A G R I C U LT U R E A N D E N V I R O N M E N TA L S E R V I C E S D I S C U S S I O N PA P E R 1 1 INVESTING IN NATURAL CAPITAL FOR ERADICATING EXTREME POVERTY AND BOOSTING SHARED PROSPERITY A Biodiversity Roadmap for the WBG WORLD BANK REPORT NUMBER 88753-GLB JUNE 2014 A G R I C U LT U R E A N D E N V I R O N M E N TA L S E R V I C E S D I S C U S S I O N PA P E R 1 1 INVESTING IN NATURAL CAPITAL FOR ERADICATING EXTREME POVERTY AND BOOSTING SHARED PROSPERITY A Biodiversity Roadmap for the WBG WORLD BANK REPORT NUMBER 88753-GLB © 2014 The International Bank for Reconstruction and Development/The World Bank 1818 H Street NW Washington, DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org Email: feedback@worldbank.org All rights reserved This volume is a product of the staff of the International Bank for Reconstruction and Development/The World Bank. 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CONTENTS iii CONTENTS Abbreviations and Acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v Glossary: What Do We Mean When We Say . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix Chapter 1: Context and Rationale. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.1 The Role of Biodiversity in Ending Extreme Poverty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.2 Providing Growth Pathways for the Bottom 40 Percent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.3 Turning Down the Heat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1.4 Responding to Global Calls for Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 1.5 The WBG Provides Comparative Advantage and Added Value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Chapter 2: Building on the Experience of the World Bank’s Biodiversity Investments . . . . . . . . . . . . . . . . . . . . . . . 7 2.1 Thematic Lessons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 2.1.1 Policy and Market Failures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 2.1.2 Governance and Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 2.1.3 Natural Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 2.1.4 Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Chapter 3: Realigning the WBG’s Investment Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 3.1 Addressing Policy Failures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 3.2 Enhancing Environmental Governance and Public Sector Capacity . . . . . . . . . . . . . . . . . . . . . . . . . 20 3.3 Building Resilience through Investing in Natural Infrastructure Across Landscapes . . . . . . . . . . . . . 21 3.4 Generating Financial Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Chapter 4: Improving the WBG’s Engagement in Biodiversity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 4.1 Mobilizing the Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 4.2 Enhancing the Way We Do Our Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 4.3 Building Capacity for the Science of Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 4.4 Creating Constituency and Leveraging Our Experience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 4.5 Working in Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 A G R I C U LT U R E A N D E N V I R O N M E N TA L S E R V I C E S D I S C U S S I O N PA P E R 1 1 iv CONTENTS References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 BOXES Box E.1: What We Mean by Biodiversity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix Box E.2: Investments in Biodiversity Can Create Jobs and Raise Incomes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi Box E.3: Biodiversity-friendly Project Design Can Improve the Performance of Infrastructure Investments. . . . . . . . . . . . . xi Box E.4: Conservation Projects Can Transform Economic Opportunities While Turning Down the Heat . . . . . . . . . . . . . . xii Box E.5: World Bank Biodiversity Projects Can Leverage Substantial Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xii Box E.6: Conservation Can Benefit Poverty Reduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiv FIGURES Figure 2.1: Number of Approved Biodiversity Projects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Figure 2.2: Biodiversity Commitments (US$, millions) over the Long Run. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Figure 2.3: World Bank Biodiversity Commitments as Percent of Total Lending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Figure 2.4: Biodiversity Commitments (US$, millions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Figure 2.5: Share of World Bank CASs Explicitly Mentioning Biodiversity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Figure 2.6: Distribution of Projects by Size of Investment (US$, millions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Figure 2.7: Evolution of World Bank Biodiversity Commitments by Funding Source (US$, millions) . . . . . . . . . . . . . . . . . 9 Figure 2.8: Number of Projects Addressing CBD Aichi Goals (BD = Biodiversity) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Figure 3.1: Conceptual Framework for World Bank Group’s Biodiversity Engagement. . . . . . . . . . . . . . . . . . . . . . . . . . 18 TABLES Table 3.1: Current and Planned Regional Focus on the Four Priority Topics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 I N V E S T I N G I N N AT U R A L C A P I TA L F O R E R A D I C AT I N G E X T R E M E P O V E R T Y A N D B O O S T I N G S H A R E D P R O S P E R I T Y A B B R E V I AT I O N S A N D A C R O N Y M S v ABBREVIATIONS AND ACRONYMS BACP Biodiversity and Agriculture Commodities Program BioCOP Biodiversity Community of Practice CASs country assistance strategies CBD Convention of Biodiversity CITES Convention on the International Trade of Endangered Species CPF Country Partnership Framework CSA climate-smart agriculture DEC Development Economics DPO development policy operations EAP East Asia and Pacific ECA Europe and Central Asia ENR Environment and Natural Resources ENRLE environment and natural resources law enforcement FCPF Forest Carbon Partnership Facility FLEG forest law enforcement and governance GDP gross domestic product GEF Global Environment Facility GHG greenhouse gas GPG Global Practice Group ha hectare IBRD International Bank for Reconstruction and Development ICCWC International Consortium to Combat Wildlife Crime IDA International Development Association A G R I C U LT U R E A N D E N V I R O N M E N TA L S E R V I C E S D I S C U S S I O N PA P E R 1 1 vi A B B R E V I AT I O N S A N D A C R O N Y M S IEG Independent Evaluation Group IFC International Finance Corporation IFI international financial institution IFM innovative finance mechanism LAC Latin America and the Caribbean LT long-term MDGs Millennium Development Goals MEA Millennium Ecosystem Assessment MIGA Multilateral Investment Guarantee Agency MT medium-term NCD Natural Capital Declaration NGOs nongovernmental organizations NPI net positive impact NRM natural resource management OP Operational Policy PES payments for ecosystem services PFM participatory forest management PS6 IFC’s Performance Standard 6 RCM Regional Coordination Mechanism RSPO Roundtable for Sustainable Palm Oil SAR Southeast Asia SCD Systematic Country Diagnostic SDGs Sustainable Development Goals ST short-term TEEB The Economics of Ecosystems and Biodiversity WAVES Wealth Accounting and Valuation of Ecosystem Services WB World Bank WBG World Bank Group I N V E S T I N G I N N AT U R A L C A P I TA L F O R E R A D I C AT I N G E X T R E M E P O V E R T Y A N D B O O S T I N G S H A R E D P R O S P E R I T Y G LO S S A R Y: W H AT D O W E M E A N W H E N W E S AY . . . v ii GLOSSARY: WHAT DO WE MEAN WHEN WE SAY . . . Cognizant of the definition below, in this roadmap we consider biodiversity as the living natural capital that supplements and influences economic growth and human well-being. We consistently refer to biodiversity in the context of conservation and sustainable use. We view biodiversity in the context of ecosystem services, to which it is inextricably linked, and in the way biodiversity and habitat change are manifested through the provisioning of these services. Biodiversity is essential for ecosystem functions, and functional diversity is important for supporting the flow of ecosystem goods and services, including maintaining resilience to disturbances such as climate change. Biodiversity is the variability among living organisms from all sources including, among others, terrestrial, marine and other aquatic ecosystems, and the ecological complexes of which they are part; this includes diversity within species, between species, and among different ecosystems. Ecosystems are ever-changing complexes of living things interacting with the non-living environment. People are integral parts of ecosystems; our actions shape ecosystems and our well-being is tied to them. Ecosystem services span the whole pathway from ecological processes (for example, biomass, soil formation) through final ecosystem services (for example, water regulation) and goods (for example, drinking water), to their values to humans (for example, sanitation and health). This document includes examples where biodiversity pro- vides provisioning and regulating ecosystem services. Ecosystem services are the benefits people obtain from the activity or functions of ecosystems. Ecosystem resilience is the capacity of an ecosystem to tolerate disturbance without collapsing into a qualitatively different state that is controlled by a different set of processes—an ecosystem that can withstand shocks and rebuild itself when necessary. People depend on and impact ecosystems and the services they provide from local to global scales. Resilience in social systems has the added capacity of humans to anticipate and plan for the future. Resilience is a property of these linked social-ecological systems. Green economy and growth is low carbon, resource efficient, and socially inclusive. Green growth improves human well-being and social equity. It enhances shared prosperity while significantly reducing environmental risks and ecological scarcities. Transition pathways depend on domestic context, natural capital, and socio-economic priorities. Natural capital is the Earth’s living and nonliving natural assets such as soil, air, water, flora, and fauna. Biodiversity is the foundation of the living natural capital. Ecosystem goods and services can be seen as the returns from natural capital underpinning conventionally measured economic growth, providing inputs and increasing the productivity of economies. Maintaining the stock of natural capital sustains the flow of ecosystem goods and services valuable to our societies, economies, and human well-being. Natural infrastructure is the network of natural and semi-natural areas, features, and green spaces in the broader rural and urban landscape and seascape. It enhances biodiversity conservation, ecosystem health and resilience, and human well- being through the maintenance and enhancement of ecosystem services. Sometimes termed green infrastructure, it can be strengthened through strategic and coordinated initiatives that focus on maintaining, restoring, improving, and connecting existing areas and features, as well as creating new ones. A G R I C U LT U R E A N D E N V I R O N M E N TA L S E R V I C E S D I S C U S S I O N PA P E R 1 1 E xecutive S ummary ix EXECUTIVE SUMMARY BOX E.1: What We Mean by Biodiversity KEY MESSAGES ƒƒ Investments in the sustainable use and conservation of Biodiversity is the living web that connects the tangible and biodiversity will contribute to reaching the World Bank intangible elements of healthy ecosystems—the essence of Group’s (WBG) twin goals in a sustainable manner by renewable natural capital underpinning conventionally mea- leveraging ecosystem goods and services in the pursuit sured economic growth and human well-being. Biodiversity of poverty alleviation at the rural frontier where poor is essential for ecosystem functions that provide the flow of ecosystem goods and services providing the foundation for communities depend on returns from biodiversity to sustainability, and maintaining both ecological as well as social catalyze growth. resilience to disturbances such as climate change. ƒƒ Biodiversity and healthy ecosystems play a key role in ecosystem-based adaptation and mitigation to climate change and in building landscape level resilience. well-being, and safety nets are often inextricably linked to and ƒƒ The WBG, with its convening power and expert staff, dependent on natural and semi-natural ecosystems such as forests, add significant value in its biodiversity work because of rangelands, lakes, rivers, and the ocean. By some estimates, ecosys- its ability to: (1) work at scale; (2) integrate biodiversity considerations into cross-economy policy dialogues; tem goods and services account for more than half of the “gross (3) work across sector boundaries; and (4) develop domestic product of the poor.” Worldwide, environmental income, innovative financial mechanisms and leverage substan- ­ three-quarters of which come from natural forests, accounts for 28 tial funding. percent of total household income and has particular importance ƒƒ To maximize impact, the WBG will focus its investments for low-income households. The economic status of poor people is in biodiversity in four key areas: (1) addressing policy often extremely fragile and may be drastically changed as a result failures; (2) enhancing environmental governance and of external shocks and environmental change entirely beyond their public sector capacity; (3) building resilience through control or influence. Disasters—often exacerbated by degradation investing in natural infrastructure across landscapes; and (4) generating financial flows. of biodiversity—frequently affect vulnerable social groups such as ƒƒ The WBG proposes a series of concrete institutional women, children, youth, indigenous people, and minorities in par- steps to support clients in developing solutions based ticular. Households can be thrown back into poverty by a variety of by: (1) mainstreaming biodiversity across sectors; causes such as ill health, poor harvests, or social conflicts, but increas- engaging upstream in investments; and (3) leveraging (2) ­ ingly also by environmental exclusion, degradation, and disasters. ­ nowledge and skills across the whole WBG. its k When these situations occur, they regularly rely on biodiversity as a safety net. Increasing urbanization does not necessarily reduce Biodiversity Matters for the Poor these dependencies, as many of the world’s largest and ­ fastest- Seventy percent of the world’s poor—some 840 million people, growing cities depend on drinking water from protected areas. including most of the extremely poor—live in rural areas. Biodiver­ Furthermore, natural infrastructure often plays a role in protection sity  and healthy ecosystems are particularly important for them from floods or landslides in disaster-prone areas often inhabited by (see box  E.1 for what we mean by biodiversity). Their livelihoods, the poorest people. A G R I C U LT U R E A N D E N V I R O N M E N TA L S E R V I C E S D I S C U S S I O N PA P E R 1 1 x EXECUTIVE SUMMARY Biodiversity Matters for Shared Prosperity biodiversity areas such as cloud forests cover only about 4 percent Biodiversity investments that sustain healthy ecosystems and of tropical dam watersheds but receive and filter 50 percent of increase ownership of environmental assets are often a significant their surface water. The water supply of one-third of the world’s means to increase people’s control of their own lives as well as insur- 100 largest cities depends on protected areas, and irrigated food ance for unexpected shocks. Despite massive efforts and significant production consumes some 70 percent of global freshwater with- progress in fighting extreme poverty, 2.7 billion people in the world drawals, the sustainability of a large portion of which is guaranteed still live on between US$1.25 and US$4 a day. While extreme poverty by natural ecosystems. Healthy oceans are equally important: The has declined, especially in East Asia and China, the proportion of peo- global supply of seafood is worth more than US$190 billion; sea- ple that move in and out of extreme poverty has increased to around food contributes 16 percent of global animal protein consumption, 50 percent of the population, and inequality is growing. Biodiversity and more than 300 million people—the vast majority of them in and natural ecosystems, which often provide subsistence and a basis developing countries—depend on fisheries and aquaculture for for small business and self-employment, can provide an avenue out their livelihoods. of poverty and cushion people against being thrown back into extreme poverty by external shocks. Environmental income can be Biodiversity Conservation Helps to Turn Down the Heat significant and often relies on the direct use of wild fauna and flora. Climate change threatens to roll back decades of development For example, in Ghana women can make about a third of their total and poses a fundamental risk to our ability to end global poverty income from forests, and income from marketed forest produce can and build shared prosperity. Biologically rich ecosystems are more be up to a fifth of their total cash income. resilient, and there is a strong link between biological diversity and ecosystem productivity, stability and function. If global average Investments sustaining biodiversity and healthy ecosystem and temperature increases exceed 2–3°C, major changes in ecosystem the productive capacity of renewable natural capital are essential structure, function, interactions, and biome shifts are expected. for green growth in key sectors that build shared prosperity, such Tropical and sub-tropical regions in Africa and South America are as agriculture, forestry, and fisheries, all of which depend on the specifically vulnerable. It is also well established that declining stock and flow of ecosystem goods and services. Agriculture and abundance and loss of species or widespread shifts in habitat dis- food production in particular depend on biodiversity and healthy tributions leads to loss or degradation of ecosystem services with ecosystems. For example, the worldwide economic value of insect potentially significant impacts on our economies. Not only does pollination for the main food crops was US$209 billion in 2005, and such loss have a greater impact on poor and vulnerable people, amounted to 9.5 percent of the total value of agricultural food but it can also trigger feedback initiating increasing emissions and production. Three-quarters of the 115 leading global food crops global warming. depend upon animal pollination, and many protected areas con- Biodiversity and healthy ecosystems are key elements in building serve wild relatives of major food crops and commodities such as resilience to climate change. Land use change not only degrades wheat, millet, coffee, and pepper, holding a key to diversifying farm- biodiversity and critical ecosystem services such as water supply ing systems and enhancing climate resilient agriculture. but simultaneously drives increased emissions. Forests are particu- Taking biodiversity and healthy ecosystems into account early larly important; forest ecosystems contain more than 75 percent of on in investment planning specifically in the agriculture, fisheries, global terrestrial biomass carbon (15 