16, para. 7(a), 6; VI/18, para. 1; XI/4, para. 13; X/3, para. 11; IX/11A, para. 2)

National Budgeting
  • Promote budgetary allocations for biological diversity and its associated ecosystem functions and services in national and relevant sectoral budgets, including ecological fiscal transfers as a means for burden sharing; (VI/16, para. 7(b); XII/3, annex IV, para. 32, 35(b))
  • Grant tax exemptions or tax credits in national income or corporate taxation systems for biodiversity-related donations or activities, and establish reduced value added tax (VAT) rates for products that have less impact on biodiversity. (XII/3, annex IV, para. 14(c), 35(a), 35(c))
  • Include specific criteria on biodiversity in national procurement plans and policies, national strategies for sustainable consumption and production, and similar planning frameworks, such as, for instance, policies that include avoided or reduced impact on biodiversity as a major procurement aspect, transparent information on procurement conditions, and fair procurement criteria, for example through eco-labelling; (XII/3, annex IV, para. 38(d)-(e))
  • Implement a wide range of country-specific biodiversity financing mechanisms to mobilize resources at domestic level, and apply relevant safeguards, as appropriate (XI/4, para. 1, 21; IX/11B, para. 4; 14/15, para. 7; XII/3, para. 16-17 and annex IV, para. 33)

Mobilizing Instruments
  • Explore opportunities to utilize various initiatives including debt-relief instruments to promote conservation and sustainable use of biodiversity; (XII/3, annex IV, para. 16; VII/21, para. 9)
  • Promote and foster new national and regional environmental funds and strengthen/expand such existing funds as essential complements to the national biodiversity resource base; (XII/3, annex IV, para. 39; VIII/13, para. 7)
  • Identify, engage and increase South-South cooperation as a complement to North-South cooperation to enhance technical, technological, scientific and financial cooperation. (XII/3, annex IV, para. 12; IX/11A, para. 5)
  • Create the enabling environment to mobilize private and public-sector investments in biological diversity and ecosystem services, such as national ranking and/or top‑runner lists of those private and public sector companies that dedicate resources to the conservation and sustainable use of biodiversity or to reducing impacts on biodiversity, including market and non-market based instruments and biodiversity financing mechanisms; (XII/3, para. 14 and annex IV, para. 14(a)-(b), 38(a), 38(b), 38(f), 38(g); XI/4, para. 16; IX/11A, para. 4; VII/21, para. 8; IX/11A, para. 6; XI/4, para. 14)
  • Promote, where applicable and in accordance with national legislation, schemes for payments for ecosystem services, consistent and in harmony with the Convention and with other relevant international obligations, and apply safeguards as appropriate and in accordance with national circumstances. (XII/3, annex IV, para. 37)
  • Consider establishing enabling conditions for biodiversity offset or compensation mechanisms where relevant and appropriate and in accordance with national legislation, while ensuring that they respect the mitigation hierarchy, implement current levels of biodiversity protection in the planning system with the involvement of indigenous and local communities as applicable, and are not used to undermine unique components of biodiversity;(XII/3, annex IV, para. 38(c))
  • Encourage and support collective action, including by indigenous and local communities, and non-market-based approaches for mobilizing resources for achieving the objectives of the Convention, by promoting community-based natural resource management and promoting indigenous and community conserved territories and areas; (XIII/20, para. 19; XII/3, para. 28, 4, and annex IV, para. 36; IX/11A, para. 7)

Potential implementation/project partners

In decision 15/(CBD/COP/15/L29), paragraph 25, the Conference of the Parties “Takes note with appreciation of the work of relevant and interested international organizations and initiatives, including the Biodiversity Finance Initiative of the United Nations Development Programme (BIOFIN), to provide financial and technical support and capacity-building for interested countries in the development, updating and implementation of national finance plans for biodiversity, and for the refinement of the Biodiversity Finance Initiative methodology, and encourages BIOFIN and other relevant and interested organizations and initiatives to continue and expand their work.”

According to the GEF-8 programming directions document (GEF/C.62/03, June 15, 2022), potential partners include: a) UNDP’s Biodiversity Finance Initiative (BIOFIN); b) Natural Capital Assessment and Accounting initiatives, including the UN SEEA; c) The Capitals Coalition; d) the Natural Capital Project; and e) OECD. The program will seek to leverage synergies with UNCCD and UNFCCC as appropriate.

UN SEEA: Natural Capital Assessment and Accounting initiatives

The SEEA Ecosystem Accounting Central Framework, adopted in 2012 by the United Nations Statistical Commission, constitutes an integrated and comprehensive statistical framework for organizing data about habitats and landscapes, measuring ecosystem services, tracking changes in ecosystem assets, and linking this information to economic and other human activity. The SEEA framework includes developing national accounting related to environmental protection and resource management. The UNSD SEEA Ecosystem Accounting initiative takes a spatial approach to accounting based on five core accounts: ecosystem extent, ecosystem condition, ecosystem services, and monetary ecosystem asset. Around 34 countries have developed ecosystem accounting to date.

