Finance for nature, a commitment of the whole society to the sustainability of the planet


Harnessing the enormous potential of private investment in nature-based solutions is crucial to protect the environment and promote the sustainable development of the economy.

  • Bioeconomy represents a growing market where biodiversity plays a leading role.
  • No set of initiatives and financial instruments will suffice for the conservation of biodiversity without the involvement of civil society as an active and decisive actor in its sustainable use and financing.

Ten participating countries agreed that the management of biodiversity in Latin America and the world is underfunded. The global financial gap is between USD150–440 billion per year, while only about USD52 billion per year is invested in biodiversity.

The regional estimates of spending on biodiversity for 2015 are USD2.8 billion (Chile, Colombia, Costa Rica, Guatemala, Ecuador, Mexico and Peru), while the estimated regional costs of biodiversity policies amount to USD15 billion.

“Biodiversity in our region supports our vital needs, including food, human well-being and our landscapes.” She added that “although governments and the region as a whole have taken measures to protect biodiversity and the sustainable use of resources, challenges remain, biodiversity is still lost, and the planet continues to heat up at an accelerated pace”, Jessica Faieta, UNDP Resident Representative in Colombia.

Considering this, more than 60 experts from all Latin America and the Caribbean met in Cartagena to exchange experiences on economic and financial tools associated with the management of the planet’s biodiversity. Economists, governments of the region, multilateral banks, private sector and participants of the BIOFIN initiative from more than ten countries in Latin America analyzed the financing challenges and shared strategies and instruments to overcome them.

Private investments are indispensable to close the gap

Harnessing the enormous potential of private investment in nature-based solutions is crucial to protect the environment and promote the sustainable development of the economy, BIOFIN experts in Cartagena concluded. Today, most of the resources invested come from the public sector and from multilateral cooperation funds, but they are limited.

“We do not have enough money to sustain our planet in the long term,” said John Tobin, professor of practice for Corporate Sustainability at Cornell University, “but, ‘eureka’, we discovered that the gap to finance global conservation equals 1 % of all new or reinvested capital that enters private capital each year, from pension funds, individual savings and large-scale investments. The participation of the private sector is therefore fundamental: the challenge is to attract that 1% to close the investment gap”, he concluded.

Attracting private investments implies changes in the view that the financial and business sector has about biodiversity. The effects of climate change have allowed companies and financial institutions to have greater knowledge of the impact of nature on the economy and to participate in the design and implementation of mechanisms, such as green bonds or parametric insurance.

Massimiliano Riva, UNDP's innovative Finance Specialist, said that it's important to not only attract income from different sources but also to change the way in which the financial sector understands biodiversity.

“This is done in different ways. One is to understand the risks and how companies, banks and the financial sector interact with nature; the other is to visualize the role, for example, how a city can have better access to certain services such as water or flood protection with solutions based on nature, and the third is to have a new generation of companies that through their practices Sustainable business can have positive results and new ways to take advantage of biodiversity," he said.

In turn, governments must do their part, according to John Tobin “to promote greater private investment, governments must work on political reforms that guarantee legal certainty, create interesting environments that offer incentives to investments and structure projects with verifiable and larger-scale profitability.”

For their part, actors involved in the development of conservation initiatives face two challenges: strengthening their capacity to structure profitable projects with attractive scales and financial amounts and enhancing measurement of biodiversity investment impacts.

“The measurement of investments impacts in biodiversity is a process. What we have done is bring together representatives of the financial sector, NGOs, governments, among others, to define minimum standards, which will be the basis of a reliable system created with the support of all parties with a view to facilitating access to private funds,," said Massimiliano Riva.

José Alfaro, professor at the University of Michigan, emphasized the importance of measuring the impacts of investments using complementary methodologies such as social life cycle analysis and the community capital framework.

Multilateral banking is moving forward with a growing portfolio to support countries in meeting environmental and climate goals. For example, in the last five years, CAF has invested more than USD 7 billion in 25 cities on issues related to climate change.

Colombia, on the other hand, presented biodiversity compensations as a strategy to attract private investment, group environmental investments that generate significant impacts in the management of biodiversity, and direct investments toward compliance with the results.

