Development finance for biodiversity increased significantly in 2022, but the money was mostly in the form of loans rather than grants, according to new figures from the Organisation for Economic Co-operation and Development (OECD).

The OECD report, which analysed the period from 2015 to 2022, shows that funding for efforts to protect and restore nature rose from $11.1 billion in 2021 to $15.4 billion in 2022.

Most of the increase came from multilateral institutions - mainly development banks - which increased their funding from $2.7 billion in 2021 to $5.7 billion in 2022, mostly by offering concessional loans, which are cheaper than borrowing on commercial terms.

The question of whether developing countries, already burdened by debt, should be given loan finance for climate and nature action is hotly debated, with poorer countries and climate justice activists calling for more money to be disbursed as grants.

Increasing funding for biodiversity will be a key issue at the UN's COP16 conference in Colombia at the end of next month, as countries face the challenge of meeting a target to mobilise $20 billion by 2025 - a sum agreed two years ago at COP15 in Montreal. This, in turn, will influence the creation of new national biodiversity plans, experts say, which could also help curb rising carbon emissions.

To channel some of this money, governments at COP15 agreed to set up a new international biodiversity fund under the Global Environment Facility (GEF). It has struggled to get off the ground and has so far received just under $200 million.

Causes for concern

While it is "certainly good news" that funding for biodiversity has increased in the years leading up to 2022, there are some worrying trends, O'Donnell told Climate Home News.

For example, he pointed to a disparity between finance for projects designated as "biodiversity-specific", whose main goal is to reverse biodiversity loss, and funding designated as "biodiversity-related", whose main goal is to address a different problem but which has some biodiversity benefits.

The OECD report shows that while overall finance for biodiversity has increased, the amount with the main goal of reversing biodiversity loss has decreased, falling from $4.6 billion in 2015 to $3.8 billion in 2022.

"We can't protect nature and the planet by making it a tangential approach to other funding efforts," said O'Donnell. "The majority of the funding has to be driven by a real desire to protect nature."

Oscar Soria, a veteran biodiversity campaigner and CEO of The Common Initiative, an environmental think-tank, agreed that the lack of funding directly dedicated to biodiversity could limit efforts to protect protected areas and restore nature.

The predominance of loans over grants is also a challenge for developing countries, they said. "With shrinking development budgets in key donor countries, the future of real biodiversity conservation hangs in the balance," Soria added.

The OECD report shows that most direct public funding comes in the form of grants, but this type of funding has grown very slowly over the past decade, creeping up from $6.6 billion in 2015 to $7.1 billion in 2022.

The financing gap

Based on the trends shown in the OECD report, Soria noted that governments "should be able to meet" the $20 billion target for international public finance by 2025.

O'Donnell agreed that the target should be within reach, but said that implementing the global biodiversity framework agreed in Montreal - which includes a target to protect at least 30% of the planet's land and oceans by 2030 - will require significant additional funding.

"Countries should look at this and say 'we need to aim higher'," he added.

The gap for a longer-term funding target that includes all sources - for $200 billion by 2030 - is much wider, as the report shows that governments have currently only mobilised a total of about $25.8 billion for biodiversity, including from the private sector.

In the case of multilateral institutions, the funds committed to biodiversity between 2015 and 2022 represent just 3% of all development finance disbursed in those years. Top recipients include China ($750 million), Colombia ($338 million) and Mexico ($207 million).

Meanwhile, the number of donor countries remains small, with just five governments accounting for nearly three-quarters of biodiversity funding between 2015 and 2022.