percent of which is stored in forestry, water, energy, and mining sectors can produce significant protected areas) and 40 percent of soil organic carbon. Wetlands added value and multiple co-benefits in addition to biodiversity store about a quarter of the world’s soil carbon pool. Meanwhile, benefits. Nearly 80 percent of the world’s population faces high primarily commodity- and agriculture-driven deforestation and levels of water insecurity, and incident threat to biodiversity and conversion of natural ecosystems account for about a one quarter human water security are closely correlated. For example, important of global greenhouse gas emissions. Ecosystem-based adaptation I N V E S T I N G I N N AT U R A L C A P I TA L F O R E R A D I C AT I N G E X T R E M E P O V E R T Y A N D B O O S T I N G S H A R E D P R O S P E R I T Y EXECUTIVE SUMMARY xi and mitigation therefore must be a key part of the toolbox to com- BOX E.2: Investments in Biodiversity Can Create Jobs and Raise bat climate change. Climate-smart agriculture has the potential to Incomes deliver sustainable agricultural intensification and increased yields, a In South Africa’s Greater Addo Elephant National Park, a US$5.5 process for which biodiversity is not just the provider of genetic traits million World Bank/GEF investment spurred US$14.5 million in for incremental productivity increases, but an essential element of private sector investment, creating 614 jobs. In Zambia’s Kafue resilient and productive integrated agricultural land ecosystems. National Park, World Bank support to the park authorities led to private investors tripling available accommodations, such that tourist visits rose markedly and park revenues grew ten- Biodiversity is Central to the WBG’s Mission and Values fold within six years. Tourism wages are also usually higher The WBG vision is a world free of poverty. The WBG strategy sets two than average rural wages: In a tourism project in Ngamiland, Botswana, they were found to be more than twice the aver- goals to effectively deliver on this vision: to reduce extreme poverty age rural wage of US$60 per month, contributing significantly to 3 percent by 2030 and to boost shared prosperity. Both goals to poverty reduction. In Namibia, nature-based tourism is es- need to be addressed and achieved building on a foundation of timated to provide nearly 5 percent of all jobs directly, and 19 environmental and social sustainability. Protecting biodiversity and percent indirectly. sustaining healthy ecosystems are core values of the WBG as mani- fested in the operational policies that guide our engagement with public and private sector clients. They are also at the core of environ- BOX E.3: Biodiversity-friendly Project Design Can Improve the mental sustainability. Biodiversity is not only species and habitats; it Performance of Infrastructure Investments is the living web that sustains well-functioning natural ecosystems. Healthy ecosystems provide for cost-effective natural solutions that World Bank investments to protect the forests around the Nam Theun 2 dam in Lao PDR and a 30-year conservation fund to build resilience to shocks and climate change and support poverty manage the watershed have been critical in extending the alleviation by building assets and safer livelihoods. Biodiversity is the lifespan of the 1,070 MW hydropower generation facility. The essence of renewable natural capital that underpins conventionally operator is now paying for the preservation of an upstream measured economic growth and human well-being. By building watershed that helps ensure sedimentation control for the res- on natural solutions client countries can create a more solid, robust, ervoir. Dialogue with the Government of Lao PDR during plan- ning of the project also secured more effective control of illegal and sustainable foundation for a green, inclusive growth trajectory logging and poaching of wildlife in the project area. that delivers on the global vision of the WBG. The WBG has a long experience in engaging in biodiversity with early on in project planning often augments the economic return world-class expertise in the field. It has been the single largest by extending the lifespan of infrastructure, such as dams or reduc- funder of biodiversity investments since the late 1980s. The WBG ing soil erosion risks to roads, while providing significant biodiversity investments have largely been of two kinds: (1) investments in co-benefits and sustaining healthy ecosystems that increase both biodiversity, aimed at the conservation and sustainable use of ecological and social resilience to stresses such as climate change species, habitats, and ecosystems that sustain healthy ecosystems, (see box E.3). while enhancing people’s livelihoods and safety nets. These invest- ments have also been providing jobs and economic development The WGB biodiversity roadmap shows how investments in biodiver- in frequently impoverished rural areas for example by supporting sity and healthy ecosystems can add value to the WBG’s efforts to protected areas and an increasingly important tourism industry (see help our clients reduce extreme poverty by building on their natu- box E.2); and (2) investments that add value to projects in other sec- ral capital and ecosystem assets for more inclusive shared prosper- tors, such as irrigation, hydropower, and infrastructure, by increasing ity, while simultaneously investing in more sustainable, robust, and their environmental sustainability. Taking biodiversity into account resilient economies. A G R I C U LT U R E A N D E N V I R O N M E N TA L S E R V I C E S D I S C U S S I O N PA P E R 1 1 xii EXECUTIVE SUMMARY The WBG Provides Comparative Advantage The WBG’s ability to leverage finance across sectors and factors as and Added Value well as its convening role within the donor community can help WBG investments in biodiversity build on our comparative advan- mainstream biodiversity within national agendas as a critical part of tage as an institution that sets the benchmark for public develop- inclusive green growth. Almost 40 percent of the WBG biodiversity ment finance globally. The WBG has been the world’s largest source investments have been provided as standalone International Bank of development finance for biodiversity. Since the 1980s the World for Reconstruction and Development/International Development Bank (including the Global Environment Facility (GEF) funds it has Association (IBRD/IDA) lending operations while 30 percent of administered) has accounted for 60 percent of global biodiversity- biodiversity investments have blended IBRD/IDA loans with GEF related funding. The World Bank biodiversity portfolio of 245 proj- resources. Nevertheless, the role of GEF financing has been signifi- ects from FY04 to FY13 (FY = fiscal year) included over US$1 billion cant for the WBG’s biodiversity engagements and 28 percent of the in direct biodiversity commitments. There are a growing number funding between FY03 and FY14 was for GEF grant-funded stand- of actors that support countries in managing biodiversity and alone projects. However, compared to most factors the WBG can their renewable natural capital. What added value can the WBG provide significant financing leverage (see box E.5). For example, provide? Compared to many other actors, the WBG can provide highly co-financed projects implemented by the WBG only con- specific added value through: (1) client focus, scale and long- stitute 4 percent of the whole GEF portfolio but accounted for term engagement; (2)  financial leverage and convening power; one-third of all co-financing. Without the WBG’s projects, the GEF (3) economy-wide engagement and policy leverage; (4) public and co-financing ratio would fall from 4.5:1 to 3.1:1. private sector engagement and experience; and (5) global knowl- The WBG is a global center of excellence that provides economy- edge and excellence. wide technical and economic knowledge and expertise on biodi- The scale and focus of the WBG engagement has helped many cli- versity and ecosystems. It has the standing and convening power ent countries meet their development commitments. For example, to facilitate participatory dialogue between client countries and between FY02 and FY11, 46 percent of the 289 World Bank forest networks of other relevant stakeholders on matters of biodiversity sector projects with a total value of US$2.6 billion included sup- and climate change concern, such as loss of ecosystem resilience, port to protected areas, largely contributing to achieving the 2010 forest law enforcement and governance, wildlife trade, and overex- global target for protected area coverage (see box E.4). ploitation of natural resources. BOX E.4: Conservation Projects Can Transform Economic Opportunities While Turning Down the Heat BOX E.5: World Bank Biodiversity Projects Can Leverage Substantial Financing In Brazil, the Amazon Region Protected Areas (ARPA) program designated 24 million hectares of protected areas—equivalent In Mexico, having previously helped set up the Mexican Fund to 46 percent of all protected areas created in the world be- for the Conservation of Nature, a well-functioning conserva- tween 2003 and 2008—while improving the livelihoods of the tion trust fund, the Bank is now implementing the Coastal Amazonian population by generating sustainable livelihood Watersheds Conservation in the Context of Climate Change opportunities, strengthening value chains of forest-based Project, one of the largest GEF projects ever, which mobilized products, and improving coexistence between small family US$228 million from the government to promote integrated farms and larger-scale agriculture. Significant portions of the environmental management of selected coastal watersheds as newly created protected areas are on indigenous land. The in- a means to conserve biodiversity, contribute to climate change digenous people have received legal rights over the land and mitigation, and enhance sustainable land use. In Brazil, the security of access to its resources in return for conserving the Amazon Region Protected Areas Project helped catalyze the land. ARPA will prevent emission of 430 million tons of carbon creation of a US$215 million conservation trust fund to secure by 2050. the long-term sustainability of the protected areas network. I N V E S T I N G I N N AT U R A L C A P I TA L F O R E R A D I C AT I N G E X T R E M E P O V E R T Y A N D B O O S T I N G S H A R E D P R O S P E R I T Y EXECUTIVE SUMMARY x iii WBG engagement with clients has also generated significant companies to achieve Net Positive Impact on biodiversity and that innovations that currently are mainstreamed globally and in cli- will enable private sector clients to work more responsibly in areas ent countries. Payment for ecosystem services (PES) was initiated of high biodiversity value. by the WBG. The WBG was a principal founding partner piloting of The WBG will enhance environmental governance and public the GEF in 1991. By operationalizing management effectiveness sector capacity by focusing on institution-building, public sector evaluation, through the Management Effectiveness Tracking Tool, responsibility, and administrative capacity to maximize biodiversity’s the WBG together with the GEF has been instrumental in pushing contribution to driving strong economies. The clarification of roles for a change from paper parks toward better management of the and responsibilities, especially within public agencies responsible national parks and protected areas, including greater conservation for conservation and protected areas, and for conservation aspects outcomes. within other sectors, such as agriculture, forestry, fisheries, energy, Delivering Sustainable Impact by Realigning the WBG mining, and transport, as well as planning agencies, is key to coordi- Investment Portfolio nating and maximizing biodiversity’s contributions to poverty reduc- Going forward, the WBG will build on the its comparative advan- tion. The WBG’s investments will focus on the regulatory and enabling tage and experience from its portfolio of investments to focus environment. Capacity building to improve public sector perfor- on four major areas: (1) addressing policy failures, (2) enhancing mance is another important focus of WBG engagements. The WBG environmental governance and public sector capacity, (3) building will also invest in supporting policies to better manage the inevitable resilience through investments in natural infrastructure across land- trade-offs at the landscape-level between the needs and interests of scapes, and (4) generating financial flows. The WBG will be using its different sectors and will continue to help clients build their capacity experience in financing to provide solutions and innovate monetary to apply the mitigation hierarchy, allowing them to avoid or minimize returns on investment in natural capital, working in focused and adverse impacts on their biodiversity and thus safeguard their total selective partnerships with our public and private sector partners. wealth. Successful WBG biodiversity investments have often provided local and indigenous communities the rights to their assets, as in the The WBG investments will focus on drivers and causes of biodi- Amazon Region Protected Areas (ARPA) program in Brazil, providing versity loss and helping its clients address policy failures that people with opportunities to move out of poverty. The WBG will also currently allow depletion of biodiversity without tangible poverty help its clients strengthen environmental crime prevention. and/or shared prosperity gains. The priority will be on changing system-level procedures and processes, designing new financing Building on a long and successful experience of investing in pro- instruments and economic incentives, including removing harm- tected areas and landscapes, the WBG will help client countries ful subsidies for sustainable investments, and engaging in strategic build resilience through investments in natural infrastruc- partnerships. The Wealth Accounting and Valuation of Ecosystem ture across landscapes. This landscape focus aims to ensure that Services (WAVES) partnerships, for example, is helping countries the flow of ecosystem goods and services is sustained to support develop the tools and means to integrate the economic value other sectors and to provide opportunities to the poor to diversify of natural capital into economic planning and decision-making. their income and reduce their vulnerability to shocks. National pro- Another example, in the Brazilian state of Acre, the government tected area networks are the cornerstones of biodiversity conserva- has decoupled economic growth from deforestation. In doing so, tion but also serve as water towers for industry and urban centers, the government has reduced deforestation rates by 70 percent as well as a valuable buffer against the impacts of climate change. In while growing its GDP by 44 percent between 2003 and 2008. many countries national parks are also a cornerstone for the tourism The International Financial Corporation (IFC) is participating in the industry. The WBG will continue to invest in securing biodiversity recently established Net Positive Impact Alliance, a partnership with to attract public and private investment in tourism, supporting a Rio Tinto, Shell, the International Union for Conservation of Nature, nature-based and sustainable tourism industry that benefits and and The Nature Conservancy, which is developing the means for provides employment to poor communities. A G R I C U LT U R E A N D E N V I R O N M E N TA L S E R V I C E S D I S C U S S I O N PA P E R 1 1 xiv EXECUTIVE SUMMARY BOX E.6: Conservation Can Benefit Poverty Reduction including providing options for securing biodiversity co-benefits through carbon finance and aggregate offset schemes in a cost- In Kenya, the Kenya Wildlife Conservation Leasing Demonst- effective manner. A priority area will also be to explore how natural ration Project has been helping to ensure the long-term eco- capital considerations can be integrated into WBG financial products logical viability of Nairobi National Park by allowing wildlife to and services for the private sector, in particular helping the financial use areas adjacent to the park. A total of 388 households with some 22,000 hectares of land have signed up to the project. sector assess, value, and mitigate biodiversity and natural capital- These families receive rent for not fencing off their land and related risks with respect to loans, investments or insurance products. allowing wildlife to roam it. Families use some 80 percent of the rental income for school fees, with the balance invested in human health and livestock production. Mobilizing the WBG to Increase the Effectiveness of Its Biodiversity Investments Biodiversity and natural ecosystems can also play an important role The roadmap outlines priorities for the WBG investments in the in protecting development investments. For example, WBG invest- conservation and sustainable use of biodiversity. In addition, the ments to protect the forests around the Nam Theun 2 Dam in the roadmap outlines a set of internal measures to increase the vol- Lao People’s Democratic Republic (Lao PDR) and a 30-year conser- ume, impact, and effectiveness of these investments to enhance its vation fund to manage the watershed are critical in extending the contribution to the achievement of the twin goals of eliminating lifespan of the hydropower generation facility. The Dumoga-Bone extreme poverty and boosting shared prosperity in an environ- National Park in Indonesia was established to protect a major irri- mentally sustainable manner. These measures will help the WBG to gation investment in North Sulawesi, while investments in coastal better position it to work on the four priority areas for biodiversity forests, swamps, floodplains, and mangroves in Croatia, Bangladesh, engagement and includes short-term, medium-term, and long- Indonesia, Honduras, and Lithuania are providing coastal protection term steps to aid prioritization. and flood control. The measures aim to mobilize the WBG effectively to provide A great strength of the WBG lies in devising and implementing nature-based solutions to development challenges; to develop innovative financing mechanisms for biodiversity conservation and clearer internal and external leadership; and to provide resources global public goods in many countries. The WBG will prioritize con- for better leverage the WBG’s wealth of biodiversity experience in tinued innovation to develop financial mechanisms that generate supporting clients. It includes measures to enhance the way we financial flows from biodiversity and natural capital (see box E.6). do business by engaging upstream and providing added value to The aim is to enable long-term investment in biodiversity and cre- clients both through direct investments as well as by including bio- ate financial flows from biodiversity and ecosystem services that diversity across sectors. The measures also build the WBG’s capacity defray the opportunity costs of maintaining the stock over the long for the science of delivery in the sustainable use and conservation term. The WBG will design PES schemes that generate revenues and of biodiversity. The WBG will put greater focus on strategic commu- internalize costs. It will invest in conservation trust funds to dampen nication to build constituency and leveraging our experience with