Financing ecosystem restoration and biodiversity conservation: Lessons and opportunities from climate finance

Livelihoods, the economy, and human wellbeing are dependent on ecosystems, their services and biodiversity, all interconnected in a complex adaptive socio-ecological system. According to the World Bank, just a partial collapse of ecosystems and the biodiversity they support would cost up to 10% loss of GDP by 2030 for most of the world’s lower-income countries. Coincidentally this is the same timeframe within which we have to achieve the 2030 agenda for sustainable development of which SDG 14 (Life below water) and SDG 15 (Life on land) are foundational.

The State of Finance for Nature report launched earlier this year reveals that while nature-based solutions and much biodiversity conservation continue to be significantly under-funded, there is huge potential to mobilise the finance flows to nature that are urgently needed to combat biodiversity loss and achieve land degradation neutrality ambitions for 2030 and 2050.

Time is running out for finance

The first key message of the report is that finance flows to Nature-based Solutions (NbS) are currently US$154 billion per year, less than half of the US$384 billion per year investment in NbS needed by 2025 and only a third of investment needed by 2030 (US$484 billion per year). To put this in context, if the world wants to halt biodiversity loss and pursue its current ambitions on land degradation neutrality, current finance flows to NbS must urgently double by 2025 and triple by 2030. Delayed action is not an option in the face of the devastating effects of climate change, the extinction crisis, and severe land degradation globally. The first edition of the report projected that annual investments in NbS would have to triple by 2030 and increase four-fold by 2050 from the USD 133 billion invested in NbS by the end of 2020. This demonstrates a low level of traction on the achievement of nature finance flow goals, a fact that directly affects any current targets or any future goals that may be set for sustaining biodiversity and achieving SDGs in general.

Biodiversity and Green Growth are intertwined, and so is their financing

We need to situate our nature and biodiversity ambitions at the core of sustainable development planning and match them with sufficient financial investment. This falls within the wider purview of green growth, which is described by the OECD as fostering economic growth and development, while ensuring that natural assets continue to provide the resources and environmental services on which our well-being relies. Sufficient financing of restoration, biodiversity conservation and NbS is one of the key measures that have fallen short at the most critical juncture as we negotiate a new global framework for managing nature through 2030 – a key message at the ongoing COP15 talks in Montreal.

What lessons can be drawn from climate finance flows?

There is a need to mobilise finance towards ecosystem restoration and nature conservation by activating various funding sources, such as public finance, bilateral support, donor-funded programmes and trust funds for nature, as well as new innovative financing mechanisms in the private sector. Generally, ecosystem restoration and biodiversity conservation share the same common sources of finance such as Multilateral Development Financial Institutions (DFIs), bilateral development funds and climate funds (e.g. Global Climate Fund and the Adaptation Fund), however numerous environmental funds targeting sectors such as wildlife conservation, forestry and marine ecosystems are specific to nature.

Unlike the current trends in climate finance flows which are evolving to suit the needs of locally-led climate action through devolved climate funds, most funds for nature are fragmented and often sector- or even species-specific. Available funding for nature with broad scopes (e.g. the Global Environmental Facility) is often challenging for local actors to reach due to the difficult access modalities and inability to achieve prescribed scales or more importantly, lack of capacity to design the required quality of project proposals. Climate finance has evolved significantly beyond these bottlenecks to deliver accessible and sustainable funds to locally-led action through devolved financing mechanisms.

In Kenya, for instance, the County Climate Change Fund mechanism delivers climate funding to the local level in many counties where Ward level committees work with experts to design and implement climate actions, including some that contribute directly to restoration, conservation and biodiversity protection. The key lesson from such finance flow mechanisms is that they deliver sustainable funding, anchored in law and supported by policy to strategic action at the lowest level where it is required; something yet to be experienced with most environmental funding in most lower-income countries. It is also notable that like devolved climate funds, biodiversity conservation funding could be managed directly by communities with the technical support of scientists and other experts through citizen science, an approach that can improve learning at a local level while promoting awareness of biodiversity and ecosystem services.

Are there opportunities in climate funding?

Climate finance also provides many opportunities for biodiversity and ecosystem restoration that can be tapped into by harnessing the synergy between nature and climate through nature-based solutions. For example community and ecosystem-based adaptation is critical to building resilience to climate impacts and disaster risks. Organisations such as the UNEP support dozens of ecosystem-based adaptation projects across the world aimed at restoring thousands of hectares and benefitting millions of people worldwide. We are also witnessing significant growth in climate financing through voluntary carbon markets that is largely directed to ecosystem restoration at scale, for example, the Global Evergreening Alliance has recently developed a number of large restoration programmes in Africa and Asia drawing from private investment in carbon credits.

In a departure from inadequate traditional climate financing for adaptation and mitigation, the Loss and Damage Fund was established during the UNFCCC Climate Change Conference (COP 27) in Egypt. This for many highlighted the culmination of decades of pressure from climate-vulnerable lower-income countries. The fund, when mobilised will provide financial assistance to nations most vulnerable and impacted by the effects of climate change, including loss of ecosystems and biodiversity. It is expected that a significant portion of the proceeds will be used to address biodiversity loss through ecosystem restoration and conservation actions.

The most important message drawn from the State of Finance for Nature report 2022 is that with sufficient finance, NbS provide the means to cost-effectively reach climate, biodiversity and land degradation neutrality targets. The potential is boundless but needs to be matched with meaningful action.

About the author:

Hausner Wendo is a climate resilience and environmental sustainability specialist with over 11 years of intersectional experience on landscape restoration, climate risk management, socio-ecological resilience, climate adaptation and devolved climate finance. He previously worked for World Vision in Kenya, the International Institute for Environment and Development, Pan African Climate Justice Alliance, VSF Germany and Wetlands International. He has interests in socio-ecological sustainability through landscape approaches, climate risk management and adaptation.