Malawi is home to exceptionally rich biodiversity, spanning forests, wetlands, freshwater ecosystems and diverse agricultural landscapes. At the heart of this natural wealth is Lake Malawi, which supports around 800 fish species, approximately 99% of them endemic, making it one of the world’s most biologically important freshwater ecosystems. The country is also home to more than 6,000 flowering plant species, 630 bird species and 192 mammal species.
Biodiversity and ecosystem services underpin Malawi’s economy and the well-being of its people, supporting agriculture, fisheries, forestry, tourism, food security and livelihoods. Around 500,000 people depend on fisheries for food and income, while forests and other natural ecosystems provide communities with timber, energy, medicinal plants and other essential resources.
Yet Malawi’s biodiversity is under increasing pressure from habitat loss and degradation, overexploitation of natural resources, pollution, invasive alien species and climate change. By 2020, around 50% of the country’s forests and woodlands had been lost over the previous 40 years, while approximately 60% of its land was degraded.
Through UNDP BIOFIN, Malawi is working to strengthen the financing of its biodiversity priorities. By assessing biodiversity expenditure and financing needs and developing priority finance solutions, the initiative supports the country in mobilizing additional resources, improving the effectiveness of existing expenditure and strengthening the long-term financial sustainability of biodiversity conservation.
Malawi’s Biodiversity Finance Plan identifies 11 finance solutions to mobilize and manage resources for biodiversity more sustainably. Five have been prioritized for implementation, focusing on improving public finance, developing market-based mechanisms, securing revenues for conservation and reforming incentives that can harm biodiversity.
Biodiversity budget tagging
Malawi became the first African country to adopt biodiversity budget tagging, enabling the government to systematically identify and track biodiversity-positive expenditure and strengthen the case for increased public investment. Biodiversity considerations have been integrated across programmes and sub-programmes covering natural resources, agriculture, ecotourism, water and local government budgeting.
Payment for Ecosystem Services (PES)
Malawi is developing a national PES implementation framework to create mechanisms for compensating communities that protect and manage important ecosystems. Initial work is exploring opportunities in areas such as Nyika Forest and Zomba Mountain, including mechanisms to direct a share of revenues generated from ecosystem services towards their conservation and management.
Carbon markets
Malawi is working to expand participation in voluntary carbon markets by strengthening the capacity of government, businesses, Indigenous Peoples and local communities to engage with carbon finance. The approach aims to generate additional resources while supporting sustainable management of biodiversity and ecosystem services.
Ring-fencing revenues for biodiversity
Work is underway to strengthen mechanisms for retaining and directing revenues from fees, fines, royalties and other charges towards biodiversity priorities. This includes opportunities in the forestry and water sectors, as well as mechanisms through which biodiversity-impacting industries can contribute to restoration and conservation.
Reforming biodiversity-harmful subsidies
Malawi is assessing subsidies in priority sectors to identify those that may negatively affect biodiversity and explore opportunities to redesign or repurpose them towards biodiversity-neutral or biodiversity-positive incentives.
Additional finance solutions are also being advanced, including a national biodiversity offset strategy, valuation of Malawi’s natural capital, and engagement with the financial sector to integrate biodiversity into financial decision-making and develop nature-positive products such as green loans, bonds, insurance and investment instruments.
Biodiversity budget tagging
Malawi became the first African country to adopt biodiversity budget tagging, enabling the government to systematically identify and track biodiversity-positive expenditure and strengthen the case for increased public investment. Biodiversity considerations have been integrated into programme-based budgeting across natural resources, agriculture, ecotourism, water and local government performance frameworks.
The experience demonstrates how budget tagging can help Ministries, Departments and Agencies generate better evidence on biodiversity spending and advocate for resources within the national budget. A key next step is to extend the approach to local councils and better connect local and central financial systems. This would strengthen national reporting and generate more precise biodiversity expenditure data through government financial systems, supporting more transparent and evidence-based financing decisions.
Malawi officially joined UNDP BIOFIN in 2018, with implementation beginning in October 2019. Since then, the country has completed the full BIOFIN assessment process, building a comprehensive evidence base for biodiversity finance and translating its findings into a Biodiversity Finance Plan.
The Policy and Institutional Review (PIR) found that Malawi has a generally favourable policy and institutional framework for biodiversity finance, while identifying challenges including fragmented budgets across sectors and limited awareness of the economic and social importance of biodiversity.
The Biodiversity Expenditure Review (BER) found that approximately US$164 million was allocated to biodiversity-related initiatives between 2015 and 2020, equivalent to 1.3% of total public expenditure. National resources accounted for 83% of this spending. However, biodiversity expenditure as a share of public spending declined from 2.3% in 2016 to 0.9% in 2020.
The Financial Needs Assessment (FNA) estimated that approximately US$93 million would be required to implement the National Biodiversity Strategy and Action Plan II (2015–2025). Reducing direct pressures on biodiversity represented the largest financing requirement, at approximately US$34 million.
Building on these assessments, Malawi developed its Biodiversity Finance Plan (BFP), identifying priority finance solutions to mobilize resources from public and private sources and improve financing for protected and conserved areas, ecosystem restoration and other biodiversity priorities. The plan also supports the Malawi 2063 vision of becoming an “inclusively wealthy and self-reliant nation” by strengthening the use of economic and financial instruments for biodiversity.
UNDP BIOFIN has also supported institutional and technical capacity to access and manage biodiversity finance, while strengthening collaboration between environmental and finance institutions. This includes work to promote biodiversity-friendly fiscal policies, explore the repurposing of harmful subsidies, and integrate nature-related considerations into financial regulations and instruments.