funding oscillations that make nature vulnerable to degradation, clients and stakeholders, and engage in strategic partnerships to and will apply its experience in implementing a range of land and deliver on the four priority areas and ensuring alignment with the forest-based climate mitigation pilot and demonstration projects, WBG twin goals. I N V E S T I N G I N N AT U R A L C A P I TA L F O R E R A D I C AT I N G E X T R E M E P O V E R T Y A N D B O O S T I N G S H A R E D P R O S P E R I T Y C H A P T E R 1 — C O N T E X T A N D R AT I O N A L E 1 Chapter 1 CONTEXT AND RATIONALE The purpose of this Roadmap1 is to outline strategic prior- A diversity of functional response mechanisms to environmental ity actions for the World Bank Group (WBG) to support its variation among species in an ecosystem maintains resilience to clients in their quest to eliminate extreme poverty by 2030 disturbances (Rockström et al. 2009) such as climate change. and boost shared prosperity through the conservation and Maintaining the stock of natural capital sustains the flow sustainable use of biodiversity. It describes the key areas of of valuable ecosystem goods and services essential to our support to our clients to address poverty, shared prosperity, and economies, human societies, and well-being. From an eco- sustainability. It builds on the WBG’s corporate strategy of 2013 nomic perspective, ecosystem services are the return on natural and the 2012–22 environment strategy. It is closely aligned with capital, and the sustainable management of this capital underlies the WBG Agricultural Action Plan (2012) and the Forest Action Plan inclusive green growth. Increasingly, countries are seeking a mea- (in progress). It is based on the comparative advantage of the WBG sure of total wealth so that physical capital is not manufactured at in defining key areas of action for the coming years, especially the the expense of natural or social capital. Many companies also are expertise and capacity for policy-level and economy-wide engage- seeking to understand and incorporate the value of natural capital ment, as well as its experience in finance and the private sector. It in their operations and throughout their often global supply chains. draws upon WBG experience over the past 10 years and outlines what knowledge, resources, partnerships, and engagements it takes Biodiversity has intrinsic values for people and societies. Our to deliver successful solutions that enhance inclusive green growth evolutionary coexistence with the natural world is embedded into and support the sustainable development and livelihoods of the who we are as humans and in our cultural expression as societies. world’s poor people. This material, cultural, and spiritual significance of biodiversity and nature more broadly provides the moral basis for our responsibility Biodiversity is the living natural capital that underpins for protecting the earth’s biological systems and diversity as a public conventionally measured economic growth and well-being. good. A “grow now and clean up later” development approach puts It includes the diversity within species, the number of species, at risk these core human values and global public goods as well as and the diversity within and among ecosystems—our renewable green and sustainable growth (World Bank 2012). Losses of envi- natural capital. It is of overarching importance for maintaining the ronmental assets, especially biodiversity, can be irreversible. Clients’ earth’s life-supporting systems and it interacts with other critical environmental policies and the WBG’s operational policies acknowl- global systems. Biodiversity is essential for ecosystem functions, and edge these values and provide for safeguards and performance the functional diversity of ecosystems is important in supporting standards to ensure that public and private investments are socially the flow of ecosystem goods and services (Cardinale et al. 2012). and environmentally responsible. The WBG supports the protection, maintenance, and rehabilitation of biodiversity and its functions in 1 The roadmap was developed by the Agriculture and Environmental Ser- vices Department in the Sustainable Development Vice-Presidency, in its economic and sector work, public and private sector financing, collaboration with the Bank’s regional units and IFC. The roadmap has and policy dialogue. The WBG also works with clients to apply a pre- benefited from the inputs of numerous members of the Biodiversity Community of Practice. Their contributions are gratefully acknowledged. cautionary approach to ensure sustainable development. A G R I C U LT U R E A N D E N V I R O N M E N TA L S E R V I C E S D I S C U S S I O N PA P E R 1 1 2 C H A P T E R 1 — C O N T E X T A N D R AT I O N A L E 1.1 THE ROLE OF BIODIVERSITY IN ENDING Cities, including the urban poor, are growing consumers of EXTREME POVERTY ecosystem services. The total urban area is expected to triple and Biodiversity is particularly important for the estimated 840 populations to double up to 2030, with cities expanding faster in million rural poor people. Poverty remains a largely rural problem: area than in population. Though urbanization often increases bio- 70 percent of the world’s poor live in rural areas (World Bank 2014), diversity loss and habitat degradation, conservation and sustainable and the loss of biodiversity and the degradation of natural capital use of biodiversity make our cities more livable, resilient, and sus- impact them the most. The livelihoods, well-being and safety nets tainable, and cities are increasingly dependent on the protection of of the rural poor, especially women, are often inextricably linked to biodiversity. For instance, urban-based and international demands and dependent on natural and semi-natural ecosystems. According for agricultural products are significant drivers of deforestation in to some estimates, ecosystem goods and services account for more the humid tropics (DeFries et al. 2010), while approximately a third than half of the “gross domestic product (GDP) of the poor,” that is, of the 100 largest cities in the world get a major share of their water the total source of livelihoods of rural and forest dwelling house- from protected areas, including Johannesburg, Nairobi, Mumbai, holds (Sukhdev et al. 2010). In addition, biodiversity is of particular Quito, and Rio de Janeiro (Dudley and Stolton 2003). An estimated importance for the 300 million indigenous people of the world, 10 percent of world GDP (US$6 trillion annually) is spent on city one-third of whom (about 50 percent if China is excluded) live in infrastructure and, though decreasing, some 32 percent of urban extreme poverty. For them, nature—apart from being a source of dwellers still live in slums. Unplanned urban expansion encroaches livelihood and well-being—is the foundation for their cultural and on and degrades natural habitats while often simultaneously spiritual identities (CBD 2010). increasing the environmental risks the urban poor face. Floods, landslides, fire, and other environmental disasters typically affect Poor rural people depend on smallholder farming, livestock, the poorest. Better planned urban development and infrastructure and artisanal fisheries. Their livelihoods are therefore dispropor- investments, including natural infrastructure for flood protection tionally dependent on the use and management of biodiversity and and landslide prevention, as well as retaining the amenities of green the goods and services of natural ecosystems, such as forests, range- spaces, such as in the case of the reforestation of the favelas of Rio lands, soils, freshwater, oceans, and wildlife, often at the interface de Janeiro, can provide lasting benefits for people, urban living, and between natural ecosystems and semi-natural cultivated or man- ecosystems, including enhanced climate-resilient urban develop- aged ecosystems (Barrett 2008; Barrett et al. 2011). Despite massive ment that significantly reduces risks for poor urban people. efforts and significant progress, 2.7 billion people in the world live on between US$1.25 and US$4 per day (World Bank 2013). While extreme poverty has declined, especially in East Asia and China, the 1.2 PROVIDING GROWTH PATHWAYS FOR THE number of people that move in and out of extreme poverty has BOTTOM 40 PERCENT increased to around 50 percent of the population, and inequality Biodiversity-related investments in natural capital underpin is growing. External shocks and environmental change entirely livelihoods. Household-level income gains are typically associ- beyond their control or influence may drastically change the eco- ated with transition to non-farm wages and income from self- nomic status of the rural poor, affecting especially vulnerable social employment. The share of non-farm income is increasing in almost groups such as women, children, youth, indigenous people, and all countries, and non-farm self-employment—a source of income minorities. Households can be thrown back into poverty by a variety for 20–40 percent of households—is important everywhere. Often, of causes such as poor health, poor harvests, or social conflicts, but non-farm self-employment relies on the direct use of wild fauna and increasingly as a result of environmental degradation and disasters. flora. For example, in Ghana women can make about a third of their When this happens, the rural poor are often forced to turn to biodi- total income from forests, and income from marketed forest prod- versity for their livelihood. ucts can be up to a fifth of their total cash income. I N V E S T I N G I N N AT U R A L C A P I TA L F O R E R A D I C AT I N G E X T R E M E P O V E R T Y A N D B O O S T I N G S H A R E D P R O S P E R I T Y C H A P T E R 1 — C O N T E X T A N D R AT I O N A L E 3 Sustainable management of biodiversity is essential for pepper (India), millet (Niger), wheat (Armenia), and a range of fruits green growth in key sectors, such as agriculture, forestry, and (Indonesia) (MacKinnon et al. 2010). More diverse farming systems fisheries, which depend on the stock and flow of ecosystem maintaining agrobiodiversity2 have significant potential to increase goods and services. Some 70 percent of global freshwater with- agricultural yield, while simultaneously increasing resilience, reduc- drawals are for irrigated food production (Foley et al. 2011). Incident ing risks in the sector (Jackson et al. 2007; Smale and Drucker 2008), threats to biodiversity and human water security are closely corre- and providing cost-effective insurance for the poor (Heal 2000). lated, and nearly 80 percent of the world’s population faces high lev- els of water insecurity (Vörösmarty et al. 2010; Sáenz and Mulligan 1.3 TURNING DOWN THE HEAT 2014). For example, in Kenya reducing rates of annual deforestation Addressing climate change is a WBG corporate priority, and provides far greater economy-wide benefits than the short-term ecosystem conversion and degradation are major drivers of harvesting which is often followed by land use conversion: The cash climate change and reduced resilience. Climate change threat- value of timber and fuel wood on 5,000 hectares (ha) is estimated at ens to roll back decades of development and poses a fundamental US$16 million, while the total economy-wide impact of the decrease risk to our ability to end global poverty and build shared prosperity in regulating ecosystem services was estimated at US$65 million in in a sustainable manner. The current carbon-intense growth paths 2010, of which lower agricultural production due to reduced water and underinvestment in resilience and disaster risk management yield and stream flow accounted for US$30 million (UNEP 2012). cannot continue. Rising temperatures and sea levels, storms, floods, Worldwide, the economic value of insect pollination for the main or droughts threaten devastating implications for affected econo- food crops in 2005 was US$209 billion and amounted to 9.5 percent mies. At the same time, WB client countries are grappling with the of the total value of the world agricultural food production (Gallai imperative to increase investment in agriculture for food security et al. 2009). This points to the need for protecting sufficient natural and alleviate rural poverty. This requires addressing deforestation areas adjacent to production fields where insects can live to perform and the conversion of natural ecosystems. Agriculture and agricul- this function. Oceans contain 80 percent of all life on Earth and are ture-driven conversion of natural ecosystems and forests account essential for global food security, economic growth, and sustainable for about a quarter of global greenhouse gas (GHG) emissions. livelihoods. The annual value of the global supply of seafood is more Forest ecosystems contain more than 75 percent of global terres- than US$190 billion. Seafood contributes 16 percent of global ani- trial biomass carbon and 40 percent of soil organic carbon (Jandl et mal protein consumption, and more than 300 million people, the al. 2007). Of this, 15 percent is stored in protected areas (Campbell vast majority of them in developing countries, depend on fisheries et al. 2008). and aquaculture for their livelihoods (FAO 2010). Sustainable intensification of agriculture and climate-smart Agriculture and food production especially depend on biodi- food systems will be critical in addressing loss of biodiversity, versity and functioning ecosystems. Three-quarters of the 115 saving water, and reducing deforestation and GHG emissions leading global food crops depend upon animal pollination, includ- (World Bank 2012). Land conversion invariably leads to net car- ing important cash crops such as cocoa and coffee. Animal pollina- bon releases, sometimes with comparatively low yield gains. For tors, such as bees, birds, and bats are essential for an estimated 35 example, conversion of tropical lands releases twice the amount of percent of global crop production and increase the output of 87 of the leading food crops worldwide (Klein et al. 2007). For example, 2 Agrobiodiversity refers to: “The variety and variability of animals, plants in Costa Rica pollination services have improved coffee quality and and micro-organisms that are used directly or indirectly for food and agriculture, including crops, livestock, forestry and fisheries. It comprises increased yields by 20 percent in farms closer than 1 kilometer (km) the diversity of genetic resources (varieties, breeds) and species used for food, fodder, fibre, fuel, and pharmaceuticals. It also includes the from forests, contributing 7 percent of farm income (Rickets et al. diversity of non-harvested species that support production (soil micro- 2004). Many protected areas provide in situ genetic conservation of organisms, predators, pollinators), and those in the wider environment that support agro-ecosystems (agricultural, pastoral, forest, and aquatic) wild relatives of major food crops, such as coffee (Ethiopia, Uganda), as well as the diversity of the agro-ecosystems.” (FAO 1999). A G R I C U LT U R E A N D E N V I R O N M E N TA L S E R V I C E S D I S C U S S I O N PA P E R 1 1 4 C H A P T E R 1 — C O N T E X T A N D R AT I O N A L E carbon per unit area of those in temperate regions when cleared, 1.4 RESPONDING TO GLOBAL CALLS FOR ACTION but average crop yields are only 50 percent (Foley et al. 2011). Yet, The world is experiencing a dramatic loss of biodiversity3 that the currently non-cultivated area suitable for cropping that is non- may undermine development opportunities and exacerbate forested, non-protected, and populated with less than 25 persons risks, particularly for the poor. Biodiversity loss, driven mainly per square kilometer amounts to 446 million ha, almost a third of by habitat loss, degradation, and fragmentation, overexploitation, the globally cropped land area (Deininger et al. 2011). Hence there invasive species, climate change, and pollution, is among two of the are significant opportunities using climate-smart agriculture (CSA) nine global systems estimated to have moved farthest beyond a safe to achieve the triple win of growing more food, mitigating climate operating space (Rockström et al. 2009).4 The Millennium Ecosystem change, and building resilience. However, this requires adopting and Assessment (MEA), assessing the consequences of ecosystem better targeting sustainable agricultural intensification measures change to human well-being, found that only 4 of 24 ecosystem that limit agricultural expansion at the expense of forests and natu- services examined had been enhanced, while 15 were used unsus- ral ecosystems; enhancing the resilience of cropping systems and tainably or had been degraded (MEA 2005). Since 2002, the world resource use efficiency; and increasing food delivery. Such strategies has lost 52 million hectares of forests, and about 40 percent of warm could increase food availability by 100–180 percent (Foley et al. 2011) water coral reefs since the 1980s. The Living Planet Index (LPI), which while securing vital ecosystem services that sustain food production. monitors selected species populations, has declined by 30 percent globally, and by almost 60 percent in developing countries in the CSA needs to deliver intensification without sacrificing yields, tropics, which account for the greatest share of global biodiversity.5 and biodiversity has a critical role to play. Much of the gradual The Red List Index, which measures extinction risk, shows that species increase in agricultural production has been achieved through the in groups where trends are known are all increasingly threatened.6 expansion of the agricultural frontier. The results are often growing habitat fragmentation and a loss of ecological connectivity where The loss of biodiversity is manifested in growing impacts natural ecosystems are retained in scattered islands of protected on the provision of ecosystem services, such as clean water, areas surrounded by increasingly intensive agricultural and forest food provision, and protection from environmental disas- land management. If we aim to meet the challenge of producing ters, all of which are critical for human well-being and green 50 percent more food, biodiversity has to be not just a provider of growth. For the 70 percent of the world’s poor in rural areas, agri- genetic traits for incremental productivity improvements, rather culture is the major source of income and development (World an essential component of improved food systems. Integrating Bank 2014), including for 2.5 billion people living on small-scale biodiversity in agricultural production can raise income and food farming in developing countries. The loss of agrobiodiversity may security and enhance other factors such as health or cultural preser- have consequences for our ability to respond to demands for higher vation (Frison et al. 2011; Larsen et al. 2012). Increased crop diversity crop yields and productivity while simultaneously adapting to the and diversity between agricultural production systems also raises resilience to pests and disease. Integrated landscape approaches 3 CBD defines biodiversity loss to be “the long-term or permanent qualita- tive or quantitative reduction in components of biodiversity and their can increase production of ecosystem services, such as in the case potential to provide goods and services, to be measured at global, of agrosilvopastoral land use in Sahel, where farmer-assisted