Finance, targets, green economy and innovative financial mechanisms

March 2011
1 page

Helena Paul & Antje Lorch

ECO "Post-COP 10", Vol 36(1), p. 5.

Discussions on funding, financial targets and innovative financial mechanisms were extremely difficult during the COP10 in Nagoya in October 2010 and clearly revealed the divide between North and South. They also reflect a wider struggle going on over the effectiveness and implications of market‐oriented approaches to the three Rio Conventions, including biodiversity
conservation. This struggle that is going to be central for "Rio+20", the 2012 United Nations Conference on Sustainable Development where 'green economy' is one of the two main topics on the agenda.

Financial Targets – once again no decision (till 2012?)

The COP10 approved 20 new targets for the Strategic Plan 2011‐2020, but failed to agree on targets for increased financial resources. This is one of the most critical failures of the COP, especially when there is clear evidence that Parties (in the global South) lack resources to implement CBD decisions. Donor countries opposing targets used a lack of understanding about how many resources were actually needed to implement CBD decisions, and missing baselines and measurement methodologies as an excuse to commit to any specific amounts. This closely parallels the failure of developed countries to make meaningful commitments in the climate talks.
The final COP10 decision involves a number of intercessional research and activities in order to finally set a target on financial resources at COP11 in 2012. The decision reads: “decides to adopt targets at its eleventh meeting, provided that robust baselines have been identified and endorsed and that an effective reporting framework has been adopted. This will allow progress towards the targets set out in this decision and towards target 20 of the Strategic Plan, including an effective reporting framework, to be used in assessing the information provided by Parties as outlined in this decision for the consideration of the Conference of the Parties at its eleventh meeting” (COP/DEC/X/3/para 8(i)).
The COP did adopt indicators, outlined in Decision X/3/para 7, including to track:

  • aggregated financial flows … of biodiversity related funding, per annum, from Official Development Assistance, domestic budgets, private sector, NGOs, etc;
  • amount of funding provided through the GEF and allocated to biodiversity funding area; and
  • resources mobilized from the removal, reform or phase‐out of incentives, including subsidies, harmful to biodiversity which could be used for the promotion of positive incentives.

However, it is unclear how ‘biodiversity‐related funding’ will actually be determined. This is something civil society will need to watch carefully, as academic research shows that OECD categorizations of ‘biodiversity related’ aid tend to exaggerate the biodiversity related aspects of projects 1
Due to the funding situation at the CBD Secretariat, there is also the prospect that much of the work to set “robust baselines” or to make “an effective reporting framework” will not be completed. It is easy to imagine negotiations on targets failing at COP11 if donor countries again claim to be ‘lacking information or baselines’ to determine their financial commitments.

Global Environment Facility

During COP10, Parties were also meant to provide guidance to the Global Environment Facility (GEF) to set targets for new and additional financial resources for biodiversity. In the negotiations, Parties from the Global South forcefully noted that despite the increase in GEF allocations, the amount of real resources flowing has decreased. Since GEF funds are increasingly only given under the condition that funds are matched from other sources, countries have to take up additional credits to receive GEF funding, resulting in debts.
Parties agreed (X/26) to undertake a needs‐assessment for implementation in order to develop an understanding of “the amount of funds that are necessary to assist developing countries and countries with economies in transition, in accordance with the guidance provided by the Conference of the Parties, in fulfilling their commitments under the Convention for the sixth replenishment period of the Global Environment Facility Trust Fund”.
However, in an interesting turn of events, it appears that this decision was excluded from the core CBD budget. As such, at the time of writing, this decision is presently not funded either, which does not bode well for the ‘goodwill’ that the CBD depends upon to function.

Innovative financial mechanisms

The negotiations about Innovative Financial Mechanisms (IFMs) in the Financial Contact Group showed that differences among Parties were not about details, but about the whole concept of IFMs as such.
The proposed decision text soon ended up with brackets around or in every single paragraph, while some paragraphs even had two or three contradictory options. In particular, the ALBA countries represented by Bolivia made a strong stand about the need to establish safeguards before the development of IFMs. While Parties in general agreed on a need for safeguards they obviously could not come to an agreement about what they should include or even what should be protected from what. Bolivia's proposal “to ensure that IFMs would not lead to a ‘commodification of nature’” certainly was the most contested safeguard ‐ but also the one that shows how far countries differ on the issue.
Here the split is not only between developing and developed countries, but also among developing countries that have different interests (see document UNEP/CBD/COP/10/L.46).
However, it is important to bear in mind that there is a lot going on behind the scenes. An information paper was prepared for COP10 Nagoya to present the idea of a Green Development Mechanism, intended to be somewhat similar to the Clean Development Mechanism (CDM) under UNFCCC, a mechanism which is beset with problems. In the end the whole decision on IFMs, including references to the GDM, was not adopted as no consensus would be found. This does not mean that the issue is closed. The Green Development Mechanism is currently re‐branding itself as the Green Development Initiative. The GDI website has a draft paper on land tenure, in the context of CBD, IFC, GEF, and UNFCCC/REDD, suggesting they are thinking Rio+20. “Green economy” is one of the two themes for the 2012 United Nations Conference on Sustainable Development (the so‐called Rio+20 conference).
But while "green" sounds positive, it has radically different meanings in different sectors. The COP10 Decision 21 on Business Engagement sets the green economy firmly in the context of the Business and Biodiversity Initiative launched at COP9 in Bonn. It promotes the involvement of organisations including the Business and Biodiversity Offsets Programme, the Biotrade Initiative of the United Nations Conference on Trade and Development, the World Business Council for Sustainable Development and the OECD. During the ongoing lead up to Rio+20, it is therefore key to observe how this term is used in order to ensure that the discussions do not become dominated by an agenda to “save” biodiversity through dealing and trade, including offset mechanisms.
Off‐set mechanisms have been established in the Clean Development Mechanism and proven very problematic on a number of levels. In a context of the CBD, off‐sets could set conservation of high biodiversity areas against access to resources in areas defined as low biodiversity, and could lead to human right violations of those living on lands required as off‐sets.
In COP10 Decision 3 Strategy for resource mobilization in support of the achievement of the Convention’s three objectives (UNEP/CBD/COP/DEC/X/3), 8c, Parties and “relevant organisations and initiatives” are invited to submit information concerning IFMs by not later than 30 June 2011. It is vital to ensure there are substantial submissions and that civil society organisations continue to raise awareness about these attempts to replace funding commitments with doubtful market instruments.

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