The BIOFIN project began its activities in Colombia in March 2015, joining a group of 40 beneficiary countries for this initiative, within this group, 11 countries belong to the Latin America cohort. Colombia is the most biodiverse country per square kilometre in the world. Biodiversity management affects the social and economic development of a large portion of the population; it is a matter of interest for the national economic policy due to its impact. The analysis and implementation of BIOFIN’s strategy in Colombia has allowed a detailed examination of past investments in protection, conservation, sustainable use of biodiversity, the inclusion of sectorial policies and strategies for fair and social equitable distribution to determine tendencies, financing gaps and opportunities aimed at meeting the country’s goals for biodiversity and the AICHI biodiversity targets in the meetings of the parties to the Convention on Biological Diversity.
Our strategy To optimize the allocation of current public expenditure on biodiversity conservation.
- To improve the effectiveness of economic and financial instruments related to biodiversity management.
- To assess, facilitate and intensify the participation of the private sector in biodiversity management in the country.
- To innovate in financial and economic mechanisms that contribute to the financial leverage of proposed goals.
- To articulate biodiversity finance with peace, green growth, and climate change finance.
- Consolidation of BIOFIN’s technical committee with the participation of the Ministry of Environment and Sustainable Development, the Ministry of Finance, the National Planning Department, the National Administrative Department of Statistics, and the National Environmental Licensing Authority
- Design of a strategy and joint action plan between the BIOFIN project and the Readiness for Green Climate Fund within the framework of the Financial Management Committee of the National Climate Change System (SISCLIMA, acronym in Spanish).
- Proposal of economic analysis, financial valuation, and budget design, including the biodiversity variable of the first Colombian project to be presented to the Green Climate Fund).
- Participation in the construction of goals and indicators of the national baseline for Sustainable Development Goals (GDS), focusing on those directly associated with biodiversity.
- Connection and assessment of the economic benefits of conservation and sustainable use of biodiversity in the construction of peace in Colombia.
- Formulation and implementation of the District Program of Payments for environmental services, jointly with the District Secretary for the Environment and the Mayor's Office of Bogotá.
- Technical support in the construction of the national policy for protected areas in Colombia by 2030.
- Support in the formulation of projects for the conservation and restoration of protected areas and other strategic areas of environmental importance at the regional level, to mobilize resources of the 1% of the current income of the territorial entities that must be invested in the environment, royalties, and carbon tax.
- Support to the Colombian government in preparations to achieve its biodiversity goals acquired in the Convention of Biological Diversity.
- Incorporation of the technical debate on harmful incentives in the mobilization and redirection of resources for the financing of biodiversity.
- Evaluation and monitoring of the impact of COVID-19 on Biodiversity Finances.
Increase public investment in payment for environmental services projects
Analysis carried out by the BIOFIN team in Colombia, show some problems that PES could being to help solve. Namely, conditions of degradation and deforestation in strategic ecosystems, conflict surrounding land use in these areas, as well as the need to generate options for agricultural producers with a sustainable productive intensification that improves the provision of environmental services.
Second, the analysis also reveals that public and private stakeholders are motivated by common interests in the management and financing of actions associated with preservation and restoration of strategic ecosystems, specially related with the water ecosystem services.
Finally, the main financial sources identified by BIOFIN to finance PES are: infrastructure works for taxes, 1% of the current income of the territorial entities that must be invested in the environment, royalties and carbon tax.
Estimated finance result: Mobilization up to USD $31.8 million from regional and local resources mainly, in addition to the established national financing sources.
Unlocking funds from authorized environmental offsets to reduce deforestation
BIOFIN has supported government efforts to boost pending investments for compensation obligations, through costing assessments of the obligations to establish financial information, which is currently absent. This, to help structure the portfolio for investment projects located regionally and facilitate meeting points between pending offset obligations and investment projects.
In recent years, initiatives by private companies have emerged, showing there is a need to expand the available tools to enhance the effective execution of compensation obligations at the national level. One of these tools are “habitat banks” which facilitate private companies’ fulfilment of obligations by selling them "credits" in areas where compensation requirements are merged, and actions for the preservation, improvement or restoration of ecosystems are implemented to compensate the negative impacts on biodiversity.
Currently, Biodiversity Credit Systems are one of the mechanisms being implemented around the world to offset impacts, mainly through habitat banks. BIOFIN Colombia wants to boost these emerging initiatives by increasing the general knowledge about them and promote its use for the fulfilment of pending offsets. Therefore, it is worth noting that Colombia is becoming one of the lead countries in the region working on habitat banking.
Estimated finance result: Mobilization up to USD $4 million through boosting investments from pending compensation obligations by approved licensed projects.
Royalties directed at biodiversity conservation and management in environmental interest areas
Low levels of investments in environmental projects can be explained, firstly, by a lack of investible and attractive projects available for regional governments to support . Second, there is an absence of incentives to allocate resources in the environmental sector, further evidencing the need to strengthen regional and local governments in the formulation of projects on environmental, and, biodiversity-related issues to optimize these resources.
For this reason, this financial solution will promote the use of royalties in projects aimed at the conservation of biodiversity and ecosystem services in areas of environmental interest, through investment projects formulated for conservation of areas protected, paramos, mangroves, dry forests, among other ecosystems.