natural regional and national levels” (CBD COP VII/30). See also: Butchart et al. (2010). regeneration has helped restore five million ha of Faidherbia albida 4 “Safe operating space” refers to the amount humans can exploit natu- parklands. In many current agriculture, livestock, aquaculture, or ral systems without fundamentally altering those systems in a way that imperils the societal organization, economies, and technologies that plantation forestry practices growth involves tradeoffs. However, have been built on the stability these systems displayed in the Holo- cene, the current geological epoch. Rockström et al. (2009). policies, innovation, and smart subsidies can help minimize or elimi- 5 The LPI monitors over 7,100 vertebrate populations of over 2,300 species nate some of these tradeoffs. For example, changes in rural credit of mammals, birds, reptiles, amphibians, and fish from around the globe; changes in population size, relative to 1970 (1970 = 1.0) is plotted over time. criteria have played a significant role in drastically reducing defores- 6 The Red List Index monitors the extinction risk (level and trend) of all tation rates in the Brazilian Amazon (Assuncão et al. 2013). species in a group (such as amphibians or corals) over time. I N V E S T I N G I N N AT U R A L C A P I TA L F O R E R A D I C AT I N G E X T R E M E P O V E R T Y A N D B O O S T I N G S H A R E D P R O S P E R I T Y C H A P T E R 1 — C O N T E X T A N D R AT I O N A L E 5 challenges of climate change. Water provision is one of the most principal global framework for addressing conservation and sustain- vital ecosystem services that biodiversity can help ensure, yet about able use of biodiversity. In 2010, the tenth conference of the par- 2.7 billion people experience severe water scarcity for at least one ties approved and committed to implementing the CBD Strategic month per year (Hoekstra and Mekonnen 2011). The loss of coral Plan 2011–20, including the 20 Aichi Targets and a broad vision for reefs has significant negative consequences for 350 million people 2050. The implementation of the CBD and the strategy is driven by living in coastal areas by reducing coastal protection and habitat for thematic programs but specifically through National Biodiversity fish. Deforestation and land conversion contribute about 30 percent Strategies and Action Plans prepared by the countries. The MDGs, of global greenhouse emissions, and the loss of biodiversity reduces the emerging post-2015 development framework, and the Aichi the resilience of ecosystems to disturbances. Environmental Targets together provide a comprehensive framework within which degradation and disasters—manifested by floods, erosion, and poverty and development are addressed in an environmentally sus- sedimentation—threaten large-scale infrastructure investments tainable way that secures the long-term future of our planet and its in hydropower, irrigation, or coastal defenses. The combination resources for future generations. of these global challenges—food security tied to agriculture and fisheries, water provision, protection from natural disasters—are The WBG’s environmental and social policies, including intimately entwined with healthy biodiversity in a complex web. World Bank Safeguard Policies and the International Finance Corporation’s (IFC’s) Policy and Performance Standards on The Millennium Development Goals (MDGs) provide the cur- Environmental and Social Sustainability, embody the core rent development framework to address global poverty, and values of the institution. These policies are the cornerstone of WBG specifically strive for sustainability. The WBG has been instru- efforts to protect people and the environment, and to ensure equitable mental in assisting client countries to successfully reduce extreme and sustainable development outcomes. The World Bank Safeguard poverty and progress toward achieving the MDGs. The links between policies are currently being reviewed to better meet the varied needs poverty and the environment are complex but they are strong. The of borrowers and to address new development demands and chal- MDGs’ environmental sustainability goal is based on the principles lenges. It is anticipated that the review will lead to a newly integrated of sustainable development in country policies and programs, framework that builds on the existing core principles. It is intended specifically reversing the loss of environmental resources, including to enhance policy alignment with internal and external changes, and the loss of biodiversity. The WBG twin goals to eliminate extreme provide a solid foundation for a renewed and strengthened partner- poverty and boost shared prosperity by 2030 also include the need ship with World Bank borrowers, leading to enhanced development to achieve them sustainably. Environmental sustainability is a core effectiveness. Additionally, IFC’s Policy and Performance Standards on principle in the WBG inclusive green growth agenda and should also Environmental and Social Sustainability, which underwent their first be the foundation on which the Sustainable Development Goals revision in 2012, include a strong focus on biodiversity and ecosystem (SDGs), the post-2015 development framework that is currently services. In fact, IFC is the first international financial institution (IFI) to being formulated within the United Nations, will be built. explicitly incorporate the concept of ecosystem services in its institu- WBG client countries are also committed to the Convention tional policies and requirements for its clients. of Biodiversity (CBD).7 The MEA, the G8-initiated study on The IFC has been providing leadership in the financial sector on Economics of Ecosystems and Biodiversity (TEEB) (Sukhdev et al. biodiversity and ecosystem services issues. Channeling finance 2010), and a growing body of experience and scientific knowledge to businesses that are environmentally and socially sustainable is have increased our understanding of the intricate and close rela- at the core of the financial sector’s role in promoting sustainable tionship between biodiversity, ecosystems goods and services, economic growth. When financial institutions have the policies and and human well-being. The CBD, one of the Rio Conventions, is the tools to better understand how their clients’ management of biodi- 7 193 countries are parties to the CBD. versity issues affects their performance as well as the increasing costs A G R I C U LT U R E A N D E N V I R O N M E N TA L S E R V I C E S D I S C U S S I O N PA P E R 1 1 6 C H A P T E R 1 — C O N T E X T A N D R AT I O N A L E associated with declining natural capital, they can better incorporate community, can help mainstream biodiversity within this information in their investment due diligence processes. IFC’s national agendas as a critical part of inclusive green growth. Policy and Performance Standards on Environmental and Social Almost 40 percent of the World Bank’s biodiversity investments Sustainability currently provide one such tool, notably through have been provided as standalone IBRD/IDA lending operations, Performance Standard 6 on Biodiversity Conservation and Sustainable while 30  percent of biodiversity investments have blended IBRD/ Management of Living Natural Resources. Through the Equator IDA loans with GEF resources. Nevertheless, the role of GEF financ- Principles, 78 commercial financial institutions globally have adopted ing has been significant for the Bank’s biodiversity engagements policies and standards inspired by IFC’s standards, and IFIs, European and 28 percent of the funding between FY03 and FY14 was for GEF development finance institutions, and Organization for Economic grant-funded standalone projects. However, compared to most Cooperation and Development export credit agencies refer to them. actors the World Bank can provide significant financing leverage. For example, highly co-financed projects implemented by the World Bank only constitute 4 percent of the whole GEF portfolio 1.5 THE WBG PROVIDES COMPARATIVE but accounted for one-third of all co-financing. Without the Bank’s ADVANTAGE AND ADDED VALUE projects the GEF co-financing ratio would fall from 4.5:1 to 3.1:1. World Bank investments in biodiversity will build on its com- The WBG is a global center of excellence that provides econ- parative advantage as an institution that sets the benchmark omy-wide technical and economic knowledge and expertise for public development finance globally. The WBG has been the on biodiversity and ecosystems. It has the standing and con- world’s largest source of development finance for biodiversity. Since vening power to facilitate participatory dialogue between client the 1980s the World Bank (including the GEF funds it has adminis- countries and networks of other relevant stakeholders on matters of tered) has accounted for 60 percent of global biodiversity-related biodiversity and climate change concern, such as loss of ecosystem funding. The World Bank biodiversity portfolio of 245 projects from resilience, forest law enforcement and governance, wildlife trade, FY04 to FY13 included over US$1 billion in direct biodiversity com- and overexploitation of natural resources. mitments. There are a growing number of actors, both global, public sector and non-governmental that support countries in managing WBG engagement with clients has also generated significant biodiversity and their renewable natural capital. Compared to many innovations that currently are mainstreamed globally and other actors the WBG can provide specific added value through: in client countries. Payment for ecosystem services (PES) was (a) Client focus, scale and long-term engagement; (b) Financial initiated by the World Bank. The WB was a principal founding part- leverage and convening power; (c) Economy-wide engagement ner piloting of the GEF in 1991. By operationalizing management and policy leverage; (d) Public and private sector engagement and effectiveness evaluation, through the Management Effectiveness experience; and (e) Global knowledge and excellence. Tracking Tool, the World Bank together with the GEF has been instrumental in pushing for a change from paper parks toward bet- The scale and focus of the World Bank engagement has ter management of the national parks and protected areas, includ- helped many client countries meet their development com- ing greater conservation outcomes. mitments. For example, between FY02 and FY11, 46 percent of the 289 World Bank forest sector projects with a total value of US$2.6 As an original partner of the GEF and as part of the inter-agency task billion included support to protected areas, largely contributing to force that developed the GEF 6 strategy, and as the only GEF imple- achieving the 2010 global target for protected area coverage (see menting agency to routinely leverage co-financing through its own text box on ARPA). resources, the WBG is very well-placed to access GEF 6 financing, including from new areas of eligibility like in the realms of wildlife The WBG’s ability to leverage finance across sectors and crime or innovative financing, as well as in the new innovative pro- actors, as well as its convening role within the donor grammatic approaches. I N V E S T I N G I N N AT U R A L C A P I TA L F O R E R A D I C AT I N G E X T R E M E P O V E R T Y A N D B O O S T I N G S H A R E D P R O S P E R I T Y CHAPTER 2 — BUILDING ON THE EXPERIENCE OF THE WORLD BANK’S BIODIVERSIT Y INVESTMENTS 7 Chapter 2 BUILDING ON THE EXPERIENCE OF THE WORLD BANK’S BIODIVERSITY INVESTMENTS The WBG is the largest funder of international biodiversity Development Association (IDA) loans; 39 percent was provided as conservation. Its biodiversity work includes targeted investment standalone IBRD and IDA lending operations; and a small remainder projects and safeguards-induced work. Since the 1980s the World came from other trust funds. A survey of a sample of the stand- Bank (including the Global Environment Facility (GEF) funds it has alone loan operations, however, indicated that about one-third had administered) has accounted for 60 percent of global biodiversity- resulted from earlier dialogue and investments supported by GEF related funding (Miller et al. 2013). The overall World Bank biodi- funding. versity portfolio of 245 projects in the ten years from fiscal 2004 to 2013 included direct biodiversity commitments worth over The World Bank’s investments in biodiversity have been US$1 billion. These projects have taken place in 74 countries in all decreasing in number and volume in the last seven years. The six WBG regions. Most projects were in the Africa and in the Latin portfolio reached a peak in 2005, with 39 new projects approved, America and Caribbean regions, which between them accounted and has since stabilized at a significantly lower level, where an aver- for more than two-thirds of biodiversity projects. This share gradu- age of some 20 projects have been annually approved over the last ally decreased during the period under review. five years (see figure 2.1). In parallel, financial commitments have shrunk (see figure 2.2; the financing spike in 2009 was due to a single In keeping with the World Bank’s country management unit- large project), and the proportion of total World Bank lending that led decision-making, investment in biodiversity has largely biodiversity represents, while always small, has fallen precipitously taken place in response to opportunities, rather than in pur- from its high of 0.75 percent in 2005 (see figure 2.3). The decline suit of deliberate corporate strategic directions. The resulting in funding has particularly been a function of a slide in GEF com- variety of projects has been useful in responding to client demand mitments implemented by the Bank, combined with high volatility for conservation interventions and in targeting interventions to in IBRD and IDA commitments for biodiversity, which, over the last local conditions. It has also created a wide breadth of experience 10 years have been on a downward trend (see figures 2.2 and 2.4). and expertise within the WBG. However, the diversity has simultane- Having commenced in 1988, World Bank commitments for biodi- ously meant that expertise within the WBG has been thinly spread versity rose following the 1992 Rio Earth Summit and the creation of across thematic issues, and that lessons from the portfolio are the GEF, and kept rising following the 2002 Johannesburg follow-up spread equally broadly across a wide array of interventions. summit. However, they have since somewhat decoupled from inter- Since 1988, the World Bank has invested about $4.1 billion in national trends, such as the commitment of the 2010 Nagoya CBD operations that explicitly or implicitly support biodiversity summit to further increase international financing for biodiversity. conservation and sustainable use. Of this, about 28 percent The more recent slide has not just gone against the grain of interna- was for GEF grant-funded standalone projects; 30 percent went tional political and funding trends, but has also taken place in spite to projects where GEF resources were blended with International of a slightly rising occurrence of biodiversity in country assistance Bank for Reconstruction and Development (IBRD) and International strategies (CASs) over time, as figure 2.5 illustrates. A G R I C U LT U R E A N D E N V I R O N M E N TA L S E R V I C E S D I S C U S S I O N PA P E R 1 1 8 C hapter 2 — B uilding on the E xperience of the W orld B an k ’ s B iodiversity I nvestments FIGURE 2.1: N  umber of Approved Biodiversity Projects FIGURE 2.3:  World Bank Biodiversity Commitments as Percent of Total Lending 45 0.8 40 0.7 35 0.6 30 0.5 25 20 0.4 15 0.3 10 0.2 5 0.1 0 0 04 05 06 07 08 09 10 11 12 13 04 05 06 07 08 09 10 11 12 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 FIGURE 2.2: B  iodiversity Commitments (US$, millions) FIGURE 2.4: Biodiversity Commitments (US$, millions) over the Long Run 300 Total 300 5-year moving average 250 250 200 200 150 100 150 50 0 100 88 90 92 94 96 98 00 02 04 06 08 10 12 19 19 19 19 19 19 20 20 20 20 20 20 20 50 Biodiversity investments on average made up 38 percent of each project’s total investment. As a result, they have tended to be small, 0 with the vast majority less than US$5 million (see figure 2.6). It is 04 05 06 07 08 09 10 11 12 13 20 20 20 20 20 20 20 20 20 20 remarkable that this decline has taken place in the context of a) a global decision to double investments in biodiversity made at the GEF 6. The overall decrease also implies a relative decrease in GEF eleventh Conference of the Parties to the Convention on Biological funds funneled through the World Bank in the face of a growing Diversity in 2012, b) an expansion by roughly one third of the global overall number of GEF implementing agencies, a trend that figure protected areas network between 1990 and 2010 (Bertszky et al. 2.7 demonstrates. 