UNDP: Biodiversity Finance Initiative (BIOFIN)

Since 2013, UNDP has implemented The Biodiversity Finance Initiative (BIOFIN). BIOFIN has developed an evolving methodology to assess national biodiversity expenditures, financial needs and facilitate the design of national biodiversity finance plans, and strategies to reduce the needs to a level where national biodiversity targets can be achieved (The BIOFIN Workbook). These consist of 10-15 finance solutions involving the public and private sector and civil society. A menu of options was designed to enable countries to select any financing solution utilized in countries around the world (i.e., the Catalogue of Biodiversity Finance Solutions). To date, 44 countries are implementing the BIOFIN methodology, including the development of national biodiversity plans. So far 31 countries have completed their finance plan. BIOFIN works in a collaborative way with the various global initiatives on biodiversity finance.

World Bank: The Wealth Accounting and the Valuation of Ecosystem Services (WAVES)

The Wealth Accounting and the Valuation of Ecosystem Services, launched in 2010, is a World Bank-led global partnership that aims to promote sustainable development by ensuring that natural resources are mainstreamed in development planning and national economic accounts. WAVES is now part of the broader World Bank umbrella initiative, the Global Program for Sustainability (GPS). This global partnership brings together a broad coalition of UN agencies, governments, international institutes, nongovernmental organizations and academics to implement Natural Capital Accounting (NCA) building on internationally agreed standards, and develop approaches for other ecosystem service accounts. By working with central banks and ministries of planning and finance across the world to integrate natural resources into development planning through NCA, this partnership aims to enable more informed decision making to ensure genuine green growth and long-term advances in wealth and human well-being. WAVES has been implemented at country level in several countries, including: Botswana, Colombia, Costa Rica, Guatemala, Indonesia, Madagascar, the Philippines and several other.

UNEP: Finance Initiative

The Finance Initiative catalyzes action across the financial system to align economies with sustainable development. UNEP FI brings together banks, insurers, and investors globally to shape the sustainable finance agenda. It has developed a network for the finance sector, establishing sustainability frameworks within the finance industry to address global environmental, social and governance (ESG) challenges.

OECD: Development Assistance Committee (DAC)

Official Development Assistance is tracked and monitored by the OECD Development Assistance Committee (DAC) so that individual donor efforts are measured alongside the wider array of resources that are available to developing countries. OECD informs donors about where aid should be targeted, and provides a clearer picture and tracking of resource flows available to developing countries. Since 1998, OECD's DAC has set up the Rio markers system, consisting of policy markers to monitor and statistically report on the development finance flows targeting the themes of the Rio Conventions, including the Convention on Biological Biodiversity (as now adopted by the GEF).

The Natural Capital Protocol

The Natural Capital Protocol is a decision-making framework that enables organizations to identify, measure and value their direct and indirect impacts and dependencies on natural capital. Today, it is embedded under The Capitals Coalition, an initiative that develops, advocates for, and advances the capitals approach. It works with organizations and individuals spanning global systems to understand the value that flows from the capitals and to ensure that it is included in decision-making. The Natural Capital Protocol responds to this gap by offering an internationally standardized framework for the identification, measurement and valuation of impacts and dependencies on natural capital to inform organizational decisions.

The Taskforce on Nature-related Financial Disclosures (TNFD)

The Taskforce on Nature-related Financial Disclosures, established in June 2021, aims at developing and delivering a risk management and disclosure framework for organizations to report and act on evolving nature-related risks, with the aim of supporting a shift in global financial flows away from nature-negative outcomes and toward nature-positive outcomes. Currently, the Taskforce has 40 individual members, including central and private banks, with its funding sources from governments or United Nations entities for its activities.

Related references

May 2023: India: Biodiversity funds hardly spent on its conservation
May 2023: Ecuador: Thanks to market value loss of Ecuador's bonds, investors sold $1.6 billion worth to the bank Credit Suisse at an average of 40 cents on the dollar to avoid the risk of bigger losses. The bank then converted them into a $656 million Galápagos Marine Bond, and the U.S. government’s development bank provided political risk insurance. Ecuador would save more than $1 billion in future interest and principal payments, and has committed to spending more than $323 million over about 18 years on conservation in the Galápagos region, particularly to manage and monitor the Hermandad Marine Reserve through an endowment intended to fund such activities in perpetuity.

Biodiversity-tied bond sales at a record $165 billion in 2023; Nature theme faces challenges in finding quantifiable metrics
US-Peru debt-for-nature swap to protect Amazonian biodiversity hotspots in September 2023. Peru will redirect $20 million of its deb to the US to spend on establishing parks and protected areas as well as improving the livelihoods of indigenous peoples and local communities in the Peruvian Amazon. The US has contributed to 22 debt-for-nature swaps in countries since the 1998 Tropical Forest and Coral Reef Conservation Act, generating over $380 million in conservation funds over the 25 years.