Innovative Financial Mechanisms

Goal 4 of the Convention’s Strategy for Resource Mobilization seeks to: “Explore new and innovative financial mechanisms at all levels with a view to increasing funding to support the three objectives of the Convention”, with six strategic objectives:

“4.1. To promote, where applicable, schemes for payment for ecosystem services, consistent and in harmony with the Convention and other relevant international obligations.

“4.2. To consider biodiversity offset mechanisms where relevant and appropriate while ensuring that they are not used to undermine unique components of biodiversity.

“4.3. To explore opportunities presented by environmental fiscal reforms including innovative taxation models and fiscal incentives for achieving the three objectives of the Convention.

“4.4. To explore opportunities presented by promising innovative financial mechanisms such as markets for green products, business-biodiversity partnerships and new forms of charity.

“4.5. To integrate biological diversity and its associated ecosystem services in the development of new and innovative sources of international development finance, taking into account conservation costs.

“4.6. To encourage the Parties to United Nations Framework Convention on Climate Change and its Kyoto Protocol to take into account biodiversity when developing any funding mechanisms for climate change.”

Innovative financial mechanisms explore supplementary yet more sustainable financial and economic approaches to human interaction with biodiversity and ecosystem services. Based upon the modern financial and economic methods, innovative financial mechanisms seek to develop financial and economic solutions to the current biodiversity crisis and to transform the prevailing financial and economic systems that have been distortionary in sustaining life on earth, thus avoiding unsustainable commodification of the nature. Innovative financial mechanisms are considered as important instruments to mobilize new and additional financial resources for achieving the Convention‘s objectives, and explored in the broad context of innovation for biodiversity while recognizing the close synergies between conserving biodiversity, combating desertification, and mitigating and adapting to climate change. As the only innovation process under the Convention, further work on innovative financial mechanisms will likely be organized around the following four priorities for national and international action:

• Empower Parties and relevant stakeholders to explore innovative financial mechanisms through education and training events, and foster appropriate skills and attitudes needed for innovative financing;
• Mobilize private funding through innovative financial mechanisms by fostering biodiversity entrepreneurship and enabling biodiversity entrepreneurs to experiment, invest and expand creative economic activities that contribute to addressing biodiversity challenges;
• Facilitate efficient knowledge development and flows through the development of networks and markets which enable the creation, circulation and diffusion of knowledge;
• Explore and apply innovative financial mechanisms to address global and social challenges as related to biodiversity loss, including through the development of international mechanisms to provide finance and incentives to address global challenges through innovation in developed and developing countries.

The tenth meeting of the Conference of the Parties conducted a review of implementation of goal 4 of the Convention’s strategy for resource mobilization, and requested the Executive Secretary to undertake further activities on innovative financial mechanisms. The next review will take place at the twelfth meeting of the Conference of the Parties.

For the biennium 2011-2012, the Conference of the Parties “invites Parties, relevant organizations and initiatives, such as the World People’s Conference on Climate Change and the Right of Mother Earth, to submit information concerning innovative financial mechanisms that have potential to generate new and additional financial resources as well as possible problems that could undermine achievement of the Convention’s three objectives, not later than 30 June 2011, for the Executive Secretary to compile and present a synthesis of this information.”

Further readings

WGRI Recommendation 3/9: Policy options concerning innovative financial mechanisms

Policy Options Concerning Innovative Financial Mechanisms (UNEP/CBD/WG-RI/3/8, 15 February 2010) (ar en es fr ru zh)

Innovative Financial Mechanisms: Report of the proceedings of the International Workshop on Innovative Financial Mechanisms (UNEP/CBD/WG-RI/3/INF/5, 6 May 2010) (en) (workshop website)

Options for Resource Mobilization, Including Innovative Financial Mechanisms, and a Draft Strategy for Resource Mobilization in Support Of the Achievement of the Objectives of the Convention (UNEP/CBD/WG-RI/2/4, 16 May 2007) (ar en es fr ru zh)

Report of the Budapest Workshop on Innovative Financial Mechanisms (22-23 March, 2011) (en)