Financing Nature-Based Solutions

BIOFIN-EU Resources Knowledge Accelerators Financing Nature-Based Solutions

Glossary

Definitions & Key Concepts

Biodiversity Funding

Biodiversity financing can be defined as expenditures that contribute to biodiversity conservation, restoration or sustainable use, whether by directly targeting these objectives or by having positive effects on them (“nature-positive”).

Source: European Commission (2023) EU Briefing.

Payment for Ecosystem Services (PES)

A voluntary transaction whereby a well-defined land-use service is ‘bought’ by an ecosystem service buyer from an ecosystem service provider if and only if the ecosystem service provider secures ecosystem service provision (i.e., based on conditionality).

The PES concept builds on the “provider gets” principle which differs from the “polluter pays” one as it is focused on the idea that ecosystem service providers be paid for positive externalities they provide rather than on the idea that polluters pay to compensate for negative externalities they generate.

Source: Centre for International Forestry Research – Occasional Paper #42 (2005) Payments for environmental services.

Private Funding Sources

The private sector provides funding through philanthropy, contributions to non-governmental organisations, market-based instruments, green bonds and other channels, although biodiversity finance is still less developed than climate finance.

Source: European Commission (2023) EU Briefing.

Public Funding Sources

Public domestic expenditures, mainly from government budgets (including from the EU and its Member States), represent the majority of biodiversity financing. Since a large part of the world’s biodiversity is located in developing or emerging countries, international financial flows such as official development assistance (ODA) also play a crucial role, including to help leverage domestic funding.

Source: European Commission (2023) EU Briefing.

Tax Incentivising

Transformative change includes integrating the value of nature in production systems as well as decision-making. To shift the tax burden from labour to pollution, under-priced resources and other externalities, the EU promotes tax systems and pricing that reflect environmental costs, such as biodiversity loss, via ‘user pays’ and ‘polluter pays’ principles. Biodiversity considerations are integrated into decision-making via methods such as life-cycle analyses and natural capital accounting to measure the environmental footprint of products and organisations.

Source: European Commission (2023) EU policies addressing indirect drivers of biodiversity loss.

The “Polluter Pays” Principle

The commonly accepted practice that those who produce pollution should bear the costs of managing it to prevent damage to human health or the environment. A polluter pays principle aims at preventing anybody from reaping the benefits at the expense of (or even considerable harm to) other members of the society.

Source: IPBES (2019), Global Assessment Report, Glossary.

Current State & Trends

Biodiversity Finance Gap

The Biodiversity Finance Gap—the difference between the financial resources needed to conserve and sustainably manage biodiversity, and the funds currently available—is one of the most pressing challenges in global conservation. Estimates suggest that closing this gap requires hundreds of billions of dollars annually. Although no less than US$143 billion is spent on biodiversity every year globally, this is far below the estimated US$824 billion needed to protect and restore nature.

Source: BIOFIN-The Biodiversity Initiative / UNDP (2026) What is Biodiversity Finance?.

EU Funding: 2014-2020 Budget

During the 2014-2020 period, the EU budget dedicated EUR 85 billion to combat biodiversity loss, or 8% of the EU long-term budget, the multi-annual financial framework (MFF). This reflects contributions from a range of EU programs across different policy areas, including notably a significant contribution from the common agricultural policy (CAP).

Source: European Commission (2025) Financing from the EU budget.

EU Funding: EU Biodiversity Strategy for 2030

The EU Biodiversity Strategy for 2030 sets the following objectives: 

at least €20 billion a year should be unlocked for spending on nature. This will require mobilising private and public funding at national and EU level, including through a range of different programmes in the next long-term EU budget.

as nature restoration will make a major contribution to climate objectives, a significant proportion of the EU budget dedicated to climate action will be invested on biodiversity and nature-based solutions.

under InvestEU (the new EU investment programme for 2021-2027), a dedicated natural-capital and circular-economy initiative will be established to mobilise at least €10 billion over the next 10 years, based on public/private blended finance.

Source: European Commission (2025) Financing from the EU budget.

Harmful funding

Reducing the global financing gap will also require, more broadly, to channel overall public and private capital flows away from activities estimated to have negative impacts on biodiversity. This implies in particular the reform of government support, including subsidies, that is harmful to biodiversity, currently amounting to at least USD 800 billion per year according to recent estimates

Source: European Commission (2023) Publications on biodiversity financing; EU Briefing.

National Biodiversity Strategies and Actions Plans (NBSAP)

The 1992 UN Convention on Biological Diversity (CBD) requires that signatories integrate consideration of the conservation and sustainable use of biological resources into national decision-making, and mainstream issues across all sectors of the national economy and policy-making framework. The NBSAP is the practical application of this requirement. As such, as one aspect of their treaty obligations, member states are expected to map their harmful subsidies in their national plans. Globally, BIOFIN-UN has played a leading role in helping developing countries implement this aspect of their respective NBSAPs.

Source: UN Convention on Biological Diversity (1992) National Biodiversity Strategies and Actions Plans.

Regulatory Initiatives

Key Sources

The following reports and publications offer reliable, evidence-based information on biodiversity and can support both personal learning and the development of educational materials.