Welcome to the Conservation Finance Guide. The overall goal is to provide practical tools to support the rapid expansion of sustainable finance mechanisms that generate long-term funding for biodiversity conservation.
Welcome to the Conservation Finance Guide. The overall goal is to provide practical tools to support the rapid expansion of sustainable finance mechanisms that generate long-term funding for biodiversity conservation.
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To navigate directly to a Category of Finance Mechanisms within “Grants and Other Transfers”
Grants and other transfers are finance mechanisms that enable financial flows from sources of finance to recipients or beneficiaries seeking funding for sustainable development and conservation objectives. Unlike other investments, this finance is provided with either no expectation of financial return to the finance source or below-market concessional rates of financing. This includes philanthropic finance as well as remittances or other forms of financial transfers with development or conservation objectives.
To navigate directly to a Class of Finance Mechanisms:
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Bilateral and Multilateral ODA is described as “resource flows to countries and territories on the DAC List of ODA Recipients (developing countries) and to multilateral agencies which are: (a) undertaken by the official sector; (b) with promotion of economic development and welfare as the main objective; (c) at concessional financial terms. In addition to financial flows, technical co-operation is included in aid. Grants, loans and credits for military purposes and transactions that have primarily commercial objectives are excluded. Transfer payments to private individuals (e.g. pensions, reparations or insurance payouts) are in general not counted.” (OECD, accessed November 21th, 2019). In effect, ODA is a means by which countries can support economic development in other countries through financial or technical transfers. Historically ODA has accounted for about 12% of global conservation financial flows (Parker et al. 2012).
Specific global and national data and information on bi-lateral aid for biodiversity can be found on OECD’s page for External Development Finance Statistics. Germany, through its development bank, KfW, is one of the greatest individual contributors of ODA specifically for conservation and have reviewed their investments in biodiversity. Multilateral development banks such as the World Bank and multilateral funds such as the Global Environment Facility (GEF) provide grants and grant like concessionary financing for a wide range of environmental initiatives including conservation.
Increasing Official Development Assistance (ODA)
Increasing ODA flows through better programming and delivery, training on grant preparations or other targeted efforts. Official agencies, including state and local governments, or their executive agencies channel aid to recipient countries with the objective to address environmental challenges. The donor(s) transfers financial resources to awarded programmes and projects directly or indirectly through accredited agencies, private companies, and civil society organizations (NGOs). Although the most common disbursement is grant financing, funding may come in a variety of forms, including concessional loans, guarantees and equity. For the latter modalities in particular, OECD guidelines can be applied to define the type of aid provided.
Aid Coordination Strategies
Aid coordination strategies (and/or institutions) can help to improve and guide strategic proposals as well as deliver resources in a more effective manner. Aid coordination strategies are usually established at national and sector levels (e.g. environment)
Increase in biodiversity related bilateral ODA
ODA may be provided bilaterally, from donor to recipient. Biodiversity may be featured in bilateral donor strategies (e.g. Germany or Norway) but priorities vary greatly and change frequently among donors. Additional allocation usually requires the provision of evidence for results and political lobbying. Priorities can be negotiated both nationally and internationally.
Increase biodiversity component of Climate Aid
Biodiversity related financing within official public assistance provided for climate change mitigation and adaptation. Public climate finance is counted separately from general ODA due to the promise of additionality made by developed countries in climate agreements. Biodiversity may be featured in climate donor strategies more prominently (e.g. Germany or Norway) as clear co-benefits exist with climate adaptation and in many cases with mitigation measures as well. Additional allocations to biodiversity require evidence for climate results out of biodiversity focused interventions (e.g. ecosystem based adaptation) and political lobbying. Climate finance is delivered bilaterally (e.g. German International Climate Initiative-IKI) and multilaterally (e.g. the Green Climate Fund).
Multilateral ODA
Biodiversity related financing in ODA channelled through a multilateral development agency such as the United Nations or the World Bank. Biodiversity may be featured in multilateral donor strategies. Additional allocation requires the provision of evidence for clear results and political lobbying. Priorities are negotiated both nationally and internationally. The Global Environment Facility and the Green Climate Fund are among the largest multilateral providers.
Other Official Flows
Biodiversity related financing from Other Official Flows (OOF) i.e. official sector transactions that do not respect OECD classification criteria as ODA. They can include, for example, loans with a grant element of less than 25 percent. While not specific to biodiversity, OOF financing can be also considered for certain conservation organizations.
Debt-for-Nature Swaps
Through debt restructuring agreements, governments are able to write off a proportion of their foreign held debt. The savings accrued will be channeled into domestic conservation initiatives and climate adaptation programmes. This often entails the establishment of a Conservation Trust Fund to channel the funds. Debt-for-nature swaps can target both official and commercial lending, with the former being the most common scheme.
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Philanthropy is primarily financial transfers from private and corporate donors to beneficiaries with the intention of contributing to sustainable development including conservation. In addition to grants and concessional finance (below market rate or enhanced conditions), this would include corporate volunteerism and technical support.
Examples of major philanthropic organizations that have contributed to conservation include the Gordon and Betty Moore Foundation, the Walton Family Foundation, the Packard Foundation, Pew Charitable Trust, and many others. An example of a specific conservation program or campaign supported by philanthropy includes the Vibrant Ocean Initiative (previously termed 50 Reefs) to which Bloomberg Philanthropies has pledge $86 million.
