5.2.1 Terminology and principles

The terms used in this chapter have some established meanings within public finance, but they can mean different things to different stakeholders. This section clarifies key terms and the Glossary defines others.

First, the detailed costing outlined in the FNA could be termed a “bottom-up” approach in comparison to the CBD High-Level Panel “top-down” financial needs assessment (see Chapter 1), but the term bottom-up budgeting can also refer to local administrative budgeting. The FNA focuses on direct costs or financial costs unless explicitly stated. This contrasts with an economic definition of costs, which, in addition to financial costs, can include indirect costs and welfare implications (such as “opportunity costs”; see Appendix III on Cost-Benefit Analysis). While BIOFIN recommends the use of cost-benefit analysis (or other multivariate approaches) to build a case for biodiversity investments, the FNA does not require it.

Certain actions must be translated into detailed “costable actions” to achieve the level of detail needed for accurate costing. Costable actions can be defined as “specific actions or activities that seek to achieve a clear or quantified result, the estimated cost of which can be calculated based on their description, research, or expert opinion”.

Finally, BIOFIN encourages the use of the term “investment” in biodiversity to highlight that resources allocated to biodiversity management are not simply costs without returns. Budget allocations to biodiversity management can protect or enhance natural assets that provide future economic benefits, similar to investments in infrastructure or health care. However, the term investment also refers to capital expenses as compared to recurring or operating expenses in the budget.

BIOFIN encourages FNA to be:

  • Comprehensive – to cover all aspects of sustainable biodiversity management even if it requires the scope to go beyond national biodiversity strategies.

  • Accurate – to be based on justifiable costs and actions directed specifically at achieving identified results.

  • Detailed – to organize actions under targets or results, and results under strategies.

  • Prioritized – to rank activities or results in terms of: 1) importance for achieving national biodiversity vision and targets, 2) potential net benefits of the investment, and 3) other national priorities.

  • Aligned – to be compatible with national budgeting processes and public financial management provisions to enable effective results uptake.