Gonon, Morgane; Svartzman, Romain; Althouse, Jeffrey; (2024) Bridging the Gap in Biodiversity Financing: A review of assessments of existing and needed financial flows for biodiversity, and some considerations regarding their limitations and potential ways forward. (UCL Institute for Innovation and Public Purpose, Working Paper Series 2024-14). UCL Institute for Innovation and Public Purpose (IIPP): London, UK.

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Abstract

Global sustainability policy and discourse increasingly focus on closing a “financing (or funding) gap” to meet global goals for climate and biodiversity. In particular, the Global Biodiversity Framework (GBF), adopted by 196 countries in 2022, seeks to fill a finance gap of US$ 700 billion by 2030 to effectively halt and reverse biodiversity loss. Against this backdrop, this report seeks to provide clarity on the current state of "global biodiversity finance" and related challenges and debates. It first details the existing assessments of both existing financial flows and future funding needs for biodiversity, including details on the various methodologies used to estimate the amounts concerned, the type of financial instruments considered, and the sectors and activities targeted. Estimates of current global biodiversity finance significantly vary across studies, from a minimum of US$ 78 billion to a maximum of US$ 200 billion annually. Despite their methdological differences, some general patterns emerge across studies. Domestic public expenditures are by far the main component of biodiversity financing today. While most of the current funding is currently coming from and supporting action in high-income countries (mainly the US, Italy, France, and Germany), China has a growing role in domestic and international biodiversity financing. Additionally, studies highlight that multilateral public expenditure and private finance are on the rise, including through the development of market-based mechanisms such as biodiversity credits. This report also discusses the meaning and limitations of such assessments. In particular, we argue that by focusing predominantly on “bridging a financing gap”, these studies, and the policy discussions using them, risk: (i) concealing the key underlying barriers to protecting biodiversity, including specific socioeconomic dynamics cannot be reduced to a “lack” of financing (e.g. rich countries’ consumption patterns that drive biodiversity loss worldwide); (ii) diverting attention from more important questions related to transforming the financial system itself, especially the need to reform the international financial architecture so as to enable low- and middle-income countries to access long-term public funding for their sustainable development. While not intending to provide an exhaustive look into such questions, the report calls for future research to clarify how the need to expand access to finance (the “finance gap approach”) must be assessed jointly with the need for transformative socioeconomic changes to achieve sustainability goals, including potential transformations of the financial system itself (a “transforming finance approach”).

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