South Africa’s biodiversity stewardship model has been successful but relies heavily on public and NGO funding, creating a finance gap that must be closed through other sources, according to the UNDP’s Biodiversity Finance Initiative (BIOFIN).

More than two-thirds of protected areas in the megadiverse country were established in the 2008-16 period thanks to stewardship initiatives, but a funding gap that started to show already in 2018 is widening significantly due to escalating fiscal constraints, Nokutula Mhene, a BIOFIN specialist at UNDP South Africa, wrote in a recent blog post.

Provincial governments and NGOs contribute most of the funding to biodiversity work in the country, but with the national government’s budget deficit projected to climb above 5% for 2023-24 and debt servicing likely to surpass 22% of revenue in 2026-27, biodiversity entities are facing funding cuts.

“This has led to a growing funding gap, which poses a significant threat to national conservation efforts, tourism, and the biodiversity stewardship model,” Mhene wrote.

The warning shout and call for new solutions aligned with that of a report released last year by the Endangered Wildlife Trust and the Wildlife and Environment Society of South Africa.

It comes as the world has pledged to ramp up efforts to halt global nature and biodiversity loss by 2030, but South Africa – one of the most biodiverse countries on the planet – risks facing a deepening crisis.

The country must now urgently consider new pathways to secure funding, both through policy efforts and by seeking increased contributions from the private sector, according to BIOFIN.

That could include slashing harmful subsidies and redirecting the funds to de-risk private sector biodiversity investments, or develop blended finance instruments to attract more funding.

South Africa could also “elevate biodiversity to an investible asset class, similar to climate finance, to attract participation from South Africa’s capital markets,” wrote Mhene.

“The climate finance narrative in South Africa is well-developed, with various mechanisms encouraging the participation of large capital markets.”

While the post did not mention examples of investible asset classes, it could involve initiatives similar to the World Bank’s rhino bonds in the country, or generating biodiversity credits – something several project developers are already in the process of doing.

Last year, the South African environment ministry also signed its first biodiversity tax break agreements with landowners.

“To ensure the long-term sustainability of biodiversity management in South Africa, it is crucial to foster partnerships with private investors and embrace innovative finance structures. The government of South Africa and other stakeholders must rethink how best to structure biodiversity stewardship to attract investment from sources beyond the public purse,” wrote Mhene.

“By mobilising significant financial flows from capital markets, repurposing detrimental subsidies, creating blended financing instruments, and elevating biodiversity as an investable asset class, South Africa can secure the future of its rich natural heritage.”

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