Corporate and corporate foundations’ donations
Corporations provide support to organizations implementing sustainable development including nonprofits through direct-giving programs, private foundations, and/or public charities. As well, companies can also offer their employees' time by encouraging employee volunteerism. A foundation can be established as part of a company's corporate social responsibility (CSR) strategy and be funded via the allocation of a percentage of accrued profits, an endowment or other means. Annual giving could range from a few hundreds thousands of dollars to hundreds of millions. They may or may not have a specific mandate or geographic coverage. Some companies and corporate foundations have a focus on biodiversity and conservation.
Mobilization of private donations
Nature and conservation receive large amount of resources from private donations and philanthropies. Different fund-raising strategies and marketing campaigns are used by non-governmental organizations and conservation societies to raise funding from private citizens including memberships, fundraising events, etc.
Aid Coordination Strategies
Aid coordination strategies (and/or institutions) can help to improve and guide strategic proposals as well as deliver resources in a more effective manner. Aid coordination strategies are usually established at national and sector levels (e.g. environment).
Increase biodiversity component of climate aid
Biodiversity related financing within official public assistance provided for climate change mitigation and adaptation. Public climate finance is counted separately from general ODA due to the promise of additionality made by developed countries in climate agreements. Biodiversity may be featured in climate donor strategies more prominently (e.g. Germany or Norway) as clear co-benefits exist with climate adaptation and in many cases with mitigation measures as well. Additional allocations to biodiversity require evidence for climate results out of biodiversity focused interventions (e.g. ecosystem based adaptation) and political lobbying. Climate finance is delivered bilaterally (e.g. German International Climate Initiative-IKI) and multilaterally (e.g. the Green Climate Fund)
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Formal and informal financial transfers between countries that are targeted for sustainable development or conservation - Remittances are defined as “a sum of money sent in payment or as a gift.” (Lexico, accessed January 10th, 2020). One example of the potential impact of remittances for conservation an example in El Salvador, where remittances were found to have positive benefits for reforestation.
Remittances
Private transfers from a migrant worker (i.e. living in a foreign country for one year or longer) to a receiver (often but not limited to family) in his/her country of origin. When remittances are not used to respond to immediate consumption needs, they can be saved and invested at the benefit of the local economy/ community/ environment of the worker’s country of origin. Diaspora bonds, saving products and investments are all available instruments to channel resources towards conservation and other sustainable development investments.
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Conservation Trust Funds (CTFs) are defined as “private, legally independent institutions that provide sustainable financing for biodiversity conservation.” (Conservation Finance Alliance, 2014). CTFs provide financing for a range of environmental actions often supporting protected areas, sustainable livelihoods, and other conservation related goals. The more general term “Environmental Funds” is used to describe CTFs and government managed funds, as wel,l such as forestry funds and other funds earmarked for environmental efforts. Two resources for case examples and additional valuable information on these CTFs include: (1) RedLAC, the Latin American and Caribbean Network of Environmental Funds, and (2) CFA’s Environmental Funds toolkit.
Water Funds
Trust Funds
Legal vehicle (trust) that supports biodiversity by mobilizing, blending, and overseeing the allocation of financial assets. It is a country-driven solution that should feature a clear focus, a rigorous project approval and implementation process, solid monitoring and evaluation frameworks, and strict control over asset/financial management and investment. The term encompasses conservation funds, carbon funds and other environmental funds. They can be regional, national or sub-national. Common type of capital structures include endowment, sinking and revolving funds.
Climate, Carbon and Forestry Funds
Legal vehicle (trust) that supports climate priorities by mobilizing, blending, and overseeing the allocation of financial assets. It is a country-driven solution that should feature a clear focus, a rigorous project approval and implementation process, solid monitoring and evaluation frameworks, and strict control over asset/financial management and investment. The term encompasses carbon sequestration funds. Climate and biodiversity are strongly related with well known ecosystem-based solutions for both mitigating and adapting to climate change.
Air Pollution Funds
Legal vehicle (trust) that supports environmental priorities by mobilizing, blending, and overseeing the allocation of financial assets for combating air pollution.
Protected Areas Trust Funds
Environmental Trust Funds established for the financing and support of individual protected areas, regional groupings of protected areas or entire protected areas systems. Funds can be local, national, or include several countries.
Oil and Gas and Other Natural Resource Revenue Funds
Legal vehicle (trust) that supports environmental priorities by mobilizing, blending, and overseeing the allocation of financial assets for generated from revenues or fees associated with non-renewable and renewable natural resources managed as a trust fund.
Regional Trust Funds
Legal vehicle (trust) that supports biodiversity by mobilizing, blending, and overseeing the allocation of financial assets at the regional level. Examples of regional environmental funds are found in the Caribbean, Central Africa and Pacific regions.
Payment for Ecosystem Services
Beneficiaries/users of an ecosystem service, such as water regulation, make a direct or indirect payment to the provider of that service in exchange for service provision and maintenance. This "user pays" concept implies that whoever preserves or maintains an ecosystem service should be paid for doing so. Beneficiaries/users of an ecosystem service can make a direct payment to the provider of that service through a private contract or an indirect payment through the intermediation of the State who charges the users through a tax or fee. Payments for ecosystem services are mostly found in the water, forest, agriculture and energy sectors. Also known as "Payment for Environmental Services"
Payment for Ecosystem Services - Private to Private
Beneficiaries/users of an ecosystem service make a direct payment to the provider of that service. The system can be voluntary using a private contract. Payments are mostly found in the water, forest, agriculture and energy sectors. For example, Nestle (formerly Vittel) pays farmers to refrain from using chemicals in north-eastern France and the City of New York pays farmers and other land owners to protect watersheds in the Catskill mountains, thus saving billions of dollars by avoiding the construction of major water treatment systems.