Exploring Biodiversity-Positive Incentives to Halt Biodiversity Loss

The extent of the global biodiversity decline calls for immediate action to tackle its root causes. Human activities stand at the center of this issue, meaning that interventions are needed to halt harmful behavior and encourage positive change. One of them is the biodiversity-positive incentives.

Exploring Biodiversity-positive Incentives

Between 1970 and 2020, the average wildlife population shrunk by 73%. Several anthropogenic activities are among the biggest threats to this loss, including habitat loss driven by agriculture, overexploitation, and pollution. This underscores the urgency of a massive change, especially given the vital role of biodiversity for economic, planetary, and societal wellbeing.

One possible intervention is biodiversity-positive incentives. These incentives refer to various economic instruments designed to either discourage harmful activities or encourage beneficial ones related to biodiversity. One example of existing policy is the Biodiversity Net Gain in the UK, which requires development projects to have a positive impact on biodiversity.

In general, the incentive can operate under the polluter-pays principle or the beneficiary-pays approach. The polluter-pays principle means the party that generates pollution is responsible for paying for the environmental damage it causes. Examples include taxation and biodiversity offset.

Meanwhile, the beneficiary-pays approach occurs when those benefiting from certain projects are responsible for paying the incentives. Examples include payments for ecosystem services (PES), in which service users, such as companies or governments, provide incentives for landowners or managers to manage their land to deliver ecological services.

Opportunities & Challenges

The implementation of biodiversity-positive incentives is encouraged in Target 18 of the Kunming-Montreal Global Biodiversity Framework, adopted by the United Nations in 2022. The target seeks to scale up positive incentives for conservation and sustainable biodiversity use, while phasing out or reforming other forms of incentives to support the goal.

When designed well, biodiversity-positive incentives can significantly influence business activities, development projects, as well as production and consumption behavior by making harmful behavior more expensive and rewarding beneficial activities for biodiversity.

Ideally, the incentive can also direct more actions and financial flow to activities promoting conservation, sustainable biodiversity use, and ecosystem restoration. For example, biodiversity-related taxes can be directed toward research and development projects. It can also compel businesses to find innovative ways to uphold biodiversity in their operations to reduce their tax burden.

Despite the potential, challenges persist in the implementation. A report by OECD finds that around 80% of countries globally lack offset requirements, which illustrates an insufficient regulatory framework to support biodiversity-positive incentives. In countries where regulations and policies are already in place, the coverage remains limited. Inadequate budget allocation and limited adoption of other instruments like tradable permits also pose significant challenges.

Scaling Up Implementation

Scaling up biodiversity-positive incentives becomes crucial, especially considering the compounding impacts of climate change on top of harmful human activities. Therefore, the OECD’s report offers several recommendations to accelerate the adoption of this mechanism at the country level. Some of them are:

Set clear objectives and adopt robust, well-aligned metrics to increase certainty and transparency, while facilitating effective incentive design and performance evaluation.
Engage stakeholders early and meaningfully, including landowners, local communities, and Indigenous Peoples, to boost participation and promote equitable processes and outcomes.
Enhance transparency and verification to improve the credibility and effectiveness of the incentive mechanism. This includes using public registries and conducting independent audits.
Strengthen compliance and enforcement to identify non-compliance and enforce proportionate penalties and remedial actions.
Reinforce other biodiversity policies and promote policy coherence to ensure scalability and effectiveness of biodiversity-positive incentives.

Editor: Nazalea Kusuma

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