Mobilising Public and Private Finance for Biodiversity

1. Mobilising finance for biodiversity: Synthesis and key messages

Abstract

Biodiversity loss threatens economic resilience, financial stability and human well-being by undermining the ecosystem services on which societies and economies depend. Although the Kunming-Montreal Global Biodiversity Framework has strengthened international ambition, finance to halt and reverse biodiversity loss remains insufficient. This chapter synthesises the report's findings on how governments can scale and better align public and private finance for biodiversity. It emphasises that financial instruments alone cannot overcome distorted incentives, weak regulatory frameworks or limited institutional capacity, and that private finance complements rather than substitutes for public spending. Drawing on emerging experience across countries, sectors and asset classes, the chapter identifies priority actions to align incentives with biodiversity objectives, strengthen markets and investment conditions, improve data, metrics and disclosure frameworks, and reinforce governance and accountability. Together, these measures can help mobilise finance to achieve effective, equitable and durable biodiversity outcomes.

1.1. The biodiversity challenge

Biodiversity loss is accelerating, with significant implications for economic stability and long-term prosperity. Species are disappearing at rates unprecedented in human history, wildlife populations have declined on average by over 70% since 1970 (WWF, 2024[1]), and terrestrial, freshwater and marine ecosystems are being degraded across much of the world (IPBES, 2019[2]). These are not only environmental losses. Biodiversity underpins the ecosystem services on which the global economy and human well-being depend – pollination, soil formation, water purification, flood regulation and carbon sequestration.

As ecosystems deteriorate, the risks to businesses, investors and financial systems increase (OECD, 2021[3]). These risks are not linear. Ecosystems can absorb stress up to a point, but beyond certain thresholds they may shift abruptly to less productive states. Such regime shifts – the collapse of a fishery, the dieback of a forest, or the transition of a lake into an oxygen-depleted state – are costly if not impossible to reverse and can generate cascading economic and social impacts. This underscores the value of early action and a precautionary approach. It also has direct implications for how nature-related risks are assessed, managed and priced.

Protecting and restoring biodiversity is therefore both an environmental imperative and a strategic investment in economic resilience. While the scale of the challenge is significant, so too is the opportunity. A transition toward economies and financial systems that value biodiversity can reduce long-run risks, strengthen resilience and unlock new sources of value and investment across sectors.

1.2. The financing challenge

Finance is central to meeting the mission of the Kunming-Montreal Global Biodiversity Framework (KMGBF) – to halt and reverse biodiversity loss. Conserving biodiversity, restoring degraded ecosystems, and transitioning toward more sustainable patterns of production and consumption all require sustained and well-directed financing. Investment is also needed in data infrastructure, governance capacity and institutional frameworks that effective biodiversity stewardship depends upon.

The adoption of the KMGBF in 2022 marked a step change in global ambition. Its finance-related commitments – including mobilising at least USD 200 billion annually from all sources – have renewed momentum for action at national and international levels. While consistent time-series data remain limited, available evidence indicates public (domestic and international) and private finance has increased this decade (OECD, 2026 Forthcoming[4]). For example, annual private investment seeking both biodiversity benefits and financial returns exceeded USD 14 billion in 2025 – higher than previous years with data (Bennett et al., 2026[5]).

Nonetheless, current financial flows remain deeply misaligned with biodiversity objectives. The gap between what is being spent and what is needed is estimated to be in the order of several hundred billion – and continues to widen (Paulson Institute, 2025[6]). At the same time, expenditure and incentives that are harmful to nature significantly exceed investment in conservation and restoration, further increasing the scale of the challenge. Addressing these imbalances will require co-ordinated action across multiple policy areas and from a wide range of stakeholders.

Public finance currently accounts for most biodiversity-related expenditure, reflecting the public-good characteristics of many ecosystem services (OECD, 2026 Forthcoming[4]). However, fiscal constraints, competing spending priorities and rising debt burdens mean that governments cannot bridge the financing gap alone. Mobilising substantially greater levels of private finance is therefore essential. Furthermore, given that many of the drivers of biodiversity loss originate in private-sector activities, aligning private investment and business decisions with biodiversity objectives will be essential to achieving the goals of the Kunming-Montreal Global Biodiversity Framework.

