Increase in global biodiversity funding largely driven by loans, OECD finds

Published 12:37 on September 18, 2024  /  Last updated at 12:37 on September 18, 2024  / /  Biodiversity, International

Biodiversity funding hit $25.8 billion globally in 2022, the highest level since 2015, although the increase was largely driven by loans provided by multilateral institutions rather than grants, according to the OECD.

Biodiversity funding hit $25.8 billion globally in 2022, the highest level since 2015, although the increase was largely driven by loans provided by multilateral institutions rather than grants, according to the OECD.

The organisation on Wednesday published an overview of the main trends in funding towards biodiversity-related objectives for the period 2015-22.

On average, funding from all sources stood at $15.5 bln annually over the assessed eight-year period, showing an increase of 136% in 2022 compared to 2015.

According to the analysis, the growth was largely driven by a significant increase in multilateral institutions’ commitment, including multilateral development banks (MDBs), representing a 123% jump from 2021 to 2022.

Overall, multilateral biodiversity-related finance was mainly deployed through loans (70%) followed by grants (28%).

Source: OECD

The disproportion is particularly evident in Asia, where loans made up 84% of the total, Latin America and the Caribbean (81%), and Europe (72%).

While most of the multilateral biodiversity-related finance was allocated to agriculture (22%), general environment protection (16%), and water (13%), none of the investments in these three sectors had nature preservation as their primary focus.

Those funds are expected to have positive impacts on biodiversity due to the fact that banks are increasingly committing to mainstreaming nature into their policies, the OECD said.

“However, none of the sectors had biodiversity-related objectives as a main driver for multilateral investments,” the report said.

“In effect, multilateral institutions, and in particular MDBs, have committed to step up action to further mainstream nature into their policies and operations, as well as to develop methodologies to track and report ‘nature positive’ investments.”

MORE PRIVATE FUNDING NEEDED

According to the analysis, global public and private investments are currently 23% short of Target 19 of the Global Biodiversity Framework (GBF), which aims at mobilising $20 bln by 2025.

Despite progress, meeting the goal still requires greater mobilisation of private flows, according to the report.

“Private finance mobilised with public finance has more than doubled, up to $1.8 bln in 2022 from $748 mln in 2021,” it said.

“However, these amounts are still far from those achieved in other policy areas, such as climate change – $16.1 bln on average over 2017-22.”

Notably, the report showed that public and private funding for projects with biodiversity as a principal objective decreased by 17% since 2015, falling from $4.6 bln to $3.2 bln in 2021 and $3.8 bln in 2022.

“Biodiversity considerations still represent a relatively low share of the total official development finance portfolio, [around] 4%-7%, or $6.1-9.7 bln on average over the period,” the document said.

“While mainstreaming across activities is essential – and particularly in nature-dependent sectors – donors may consider raising their efforts towards core biodiversity-related activities, to increase and improve biodiversity and its ecosystem services and ensure that their impacts are sustained in time.”

A separate analysis carried out by London-based think tank ODI and published in June unveiled that only two out of 28 rich countries allocated what is estimated as their fair share of the resources for biodiversity required under the GBF, while over 80% of them provided less than half of it.

By Giada Ferraglioni – giada@carbon-pulse.com

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