Our economy is highly dependent on the health of nature. The World Economic Forum reports that over half of the world’s GDP is moderately or highly dependent on ecosystem services. At the same time, the current state of nature is on the brink of reaching a functional collapse as biodiversity planetary boundaries (i.e. the loss of biosphere integrity) has been transgressed as a consequence of human activity. While no amount of money could be the panacea to our humanity’s broken relationship with nature, this mapping exercise assessed the state of governments’ expenditure on environment protection (as % of GDP) on the background of their countries’ biodiversity richness (i.e., the total count bird, amphibian, fish, mammal, reptile, and plant).
A mismatch between the level of biodiversity richness and environment-positive expenditure
Figure 1. Overlaying of biodiversity richness and of government expenditure on nature-positive activities by 106 countries and territories. This mapping exercise draws on two data sets that are publicly available online: Government expenditure on environmental protection (IMF,2021) and Biodiversity richness (Global Biodiversity Index, 2021). It should be noted that not all spending was dedicated to biodiversity conservation/ protection directly, much was directed to the mitigation of biodiversity loss through activities such as waste and wastewater management, pollution abatement etc.
Our mapping highlighted a global mismatch between the level of biodiversity richness and environment-positive expenditure. Specifically, big spenders on nature-positive activities were mainly least to medium biodiverse countries, while most biodiverse countries spent the least on nature, with an exception for Australia whose rich nature and biodiversity scene received a proportionate amount of government spending.
- Out of 15 countries with the highest biodiversity index, only 1 country was a big spender (Australia with over 1% of GDP), and 2 countries were medium spenders (Colombia and China spent over 0.5% of GDP).
- Out of 15 countries with the highest spending on the environment, 13 countries had low biodiversity index. Only 2 countries had a medium and high biodiversity index (Japan and Australia at 153.58 and 337.18 points respectively).
However, the correlation between biodiversity richness and nature-positive expenditure must be taken with a grain of salt, as a low biodiversity index score does not only mean that the territory is inherently less biodiverse (due to geographical location), but it also means that natural capital in that area had been severely damaged by human activities by the time of calculation.
Overall, on a global scale, 58% of 106 countries spent under 0.5% of their GDP on protecting the environment. On a regional scale, 4 regions (Asia, Africa, North America, and South America) mainly consisted of countries spending less than 0.5% of GDP on the environment while hosting the majority of the world’s biodiversity. This trend points to the need to focus on regions and countries that are not big spenders on nature yet.
The way forward
The BNEF latest Biodiversity Finance Factbook developed a weighted framework containing 3 criteria to help channel biodiversity restoration and preservation funding priorities to countries that need it most. This factbook confirmed our call to focus on the triple-A regions (Asia, America, and Africa) with Brazil, China, Indonesia, Congo (DRC), and India being the top 5 funding priorities.
Based on this mapping, we encourage UNEP FI members and other financial institutions to identify where their investments and operations are and whether they occur in areas with high biodiversity richness and low government expenditure on nature. Below are some additional take-aways and recommendations:
- Blended finance, or private finance sources such as biodiversity offsets and credit markets should be considered a key instrument in tandem with government expenditure. Financial institutions can join the Biodiversity Credit Alliance, supported by UNDP, UNEP FI and SIDA, to be the pioneer in the formulation of a credible and scalable biodiversity credit market under global biodiversity credit principles.
- The lack of data on nature-positive expenditure from private sectors also calls for attention to a more robust mechanism for reporting and disclosure. To support the shift of financial flow to nature-positive investments, the UNEP FI-led Taskforce on Nature-related Financial Disclosures (TNFD) pilots have been working with over 50 financial institutions to test the draft versions of the TNFD framework by trying out the integration of nature-related risks and dependencies into their internal risk assessment. Interested financial institutions are encouraged to pilot test and engage in the development of the TNFD to have their expertise and experiences heard in the development of a disclosure framework for organisations to report and act on evolving nature-related risks.
- Private investors in nature-positive programmes should also consider the different characteristics of financial institutions in different regions and their appetite for long-term investment in biodiversity conservation and restoration (e.g, private investors in emerging economies might not have as big of an appetite for long-term investment in nature-positive activities as their counterparts in the global north). Therefore, the new UN-convened bank-led working group is expected to help banks around the world align their investment portfolios with the Kunming-Montreal Global Biodiversity Framework (GBF) adopted in December 2022 to close the biodiversity financing gap while upholding the rights of indigenous peoples and local communities.
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