Protected areas: one of the most critical financing issues

The directors of the national parks of Colombia, Costa Rica and Cuba presented their experiences, successes and challenges in the financial management of protected areas in a panel held in the Coral Parks of Rosario and San Bernardo. One of the key conclusions is that the collective conscience in conservation has been strengthened in Latin American during the last years.

“The budget assigned to Parks is approximately USD 33 million per year to care for 1,116 protected areas, which is equivalent to more than 31 million hectares; we have made progress, but the gap is still very big”, Julia Miranda, director of National Parks of Colombia.

Grettel Vega, director of the National System of Conservation Areas of Costa Rica explained that the Central American country receives an annual budget of approximately USD71 million for the protection of 2.7 million hectares in conservation. However, she pointed out that they need to improve investment since a large part of the resources are allocated to human resources.

Finally, the delegate of the environmental division of the Ministry of Science, Technology and Environment of Cuba, Gloria Gómez, said that a conservation culture is becoming stronger among citizens, and that they are working on creating further consensus with the Government, organizations and society at large to achieve a more optimal income redistribution in the future.

Bioeconomy: a growing market where biodiversity plays a leading role

Bioeconomy is based on the consumption and production of goods and services derived from the direct use and sustainable transformation of biological resources, including biomass waste generated in the processes of transformation, production and consumption.

It is a sector that can provide a framework for the development of policies focused on addressing the social challenges and the concerns of sustainable development according to the 2030 Agenda. However, its development is incipient in Latin America.

“The bioeconomy represents 9% of world GDP and is a growing market at two digits per year. This sector requires added value in its processes to achieve the integral use of biodiversity that benefits communities and industries,” said Hernado José Gómez.

On the other hand, Claudia Betancourt, manager of Bioentropic Colombia, stressed that:

Advancing the development of the bioeconomy implies generating the appropriate financial instruments so that biotechnology companies are economically viable and support the research and testing deadlines before selling in the market, the experts concluded.

Similarly, they showed that the circular economy is an opportunity to enhance the bioeconomy, since it can help define sustainable and profitable business models given that the challenge of producing more efficiently and with less waste is possible through research and the use of modern biotechnology in production processes.

Access to genetic resources and benefit sharing

The fair and equitable distribution of the benefits derived from the use of genetic resources is one of the three pillars of the Convention on Biological Diversity and its application is the main objective of the Nagoya Protocol on Access and Benefit-sharing (ABS).

Genetic resources are essential for the development of agriculture, food/beverages, pharmaceutical and biotechnological products. These products are compatible with poverty alleviation, food security, human well-being and underpin life support systems of the Earth, experts said.

“It is important to raise awareness and highlight the economic, environmental and social potential of genetic resources in the context of the bioeconomy for decision-makers,” said Santiago Carrizosa of the UNDP. He added that “the creation of a Business Center for ABS that promotes the use of genetic resources with a focus on development in the bioeconomy and includes the government, private companies and academia can be an important step in the development of this sector”.

For its part, Costa Rica presented the case of the alliance with the company Channel:

Ministries of Environment and Finance, the winning alliance

The Deputy Minister of Finance of Colombia Luis Alberto Rodríguez and the Deputy Minister of the Environment of Colombia, Roberto Esmeral, participated in the closing session. They discussed coordination mechanisms needed to strengthen finance for nature in the country, and lessons learned from other experiences in the world.

“The word sustainability is the key to linking private sector investments with the protection of biodiversity,” said the Deputy Minister of Environment, adding that Colombia is committed to pay for environmental services, recognizing the role of the communities in the protection of ecosystems and in the creation of legal productive alternatives to care for the environment.

The Deputy Minister of Finance of Colombia Luis Alberto Rodríguez said that “the management of financial information that accounts for biodiversity, environmental assets and liabilities, the carbon tax and risk assessments have encouraged dialogue and close collaboration between the Ministries of Environment and Finance “.

Both deputy ministers recognized the work of the BIOFIN initiative as a platform that opens doors to achieve sustainability of nature’s finances in the medium to long term.

Jimena Puyana, coordinator of the environment and sustainable development area of UNDP in Colombia stressed the organization’s commitment to generating financial information related to climate change and biodiversity for informing decisions in the country, and highlighted the importance of working jointly to strengthen and design innovative financial mechanisms to overcome the existing financing gap.

This article was first published on Medium here.