2012), illustrating the importance countries place on conserva- tion, and c) in the context of GEF financing for biodiversity that Despite these shifts in the portfolio, World Bank investments has remained stable over time and will reach record levels under in the biodiversity offer a number of important lessons for I N V E S T I N G I N N AT U R A L C A P I TA L F O R E R A D I C AT I N G E X T R E M E P O V E R T Y A N D B O O S T I N G S H A R E D P R O S P E R I T Y CHAPTER 2 — BUILDING ON THE EXPERIENCE OF THE WORLD BANK’S BIODIVERSIT Y INVESTMENTS 9 FIGURE 2.5: Share of World Bank CASs Explicitly FIGURE 2.8: Number of Projects Addressing CBD Mentioning Biodiversity Aichi Goals (BD = Biodiversity) 100% 350 300 50% 250 200 0% 150 94 96 98 00 02 04 06 08 10 12 19 19 19 20 20 20 20 20 20 20 100 50 FIGURE 2.6: Distribution of Projects by Size of Investment 0 (US$, millions) BD S n ss BD ns tio ES lo tio ta of on 160 BD en d en us an re rv em of at su te BD st es 140 pl in es e im m us hi pr ov fro ic ca e e pr -A nc 120 uc s m g on fit ha in ed I ne C. N ly En R er be F. 100 B. E. nd ce U an A. 80 E nh D. 60 40 20 the conservation and sustainable use of, access to, and bene- 0 0–1 1–5 5–10 10–20 > 20 fit sharing from biodiversity. With projects ranging from support to protected areas, institution building, integrating biodiversity con- servation into production landscapes, designing sustainable financ- ing schemes for conservation, designing smart green infrastructure, FIGURE 2.7: Evolution of World Bank Biodiversity to promoting nature tourism and fighting wildlife crime or invasive Commitments by Funding Source (US$, millions) alien species, the World Bank’s biodiversity portfolio covers a broad 250 GEF array of issues, and serves as a basis on which to build for the future. GEF med size IBRD/IDA 200 In the absence of strategic corporate goals, the investment Rainforest portfolio has been fragmented with increasing transac- 150 tion costs in relation to disbursements. In keeping with the country-driven partnership strategy process, the World Bank has 100 responded to demand for biodiversity projects either opportu- 50 nistically or driven by safeguard concerns in investments in other sectors, rather than pursuing concerted strategic investments that 0 are aligned with client country commitments under the CBD. As a 04 05 06 07 08 09 10 11 12 13 result, projects have addressed a wide variety of issues. Since fiscal 20 20 20 20 20 20 20 20 20 20 A G R I C U LT U R E A N D E N V I R O N M E N TA L S E R V I C E S D I S C U S S I O N PA P E R 1 1 10 CHAPTER 2 — BUILDING ON THE EXPERIENCE OF THE WORLD BANK’S BIODIVERSIT Y INVESTMENTS 1988, they have, for example, addressed 19 of the 20 Aichi Targets approach to maximizing the livelihood contributions and poverty and all five Aichi Goals in the CBD strategic plan 2011–20 (see fig- reduction returns of conservation. In seeking to make the conserva- ure 2.8, multiple goals per project possible). In terms of Aichi Goals, tion and sustainable use of biodiversity financially sustainable and the largest share of projects addressed the status of biodiversity, rewarding for communities, the World Bank has pursued various while relatively few projects targeted benefits from biodiversity and pathways: in Zambia’s Kafue National Park, World Bank support of ecosystem services (ESS). While the flexibility to respond to vary- the park authorities led to private investors tripling available accom- ing client priorities has had the advantage of making the portfolio modations, such that tourism visits rose markedly and park revenues more resilient, being the largest financier of biodiversity, the Bank’s grew ten-fold within six years. Similarly, in South Africa’s Greater investments may have made a greater impact toward achieving Addo Elephant National Park, a US$5.5 million investment spurred national commitments or globally agreed biodiversity goals if client US$14.5 million in private sector investment and the creation of engagement was based on explicit strategic goals. This Roadmap 614 jobs. The Albania Natural Resource Development project led to proposes to address this. an eight percent increase in incomes in communities that rehabili- tated and sustainably managed their forest and pasture resources. A lack of focus on the poverty impacts of biodiversity invest- The Honduras Forests and Rural Productivity Project launched ments has left the portfolio’s outcomes on poverty unclear. subprojects in a subset of communities that increased incomes World Bank biodiversity projects have often protected global public by over 300 percent, and more broadly, created 3,000 direct jobs goods or addressed biodiversity based on safeguards considerations and an additional 5,400 indirectly. In the Indian state of Andhra without systematically pursuing poverty reduction goals. While Pradesh, a 23 percent decline in seasonal outmigration was associ- there is an argument to be made for the intrinsic value of conserv- ated with average annual forest-based incomes rising from US$44 ing biodiversity, as a development institution, the World Bank also to US$104 as a result of the AP Community Forest Management needs to take into consideration the wider development impacts of Project. The Second Community Forestry Project in Mexico showed its biodiversity investments. The fact that the World Bank’s conserva- a similar trend, as an estimated 6,200 people did not migrate from tion projects have not been systematic in monitoring and evaluating the project states as employment in the forest sector increased by their impact on poverty reduction has meant that the true impact 27 percent and the net value of forest goods and services grew by remains largely unassessed even in the many cases where projects 36 percent. Conservative estimates of the impact of the Eastern Arc have created jobs and income streams for communities. Given the Conservation and Management Project in Tanzania indicate that its complexity of the linkages, differing views on the compatibility of 273 participatory forest management (PFM) subprojects benefiting conservation and poverty reduction, as well as the strategic focus 520,000 individuals generated an average of US$100 per person of the WBG on poverty reduction and creation of shared prosperity, annually. While these projects provide positive examples for how there is potential to better utilize the WBG’s experience to under- conservation can yield poverty-reduction results, a more systematic stand the poverty outcomes of biodiversity investments. The need focus on poverty reduction is still necessary. for better monitoring of outcomes and community engagement was also a recommendation of the Independent Evaluation Group Given that biodiversity projects are but a relatively minor (IEG) review of the forest sector portfolio. While the relatively recent part of World Bank’s portfolio, the application of the envi- adoption of Biodiversity Core Sector Indicators is a step in the right ronmental safeguards represents an important extension of direction, there is a need for better data gathering on biodiversity- the WB biodiversity work. Operational Policy (OP) 4.04 on natural linked poverty impacts. habitats represents an opportunity and in most cases an obligation to integrate biodiversity considerations into projects whose primary Biodiversity conservation and management can yield income focus is in other sectors. Thus, between fiscal 2003 and 2012, 466 and growth opportunities, but more effort is needed to fully projects triggered OP 4.04 in the energy, infrastructure, mining, understand and realize the potential. There is no one-size-fits-all agriculture, and forestry sectors. Safeguards provide an opportunity I N V E S T I N G I N N AT U R A L C A P I TA L F O R E R A D I C AT I N G E X T R E M E P O V E R T Y A N D B O O S T I N G S H A R E D P R O S P E R I T Y CHAPTER 2 — BUILDING ON THE EXPERIENCE OF THE WORLD BANK’S BIODIVERSIT Y INVESTMENTS 11 to go beyond a “do no harm” approach toward a “do some good” less attention to biodiversity or natural capital leading to reduced approach by implementing high environmental management stan- public sector responsibility and management often outsourced to dards. There is particular opportunity for doing so given the focus civil society with insufficient resources and fragmented boutique on addressing the infrastructure deficit. For example, in Honduras, interventions. Similarly, environmental externalities of develop- the Rural Roads Project included the establishment of a 2,000 ha ment and investments are not properly accounted for, specifically protected area for the Honduran Emerald, an endemic humming- in private sector investments and the loss of ecosystem goods and bird species that was being threatened by loss of habitat potentially services and biodiversity is not reflected in investment or financial associated with the project. Under the Nam Theun II project in Lao risk or in the risk rating of companies or countries. There has also PDR, a watershed management authority was established to protect been limited success in creating biodiversity related value addition the watershed and the ecosystem services it provided to reduce and financial streams. sedimentation in the hydropower facility. Independent research has Continued policy and market failures hamper the conser- further confirmed that integrating conservation objectives in World vation and sustainable use of biodiversity. Economists have Bank projects does not negatively affect development or poverty yet to devise a methodology that adequately values biodiversity. reduction outcomes (Kareiva et al. 2008). The ongoing safeguards Incipient work is underway to value ecosystems services as noted reform process aims at providing a more consistent integrated in the UN System of Environmental Economic Accounts and imple- framework that will help determine how safeguards will contribute mented among others by the World Bank-coordinated Wealth more effectively to conservation in the future. Accounting and Valuation of Ecosystem Services (WAVES) part- The WB has engaged in several high-profile biodiversity nership. Additionally, IFC is supporting pioneering work to assist partnerships and programs, such as the Critical Ecosystems companies in this area. IFC is also a signatory to the Natural Capital Partnership Fund, Save our Species, the Global Tiger Initiative, the Declaration (NCD) at the institutional level and actively works to Program on Forests, or the Global Partnership for Oceans. These meet its commitments under the Declaration. However, very little kinds of partnerships have proven valuable as conduits of knowl- progress has been made in understanding, incorporating, measur- edge management, and have afforded the WB a seat at the table ing, and accounting for the value of biodiversity to economies and during important policy discussions. However, the WB could businesses. In combination with perverse incentives, such as subsi- increase the value it derives from such partnerships and increase dies for land conversion, this continues to lead to the destruction of the leverage potential of its engagement by going beyond its role natural and semi-natural ecosystems in favor of agriculture, urban as a financial intermediary and seeking to better link its role in part- areas, and infrastructure. Costa Rica and Brazil provide examples of nerships to its own portfolio of projects. This has notably been the how such forces can be turned around by changing subsidies or case with the WB’s participation in the International Consortium to economic incentives, and how they have been able to reduce or Combat Wildlife Crime (ICCWC), which has provided technical sup- reverse land conversion. port to WB projects through its pre-investment facility. 2.1.2 Governance and Administration The governance, regulation, and administration of biodiver- 2.1 THEMATIC LESSONS sity need to be firmly rooted in the public sector, but with 2.1.1 Policy and Market Failures close connection to other sectors. The roles and responsibilities Ecosystems, biodiversity, and natural capital are vital ele- of the public and private sectors and civil society could be better ments for economic development and human well-being. defined. In all cases, clear tenure arrangements and clarifying the Despite this they are poorly accounted for and are insufficiently actors’ different roles increases effectiveness. In general, close col- taken into account in economic decision-making or in providing sig- laboration between the public and private sectors yields the best nals to markets. Partly due to this undervaluation, governments pay results for biodiversity. Indeed, in some cases, such as in Peru, the A G R I C U LT U R E A N D E N V I R O N M E N TA L S E R V I C E S D I S C U S S I O N PA P E R 1 1 12 CHAPTER 2 — BUILDING ON THE EXPERIENCE OF THE WORLD BANK’S BIODIVERSIT Y INVESTMENTS actual management of certain protected areas has been outsourced expertise in the effective conservation and management of biodi- to nongovernmental organizations (NGOs) who have been success- versity and inclusive growth as part of healthy businesses. ful in raising funding and managing them, while the government retains a strong hand in regulating activities therein, and setting Clarifying access to, tenure of, and benefits from biodiversity targets and priorities. Jordan has gone further, assigning responsi- establishes incentives and builds poor people’s assets. Weak bility for managing the national system of protected areas by spin- governance and open-access resource regimes have frequently ning off its protected areas agency into a nonprofit NGO, the Royal resulted in the degradation of common property resources, and Society for the Conservation of Nature, which derives a significant greater focus on rights-based management can provide an avenue portion of running costs from tourism and other biodiversity-linked for managing the development-conservation tradeoff and help businesses that are independent of the conservation manage- build assets for the poor as a way out of poverty. In Albania, build- ment of the protected areas. In addition to its potential role as a ing on the success of activities piloted under a preceding IDA government-mandated partner, civil society often plays important investment in forest sector management, the Natural Resource roles as a watchdog in enhancing the interests of people affected by Development project confirmed usufruct rights and introduced biodiversity-related development interventions and as a provider of participatory forest and pasture management in 251 communes, technical expertise, as well as in communications outreach, educa- covering an area of 307,665 ha. The project created 105 Forest and tion, and public awareness raising. Pasture Users Associations to support the sustainable management of community resources. This led to an eight percent increase of The private sector needs collaborative models to better incomes in project-supported communities within the life of the incorporate biodiversity in its institutional policies, stan- project. The project also led to reforestation of 1,634 ha, sequester- dards, and operations. Overall, companies continue to face chal- ing an estimated 64,000 tCO2. In Mexico, the Second Community lenges in understanding and assessing biodiversity and ecosystem Forestry Project placed 1.78 million ha under community zoning services and in identifying adequate and appropriate mitigation plans. Given the success of these plans, the government prepared measures. As companies continue to move deeper into high biodi- an additional 451 zoning plans covering 2.64 million ha. A follow- versity value areas in search of resources, and as footprints of large up project initiated community forestry programs in 700 additional agribusiness companies expand they face challenges in implement- communities, 80 percent of which are indigenous. In Brazil, the ing mitigation measures and engaging with stakeholders outside Amazon Region Protected Areas program designated 24 million of the immediate boundaries of their investments. To adequately hectares of protected areas—equivalent to 46 percent of all pro- assess risks and mitigate impacts on a larger scale, companies are tected areas created in the world between 2003 and 2008—while seeking to implement where they have limited influence and man- improving the livelihoods of the Amazonian population by gen- agement control, which is especially challenging in post-conflict erating sustainable livelihood opportunities, strengthening value regions. Moreover, oftentimes multiple companies are operating chains of forest-based products, and allowing for better coexistence the same landscapes, even impacting the same types of biodiver- between small family farms and larger-scale agriculture. Significant sity, but are working in isolation from one another. This model is portions of the newly created protected areas are on indigenous not sustainable in the long-term as transaction costs are high and land. The indigenous people have received legal rights over the rising, and adequate assessment of biodiversity at the landscape land and security of access to its resources in return for conserving scale is difficult for a single project sponsor to achieve. Exceptions the land. In Namibia community conservancies have been shown can be found in certain agricultural, aquaculture, and extractive to have positive impacts on household welfare, raising revenues sectors (for example, palm oil, cocoa, coffee, shrimp, mining) where generated through the conservancies, in turn spurring the estab- multi-stakeholder initiatives have organized to share knowledge, lishment of numerous new conservancies. Rights- and community- implement sustainability certification, and transform markets. based management is not limited to land, as open-access regimes The latter have often been pioneers and developed considerable and the overexploitation of marine resources have been shown to I N V E S T I N G I N N AT U R A L C A P I TA L F O R E R A D I C AT I N G E X T R E M E P O V E R T Y A N D B O O S T I N G S H A R E D P R O S P E R I T Y CHAPTER 2 — BUILDING ON THE EXPERIENCE OF THE WORLD BANK’S BIODIVERSIT Y INVESTMENTS 13 cause billions of dollars in welfare losses in coastal communities and crime detection and case-tracking system and independent forest- fisheries around the world. In Senegal, co-management areas have crime monitoring in Cambodia and other countries. Dialogue with brought the Ngaparou fishery back from the brink of collapse in the the Government of Lao PDR during planning of the Nam Theun II space of four years, and rising fishing revenues have led to invest- Hydroelectric Power Project, for example, secured more effective ment in value addition along the value chain. control of illegal logging and poaching of wildlife in the project area. The World Bank’s program of support to financial sector integrity is The design and management of the stock and flow of bio- helping to bring anti-money laundering tools to bear in addressing diversity is more successful if communities are involved in environment and natural resources law enforcement (ENRLE). The both processes. The success of rights-based management builds World Bank initiated the concept of FLEG with its sponsorship of the on another common theme that has played an important role in first East Asia Ministerial Meeting on the subject in 2001, followed the success of many projects: community involvement in con- by similar meetings in Africa, Europe, and North Asia. With funding servation decision-making and management. The active involve- from the European Union through the European Neighborhood ment of women represents a particular opportunity for economic and Partnership Instrument, the World Bank set up a FLEG program empowerment, while also providing a perspective on conservation that supports governments, civil society, and the private sector of that would be lost without their involvement. The importance of Armenia, Azerbaijan, Belarus, Georgia, Moldova, Russia, and Ukraine this approach to project success has been a consistent feature of in the development of sound and sustainable forest management World Bank projects: A review of the 58 biodiversity projects with practices, including the prevention of illegal forestry activities. Implementation Completion Reports over the fiscal period from 2003 through 2012 showed that nearly one-third reported commu- 2.1.3 Natural Infrastructure nity participation in project planning, decision-making, and conser- Landscape approaches8 hold the most promise for balancing vation or resource management as being central to their success. the challenge of increased food production while sustain- This democracy dividend is a key co-benefit of investments in the ing biodiversity and ecosystem service and addressing land conservation and sustainable use of biodiversity. use-based GHG emissions. Population growth, the associated demand for increased agricultural production, and industrial and The World Bank is now the largest provider of development infrastructure development as well as climate change constitute assistance for combating environment and natural resources increasing threats to biodiversity. Landscape approaches take both crime. In 2006 the World Bank was financing over US$310 million a geographical and a socio-economic perspective to managing the in investments for forest law enforcement and governance (FLEG) resources that form the foundation—the natural capital—for meet- alone. A more recent review found that the level of funding had ing our goals of food security and inclusive green growth. Such strat- remained quite steady with ongoing commitments at around egies integrate management of land, water, and living resources, US$300 million supporting 39 projects covering forestry, fisheries, and promote sustainable use and conservation in an equitable and wildlife law enforcement. Two-thirds of this (US$201 