Biodiversity finance: evolution of the field, from initial efforts to a period of rapid institutionalization and corporate nature-positive pledges

A review of the literature of biodiversity finance—also referred to as conservation finance or nature finance—suggests that much of the work in the area has revolved around three foundational questions, namely (i) how much do we spend on biodiversity conservation globally?; (ii) how much should we spend on global biodiversity if we are to sustainably manage it for the long term?; and, (iii) if there is a difference between actual spend and existing needs, how do we bridge this global biodiversity financing gap? While the various methodologies used to estimate spend and existing needs differ widely and are based in part on debatable assumptions, existing estimates broadly support the notion that the biodiversity financing gap is far wider than what government appropriations and philanthropy could be expected to contribute. This has led researchers and practitioners, in turn, to explore a variety of financial mechanisms, including investment products, that leverage private, return-seeking capital, whether as the sole source of capital or blended with other sources capable of crowding in private capital. Other recent work includes the development of metrics of investment success in biodiversity finance, the role of insurance in attracting capital into the field, and the enabling conditions that could lead to at-scale biodiversity markets. The author will review the development of academic and industry research in biodiversity finance and provide a structured survey of the evolution of the field, from initial efforts (roughly 2010–2015), through early experimentation with biodiversity-themed financial instruments (ca. 2015–2020), to a period of rapid institutionalization and corporate nature-positive pledges (2020–present). This latter period has shown strong momentum, despite various bottlenecks and methodological challenges including measurement uncertainty, weak revenue models, and the lack of broadly agreed definitions. Finally, the author will transition the session towards the promising research frontiers now being advanced by the other speakers in this session: financing structures that support biodiversity conservation, improved risk-pricing models, frameworks for aligning financial flows with global biodiversity targets, and others. The author’s goal is to map the terrain and set the stage for an agenda that can support a credible, scalable, and scientifically grounded ecosystem for biodiversity finance.