Mobilising private finance requires coherent public policy, credible regulatory frameworks and capable institutions to create the conditions in which private capital can be deployed effectively and responsibly. At the same time, private finance can complement but not substitute for public finance. Many biodiversity outcomes generate limited or no direct financial returns and will continue to rely on public and philanthropic funding. Public finance therefore plays a dual role: as a primary source of funding where market-based returns are insufficient, and as a catalyst to crowd in private capital where viable opportunities exist.

1.3. Scope and purpose of this report

This report examines how to scale and better align public and private finance for biodiversity. It reviews a range of instruments and mechanisms (Table 1.1), assesses current practice, draws on emerging evidence and experience across countries and sectors, and identifies actionable policy options for governments, public finance institutions and financial market actors.

The landscape of biodiversity finance is evolving rapidly. New instruments, markets, partnerships and investment models are emerging across jurisdictions and asset classes. Financial institutions, corporations and investors are increasingly recognising both the risks associated with biodiversity loss and the opportunities linked to nature-positive transitions. But this landscape remains fragmented, with diverse approaches, limited standardisation and uneven levels of maturity. Countries developing biodiversity finance plans and seeking to accelerate progress towards national commitments and global goals need greater clarity on what is available, what works under which conditions, and how to structure interventions effectively.

This report aims to provide that clarity, with particular attention to financing instruments and the enabling conditions that determine whether financial flows deliver durable biodiversity outcomes. Chapter 2 provides an overview of the biodiversity finance landscape, including actors and their roles, and the broader policy context. Chapter 3 examines the range of biodiversity finance instruments and mechanisms, including how they function, the contexts in which they are most appropriate and the practical considerations for policy design. Chapter 4 focuses on how different instruments interact in practice, and how governments can create the conditions needed to mobilise and align public and private finance for biodiversity at scale. Key messages and good practice recommendations from the report are summarised below.

1.4. Key messages and good practice recommendations

1.4.1. Key messages

Finance alone cannot solve biodiversity loss – but increasing finance for biodiversity is essential. Mobilising finance for biodiversity must form part of the broader effort to align economies with nature. Finance instruments – including green bonds, blended finance vehicles, payments for ecosystem services and nature markets – are tools, not solutions in themselves. Their effectiveness depends on the policy and institutional environment in which they operate. Where market signals remain distorted, regulation is weak or enforcement capacity is limited, financial innovation alone is unlikely to deliver biodiversity outcomes at the scale required. Coherent regulatory and policy frameworks, effective institutions and well-functioning markets are therefore foundational to any biodiversity finance strategy.

Aligning existing financial flows is as important as mobilising new finance. The challenge is not only that biodiversity finance remains insufficient, but that much larger financial flows continue to drive biodiversity loss. Environmentally harmful subsidies, the persistent underpricing of ecosystem services, and weak regulation and enforcement often make ecosystem degradation cheaper than conservation and sustainable use. As a result, biodiversity-positive investments operate against prevailing economic incentives. Reducing and redirecting harmful financial flows is therefore at least as important as mobilising new finance.

Public and private finance play complementary roles. Mobilising private capital is essential given the scale of biodiversity financing needs and growing pressure on public budgets. However, opportunities for commercially viable biodiversity investments remain limited. Many conservation and restoration activities still generate limited or uncertain financial returns and fail to attract significant private investment and thus will continue to depend on public and philanthropic funding. Public finance therefore remains indispensable, both for directly financing public-good biodiversity outcomes and for catalysing private investment where appropriate. Blended finance and risk-sharing instruments can help mobilise private capital, but only where barriers are clearly identified and public additionality is demonstrable.

Governance, equity and co-ordination are central to effective biodiversity finance. Delivering results at scale further depends on strong partnerships across actors – including public authorities, development actors, financial institutions, philanthropic organisations, companies, local governments, communities and indigenous peoples and project developers – bringing together complementary capital, expertise and mandates. Governments and supranational organisations play a central role not only as providers of finance, but as system architects shaping markets, aligning incentives and enabling investment. Strengthening policy coherence, improving risk assessment and disclosure, and co-ordinating action across stakeholders will be essential to mobilise finance effectively and ensure that it contributes to durable biodiversity outcomes.