million) manner. The World Bank has achieved major successes by adopting has been devoted to crime prevention and US$95 million has a broader landscape perspective to its investments: Projects in the gone toward crime detection efforts while relatively little has been Loess Plateau in China, Ethiopia, Rwanda, as well as the Sahel and devoted to suppression. Specifically, the World Bank has financed West Africa Program in Support of the Great Green Wall Initiative such diverse environmental law enforcement work as the estab- are demonstrating the promise of such approaches. Such landscape lishment of a forest police agency in Lao PDR; a series of projects approaches are best supplemented by policies enshrining the across South Asia on wildlife law enforcement; fisheries law enforce- mitigation hierarchy of avoidance-mitigation-restoration-offsets ment projects in West Africa; park and protected areas ranger in instances where some biodiversity losses are unavoidable and operations, including providing training and equipment, as well as log tracking and chain of custody systems in Liberia; and a forest 8 In this roadmap, landscape approaches are taken to include seascapes. A G R I C U LT U R E A N D E N V I R O N M E N TA L S E R V I C E S D I S C U S S I O N PA P E R 1 1 14 CHAPTER 2 — BUILDING ON THE EXPERIENCE OF THE WORLD BANK’S BIODIVERSIT Y INVESTMENTS cannot be mitigated on site. Especially when designed for habitat in the context of management contracts established with local and connectivity and when incorporating community-based biodiver- international universities and NGOs. Contractors are responsible for sity management, landscape approaches can yield concrete con- raising funds and for implementing part or all of a protected area servation outcomes. management plan. Under this modality, the contracted entities have raised at least as much as the government contribution, thereby Ecosystem-based approaches can provide a cost-effective reducing the burden on the state budget. However, this fundraising alternative to hard infrastructure for climate change adap- is subject to the usual limitations, and susceptible to the boom and tation and disaster risk management for the poor. Thus, bust of donor interest. To avoid this trap, Jordan created clusters of wetlands and mangrove forests have been shown to provide cost- national parks, where some function as conservation parks that are effective flood protection services, and similarly, forests can cheaply closed to the public, which are then cross-subsidized by tourism regulate run-off to reduce flooding. The latter approach has been parks and ecotourism activities. In addition, nationally aggregated implemented in an urban development project in Algeria, for exam- biodiversity offset schemes that could be established in the con- ple. In Vietnam, the Coastal Wetlands Protection and Development text of national no-net-biodiversity-loss policies hold promise as an Project took measures to regenerate and protect degraded man- approach to investment tradeoffs, while also addressing unpredict- grove forests that had left the coastal Mekong Delta vulnerable to able and limited financing flows for conservation management. the destruction of Typhoon Linda in 1997. In all instances, natural infrastructure was chosen as an alternative to hard infrastructure to With the support of environmental organizations, the pri- protect assets and lives. vate sector has been organizing internationally over the past decade to define and adopt voluntary sustainability 2.1.4 Financing standards, change the way it does business, and protect Sustainable management of biodiversity requires sustain- biodiversity. IFC and other financial institutions have played a able financing and incorporation of its values into economic pivotal role in this development which has been occurring primarily decision-making and financial modalities. World Bank financ- in sectors with large footprints (extractives, forestry, agribusiness, ing for biodiversity has fluctuated significantly over the last decade. and so on) and related sectors (financial institutions, trading, retail, Similar swings in available financing for biodiversity have been and so forth). This movement was initiated by large multinational observed in many countries. In particular, developing country gov- companies to reduce the risk of, lawsuits or reputational repercus- ernments often rely on external finance sources for the manage- sions, but it has gradually shifted to genuine sustainable business ment of their biodiversity. Creating predictable streams of financing strategies and behaviors and is now spreading to other sectors that allow biodiversity managers to plan ahead is thus of great and company sizes. Formal global multi-stakeholder organizations importance. The World Bank’s work on supporting the creation of such as the Roundtable for Sustainable Palm Oil (RSPO), which conservation trust funds has demonstrated one potential modality have been supported by IFC, are developing and implementing for addressing this challenge, even though it rarely is sufficient to promising schemes in which private businesses pay for biodiversity fund the entirety of the budgetary envelope for conservation. This conservation in agricultural landscapes. Producers annually obtain approach has been particularly successful in the Brazilian state of the RSPO certification which signals to the market that the palm oil Rio de Janeiro, which managed to fill 43 percent of its conservation they sell has been produced sustainably. Although the demand for financing gap by setting up the Atlantic Forest Fund. This fund is sustainably produced commodities has not been increasing as fast partially capitalized through regulatory-based compensation pay- as some would like, it is increasing and leading to gradual market ments for the environmental impacts of industrial and infrastructure transformation. These initiatives have also harvested a wealth of projects. The funds are being used to finance projects in some 20 lessons in how to manage and conserve biodiversity at producer protected areas. Another approach that has been piloted in Peru or landscape level, finance conservation through the market, estab- attracted additional funds to support protected area management lish offset systems, include smallholders in sustainability schemes, I N V E S T I N G I N N AT U R A L C A P I TA L F O R E R A D I C AT I N G E X T R E M E P O V E R T Y A N D B O O S T I N G S H A R E D P R O S P E R I T Y CHAPTER 2 — BUILDING ON THE EXPERIENCE OF THE WORLD BANK’S BIODIVERSIT Y INVESTMENTS 15 negotiate land use in public and private, broadly collaborative ways, green subsidies to forego conversion than a service agreement that as well as measure and monitor progress and impact. The WBG pays for the delivery of an ecosystem service. PES can be mobilized has full access to this knowledge thanks to IFC’s Biodiversity and more directly for immediate and direct service provision, especially Agricultural Commodities Program (BACP), which supported the in the context of large infrastructure development projects, as dem- creation and sharing of this knowledge. The current agenda of these onstrated in Lao PDR’s Nam Theun II hydropower project, whose initiatives includes dialogues with producer-country governments operator is paying for the preservation of an upstream watershed so that necessary changes in national or local legislations and regu- that helps ensure sedimentation control for the reservoir. In Kenya, lations can extend full implementation of the conservation benefits the Kenya Wildlife Conservation Leasing Demonstration Project induced by certification. has been helping to ensure the long-term ecological viability of Nairobi National Park by allowing wildlife to use areas adjacent to Payments for Ecosystem Services (PES) are one of the most the park. A total of 388 households with some 22,000 hectares of important ways for defraying the opportunity cost that the land have signed up to the project. These families receive rent for poor face in converting ecosystems. In deciding whether to not fencing off their land and allowing wildlife to roam it. Families conserve or convert an ecosystem, individuals, companies and use some 80 percent of the rental income for school fees, with the governments face economic tradeoffs. As the World Bank’s support balance invested in human health and livestock production. Indeed, to the Costa Rican government has demonstrated, PES can tip the an independent study found that the introduction of sustainable balance in favor of conservation thereby securing the continued financing mechanisms for conservation has been positively associ- provision of ecosystem services. However, these are more often ated with project success (Kareiva et al. 2008). A G R I C U LT U R E A N D E N V I R O N M E N TA L S E R V I C E S D I S C U S S I O N PA P E R 1 1 CHAPTER 3 — REALIGNING THE WBG’S INVESTMENT PORTFOLIO 17 Chapter 3 REALIGNING THE WBG’S INVESTMENT PORTFOLIO Following nearly three decades of experience investing in it has the standing and convening power to facilitate participatory the conservation and sustainable use of biodiversity, the dialogue between client countries and networks of other relevant WBG recognizes that continued investment in biodiversity stakeholders on matters of biodiversity and climate change concern, is critical to achieving the twin goals of alleviating extreme such as loss of ecosystem resilience, forest law enforcement and poverty by 2030 and boosting shared prosperity in a sus- governance, wildlife trade, and overexploitation of natural resources. tainable manner. For example, the sustainable management of This roadmap outlines a way to consolidate the portfolio in forests is improving rural livelihoods globally. Since 2002, the World favor of investing in those areas where the WBG can have the Bank has implemented 88 projects with forest components. These most impact. Specifically, investments will focus on (1) address- accounted for around US$1.2 billion in loans, credits, and grants to ing policy failures through the design and application of new tools forests resulting in improved livelihoods by bringing 73.6 million (for example, to implement natural capital accounting), financing ha under participatory or community forest management, includ- instruments (especially Development Policy Operations (DPOs)), ing extensive programs involving indigenous peoples. Sustainable and partnerships (for example, WAVES); (2) Enhancing environmen- exploitation of fisheries is another key area for shared prosperity. tal governance and public sector capacity by strengthening the role About 16 percent of the world’s intake of animal protein comes of public-sector agencies in partnership with the private sector and from fishing, with one billion people in developing countries relying civil society, focusing in particular on improving systems of gov- on seafood as a key source of protein. Some 240 million livelihoods ernance and institutions-building; (3) Building resilience through are estimated to depend on ocean fishing, with 97 percent of the investing in natural infrastructure across landscapes in close col- livelihoods that are directly dependent on fisheries and aquaculture laboration with other sectors, particularly through the land-use occurring in developing countries, mostly via small-scale operations planning, moving beyond single-sector silos, and mainstreaming in Asia. The tourism sector—driven in client countries largely by the use of green infrastructure to reduce the exposure of physical nature, in particular national parks—underpins foreign exchange and social capital to external shocks; and (4) Generating financial receipts in several African countries. flows to move governments from their exposure to volatile boom- World Bank investments in biodiversity will build on our com- and-bust financing by inventing by piloting and mainstreaming parative advantage as an institution that sets the benchmark finance mechanisms that enable long-term investment in nature for public development finance globally. The World Bank’s ability and create value to enable financial flows from biodiversity and to leverage finance across sectors and actors as well as its convening ecosystem services, in concert with our public and private partners. role within the donor community can help mainstream biodiversity Investments will balance meeting country-specific demands with within national agendas as a critical part of sustainable development. providing technical leadership across these four areas and conven- As well as being a major funding source for biodiversity projects in ing global partnerships to enhance impact. See figure 3.1 for a con- developing countries, the WBG is a center of excellence that provides ceptual framework of the Biodiversity Roadmap’s priority areas with economy-wide technical knowledge and expertise. Additionally, the larger WBG strategic environment. A G R I C U LT U R E A N D E N V I R O N M E N TA L S E R V I C E S D I S C U S S I O N PA P E R 1 1 18 CHAPTER 3 — REALIGNING THE WBG’S INVESTMENT PORTFOLIO FIGURE 3.1: Conceptual Framework for the World Bank Group’s Biodiversity Engagement WORLD BANK GROUP VISION — A WORLD FREE OF POVERTY Environment Vision: “A Green, Clean WBG’s Comparative Advantage: and Resilient World for All” (1) Client Focus and Long-term Engagement; Biodiversity Goal: (2) Economy-wide Approach; (3) Global Knowledge “Securing the provision of ecosystem Excellence; (4) Leveraging and Convening Power goods and services for inclusive green WBG’s Value Proposition: growth by mainstreaming biodiversity in (1) Shape the global agenda; (2) Customize client development and investments” solutions; (3) Advance knowledge of success Biodiversity Priority Areas: Solutions Bank–Business Lines 1. Addressing Policy Failures Enhancing Advancing Inclusive Green 2. Enhancing Governance and Public Knowledge for Growth Policies Sector Capacity Success and Governance 3. Building Resilience and Investing in Natural Infrastructure Leveraging Delivering Development Customized 4. Generating Financial Flows Finance and Natural Solutions Partnerships Convening Power–Brand Leverage Transformational Engagement Thematic (SCD) National (CPF) Regional (RCM) Priorities & Solutions Priorities & Solutions Priorities & Solutions SCD—Systematic Country Diagnostic; CPF—Country Partnership Framework; RCM—Regional Coordination Mechanisms 3.1 ADDRESSING POLICY FAILURES of converting natural assets, as well as the revenues gained. Better policy decisions can follow from a true understanding of the value The WBG will help its clients address policy failures that cur- of using biodiversity and ecosystem services, including all exter- rently allow depletion of biodiversity without visible poverty nalities. These decisions include understanding the risks associated and/or shared prosperity gains. In the Brazilian state of Acre, for with a failure to act. For the latter, the WBG will help clients develop example, the government has decoupled its economic growth policies and procedures that enable upstream impact assessment from deforestation. In doing so, the government has reduced of public and private investments. deforestation rates by 70 percent while growing its GDP by 44 per- cent between 2003 and 2008. It achieved this by reducing illegal By investing in natural capital accounting, countries can move deforestation through monitoring of timber licenses, enforcing beyond traditional GDP and incorporate natural capital into environmental regulations, regularizing land tenure, creating devel- their national accounts to make better economic decisions. opment programs in intact forest areas, targeting social programs at GDP only measures gross output, and is silent about income for the those most in need, and improving agricultural and forest produc- long term. It does not answer questions about the sustainability of tion processes. Decisions made at all levels of any government will income and growth, nor about whether the same level of income lead to more sustainable outcomes if there is a clear recognition will be available for future generations. GDP looks at one part of eco- not only of who benefits from the decisions made, but also who nomic performance—output—but says nothing about the wealth carries the environmental and other costs. The public and private and assets that underlie output income generation. For example, a sectors need to better understand and take full account of the costs country clear-cutting its natural forests is actually depleting wealth I N V E S T I N G I N N AT U R A L C A P I TA L F O R E R A D I C AT I N G E X T R E M E P O V E R T Y A N D B O O S T I N G S H A R E D P R O S P E R I T Y CHAPTER 3 — REALIGNING THE WBG’S INVESTMENT PORTFOLIO 19 and reducing opportunities for future growth. GDP also ignores the The WBG will embed biodiversity and natural capital as a key contribution of natural capital to growth. National accounts do not piece of the global climate change puzzle. Terrestrial and oce- fully capture important contributions to the economy of forests, anic ecosystems play a significant role in the global carbon cycle, wetlands, and agricultural land. In forestry, for example, timber both as emission sources and sinks, but also for their climate change resources are counted in national accounts, but they rarely include adaptation and mitigation potential. The WBG will support the forest carbon sequestration. Other services like water regulation appropriate management of terrestrial and aquatic habitats which that benefits power generation and crop irrigation, and that con- can make a significant contribution to reducing climate change. tributes directly to agricultural production are often hidden or the Better protection and management of natural ecosystems and value is (wrongly) attributed to agriculture in a country’s GDP. more sustainable management of natural resources and agricultural crops can also play a critical role in adaptation strategies. WAVES is a World Bank-led global partnership that promotes sustainable development by ensuring that natural resources The World Bank will also invest in improving safeguards to are fully integrated in development planning and national better manage the inevitable tradeoffs at the landscape- economic accounts. This global partnership brings together a level between the needs and interests of different sectors. broad coalition of United Nations agencies, governments, interna- Industry best practice is to implement a mitigation hierarchy that tional institutes, nongovernment organizations and academics to prioritizes avoidance of negative biodiversity impacts. Where this is implement environmental accounting where there are internation- not possible, minimization and restoration of damages can follow, ally agreed standards, and develop standard approaches for other with offsets to compensate for residual impacts as a last resort. The ecosystem service accounts. By working with central banks and WBG will continue to help clients build their capacity to apply the ministries of finance and planning to integrate natural resources mitigation hierarchy, allowing them to avoid or minimize adverse into development planning through environmental accounting, impacts on their biodiversity and thus safeguard their total wealth. WAVES enables better-informed economic decision-making that The WBG will also support governments in managing