The answer to the biodiversity crisis is not more debt

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The Alichur Valley in Tajikistan is one of a number of environmentally sensitive areas that researchers believe could be affected by China’s Belt and Road Initiative.Credit: Alamy

Finally, the financing of biodiversity is attracting attention.

In September, nine philanthropic organizations, mostly in the United States, pledged a total of US $ 5 billion over a decade for projects that will help preserve the richness of terrestrial species.

This month, Chinese President Xi Jinping announced the allocation of 1.5 billion yuan ($ 235 million) to the new Kunming Biodiversity Fund. This will aim to fund projects, such as protected areas, which will help slow and possibly reverse the loss of species and ecosystems.

More details are expected from China, as well as additional information on a pledge made by the European Union to double its funding for biodiversity. Contributions to the Kunming Fund should be made in the form of grants, not loans; they should have a research component; and they should be shared and managed by international organizations. In addition, access rules must be transparent and fair for all applicants. These are important factors to highlight, as there appears to be a tendency to provide environmental finance in the form of loans, many of which go to some of the world’s poorest countries, which are often already heavily indebted.

The pledges were timed to coincide with the first part of the United Nations conference on biodiversity, hosted by China, COP15, which ended on October 24. Collectively, the sums, while not insignificant, will represent just over a 1 to 2 percent increase from the roughly $ 133 billion a year the world currently spends on biodiversity. More than half of this is spent by China, the EU, Japan and the United States.

Spending on biodiversity must increase in all regions, according to a United Nations Environment Program report released in May (see go.nature.com/3ekaopk). For comparison, the money earmarked for tackling climate change stood at $ 632 billion per year in 2019-2020, according to a Nature analysis (Nature 598, 400-402; 2021).

Reasons why biodiversity finance is lower than its climate cousin include a relative scarcity of finance in low- and middle-income countries and the fact that more than half of all climate funds take the form of loans. Public and private investors know that by funding projects such as solar power plants or battery research and development, they are likely to see a return on their investments. In contrast, protecting a watershed or wetland is more of a public service and is therefore more likely to be financed by taxation. Partly because of this, some 86% of biodiversity funding currently comes from public sources, in the form of grants.

But that could be about to change. Researchers, companies, bankers and policy makers have explored how to create financial investment products – from private and public sources – in biodiversity, as well as how to better protect nature from the negative environmental impacts of large scale projects. ‘infrastructure. Most industrial sectors depend to some extent on biodiversity. Food producers, forestry, clothing manufacturers and hydropower, for example, would all struggle with healthy soils, pollinators or predictable water supplies. If nature continues to deteriorate, the world’s economic output will begin to suffer sooner or later.

One idea under consideration is how to create an internationally agreed reporting system so that any entity – a bank, government or business – needs to publish data indicating whether their investments could cause ecological damage. Such disclosures would likely make financiers think twice before making investments that could be harmful to the environment. Earlier this year, an organization called the Taskforce on Nature-related Financial Disclosures began working to develop such a system. It is co-chaired by Elizabeth Mrema, the executive secretary of the secretariat of the United Nations convention on biodiversity, and is based in Montreal, Canada.

Another idea under consideration is called Nature Performance Bonds (NPB). Under this model, indebted countries would be eligible for more favorable loan repayment terms if they could commit to spending the money saved on environmental protection.

Last month, a study commissioned by the China Council for International Cooperation on Environment and Development, an organization of policymakers that advises the Chinese government, recommended that China become a world leader in NPBs (see go. .com / 3pekzk7). The study says some 52 low- and middle-income countries owe China a combined total of more than $ 100 billion in loans. These include loans for projects forming part of China’s Belt and Road Initiative (BRI) aimed at modernizing energy sources, roads, railways and airports, mainly in airports. low and middle income countries. Many of the BRI’s investments in China are made in environmentally sensitive areas.

The terms of China’s $ 235 million biodiversity announcement have yet to be confirmed. But it would be wise for this funding not to be linked to the debts of countries whose biodiversity is affected by BRI projects. Otherwise, it would seem that the main motivation of China is the greening of its own investments, while as host of the COP15, it must think and act more globally, and work towards the creation of a fund by and for all nations.

The Kunming Biodiversity Fund should be an autonomous grant fund, ideally managed by a mechanism involving all countries, and with transparent access rules. It must also have a dedicated research component, which is not possible with loan funding. And other nations must contribute.

The need for research funding is particularly acute. There are often few funding opportunities from national research organizations for researchers in low- and middle-income countries rich in biodiversity. The official UN donor for biodiversity, the Washington DC-based Global Environment Facility, does not have a dedicated research center. It funds some science, but this is part of a small grants program (see go.nature.com/3mgu8io) that is primarily focused on funding conservation.

It is clear that biodiversity will be more financed. But loan funding should not crowd out or replace grant funding. There is a precedent for this. This is already the case in climate finance, for which the long-delayed $ 100 billion pledged to be delivered to low- and middle-income countries each year will mainly be in the form of loans.

A radical change in financing for biodiversity is needed and the Kunming Biodiversity Fund will be a step in the right direction. But it will be unfair if most of the funding pledged ends up going into loans. Finding an answer to the biodiversity crisis should not mean that the poorest countries have to take on more debt.


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