1.4.2. Recommendations and policy options

The analysis points to six key recommendations and accompanying policy options for more effectively mobilising public and private finance at scale:

1. Align economic incentives with biodiversity objectives

Aligning economic incentives with biodiversity objectives requires correcting both market and government failures that continue to favour ecosystem degradation over conservation, sustainable use and restoration.

Policy options:

• Identify and reform environmentally harmful subsidies, prioritising those with the highest ecological damage and greatest market distortion.

• Introduce or strengthen biodiversity-relevant taxes and fees to internalise environmental externalities, with revenues transparently and efficiently directed towards biodiversity objectives where appropriate.

• Provide targeted and time-bound fiscal incentives for biodiversity investments (e.g. green bond issuance), underpinned by robust eligibility criteria and safeguards.

• Align public investment flows, particularly in extractive and land-use sectors, with biodiversity objectives.

2. Create and strengthen markets for biodiversity

Scaling private investment requires more reliable and credible revenue streams for biodiversity-positive activities. Well-designed markets and demand-side measures can help create these conditions, provided strong safeguards and governance frameworks are in place.

Policy options:

• Establish clear regulatory frameworks, such as biodiversity no net loss or net gain requirements embedded in mitigation hierarchies.

• Develop biodiversity‑explicit sovereign green, sustainability and sustainability‑linked bond frameworks, and issue sovereign bonds to establish credible benchmarks and generate demand‑side signals for the broader market.

• Use public procurement, sectoral regulation and infrastructure policy to generate reliable demand for biodiversity‑positive goods, services and outcomes.

• Support piloting of biodiversity credit schemes and other nature market mechanisms, ensuring government oversight, full transparency, independent verification, strong additionality requirements and environmental and social safeguards.

3. Improve investment conditions, including through risk-sharing

Public finance can help mobilise private investment where clear barriers exist and where public intervention delivers demonstrable additionality.

Policy options:

• Use concessional capital selectively and transparently to improve risk-return profiles and crowd in private investment where public additionality is clear.

• Deploy risk-mitigation instruments, including first-loss mechanisms, guarantees and other credit enhancement, to protect investors against specific, well-identified downside risks.

• Consider insurance products (e.g. political risk, performance or parametric cover) where market-based risk transfer is more appropriate than public risk absorption.

• Fund project preparation, aggregation and pipeline development to improve investment readiness.

4. Strengthen targets, data and metrics

Credible approaches to defining, measuring and verifying biodiversity outcomes are essential for scaling investment and maintaining market confidence.

Policy options:

• Set measurable national biodiversity targets aligned with the Kunming–Montreal Global Biodiversity Framework.

• Establish interoperable, streamlined and decision-useful metrics, taxonomies and monitoring frameworks, using tiered or minimum‑quality approaches where full harmonisation is not yet feasible, while being transparent about what current measurement approaches do and do not capture.

• Strengthen national biodiversity data systems, including baseline data, spatial mapping and long-term ecological monitoring systems to ensure scientific robustness and ecological integrity in measurement approaches.

• Develop guidance on credible biodiversity key performance indicators and outcome indicators for financial instruments (e.g. sustainability-linked bonds), recognising the diversity of ecosystems and investment contexts and aligning with national and global biodiversity targets.

5. Enhance transparency, disclosure and accountability

More consistent and decision-useful information is needed to improve market confidence, reduce greenwashing risks and strengthen accountability for biodiversity outcomes.

Policy options:

• Expand the coverage and consistency of sustainable finance policies, including taxonomies and eligibility criteria, while maintaining clarity and usability for market participants.

• Support or require nature‑related financial disclosures aligned with emerging international frameworks (e.g. TNFD), underpinned by robust biodiversity metrics.

• Ensure traceability of outcomes and adopt safeguards against greenwashing, including independent verification of outcomes and claims, with clear consequences for misrepresentation.

• Encourage the integration of biodiversity considerations into credit analysis, risk assessment and investment processes across the financial sector.

6. Reinforce governance and lead by example

Effective institutions and co-ordination mechanisms are essential for implementing biodiversity finance strategies and aligning public and private action.

Policy options:

• Align public budgets, official development finance and state-owned institutions with biodiversity objectives, underpinned by formal co-ordination mechanisms across finance, environment and sectoral ministries.

• Invest in enabling systems and tools such as guidance, public registries, monitoring, reporting and verification (MRV) systems – including digital tools – and institutional capacity for implementation, oversight and accountability.

