If you want to fight against poverty, you need money. If you want to invest in roads or schools, or hospitals, you need money. If you want to develop a strategy for biodiversity, you also need money – Guillermo Zuñiga, Former Minister of Finance of Costa Rica and Lead Expert of BIOFIN Team in Costa Rica
BIOFIN supports countries with a methodology that provides innovative steps to measure current biodiversity expenditures, assess financial needs, identify the most suitable finance solutions and provides guidance on how to implement these solutions to achieve their national biodiversity target.
The BIOFIN methodology takes shape through three assessments that culminate in a Biodiversity Finance Plan. The steps include:
- The Biodiversity Finance Policy and Institutional Review (PIR) looks into the policy and institutional context for biodiversity finance in the country and establishes which are the key stakeholders to involve.
- The Biodiversity Expenditure Review (BER) is an analysis of public and private expenditures in the country that benefit biodiversity. The assessment establishes past, present and projected expenditures on biodiversity.
- The Financial Needs Assessment (FNA) estimates the finance required to deliver national biodiversity targets and plans, usually described in the NBSAPs.
- The Biodiversity Finance Plan (BFP) identify and prioritises a mix of suitable biodiversity finance solutions to reduce the biodiversity finance gap.
The last component of the BIOFIN process is the implementation phase. The BIOFIN national teams make a selection between the prioritised finance solutions and provide technical support for their implementation.
Finance solutions provide impact that contribute to the national targets through four main results:
- Generate revenues, i.e. any existing or innovative mechanism or instrument that can generate and/or leverage financial resources to allocate to biodiversity. Examples include the attraction of impact investment in conservation projects, the review or introduction of green taxes, etc.;
- Realign current expenditures, i.e. any measure that can reorient existing financial flows towards biodiversity. This result can be achieved by phasing out and reforming fossil fuel/ energy subsidies and using these freed resources to invest in renewable energy or green infrastructure instead.
- Avoid future biodiversity expenditures, i.e. any measure that can prevent or reduce future investment needs by eliminating or amending existing counter-productive policies and expenditures. This can be achieved by taxes that can generate a double dividend, or by fines for stopping ecosystem contamination by alien invasive species.
- Deliver financial resources more effectively and efficiently, i.e. any measure or instrument that can enhance cost-effectiveness and efficiency in budget execution, achieve synergies and/or favour a more equitable distribution of resources. Examples include the establishment of biodiversity business challenge funds, the merger of national conservation funds, the establishment of central procurement units or staff incentives to increase delivery of resources.
The National BIOFIN approach is explained in the graph below, including the four results leading to the reduction of the biodiversity finance gap.