The FNA seeks to estimate the financing necessary to achieve the CBD strategic plan and the related SDGs in a country. This cost estimation is only one part of the “finance” equation. By far the greatest indirect cost for biodiversity stems from needing to slow, stop or reverse the human activities that degrade or decrease natural ecosystems. Many of these are also financed by governments, donors and private companies (see Chapter 1). These issues were identified in the PIR (Chapter 3) and can be addressed in the BFP (Chapter 6). The direct costs identified in the FNA do provide a useful target for spending on biodiversity and the natural questions are: “How much of this target is currently covered and how much do we need to raise?” This section explores challenges and options related to answering these questions.
It is tempting to compare the results of the BER projections (Chapter 4) with the FNA results to determine the gap between financing needs and expenditure projections. Although this approach may result in a “financing gap” estimate, the comparison may be misleading and likely to produce a false estimate of the gap. In a few cases, a “surplus” may result from the comparison despite well-reported and substantial financing needs.
The BER and the FNA are most often not fully comparable. The BER seeks to estimate all biodiversity expenditures in the country, including secondary expenditures where biodiversity is not a primary objective. Firstly, although biodiversity strategies may include some secondary costs—such as pollution control in ecologically sensitive rivers—they are, for the most part, limited to only a subset of a country’s biodiversity actions. Secondly, many of the routine biodiversity management activities—protected area management, environmental inspection, etc.—are not considered “activities” in the NBSAP, or in green national development plans, because the latter tends to focus only on incremental activities and changes to the status quo. So, while the BER seeks to capture the status quo, the FNA instead seeks to capture the additional costs needed to change the status quo. These different approaches need to be reconciled for any meaningful comparison.
Avoid comparison altogether (not recommended)
Make one-on-one comparisons for specific activities in the FNA (recommended)
Reduce the BER results to only those well-captured in the FNA (recommended only if BER data is of high quality)
FNA reflects unmet needs - Avoid comparison altogetherThe most straightforward approach is to assume that the biodiversity strategies costed are incremental and thus, except for specific financing identified for specific actions, the entire FNA directly reflects unmet financing needs. To implement this approach, each activity is reviewed and identification of existing funding sources are determined and quantified. The gap is focused on each activity and the total can be calculated once the exercise is complete. This approach would not lead to a true national biodiversity finance needs calculation, but only a baseline measurement for an NBSAP.
FNA-focused - Make one-on-one comparisons for specific activities in the FNAIn this approach, the costs in the FNA and the expenditures in the BER (Chapter 4) are categorized by the FNA actions. For each FNA action, the BER can be examined to determine if there is a corresponding expenditure(s) closely tied to that action. The expenditure(s) is then tagged to a specific FNA action. This approach will be most effective when the BER is organized by programmes and results. If the BER is based on agencies, FNA actions should also be tagged to agencies. Even with a close tagging of agencies, it is unlikely that the costs of FNA actions and the expenditures for the agencies will be well-aligned. Moreover, even with the most detailed programme budgets and expenditures, establishing how each programme may be linked to specific (NBSAP) actions can be time-consuming and difficult to defend, as programme descriptions do not conform to the (NBSAP) actions. Still, this technique has the potential to produce good results and may offer a more robust planning tool if executed well. In an optimal scenario, the BER would be developed first, followed by the NBSAP (if it aims for a comprehensive national perspective and not only incremental activities) and finally the FNA. This ensures strong alignment from the start. In practice most countries develop their NBSAP first.
BER-focused - Reduce the BER results to only those fully captured in the FNA.An alternative to the above approach is reducing the BER to include only the expenditures linked to the FNA. This is similar to the above approach, but the categories are based on the BER and not the FNA actions. Again, this solution is dependent on the quality and level of detail of the original data that went into the BER, and on the quality of the BER tagging system. The use of BIOFIN categories to link the BER and the FNA will be further explored, although it involves similar misalignment risks as those discussed above. This approach will probably narrow the types of solutions considered in the BFP, and substantially underrepresent the overall level of investment required to meet biodiversity investment needs.
In comparison to the aspirational costing of the biodiversity targets, it may be useful to establish a more pragmatic or “budgetary” costing. The actual or “budgetary” FNA is a budgeting exercise that identifies what financial, human, physical and political capital is needed to implement the prioritized costable actions identified in the NBSAP, or other focal planning document, and, potentially, to be financed or addressed by finance solutions through the BFP. If the aspirational FNA is considered unrealistic or politically infeasible, then the conversion of the costing exercise into a budgeting exercise can produce a more realistic and marketable target amount.
This revised FNA can be used to trace a logical framework from results or actions back to the needed resources. However, the more reduced needs identified here are not likely to solve the national biodiversity finance crisis, as it aspires to do what is politically feasible (realistic budget), not what is ecologically sufficient or optimal.
Finally, existing studies on the finance gap dwell on the difference between optimal and current spending in the case of protected areas or the gap between finance needs and finance sources. To close the gap, finance sources must be identified and mobilized. The BIOFIN methodology nurtures resource mobilization for biodiversity, but it suggests a unique narrative: Closing the gap will involve not only the expansion of finance sources, but lowering future needs by improved prioritization of budgetary outlays, cost-effectiveness measures and preventive actions to avoid future expenditures. Bear in mind that even if the finance gap cannot be estimated, the evidence from the BER and FNA will be instrumental for the BFP formulation.