A centralised private sector biodiversity fund could help achieve global nature targets without the need to develop biodiversity credit mechanisms, according to a research group.
Switzerland-based Enterprise for Society Center (E4S) reckons the proposed vehicle could operate as a singular mechanism to drive funding into critical biodiversity hotspots.
A financial mechanism could be set up for the private sector to enable companies to directly contribute to the global biodiversity funding goals outlined under the Kunming-Montreal Global Biodiversity Framework (GBF), according to E4S researcher Edoardo Chiarroti.
“There is a political agenda right now to work on biodiversity credit markets, but you need some centralisation, because if the Amazon rainforest is dying you need to go for that,” Edoardo Chiarroti, a researcher at E4S, told Carbon Pulse.
“The GBF fund that was announced is designed for countries to pay into, using taxpayers money, but we need to think of ways for the private sector to chip into that.”
The GBF fund was officially launched by the Global Environment Facility in August but received just two donations from Canada and the UK, who donated $147 mln and $10 mln respectively.
This fell short of the $200 mln needed to cover its core costs. The fund is designed as a multilateral initiative to support countries in implementing biodiversity projects that meet targets set by the GBF and translated to countries through their National Biodiversity Strategies and Action Plans.
A further €40 mln donation was provided late in September by Germany, which just took donations over the setup threshold. However, no further donations have yet flowed into the fund that could be disbursed to countries.
Chiarotti contends that by enabling the private sector to pay into the fund, this may get more traction and have better outcomes for biodiversity.
“We know that offsetting biodiversity will make up a piece of the $200 bln global target that the GBF set out, but it’s too fragmented to track … with an overall private sector fund then it’s more centralised to specific restoration targets.”
Any such fund would be well placed to provide a centralised view and finance to where nature needs it most, such as key biodiversity hotspots, where the money could then be allocated against global restoration targets, contends Chiarotti, adding that it would need to align with national regulation and ensure that companies weren’t paying twice unless they chose to.
Earlier this year, E4S released a pilot study where it outlined a methodological costing approach for a project at a mining site, and alluded to how a fund could work.
The paper took a mining site in Peru and used satellite imagery to review vegetation change and calculated historic restoration compensation costs. The study priced restoration activities that a company would need to pay into the fund to compensate for the localised loss.
E4S’s costing model looks at the cost of restoration rather than the value of ecosystem services generated by specific habitats, which Chiarotti said can become more technically challenging to estimate in certain contexts.
A centrally managed fund in this context could not only provide a route for present-day compensation, where localised biodiversity offsetting is not mandated but could also provide a route for historic compensation, he said.
But Chiarotti acknowledges that to get the fund off the ground, a lot of work is needed to better understand various ecosystem types and get accurate costing information in a transparent way.
“In the best case scenario, what we would need to have is a restoration project in the same sort of region, and see how much it costs to restore the same types of habitat.”
Digital platform Restor, a spin-out of university ETH Zurich, could be used by project developers to submit project and financial information, so costs and price of restoration could be transparently accessed, Chiarotti told Carbon Pulse.
By Tom Woolnough – tom@carbon-pulse.com
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