An IntroductionTO innovativeFinancial Mechanisms How to raise $140 billion for natural capital Charlie Parker Head of Policy Global Canopy Programme
overview Why are IFMs important? How much do we need? How much are we currently spending? What is the future scale of finance? Conclusions
Why are IFMS important? There is currently a shortfall in biodiversity finance Traditional forms of finance (ODA, philanthropy) are often seen as not being able to fill the gap IFMs can engage with the private sector IFMs may internalise the externality of biodiversity loss BUT Political challenges to their implementation What do we mean when we are talking about IFMs?
What are the CostsOf Conservation? Global Canopy Programme
IFMs under the cbd Under Decision IX/11B there are six sources of finance for biodiversity Payment for ecosystem services Biodiversity offset mechanisms Environmental fiscal reforms Markets for green products Biodiversity in international development finance Biodiversity in climate change funding
Previous studies Gutman (2003) From Goodwill to Payments for Environmental Services Presents 52 financing options Broken down across six sources Public Private not-for-profit Private for-profit Payments for environmental products Payments for environmental services “You may need less money than you think”
Previous studies Gutmanand Davidson (2008) A Review of Innovative International Financial Mechanisms for Biodiversity Conservation Prepared for COP 9 of the CBD Presents 61 traditional and innovative financing options Broken down across four categories Government sources Voluntary sources Markets and Businesses International Payments for Ecosystem Services
The Little BiodiversityFinanceBOOK A guide to proactive investment in natural capital (PINC)
Think PinC Prepared for COP 10 Broken down into three sections: Generation Delivery Institutional Arrangements Presents 18 traditional and innovative mechanisms
Overarching Framework … Financial mechanisms can be broken into three components:
Generation mechanisms Based on core CBD principles of adequacy, predictability and timeliness Broken down across four criteria Scale: How much? Timeframe: When? Level: At what level? Market: From where?
Generation mechanisms Based on core CBD principles of adequacy, predictability and timeliness Broken down across four criteria Scale: How much? Timeframe: When? Level: At what level? Market: From where? Four options: Direct, Indirect, Other, Non Market
MARKET criteria Direct mechanisms Generate finance directly from the provision of an ecosystem service or biodiversity Usually local in scale Require strong regulation to scale up Examples Forest carbon market, direct PES mechanisms
MARKET criteria Indirect mechanisms Raise finance by tangibly linking the value of biodiversity and ecosystem services to more traditional markets Larger scales are achievable Require some form of demand side regulation Examples Green commodities (FSC, Shade grown coffee) Ecotourism Natural Capital Bonds
Generate finance from markets that are not linked to biodiversity and ecosystem services Even larger scales are possible Politically challenging, requires coordination Examples Maritime or aviation tax or levy, Financial Transaction (Tobin) tax Auctioning allowances
More traditional mechanisms that generate revenue from non-market sources of finance Less predictable than other sources of finance Require political will to scale up Examples ODA Philanthropy Subsidy reform
indirect Non- Market Direct Other Additional Sources What are the new and additional sources of finance?
Other Markets for green products Biodiversity in climate change funding Environmental fiscal reforms Biodiversity in international development finance Biodiversity offset mechanisms Payment for ecosystem services
Conclusions There is a shortfall in finance of $ hundreds of billions There are a range of mechanisms that are available These mechanisms have different levers to scale up Direct: Regulation Indirect: Demand Other Market: Coordination Non Market: Political will To reach finance at scale we need to use all mechanisms.
Thank You For more information visit www.globalcanopy.org Charlie Parker firstname.lastname@example.org