• Establish robust biodiversity standards for nature markets and financial instruments (e.g. green bonds) to promote environmental integrity and market confidence.

• Develop project platforms, accelerators and matchmaking mechanisms to better connect projects with finance, including by increasing project visibility, standardising project definitions and information, and aggregating smaller projects into investable portfolios.

• Maintain sustained public investment in conservation and restoration, particularly where private returns are structurally limited and biodiversity is of national or global significance.

Table 1.1. Key instruments and mechanisms to mobilise public and private finance for biodiversity

Instruments and mechanisms	Description	Private finance mobilisation	Maturity	Scaling potential
Real economy instruments and mechanisms
Biodiversity taxes and fees	Compulsory, unrequited payment (taxes) or requited payment (fees) to general government levied on tax bases particularly relevant to biodiversity.	Indirect: shifts incentives by increasing costs of biodiversity-harmful activities, encouraging private capital reallocation.	Established	High: scalable across jurisdictions and sectors with sufficient political support and administrative capacity.
Biodiversity-positive subsidies	Government grants, loans, guarantees or preferential tax treatment that support activities with demonstrated positive biodiversity outcomes.	Indirect: improves risk-return profiles of biodiversity-positive activities, crowding in private co-investment.	Established	Medium to high: constrained by fiscal space but expandable via subsidy reform and improved targeting.
Payments for ecosystem services (PES)	Voluntary conditional payments to land or marine managers who maintain or enhance offsite ecosystem services. Financed by private beneficiaries, public actors on behalf of beneficiaries, or both.	Direct and indirect: direct when privately funded; indirect when public schemes create predictable revenue streams contributing to investable projects.	Established in some jurisdictions (public schemes); developing (private schemes)	Public PES medium to high: constrained by fiscal space but expandable via subsidy reform and improved targeting. Private PES: low to medium: constrained by transaction costs, buyer co-ordination and willingness of buyers.
Biodiversity offsets	Compensation for residual unavoidable impacts from development activities as part of the mitigation hierarchy. Delivered through mitigation banking, developer-led offsets or payments in lieu.	Direct and indirect: direct as regulatory obligations require private developers to fund biodiversity gains; indirect in mature investable offset markets.	Established in some jurisdictions	Medium to high: depends on the stringency, enforcement and coverage of regulatory no-net-loss or net-gain frameworks, and lending requirements.
Biodiversity credits for voluntary contributions or insetting	Often described as voluntary instruments to mobilise finance for positive biodiversity outcomes, and intended to represent measured units of biodiversity outcomes that are additional and durable.	Direct and indirect: direct as creates a revenue stream for conservation projects from voluntary private buyers; indirect via improved project bankability.	Nascent	Low to medium: currently constrained by few and fragmented standards, environmental integrity issues, and uncertain demand drivers.
Nature-based carbon credits	Carbon credits generated through conservation, sustainable use or restoration of ecosystems. Comprise both “land-based” and “blue-carbon” (i.e. coastal and marine) credits.	Direct: channels private climate finance into nature projects; indirect via improved project bankability.	Established for carbon; developing for biodiversity co-benefits	Medium to high: existing carbon market infrastructure provides scale potential, though growth depends on market credibility, demand, and integrity standards.
Financial sector instruments and financing mechanisms
Use-of-proceeds bonds and loans	Debt instruments where proceeds are ‘ring-fenced’ for green activities. Includes green, blue and sustainability bonds and loans.	Direct: provides labelled debt capital for defined biodiversity expenditure programmes, attracting investors seeking verified environmental use of proceeds.	Established (general); developing (biodiversity-specific)	High: strong investor demand and market infrastructure, though biodiversity allocation remains limited.
Sustainability-linked bonds (SLBs) and loans (SLLs)	Performance-based debt instruments whose attributes (e.g. interest payments) are linked to pre-defined sustainability targets.	Indirect: financing proceeds are not earmarked for biodiversity projects; instead, financing terms are linked to biodiversity performance, which can influence corporate behaviour and capital allocation.	Established (general); nascent (biodiversity-specific)	Medium to high: Broad applicability across sectors, contingent on robust metrics, verification and broader investor confidence.
Environmental impact bonds and other outcome-based bonds	Outcome-based debt where investor returns are contingent on verified environmental outcomes.	Direct: attracts private upfront capital with returns tied to outcomes. Classical EIBs typically rely on public or philanthropic outcome-payers, while market-linked variants may substitute or complement these payments with ecosystem service revenues.	Nascent	Low to medium: classical EIBs constrained by structuring costs and need for committed outcome payer. Market-linked variants face different structuring challenges, including revenue uncertainty, market integrity requirements and price volatility, but may offer greater scalability where ecosystem service markets are sufficiently mature.
Crowd-based and retail debt instruments	Debt instruments that raise small‑ticket capital from retail or mission-oriented investors, often via online platforms or community‑based structures.	Direct: mobilises capital from retail investors not typically reached through institutional channels, broadening the investor base for biodiversity projects.	Established (general); nascent (biodiversity-specific)	Low to medium: suited to small-scale projects; aggregation needed for scale.
Private credit (institutional/non-bank)	Debt financing provided by institutional investors outside traditional banking channels, typically through privately negotiated loans to projects or companies, with tailored risk‑return structures.	Direct: provides flexible debt financing to biodiversity-positive projects that may not meet standard bank lending criteria, filling gaps in the capital stack.	Established (general); nascent (biodiversity-specific)	High (conditional on pipeline and standardisation).
Public equity (listed markets, ETFs)	Equity investments in publicly listed companies through primary or secondary markets, including through exchange-traded funds.	Indirect: influences corporate behaviour via stewardship, valuation, and capital allocation.	Established (general); developing (biodiversity-specific)	High potential to influence capital allocation and corporate behaviour but less direct links to biodiversity outcomes.
Private equity	Equity investments in privately held companies or assets, typically through funds that provide active ownership and long‑term capital to scale business models or projects.	Direct: deploys risk capital into unlisted nature-positive enterprises and conservation projects, providing growth financing unavailable through debt markets alone.	Established (general); developing (biodiversity-specific)	Medium to high: constrained by limited pipelines, long investment horizons, and uncertain exit opportunities.
Insurance mechanisms	Transfers financial or biophysical risk away from project developers and stabilises cash flows. Includes e.g. parametric insurance, resilience bonds	Indirect (catalytic): does not directly mobilise new finance flows, but can enable investment by reducing exposure to specific risks.	Established (general); nascent (biodiversity-specific)	Low to medium (standalone); high (as enabler).
Credit enhancement	Instruments through which public, philanthropic or concessional actors absorb or reallocate part of the downside risk to improve the risk‑return profile of investments and facilitate capital mobilisation. Includes guarantees, first-loss tranches, concessional capital.	Indirect (catalytic): reduces barriers to private investment by absorbing first-loss risk or guaranteeing against default, enabling private capital to enter at acceptable return thresholds.	Established (general); developing (biodiversity-specific)	High: widely applicable across instruments where concessional capital is available.