unavoidable can ensure genuine green growth and long-term advances in residual impacts, including through the application of biodiversity wealth and human well-being. offsets. In addition to supporting site-level offsets, the WBG will work with clients and partners to develop nationally aggregated Beyond natural capital accounting, the WBG will position offsets. A national aggregate offset policy and scheme could reduce biodiversity as a key component of development planning transaction costs and provide a policy framework and procedures at the landscape level. Governments have fundamental respon- for securing strategic conservation benefits equivalent to the bio- sibilities that encompass environment, economy, and society, and diversity losses that are associated with certain types of develop- therefore need to take a lead in integration across sectors at the ment (for example, extractive industries, infrastructure, agricultural landscape level. Many of our future challenges such as climate expansion), and that cannot be mitigated on site in the context change, food production, or sustaining water supplies require an of a project-specific environmental management plan. This could understanding of the tradeoffs and often complex linkages between provide a transparent mechanism for all private and public sector land and natural resource use and the provisioning of ecosystem development to offset adverse impacts on biodiversity through an goods and services, including biodiversity. Development of com- agreed national, prioritized conservation plan that includes all pro- mon objectives across sectors, and increased efforts to develop and tected areas and priority ecosystems in the production landscape. implement mutually supportive activities are essential. The WBG will help clients to broaden their policies and institutional frameworks The WBG, through IFC, will also engage with companies to to enable them to cope with many of these future challenges that promote the concept of Net Positive Impact (NPI). Identifying require landscape-level approaches and solutions. That will neces- the means by which companies could achieve NPI for biodiversity sarily involve governance and decision-making models that are will enable IFC clients to work more responsibly in areas of high bio- more inclusive of the private sector and all stakeholders. diversity value and comply with IFC’s Performance Standard 6 (PS6). A G R I C U LT U R E A N D E N V I R O N M E N TA L S E R V I C E S D I S C U S S I O N PA P E R 1 1 20 CHAPTER 3 — REALIGNING THE WBG’S INVESTMENT PORTFOLIO To support this, IFC is participating in the recently established NPI of resource rights, tenure, governance, and law enforcement. The Alliance, a partnership between Rio Tinto, Shell, IFC, the International clarification of roles and responsibilities in society, especially within Union for Conservation of Nature and The Nature Conservancy. The public agencies responsible for conservation and protected areas, aim of the Alliance is to promote the concept of NPI and field test and for conservation aspects within other sectors, such as forestry, related methodologies. As NPI is also a PS6 requirement for clients fisheries, agriculture, transport, mining, or energy as well as plan- working in critical habitats, IFC will share lessons and experience on ning agencies, is key to coordinating and maximizing the impact of biodiversity management, including biodiversity offsets. Moreover, public sector actors in conservation. IFC can play a role in catalyzing public-private sector collaboration Effective government performance is central to transform- by strengthening the interface between IFC, the World Bank, other ing natural assets into working capital for inclusive green IFIs, and companies for joint action. growth. The World Bank’s investments will focus on the regulatory The World Bank will help clients improve their knowledge and enabling environment to position the public sector for suc- management capacities. Improving processes for the genera- cess. Capacity building to improve public sector performance is tion, capture, management, and assessment of data, information thus an important focus of World Bank initiatives, such as WAVES and knowledge is also important in providing the basis for decision- or in the Global Partnership for Oceans. But capacity building and making. The World Bank will continue to work with its partners training, organizational performance, and administrative structures to support its clients to freely access, use, and build on existing are embedded within complex institutional environments that knowledge products, tools, and experience, and to strengthen the significantly constrain their success and that often account for train- science-policy interface and reinforce better decision-making. ing or organizational failure. The World Bank will invest in capacity building with an organizational focus that recognizes that individual performance is more affected by organizational opportunities and 3.2 ENHANCING ENVIRONMENTAL GOVERNANCE incentives such as opportunities for meaningful work, shared pro- AND PUBLIC SECTOR CAPACITY fessional norms, teamwork, and promotion based on performance The World Bank will strengthen the public sector’s responsi- rather than by training in specific skills. It will also support institu- bility and capacity for the administration of biodiversity to tional strengthening to build the infrastructure necessary to sup- maximize its contribution to driving strong economies and port individual performance and hold staff accountable for results. fostering healthy communities. The conservation sector has These efforts will include work in fragile and conflict-affected states, been dominated for years by three key actors. First, public sector in keeping with the Bank’s commitments expressed through IDA 17 natural resource management (NRM) or environment agencies and building on a long history of experience in such countries. are mandated to manage nature, but rarely have the capacity to The WBG, through IFC, will work with companies to create do so. Second, public-sector regulatory agencies have set policies guidance and tools for companies to improve ecosystem ser- and regulated impacts on nature, but are often under-resourced. vices and biodiversity assessments to enable better identifica- In response to this, a third set of actors, NGOs, have developed a tion and management of impacts. IFC is in the process of creating science of conservation and provided direct policy assistance and guidance that encompasses (1) an ecosystem services assessment for implementation support. In developing countries, the past several the identification of priority ecosystem services and recommended years have also brought additional actors into the sector, particularly good practices in ecosystem services management; and (2) a biodi- the private sector. The lack of integration of natural capital values versity assessment to identify modified and natural habitats as well as in economic planning and the growing role of private actors has recommended activities tailored to each project stage. often served to stifle investment in public sector agencies, resulting in weak institutions unable to cope with evolving environmental The World Bank will continue to support land reform and challenges that often require public policies, such as in the case governance to incentivize investments in biodiversity to I N V E S T I N G I N N AT U R A L C A P I TA L F O R E R A D I C AT I N G E X T R E M E P O V E R T Y A N D B O O S T I N G S H A R E D P R O S P E R I T Y CHAPTER 3 — REALIGNING THE WBG’S INVESTMENT PORTFOLIO 21 secure the long-term flow of ecosystem goods and services. constituency within the WBG to work on the range of ENRLE issues; Land policies are of fundamental importance to allow for the accu- (2) build the capacity of WBG staff to provide investment and techni- mulation of wealth and the well-being and economic opportunities cal assistance on ENRLE; (3) strengthen analytical work to develop a of rural and urban dwellers, particularly poor people. Therefore, the pipeline of ENRLE investments; and (4) foster demand among clients World Bank has long invested in land reform, largely focusing on for World Bank investment in ENRLE. It will also continue to engage land tenure, incentives for investments, and capacity development. in the International Consortium to Combat Wildlife Crime (ICCWC) The World Bank will gear investments to providing secure land to further the development of tools and support to client countries. tenure and building the asset base to improve the welfare of the In addition to its investment operations, the World Bank will poor, particularly vulnerable people, such as women or indigenous invest its analytic, due diligence, and partnership resources people where their land rights are neglected. This has been done to address environment and natural-resources crime. Along successfully in Ethiopia, where the rights of women were explicitly with investments in law enforcement, the World Bank will support included in land reforms. This is central to expediting land access leadership in regional and international processes and dialogue. for productive, but land-poor, producers and, once the economic While it is not a law enforcement agency, the Bank’s established environment is right, the development of financial markets that rely programs to support natural resource and environmental man- on the use of land as collateral. The World Bank will also continue to agement and safeguard global public goods, its commitment to build the capacity of governments who have a clear role to play in strengthening good governance and to fighting corruption, and its promoting and contributing to socially desirable land allocation and partnerships with key law enforcement agencies such as Interpol utilization. Improving governance in this way will allow households and Europol give it an opportunity and responsibility to do more. and communities to invest in their local biodiversity to reap long- term benefits that can provide them off-farm employment and an asset base. 3.3 BUILDING RESILIENCE THROUGH INVESTING IN NATURAL INFRASTRUCTURE ACROSS The WBG will continue to ensure that its investments in natu- LANDSCAPES ral resources, such as biodiversity, fully respect the rights The WBG will invest to ensure that the flow of ecosystem and duly take into account the demands of local communi- goods and services is sustained to support other sectors ties and indigenous peoples in natural resource governance. and to provide opportunities to the poor to diversify their Across the developing world, indigenous communities and natural income and reduce their vulnerability to shocks. The WBG resource users face immediate challenges to their livelihoods, from invests in protecting nature as a source-supply of agricultural goods declining resources to access limitations and changing governance and services, never more important than during times of external arrangements. Because communities depend on, and often have shocks. The ability of the poor to use nature as a safety net and a intricate knowledge of the management of their biodiversity, they hedge against hunger, and to exploit ecosystem services as valu- need to own conservation. Successful World Bank biodiversity able inputs to increase productivity, are becoming more important investments have often provided communities the rights to their even as they become scarcer. assets, providing opportunities to get out of poverty which has The World Bank will invest in CSA to increase food produc- transformed them into the strongest advocates for conservation. tion in an environmentally and socially sustainable way. CSA The World Bank will help its clients strengthen environmental strengthens farmers’ resilience to climate change, including by crime prevention by supporting the establishment of sustain- protecting the on- and off-farm ecosystem services that underpin able NRM regimes. The World Bank will focus on diagnosing the key production and supplement yields, and reduce agriculture’s GHG levers for intervention along the prevention-detection-suppression- emissions and increase carbon storage in farmland. Sustainable recovery chain of analysis for environmental crime. It will (1) build a intensification of food systems and CSA investments need to take A G R I C U LT U R E A N D E N V I R O N M E N TA L S E R V I C E S D I S C U S S I O N PA P E R 1 1 22 CHAPTER 3 — REALIGNING THE WBG’S INVESTMENT PORTFOLIO TABLE 3.1: Current and Planned Regional Focus on the Four Priority Topics GOVERNANCE AND PUBLIC SECTOR BUILDING RESILIENCE THROUGH ADDRESSING POLICY FAILURES CAPACITY NATURAL INFRASTRUCTURE GENERATING FINANCIAL FLOWS AFR Valuing and managing global and local Access to key natural resources for local Enhanced protected -area management in public goods as part of development. For communities. The fight against wildlife a wide cross-section of countries (includ- example the Program on Forests (PROFOR) crime is integrated into several projects, ing Benin, Cote d’Ivoire, the Democratic is funding the development of nationally and is pursued centrally through active Republic of the Congo, Mozambique, aggregated biodiversity offset systems. participation in ICCWC. Namibia, and Zambia, and others). EAP FLEG, especially in Lao PDR and Thailand Mainstreaming biodiversity conservation into production landscapes in China, and building biodiversity concerns into larger programs in Indonesia through the Coral Triangle commitments, the COREMAP ex- perience, and enhancing forest biodiversity protection efforts. ECA FLEG, particularly in the European The World Bank is supporting a number of Neighborhood and Partnership Instrument conservation trust funds (for example in East Countries. the DRC and Madagascar), and is pursuing sustainable financing through PES (for LAC Biodiversity conservation and sustainable Biodiversity and sustainable use through example in Costa Rica). use in protected area networks through protected area networks (for example, Peru) policy and institutional strengthening (for and outside (for example, in Argentina, example, in Brazil) and support to park Colombia, Mexico, Panama) by fostering agencies (Colombia). connectivity between critical areas and ensuring that other World Bank activities outside of the sector do no direct or indirect harm to high conservation value forest areas. SAR Regional approaches to biodiversity Biodiversity conservation in the productive conservation, in particular in combatting landscape, strengthening management of the illegal wildlife trade existing protected areas, and investing in biodiversity-linked livelihood approaches for addressing extreme poverty and improving ecosystem goods and services. Global The WAVES global partnership aims to main- stream natural resources in development planning and national economic accounts. Activities are ongoing in Botswana, Colombia, Costa Rica, Guatemala, Indonesia, Madagascar, Philippines, and Rwanda, and are in the pipeline in several other countries. a landscape approach to secure permeable production landscapes9 The World Bank will continue to invest in securing biodi- that provide ecosystem services and address agricultural GHG versity to attract public and private investment in nature- emissions resulting from land use change and conversion of forests based tourism, supporting a sustainable tourism industry and natural habitats. The World Bank will also invest in upstream that increasingly also benefits and provides employment to watershed protection to help our clients provide the quantity and poor communities. Economic benefits due to nature-based tour- quality of water necessary to satisfy their growing urban centers. In ism can be significant sources of income for local communities. addition, the promotion of agrobiodiverse resources and wild crop Tourism in many developing countries is largely driven by nature relative resources can boost agricultural resilience, and should be and national parks. It is also a major economic and job creating promoted, and Consultative Group on International Agricultural sector that provides significant income and employment. Nature- Research (CGIAR) can be a useful partner in doing so. based tourism projects are often located in poor rural areas where even marginal gains can be significant relative to a paucity of other income-generating opportunities. Employment opportunities 9 Permeable landscapes refers to land use that retains biodiversity within for local communities tend to be in lower-skilled and lower-paid and allows for migration of species, provisioning of ecosystem services, positions such as park guides and service staff. Nevertheless, wages and adaptation to shifting biogeographic ranges within the production landscapes. in tourism can be substantially higher than opportunities in other I N V E S T I N G I N N AT U R A L C A P I TA L F O R E R A D I C AT I N G E X T R E M E P O V E R T Y A N D B O O S T I N G S H A R E D P R O S P E R I T Y CHAPTER 3 — REALIGNING THE WBG’S INVESTMENT PORTFOLIO 23 sectors, often in subsistence agriculture. For instance, wages for National Park in Indonesia was established to protect a major irriga- wait staff, cooks, and drivers in a tourism project in Ngamiland, tion investment in North Sulawesi. Investments in coastal protected Botswana were found to be more than twice the average rural areas in Croatia, Bangladesh, Indonesia, Honduras, and Lithuania wage of $60 per month. are protecting coastal forests, swamps, floodplains, and mangroves, important for shelter belts and flood control. World Bank invest- The WBG will invest in growing the stock of biodiversity and ments to protect the forests around the Nam Theun 2 Dam in Lao natural capital more broadly to build economies on sustain- PDR and a 30-year conservation fund to manage the watershed are able industries that can access the source materials and critical in extending the lifespan of the hydropower generation facil- foundational services that their supply chains and processes ity. Floodplain forests and coastal mangroves act as safety barriers demand. There is an increasing awareness in the private sector of against natural hazards such as floods and hurricanes, while natural the need to secure ecosystem services as a means to ensure sus- wetlands filter pollutants and serve as nurseries for local fisheries. tainable supply chains and sourcing. Investments in natural infra- structure, especially investments in upper watershed management, can secure a consistent flow of the quality and quantity of water 3.4 GENERATING FINANCIAL FLOWS necessary for industries. National protected area networks are the The World Bank will continue to innovate financial mecha- cornerstones of biodiversity conservation but also serve as water nisms to generate financial flows from biodiversity and natu- towers for industry and urban centers, as well as a valuable buffer ral capital more broadly that defray the opportunity costs of against the impacts of climate change. Around the world the World maintaining the stock over the long term, cover the direct Bank is supporting the strengthening of protected area systems and costs of its management, incentivize investment across building them into national and local economies through innova- landscapes, and serve as a vehicle for mainstreaming and tive models of management and financing to ensure their sustain- regularizing