Biodiversity Finance: Protecting Nature, Growing Wealth

In a world facing unprecedented ecological challenges, biodiversity finance offers a beacon of hope. By channeling funds into nature conservation and restoration, we not only safeguard the planet’s vital ecosystems but also unlock new pathways for wealth creation and risk mitigation.

The Power of Biodiversity Finance

Biodiversity finance is the practice of mobilizing and redirecting capital to conserve, restore, and sustainably use nature. It goes beyond traditional conservation funding by integrating nature’s value into mainstream economic decisions, reshaping how we produce, consume, and invest.

This emerging field embraces public and private resources, financial incentives, and market-based solutions to tackle the root drivers of biodiversity loss: land-use change, climate change, pollution, over-exploitation, and invasive species. By reframing nature as an economic asset, biodiversity finance aligns ecological health with financial performance.

Why Biodiversity Finance Matters Economically

Healthy ecosystems underpin the services that sustain humanity: food production, fresh water, timber, climate regulation, soil fertility, pollination, flood protection, and disease regulation. These services contribute trillions of dollars to the global economy every year.

Key sectors—agriculture, fisheries, forestry, infrastructure, extractives, energy, and tourism—depend heavily on nature’s resilience. The World Economic Forum ranks nature loss as the fourth greatest long-term business risk, highlighting potential asset devaluation, supply chain disruptions, and regulatory costs.

By investing in biodiversity, businesses can reduce financial risks and operational uncertainties, enhance resilience to climate shocks, and build reputational capital in a market increasingly driven by environmental stewardship.

The Current Landscape and the Finance Gap

Despite growing interest, global biodiversity finance lags far behind what is needed to halt and reverse species loss. Between 2015 and 2017, OECD estimates ranged from USD 78 billion to USD 91 billion per year—just 0.1% of global GDP—while experts place the annual funding need between USD 150 billion and USD 440 billion.

The Kunming–Montreal Global Biodiversity Framework highlights a financing gap of roughly USD 700 billion per year through 2030. To bridge this gap, the framework calls for mobilizing at least USD 200 billion annually from all sources and repurposing USD 500 billion in harmful subsidies.

Below is a snapshot comparing current flows with required levels:

Instruments and Mechanisms: The Biodiversity Finance Toolkit

A diverse array of financial instruments is emerging to channel capital into biodiversity-positive outcomes. These tools can be tailored to national priorities and market conditions, offering stakeholders multiple entry points.

• Public finance & fiscal measures: Budget allocations for protected areas, ecosystem restoration, and environmental agencies; reforming harmful subsidies; tax incentives for sustainable practices.
• Debt and capital markets: Green bonds with biodiversity use-of-proceeds, debt-for-nature swaps, and conservation-linked bonds that tie returns to ecological performance.
• Market-based instruments: Payments for Ecosystem Services (PES), habitat and biodiversity banking, water quality trading, and certification schemes for sustainable commodities.
• Risk management and guarantees: Public credit enhancements and guarantees that de-risk private investment in biodiversity projects and mobilize larger pools of capital.

Key Initiatives and Institutions Driving Change

Several global bodies and programs are accelerating biodiversity finance by providing data, guidance, and technical support to governments and investors.

• UNDP’s Biodiversity Finance Initiative (BIOFIN): Adopted by 123 countries, BIOFIN helps measure finance gaps, develop national plans, and implement over 150 finance solutions to create jobs and reduce risks.
• OECD: Offers comprehensive estimates of biodiversity finance flows, methodological guidance, and policy recommendations to improve tracking and reporting.
• IFC/World Bank Group: Advances mainstreaming biodiversity through investment criteria, publishes the Biodiversity Finance Reference Guide, and supports emerging market projects.
• European Union: Integrates biodiversity considerations into green budgeting and ODA, setting targets to scale up domestic and international spending on nature.

Taking Action: Practical Steps for Stakeholders

Bridging the biodiversity finance gap requires coordinated efforts from governments, financial institutions, businesses, and civil society. Each stakeholder can play a defining role:

• Governments can integrate nature into national budgets, eliminate harmful subsidies, and set clear finance targets under the Global Biodiversity Framework.
• Financial institutions should adopt biodiversity risk assessments, develop green bond frameworks, and mobilize client capital for nature-positive investments.
• Businesses can measure their dependencies on ecosystem services, invest in supply chain resilience, and engage in market-based mechanisms like offsets.
• Civil society and communities can champion local conservation projects, participate in PES schemes, and hold decision-makers accountable for finance commitments.

By working together, stakeholders can unlock new sources of economic value while restoring natural capital. Biodiversity finance is more than a tool—it is a transformative approach that aligns ecological stewardship with sustainable growth.

In the coming decade, scaling up biodiversity finance will be critical to achieving global conservation goals, safeguarding livelihoods, and ensuring a resilient future for all species. The choices we make today will determine whether we leave behind a world rich in diversity or one burdened by loss. With strategic investments and collective action, we can protect nature’s wonders and grow shared prosperity.