BIOFIN has been supporting the use of royalties in projects aimed at controlling deforestation and protecting biodiversity in the territories with the highest deforestation rates, through financial, technical and management incentives, trough investment projects formulated for deforestation control in protected areas, action Plans of the Regional Systems of Protected Areas updated with their financial strategy to be partially financed with resources from the National Royalties System, stakeholders with increased basic knowledge on the design of finance strategies for the Regional Systems of Protected Areas and the support on the construction of the National Policy for Protected Areas in Colombia, jointly with National Natural Parks of Colombia, the Ministry of Environment and Sustainable Development, the GEF and WWF.
Estimated finance result: Mobilize minimum USD $98 million through the enhance public budget execution and the influence in investment budget formulation.
Institutionalization and sustainability of financial solutions in Colombia
This financial solution allows monitoring and analyzing the expenditure on environment, biodiversity, climate change and water.
The constant updating of the figures and data allows increased analysis inputs, needed in the formulation of public policy.
To date, there are different sources of information that, due to the quality and status of the data reports, make it difficult to officially report information. This occurs because the base information is composed of manual and complex procedures that affect the quality of the statistics. Hence, the interoperability mechanisms of statistics, such as the design of an application to collect information, reduce logistics timeframes and increase the time dedicated to analysis and quality assurance of the results.
The compilation of information on biodiversity finances in a unique information system, allows to identify the behavior of budget executions and address the enabling conditions for resource mobilization. The information generated by BIOFIN provides inputs at the national and regional level, as well as for entities, institutional sectors, economic sectors and for different investment projects.
Study to identify incentives in the agriculture sector with possible negative impacts on biodiversity in Colombia
BIOFIN has been working to identify all the incentives within the agricultural sector that might have harmful impacts on biodiversity; these will be analyzed and some of them will be prioritized to present options for possible reforms at the national government level. These reform options may consist of eliminating, reducing, redirecting, or greening the selected incentives.
With the reform proposal, a process of advocacy will be launched to present these incentives to policy makers and push the necessary changes on legislative or regulatory instruments.
The following document provides an identification process of institutional actors nationally, regionally and locally. This process is to be set with the National Biodiversity Strategies and Action Plan (NBSAP). It aims at promoting the construction of possible scenarios where actors can actively and positively be part of the biodiversity management process. Infographics were used to facilitate the understanding and relation of positive and negative factors, as well as actors. These infographics also contribute to summarize the analysis done.
Below you will find the review of Public Expenditure on Biodiversity in Colombia. It was made based on a tracking method of national public investing projects. This method works with selected and validated descriptors and uses an experimental logistic regression method.
On the other hand, the budget of 1.102 municipalities and 32 departments was analyzed in a subnational sphere using sequential codes from public expenditure review of such territorial entities with the classification method of expenditure identification. This method was used nationally and classified according to BIOFIN’s taxonomy.
On the basis of the foregoing, here are some strategic outcomes: annual investment in biodiversity is close to $243 million U.S. dollars, which represents 0.11% of the GDP, 0.49% of the national general budget and 22.9% of the public environmental expenditure of the country. These resources are allocated as follows: 38% for protection, 27% for restoration, 9% for sustainable use of biodiversity, 13% for incorporation, 12% for aplication and 1% for benefit participation.
The private sector invests an average of $30 million U.S. dollars at standard 2015 prices. According to expenditure classification of AICHI, expenditure has been allocated as follows: 27% for Restoration, 53% for Protection, 11.44% for incorporation of the biodiversity variable in other planning policies and instruments, and 9% for benefit participation.
Costing for the Biodiversity National Action Plan for the 2017-2030-period is calculated in $4.8 billion U.S. dollars. 85.9% of the investment will be allocated to axis 1 of the plan: biodiversity, nature conservation and protection. They are in line with the historic review of strategies showing that 77% of the resources were allocated to restoration and protection. The remaining 14% was allocated to the other five axes. The most representative axes are axis 3 (economic development) with 7.8% and axis 4 (research) with 5.2%.
According to macroeconomic assumptions of the Ministry of Finance and Public Credit, a comparison of the additional annual resources required and the business-as-usual scenario of the review, it is necessary to increase the average annual investment in $103 million U.S. dollars in order to cover the budget deficit estimated at $1.44 billion U.S. dollars and increase the average annual public expenditure on biodiversity in Colombia (2000/2015) from $240 million U.S. dollars to $447 million U.S. dollars (2017-2030),
BIOFIN in Colombia has an additional challenge: taking into account that the country is experiencing a process of economic, social and political transformation, many budgetary adjustments are affecting the annual amounts destined for biodiversity and environmental accounts in genera. The variability in oil prices, the depreciation of the national currency and the country's commitments associated with peacebuilding will imply additional efforts in public and private financing. On the other hand, Colombia is facing a situation of loss of biodiversity because of the decrease, loss or degradation of elements of native ecosystems and agroecosystems.
The Biodiversity Financial Plan was built by articulating three priority themes in the country's Development Agenda: 1) The consolidation of peace, 2) Green growth and 3) Finances of sustainable development (Climate Change and Biodiversity). The above in order to take advantage of the momentum that the National Agenda is giving to these issues, and where Biodiversity management plays a very important role in a transversal way.