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Finance Mechanisms for Biodiversity: Examining Opportunities and Challenges

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CO-CHAIRS SUMMARY of a 2012 International Workshop convened by the OECD, World Bank, the GEF, and the European
Commission, together with Sweden and India.

Key messages from the workshop:

There are three important ways to scale up biodiversity outcomes through the use of finance
mechanisms: (i) by raising additional revenue that is then used to achieve biodiversity outcomes;
(ii) by mainstreaming biodiversity in the production and consumption landscape (e.g. green
markets; offsets) and (iii) by reducing the cost of achieving biodiversity conservation and
sustainable use (e.g. environmental fiscal instruments). In some cases, finance mechanisms can
work across more than one avenue; for example, fiscal instruments can reduce the cost of doing
conservation while also changing incentives that drive conversion rather than conservation.. In
others, an IFM may not raise additional funds per se. Any additional revenue raised, such as through price premia, can help to cover the marginal cost
of mainstreaming biodiversity in producing that certified product.

The CBD's six so-called innovative financial mechanisms (IFMs) all provide opportunities to
scale up biodiversity results - but only some present an opportunity to scale up actual revenue.
And in each case, there are costs associated with developing the institutional and procedural
processes to establish an IFM. It takes money to make money. It also takes stakeholders who can
translate the true value of biodiversity into the prices of goods and services so as to encourage
more efficient conservation and sustainable use, and mechanisms to cost-effectively capture any
new revenues and distribute them to increase biodiversity outcomes. Different forms of
environmental and social safeguards also need to be considered, depending on the mechanisms
selected as well as national circumstances, so as to avoid potential trade-offs and enhance
biodiversity, ecosystem services and social outcomes. Effective monitoring, reporting and
verification is key.

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