There are many ways of influencing economics and finance to address biodiversity challenges. The most obvious is to assure long-term and steady financial flows to conservation through increased government budgets, publicly-privately funded trust funds, payments for ecosystem services, etc. However, if these finance solutions only mobilize or redirect money, they will not address the root causes of biodiversity loss and directly affect the drivers of biodiversity remediation and restoration. BIOFIN has developed a comprehensive framework for biodiversity finance built around four key desired results. These four complementary results recognize that all finance strategies, tools and instruments operate within complex systems. By specifying these four results as a lens to identify and prioritize finance solutions, stakeholders can seek a mix of comprehensive, innovative and effective finance solutions. Each result is described below:
A single finance solution can achieve multiple results. Introducing a green tax can help reduce future costs by influencing certain behaviours (e.g. reducing the level of use of chemical fertilizers and thus the need to restore the soil), while mobilizing additional resources the government can direct towards conservation.
Figure 1.4 highlights how financial results are connected to biodiversity, either by producing a measurable biodiversity outcome (e.g. expanding marine protected areas) or reducing a threat or negative pressure on biodiversity (e.g. applying sustainable forestry practices). Delivering better and generating revenues can contribute to improved biodiversity outcomes through increased budgets and more effective execution. The avoidance of future costs and the realignment of existing expenditures (such as phasing out of harmful subsidies) can reduce pressures on biodiversity by addressing the main drivers of loss, such as the overconsumption of natural resources due to unsustainable agriculture or fishery practices. Generating revenues and realigning expenditures directly affect financial flows. Delivering better and avoiding future expenditures are enabling actions that produce a measurable financial impact but not necessarily a financial transaction.
Figure 1.4: Relationship Among Financial Results, Biodiversity Outcomes and Actions