National Environmental Funds

Basis for action:

"To consider the enhancement of existing, or the establishment of new, domestic funds and funding programmes through voluntary contributions, including for official development assistance, where biodiversity is identified as a priority by developing country Parties in poverty reduction strategies, national development strategies, United Nations development assistance frameworks and other development assistance strategies, that include innovative financing instruments to achieve the Convention’s three objectives"... Strategy for resource mobilization, objective 2.5

"To establish, as appropriate, new and additional funding programmes through voluntary contributions to support the three objectives of the Convention"...Strategy for resource mobilization, objective 3.5

"To continue to support, as appropriate, domestic environmental funds as essential complements to the national biodiversity resource base"...Strategy for resource mobilization, objective 3.7

Status and Trends
National environmental funds are among the most popular tools to mobilize resources for biodiversity and ecosystem services. A 2013 survey of thirty-six conservation trust funds, 49% from Latin America and Caribbean, 28% Africa and 25% Asia and others, indicated over $672 million in US equivalent dollars under their management. An earlier survey of some twenty funds observed that the total amount contributed by donors to conservation funds probably exceeds $1.2 billion, of which around $800 million already given out as grants for biodiversity conservation, environmental protection and sustainable development, mostly in the Latin American and Caribbean (LAC) region. The most successful conservation funds in raising additional capital are those which have managed to start a "virtuous cycle" by attracting initial contributions from at least one or two key international donors, and demonstrating a high level of accountability and results during their start-up phase (i.e., their first one to five years of grantmaking).

The contribution of environmental funds to biodiversity conservation can be significantly. Suriname Conservation Foundation covers 100 percent of costs of Central Suriname Nature Reserve, lesser percentages of other protected areas. Peru’s PROFONANPE provides for 75 percent of costs of national protected area system, Bolivia’s FUNDESNAP is responsible for 50 percent of total costs of national protected area system, Ecuador’s FAN shares 20 percent of costs of national protected areas system, and Mexico’s FMCN shoulders 14 percent of total costs of the national protected areas system.

Nevertheless, a number of environmental funds appears undercapitalized, particularly in Africa, due to several reasons: original capital base fell short of expected needs or was intended as a first infusion with the intention that additional funds would flow to the funds; demand for conservation support exceeded initial estimates; endowment returns failed to keep pace with inflation; or the funds suffered a decline in asset base due to negative returns.

Counting
The methodologies for counting financial flows can differ among various funds. Conservation funds and parks funds primarily finances activities related to biodiversity and ecosystem services, and thus should be counted as biodiversity funding. Grants funds channel resources to target groups (typically non-governmental organizations and community-based organizations) for a broad range of conservation and sustainable development projects, and brown funds, financed mostly by pollution charges or fines, often allocate five to ten percent of their grants for biodiversity conservation. Sectoral funds often contain special programmes on biodiversity and ecosystem services. These categories of funding should be examined in terms of direct funding and beneficiary funding for biodiversity.

Endowment funds are invested with capital in perpetuity, and only use resulting investment income to finance grants and activities. Sinking funds disburse their entire principal and investment income over a fairly long period (typically ten to 20 years) until it is completely depleted. Counting methods on endowment funds and sinking funds must make distinction between capital assets and actual annual spending. Revolving funds receive income from taxes, fees, fines, payments for ecosystem services, etc., and are normally earmarked for several specified purposes. Only direct and beneficiary funding for biodiversity should be counted from these revolving funds.

As environmental funds draw up a diversified pool of funding resources, including official development assistance and national budgets, double counting is thus should be avoided.

Ideas of mobilization
  • The importance and role of national environmental funds are duly recognized and explored in national biodiversity strategies and action plans as well as in other national strategic documents
  • International donors and public-private partnerships are encouraged to promote additional resource flows to environmental funds and make full use of the potential of environmental funds
  • National environmental funds and sectoral funds are convinced to increase their allocations to biodiversity and ecosystem services
  • Capacity building and technical assistance are provided to new environmental funds and best practice and lessons learned are shared among fund practitioners
  • National environmental funds are promoted as a force of co-financing and execution for attracting internationally-financed projects on biodiversity and ecosystem services
  • National environmental funds are encouraged to pilot, replicate, participate in and make full use of emerging markets for ecosystem services
  • A global survey of environmental funds is conducted at least biennially in order to monitor trends, identify gaps and develop options

  • United Nations
  • United Nations Environment Programme