GadCapital: Close the Global Biodiversity Financing Gap
Loss of biodiversity threatens human prosperity. Nature must be valued, protected, and restored globally.
The Value of Biodiversity
Human activities are causing substantial and rapid biodiversity loss. Scientists believe the world is losing species at one to five species every year. In an evolutionary blink of an eye, animal and plant populations have fallen by 60% in the last four decades. If human civilization continues on this path, 30 to 50% of all species may be extinct by the middle of the 21st century.
Biodiversity is vital for our planet’s health, yet it is rapidly dwindling due to human activity. According to the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES), nature is quickly being exploited by people.
We might overlook nature’s significance while the globe attempts to control the COVID-19 outbreak and recover economies, but that would be a mistake. The World Economic Forum estimates that nature contributes roughly half of world GDP ($44 trillion). For example, the loss of all pollinators (bees, butterflies, moths, and other insects) would result in a $217 billion reduction in yearly agricultural production.
We may never know the whole worth of nature, but we know enough to know that its destruction threatens human society and that the prudent reaction is to buy insurance. For biodiversity loss, the insurance policy must be a global effort to value, conserve, and restore nature.
This is the best time to get this insurance. Participants from the UN Convention on Biological Diversity are deep in discussions to create a new global framework to reverse the decades-long reduction in biodiversity. More terrestrial and marine protected areas, greater control of natural resources and industries that rely on them, more enforcement of current rules and regulationsâand, perhaps most frightening, how to pay for it all.
We need a paradigm change in how markets and economics value nature in the medium to long run. This will not happen quickly and need strong political leadership and wide popular backing.
To limit the amount of new capital necessary, we must find and execute creative financial and policy tools that can quickly generate considerable funds for nature protection and damaging reform subsidies, such as agriculture.
To address this issue, the Paulson Institute, The Nature Conservancy, and Cornell University’s Atkinson Center for Sustainability examined how much is presently spent and required yearly in the next ten years to maintain the most significant biodiversity and the benefits it offers. The worldwide biodiversity financing deficit.
The authors predicted worldwide biodiversity conservation cash flows in 2019 at US$124-143 billion. Agricultural, forestry, and fisheries subsidies that destroy nature are at least two to four times larger. That doesn’t include fossil fuel subsidies.
Our research shows that to reverse the loss of biodiversity by 2030, we would need to invest between US$ 722-967 billion annually. The annual funding shortfall for biodiversity is estimated to be between US$ 598 and 824 billion.
Agribusiness, infrastructure, and other high-impact industries are among the first to integrate costs in their evaluations. Even primary measures in other areas won’t stop biodiversity loss until the world community reforms the industries destroying nature.
Despite the size of the financing shortfall, there is good news: it can be filled for less than 1% of yearly world GDP, or $711 billion. That’s nearly similar to Switzerland’s or North Carolina’s annual GDP. More than the globe spends on cigarettes or soft beverages. Compared to the trillions of dollars in global government stimulus programs or the tens of trillions in private assets, it’s a drop in the bucket.
Several strategies are shown here that, if scaled up, might help minimize future biodiversity funding needs and also help unlock extra money. These ideas come from all around society. Some are new financial tools, while others are policy adjustments. Others need private firms to alter their supply networks and investments. Also, anybody can help, whether they are politicians, businessmen, or ordinary citizens concerned about the planet’s health.
Don’t waste your time!
The biodiversity finance gap of about US$ 700 billion per year seems overwhelming. Narrowing the deficit becomes more feasible if that sum is divided into smaller, more achievable chunks.
Around half of the deficit may be filled without additional investments. Better use of current assets, wiser policy, and investment decisions are required to redirect capital flow away from destructive activities and toward results that benefit nature.
In addition to reducing damage to biodiversity, the authors advocate generating new money and increasing benefits by repurposing current funds.
REDUCE ECONOMIC HARM [$280-287 BILLION/YEAR]
Reducing economic activity that destroys nature minimizes future financing requirements. Changes in many industries’ and governments’ actions may help close the biodiversity funding gap.
Subsidy Reform: Reforming harmful subsidies is best to address the financing deficit. Agricultural, fishery and forestry subsidies cost the environment over $542 billion annually. Redirecting such funds to encourage more sustainable methods will benefit nature while reducing climate change and boosting food security.
