Historical definitions of the term “conservation finance” (also called biodiversity finance) are narrowly focused on generating and managing revenue for conservation. The mechanisms and strategies employed by conservation finance practitioners are actually much broader and have great potential for reducing pressures on nature and generating revenues if they are better understood and implemented. The Conservation Finance Alliance (CFA) defines conservation finance as “mechanisms and strategies that generate, manage, and deploy financial resources and align incentives to achieve nature conservation outcomes.” Identifying and implementing conservation finance mechanisms is most effective using a systems-thinking approach that seeks to address the complex interactions and needs of key stakeholders and decision makers. Some essential background to this broad definition includes the fact that the vast majority of finance for nature comes from government sources, that regulations and economic instruments are generally designed to align incentives and influence market prices, and that private investment in conservation is enabled by governments clarifying ownership and liabilities for nature and ecosystem services.
Conservation finance practices have now moved beyond the simple concept of identifying and closing the finance gap through mobilizing additional resources. Four main outcomes of conservation finance solutions can include: 1) decreasing conservation costs; 2) increasing the flow of capital; 3) discouraging harmful actions; and 4) incentivizing positive actions. These outcomes should be integrated among the mix of conservation finance solutions implemented for a given challenge. Across all finance solutions and conservation actions, it is also important to focus on improving delivery in terms of effectiveness and efficiency.
