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TWN
Info Service on Biodiversity and Traditional Knowledge (Apr23/01) The fallacy of depending on private investment to achieve biodiversity targets The recently adopted Kunming-Montreal Global Biodiversity Framework, in its Goal D and Target 19, as well as the CBD COP-15 Decision on Resource Mobilization, define the actors and mechanisms that should enable the mobilization of funds to close the so-called biodiversity finance gap. There is optimism that this gap will be closed progressively with the aid of private investment and market mechanisms. This idea is in line with the current hegemonic narrative, which prioritises private institutional investors to fund global biodiversity goals. A recently published paper challenges the underlying economic assumptions for this narrative. Private investments for biodiversity conservation need to achieve competitive financial returns, as well as effective and additional conservation outcomes. But the inherent complexities of nature mean returns are subject to unusually large uncertainties, and benefits are mostly perceived in the long term. Consistent failure to show impacts is a problem for all biodiversity finance mechanisms, especially offsets. Also, private investors are frequently tempted to prioritize commercial feasibility over environmental integrity. Finally, the assumption that de-risking offers better value than direct public conservation spending is questionable. The authors question the deprioritization of direct public investment and call for increased direct public funding of biodiversity action. Contrary to the conventional framing, well-targeted public nature investment may be a macroeconomically sound way of ensuring the provision of ecological public goods that are critical to economic productivity and resilience. The public sector has a critical role in counteracting private freeriding and undertaking crucial protective investments in nature resilience, which may constitute some of the macroeconomically most rewarding options at hand. Finally, the paper calls out global North-South inequities. Increased debt burdens and climate-related vulnerability severely constrain many low- and middle-income countries in their ability to dedicate sufficient public funds for conservation. These countries also face increasing economic pressures to sacrifice natural resources and habitats for enhancing commodity exports, which often translate into ecological degradation. This is why nature-related asset classes may reinforce, rather than alleviate, structural inequalities. More redistributive mechanisms from the Global North to fund the conservation of biodiverse ecosystems in the Global South are needed, including to counterbalance the increasing ecological footprint of high-income economies. With
best wishes, 覧覧覧覧覧覧覧覧覧覧覧覧覧覧覧覧覧覧覧覧- Nature as an asset class or public good? The economic case for increased public investment to achieve biodiversity targets Katie
Kedward, Sophus zu Ermgassen, Josh Ryan-Collins, Sven Wunder Abstract Mobilising private institutional investors to fund global biodiversity goals has become a hegemonic narrative within environmental policy and sustainable finance circles. We challenge its underlying economic assumptions and question the deprioritisation of direct public investment in nature. Financial instruments for attracting large-scale private finance into conservation often incur high transaction costs to ensure ecological effectiveness, which potentially conflict with institutional investors・ need for competitive returns, market efficiency, and investment scalability. Market-led environmental governance approaches are frequently plagued by fundamental conflicts of interest, thus failing to mitigate this trade-off. Strategies to mobilize investor involvement by using public funds to 租e-risk・nature investments may not be as promising as assumed, given the costly exercise required to render nature markets conventionally 訴nvestible・ Given these ongoing problems, we explore the economic case of increasing direct government investment to achieve biodiversity targets, as part of broader green industrial strategies. Public financing is often more suitable to incentivize the imminent bundled nature of ecosystem services provided. Contrary to the conventional framing, well-targeted public nature investment may be a macroeconomically sound way of ensuring the provision of ecological public goods that are critical to economic productivity and resilience.
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