Consolidate the supply chain’s Global supply networks have historically had a detrimental influence on nature, resulting in unsustainable agricultural and other activities. However, adopting more eco-friendly supply chain management methods may help protect the environment and improve it.
Investment Risk Management: Financial organizations take steps to recognize and manage the risks to biodiversity from their investments, which are becoming more mainstream. These include screening methods and guidelines that help investors assess risks and make educated choices about whether to invest in areas that benefit biodiversity or not.
Generating new revenue (US$169-416)
Even if harmful economic activity is decreased, new financing sources are required. Among the ways to earn money are:
The government may influence and manage the economy to boost certain sorts of income while discouraging actions that damage the environment. Taxes, fees, debt relief, loans, and tariffs are examples of new financing sources.
Green Financial Services: Investing in low-carbon infrastructure has grown in popularity in recent years, but investments in nature have lagged. Environmental impact bonds, low-interest green loans, and other green financial solutions may assist. Governments can help by setting incentives, standards, and guidelines. Get funded today!
Boost Biodiversity How to offset: Agriculture, infrastructure, and extractive businesses that inevitably affect the environment should pay to rehabilitate degraded ecosystems or safeguard at-risk ecosystems.
Aside from decreasing damage and increasing income, current public and private financial resources must be redirected. Infrastructure, climate change mitigation, and development aid already cost billions of dollars. With wise policy reforms, more of these investments may benefit nature.
Increase ODA for Biodiversity: Expanded multilateral and donor help to biodiversity-rich recipient states might include debt forgiveness, direct grants, and technical assistance to promote biodiversity efforts.
Investing in Natural Resources: Reefs, woods, wetlands, and other natural systems protect watersheds and give animal habitat. Natural infrastructure is sometimes cheaper than engineered alternatives.
Carbon Markets and Natural Solutions: One of the most excellent methods to reduce carbon emissions is to conserve natural ecosystems. Governments can accomplish climate targets while also protecting the environment by investing in these solutions. Incorporating natural landscape emission reductions into carbon markets or other financial incentives adds to the economic case for conservation.
We all have a responsibility to safeguard our own home, the Earth.
Government action is required to close the biodiversity funding gap. All governments must recognize healthy environments support strong economies. Nature should be respected as a scarce resource. Leaders should consider biodiversity when making policy, legal, and budgetary decisions.
Meanwhile, multilateral institutions and donor countries should increase bilateral and multilateral ODA to less-developed countries with transparent and sustainable biodiversity conservation plans. Developed and developing economies can help green supply chains by increasing the demand for sustainable products. Green finance objectives and policies may encourage biodiversity-enhancing actions.
Recognizing that the public sector cannot supply all the funding, the private sector, the largest source of money, may play a vital role. Governments must provide the necessary regulatory framework, incentives, and market structures to encourage private sector investment to reach this potential.
Finally, citizens may help conserve biodiversity by learning about the issue, advocating for solutions, changing their consumption habits, and voting for politicians who value nature.
The Way Ahead
For human civilizations, nature has long been an inspiration and resource. Nature is presently being over-exploited. Our lands and streams are contaminated and depleted, and ecosystems that offer critical services to civilization are being destroyed.
The 15th Conference of the Parties (COP 15) to the UN Convention on Biological Diversity will be held in Kunming, China, in 2021. They should also agree on a ânew contract for natureâ that reduces and finally stops biodiversity loss by 2030.
A worldwide solution to the biodiversity disaster must include an overarching international accord that outlines the vision and goals. But it’s not enough. The new environmental pact must be backed up by domestic policy, law, and money that aligns with each country’s aspirations. Every country’s economy is different, so governments may choose solutions that work best for them. We must work together to conserve our natural capital and provide financial support for a healthy world.
If we succeed, we will all benefit from increased food, water, economic security, a more stable climate, lower pandemic risk, and the intangible blessings nature provides us daily. And therefore, it is simply a wise investment to value nature and close the existing biodiversity funding gap.
The Paulson Institute, The Nature Conservancy, and Cornell Atkinson Center for Sustainability launched Financing Nature with a worldwide virtual event on September 17, 2020.