An expenditure review is a standard diagnostic tool used across many sectors to help understand how much money is spent within specific sectors or themes, whether budgets and expenditures are aligned with national policy priorities, and what the expenditures have achieved.
Expenditure reviews traditionally focus solely on the public sector (see Box 4.1). Due to the multiplicity of stakeholders in biodiversity, the BER scope needs to go beyond public spending and possibly encompass expenditures from the private sector and civil society, and ODA. National cumulative expenditure figures are useful for biodiversity policy and management planning purposes and can be used for the CBD (being one section of the Financial Reporting Framework), SDGs, donor, and national reporting. The BER ultimately helps develop a biodiversity budget coding protocol and tagging system, which may result in greater or more effective budget allocations. A systemic approach can help countries record and track the amount of money spent on biodiversity over time. For example, the budget coding of climate expenditures in Indonesia led the government to issue a US$1.25 billion green sukuk connected to the climate expenditures identified in the national budget.
Box 4.1: Public Expenditure Reviews in Other Sectors
Indonesia conducted a public expenditure review (PER) on the health sector. The PER included the following elements: desired health outcomes in the country; the existing health care delivery system; trends in national public expenditures in health by various types of classifications; an assessment of the efficiency and quality of health-related finance; and summary recommendations for various types of health finance reforms.4
Other areas where expenditure reviews were applied include climate;5 poverty eradication;6 education7 and the environment.8 They are often linked with policy and institutional reviews as part of an overall assessment of policies, institutions, expenditures and finance within a sector.
It is important to consider the extent of subnational expenditures (e.g. state, province, and local/municipal) in biodiversity. In countries such as South Africa with decentralized systems, a significant proportion of public budgets is distributed to subnational authorities. Fiscal decentralization might have delegated subnational authorities to manage and spend certain revenues on their own accounts. Due care should be taken to avoid double counting as expenditures can be posted at multiple levels. In some cases, site-based (e.g. protected areas systems) expenditures should also be reported if they are based on locally acquired revenue (entrance fees) that are not accounted for elsewhere.
The BER is designed to compare 1) budgets, 2) allocations, and 3) actual expenditures to determine how resources are disbursed and spent. The BER should also evaluate expenditures against government budgets, revenues, GDP, and sector contributions to GDP, among others. Ultimately, the analysis derived from the BER can be used to address fiscal sustainability and policy alignment concerns as well as efficiency and effectiveness, all of which are important inputs to the BFP as described in Chapter 6.