Note: Classifications of maturity are indicative and based on current market development, policy frameworks, and observed deployment across jurisdictions. The maturity scale comprises nascent, developing, and established categories. Scale potential refers to the ability of an instrument to mobilise public or private finance at meaningful scale over the medium to long term. High scale potential does not necessarily imply high biodiversity integrity, effectiveness, or real-world impact.

References

[5] Bennett, G. et al. (2026), Gaining Ground: State of Private Investment in Nature, https://www.forest-trends.org/wp-content/uploads/2026/06/Gaining-Ground-State-of-Private-Investment-in-Nature-2026.pdf.

[2] IPBES (2019), Global Assessment Report on Biodiversity and Ecosystem Services.

[3] OECD (2021), “Biodiversity, natural capital and the economy: A policy guide for finance, economic and environment ministers”, OECD Environment Policy Papers, No. 26, OECD Publishing, Paris, https://doi.org/10.1787/1a1ae114-en.

[4] OECD (2026 Forthcoming), Tracking Progress Towards the USD 200 Billion Biodiversity Finance Target.

[6] Paulson Institute (2025), Financing Nature: The Unabated Biodiversity Finance Crisis, https://www.paulsoninstitute.org/wp-content/uploads/2025/09/Financing-Nature_Interim-Update_2025.pdf.

[1] WWF (2024), Living Planet Report, https://www.worldwildlife.org/publications/2024-living-planet-report.