biodiversity investments. The WBG is the largest ability. Protected areas, and the natural habitats within them, can international financier for biodiversity projects, and has promoted protect watersheds and regulate water flow, prevent soil erosion, and implemented a range of innovative financing mechanisms for influence rainfall regimes and local climate, conserve renewable biodiversity conservation and global public goods in many coun- harvestable resources and genetic reservoirs, and protect breeding tries during the last decade. New approaches to financing nature stocks, natural pollinators, and seed dispersers, which together sup- conservation that mobilize funding and community action can pro- port industry, manufacturing, and agriculture across economies. vide the long-term sustainability needed to secure healthier eco- systems and improve livelihoods. The World Bank has designed PES The World Bank will invest in securing and growing the schemes that have generated revenues and internalized costs. It has flow of services from biodiversity and natural capital more invested in conservation trust funds to dampen funding oscillations broadly to sustain development infrastructure against time that make nature vulnerable to degradation. The WBG has gained and climate change. Natural infrastructure uses natural elements, valuable experience in implementing a range of land- and forest- such as trees or natural habitats, to supplement and complement based climate mitigation pilot and demonstration projects. These manmade hard infrastructure, such as pipes, pumps, or treatment projects helped to generate lessons and guidance on options for plants. The World Bank is helping countries deploy natural infrastruc- securing biodiversity co-benefits through carbon finance in a cost- ture to cost-effectively manage storm water, reduce flooding, cool effective manner. These lessons result mainly from the activities of through shading, or recharge groundwater. These investments are two complementary carbon finance mechanisms, the BioCarbon already proving that sustainably designed infrastructure can reduce Fund and the Forest Carbon Partnership Facility (FCPF). or even avoid capital expenditures, and reduce ongoing operating and maintenance costs. The World Bank has already recognized the In an era of diminishing public investments in biodiversity important role that enhanced protection of natural forests can play conservation in many countries, the WBG is fueling innova- in protecting development investments. Thus the Dumoga-Bone tion, communication, and effective partnerships that cross A G R I C U LT U R E A N D E N V I R O N M E N TA L S E R V I C E S D I S C U S S I O N PA P E R 1 1 24 CHAPTER 3 — REALIGNING THE WBG’S INVESTMENT PORTFOLIO the boundaries between the public, private, and nongovern- stakeholders and their degree of involvement, and the geographical ment spheres to bridge public financing gaps and deliver scale. As these factors vary across countries, so does the potential of effective conservation on the ground. The World Bank invests in the relevant IFMs. resource mobilization mechanisms that allow governments to raise The World Bank will invest in designing and implementing funds from diverse stakeholders, adapting a variety of arrangements PES mechanisms. The core elements and principles of PES mecha- to local circumstances. Investments are used to strengthen enabling nisms, in particular their reliance on performance-based payments legal and institutional support so that government agencies are in a framework where financial rewards are directly channeled to empowered by regulations, human resources, and enforceable those who incur the costs of providing biodiversity, make them agreements with communities, nongovernmental organizations, an increasingly popular conservation policy tool. These mecha- and the private sector. Investments promote sound conservation nisms are cost-effective in comparison to alternative interventions finance planning with targets and results that are clear and can be because they target the seller of the service, and the buyer secures tracked transparently. the requested service in the necessary amount and quality. In addi- Resource mobilization for biodiversity conservation needs tion, they are efficient and equitable in a broader sense because the to move beyond traditional donor funding and focus on producers who bear the opportunity cost of the biodiversity public innovative ways to generate stable, long-term financial goods and ecosystem services are compensated for these costs. flows. Considering the current baseline funding of US$6.5–10 bil- However, it is worth noting that publicly financed PES schemes, lion per year, the world is investing between 50 and 75 percent of whether central government fiscal transfers to subnational govern- the resources necessary to ensure the effective management of the ments for conservation investments, or direct payments to farmers existing protected area systems, and 25 to 50 percent of what would to support environmentally beneficial land use (for example, agri- be needed to achieve the objectives of the CBD more broadly. The environmental schemes in the European Union and United States) financing gap is particularly large for developing countries, where are fundamentally public expenditures. Not only are these expen- only a third of the required expenditures for protected areas are ditures often treated as new and additional conservation finance covered. These estimates of the financing gap relate to a protected (which may not always be the case), but so are the fiscal measures area-based conservation approach only. Financing gaps taking into that transfer resources (including subsidies, conservation ease- account biodiversity conservation in production landscapes—agri- ments, tax reduction or exemption) to economic agents in order to culture, forestry, and freshwater and coastal ecosystems—are esti- induce greater private-sector investment in biodiversity. mated at about US$300 billion per year. In light of these shortfalls IFC will explore how natural capital considerations can be the World Bank will invest in generating financing from innovative integrated into its financial products and services for the pri- finance mechanisms (IFMs) to begin to close this financing gap. vate sector. It is difficult for the financial sector at present to assess Whether by adopting regulations and policies for biodiver- and value the biodiversity and natural capital-related risks it faces sity market creation, stimulating public-private partner- with respect to loans, investments, or insurance products. These ships, or creating basic knowledge and capacity, the public types of risk need to be better understood and embedded in the sector plays a crucial role in the emergence and development creditworthiness analysis of loans, investments, and insurance prod- of market-based IFMs. Even after these markets are created, resid- ucts. Supporting the smart use of natural capital by investee com- ual market failure associated with the public good characteristics panies offers financing institutions a new sustainable investment of elements of biodiversity, information asymmetries, and excessive stream. Over the past year, IFC has been an active signatory of the market power of some market participants may require continuous NCD. IFC is contributing to the Declaration’s emerging governance public sector involvement. Finally, the revenue mobilization poten- structure and is engaged in the substantive work needed to achieve tial of IFMs depends on contextual factors, including the institu- its goals. This work reinforces and builds upon IFC’s leadership in the tional framework (including resource governance), the capacity of financial sector’s sustainability. I N V E S T I N G I N N AT U R A L C A P I TA L F O R E R A D I C AT I N G E X T R E M E P O V E R T Y A N D B O O S T I N G S H A R E D P R O S P E R I T Y CHAPTER 4 — IMPROVING THE WBG’S ENGAGEMENT IN BIODIVERSIT Y 25 Chapter 4 IMPROVING THE WBG’S ENGAGEMENT IN BIODIVERSITY To increase the volume, impact, and effectiveness of its Bridge biodiversity expertise out of ENR into other relevant investments in the conservation and sustainable use of bio- GPGs (especially the agriculture, water, energy and extractives, diversity, and to enhance its contribution to the achievement transport and information technology, and urban, rural, and social of the twin goals of eliminating extreme poverty and boost- development GPGs) and teams (especially forestry and associated ing shared prosperity in a sustainable manner, the WBG will funding vehicles such as the BioCarbon Fund and the Forest Carbon engage in a number of institutional reforms that will better Partnership Facility). (MT) position it to work on its four previously developed priority Establish an ENR GPG-based Global Expert Team with dedi- issues for biodiversity. These steps have been classified as short- cated budget for staff time and travel as part of a pre-investment term (ST), medium-term (MT), and long-term (LT) measures to help facility (from the Umbrella Trust Fund proposed in the following prioritization. paragraph) to support World Bank Country Management Units (CMUs) in developing Systematic Country Diagnostics (SCDs) and 4.1 MOBILIZING THE ORGANIZATION Country Partnership Frameworks (CPFs). They should also sup- Establish a biodiversity team in the Environment and Natural port task teams as they prepare projects and foster demand for Resources (ENR) Global Practice Group (GPG) consisting of sustainable NRM regimes, including to provide quality control and technical expertise in the key above-mentioned focal areas of design biodiversity inputs across the NRM portfolio. Leverage the conservation and sustainable use of biodiversity in both the pub- specializations to guide country and sector dialogue and improve lic and private sector. Ecosystem services and biodiversity should our future project pipeline including tying future actions in with the be constituted as a distinct subsector and a subunit of the ENR broader WBG objectives. (ST) GPG. A Lead Biodiversity Specialist or a Biodiversity Adviser Create and provide resources for a pre-investment facility and Practice Leader should be appointed to represent and lead through a Natural Solutions Umbrella Trust Fund that supports the WBG work on the implementation of the WBG Environment the Bank’s work on ecosystems and sustainable use of biodi- Strategy and the conservation and sustainable use of biodiversity versity, and as a project development facility. This could host and in Bank investments. The Biodiversity Lead will coordinate with IFC’s be structured around three facility resourcing windows to create, Lead Biodiversity Specialist to ensure a coordinated position and catalyze, and capitalize natural solutions to deliver to clients. WBG balanced perspective between public and private sector efforts. (ST) clients and stakeholders have repeatedly expressed strong inter- Conduct a gap assessment of critical expertise against impor- est in a better use and exchange of existing knowledge between tant and emerging thematic knowledge, issues, and operational countries, including both South-South and North-South exchanges, criteria to develop a WBG staffing strategy (once the new GPG and to better document client demand and identify opportuni- structure is in place) and to build talent and relevant technical ties to support real time decision-making and build natural solu- knowledge and skills on biodiversity. (ST) tions based on new and potentially transformational knowledge. A G R I C U LT U R E A N D E N V I R O N M E N TA L S E R V I C E S D I S C U S S I O N PA P E R 1 1 26 CHAPTER 4 — IMPROVING THE WBG’S ENGAGEMENT IN BIODIVERSIT Y The facility would have three windows: a solutions window, a The focus would be on innovation, to build on lessons learned and pre-investment facility, and an innovation incubator. (MT) the integration of frontiers of new knowledge into WBG operations. A solutions window that creates knowledge, invests in its use, and promotes evidence-based solutions by tying knowl- 4.2 ENHANCING THE WAY WE DO OUR BUSINESS edge to investments. This window would (1) support innovative To leverage a renewed biodiversity and ecosystem team analytical work for the development and preparation of SCDs and within the ENR GPG, the WBG must enhance the way it does CPFs; (2) provide economic and sector work, knowledge products, business. Firstly, it needs to better leverage, monitor, and measure and non-lending technical assistance (including on the costs of the conservation and sustainable use of biodiversity within the WBG environmental degradation and on clients’ priority-setting options portfolio. This could entail adopting the principles outlined in IFC’s for biodiversity investments) to direct World Bank operations; and Performance Standard 6 to strengthen the Natural Habitats opera- (3) provide development financing and support to client countries tional policy (OP 4.04) in an effort to move from a “do no harm” to on how to manage biodiversity and natural capital for inclusive a “do some good” approach; applying the biodiversity core sector green growth. indicators more broadly, including in agriculture operations that do not have a biodiversity component per se, but in which yields A pre-investment facility that catalyzes inclusive green are underpinned by dependence on biodiversity and ecosystem and resilient growth and transforms development path- services; or devising triggers that relate to the policy framework that ways by providing incremental, early-stage funding to sector and affects biodiversity that can be used in DPOs. (LT) country teams to support Systematic Country Diagnostics (SCDs). Investments would perform real-time diagnostics on what is Increase the emphasis on monitoring and evaluation in bio- needed in terms of an enabling environment, actors, institutions, diversity investments and operations, including better use of technologies, and investments to initiate transformational change. Core Sector Indicators, to understand how to structure global The facility could also finance timely feasibility analysis underpin- responses to sustain and scale up impact beyond individual ning strategic or complex environmental investments, and explore country operations. This also extends to including biodiversity innovative financing for transformative change. The pre-investment indicators in the Corporate Scorecard, and conversely, including facility could strengthen client capacity to adopt and operationalize indicators on poverty and shared prosperity in biodiversity opera- new knowledge and strengthen client country understanding of tions, better distinguishing between primarily biodiversity-targeted and ability to meet global commitments (such as the MDGs) or mul- operations and those where biodiversity is mainstreamed, and tilateral environmental agreements such as the CBD, the Convention developing sector-specific indicators where appropriate. In addition, on the International Trade of Endangered Species (CITES), or the it will require designing protocols—for example with Development United Nations Framework Convention on Climate Change. Economics (DEC)—to perform diagnostic work on the state of bio- diversity and ecosystem services as part of project preparation for all An innovation incubator that capitalizes WBG teams and investment operations in the NRM sector. This will also imply explor- strategic partnerships to test new ideas for existing and emerg- ing methodological frontiers including in information technology ing challenges, explore solutions and deploy new technologies or and how they can be applied in client countries. (MT) design appropriate institutional, governance, and policy frameworks that can be rapidly scaled up and operationalized through regular Engage upstream with clients in biodiversity. This could hap- WBG operations. This could include, for example, support to test pen more easily were the existing biodiversity community of prac- national aggregate biodiversity offset schemes to achieve no-net tice transformed into a sub-practice in the new ENR with resources loss biodiversity management regimes, or national application of made available to develop a robust pipeline, especially by blend- PES to generate ecosystem-based financial streams, fostering pub- ing biodiversity components into other sectoral projects whose lic-private sector linkages, and creating public sector fiscal space. success is dependent upon biodiversity and ecosystem services I N V E S T I N G I N N AT U R A L C A P I TA L F O R E R A D I C AT I N G E X T R E M E P O V E R T Y A N D B O O S T I N G S H A R E D P R O S P E R I T Y CHAPTER 4 — IMPROVING THE WBG’S ENGAGEMENT IN BIODIVERSIT Y 27 (for example, agriculture and food security, access to wood-based use a SPARK platform, which will include a centrally accessible roster energy or hydropower). (MT) of vetted consultants, a document library for terms of reference, manuals, and so on; a calendar of relevant events, a Q&A forum, a Building a pipeline composed of blended projects will require blog, and staff profile notes. The platform will also function as the biodiversity staff working upstream with other sectors to main forum for WBG-wide biodiversity-relevant processes, such as identify opportunities and develop activities that support the safeguards reform, in which biodiversity experts continue to be long-term functioning of the relevant biodiversity and eco- engaged, and participation in global events (for example, CBD con- system services. A dedicated trust fund or off-the-top World Bank ferences of the parties, World Parks Congress). (ST) budget could be used to perform the upstream analytics to identify these dependencies or demonstrate the relevant technologies. (MT) Develop and execute an annual work plan for knowledge sharing events. In addition, an output-driven mentorship program Increase portfolio impact by encouraging larger thematically is planned in order to transmit knowledge from senior to junior staff focused operations, including by pooling GEF focal area funding members and create more effective staff linkages, and monthly into single operations where possible, targeting key priority areas brown bag lunches will be organized. (ST) across GPGs to reduce portfolio fragmentation and spreading WBG resources. Such examples are the emerging WAVES partnership on Carry out a gap analysis to identify knowledge gaps in the biodiversity and ecosystem valuation; the Global Partnership for WBG on the four priority areas. The focus will be on identify- Oceans addressing critical food security and livelihoods concerns ing knowledge and skills that are required to better position the and the conservation and sustainable use of marine resources; or WBG to deliver expert advice to its clients. This analysis will be the FLEG and growing ENRLE portfolio addressing natural resources used to inform a strategic plan for focusing programming in the governance concerns. Similar strong focus should be on the chal- short-term, and for how to fill any identified gaps in the medium- lenge of sustainably planning landscape use across GPGs—dealing term. In addition, an analysis will be carried out of the biodiversity- with the nexus of agricultural production, infrastructure demands, relevant tools available to WBG staff (for example, the Protected GHG emissions from land use, and sustaining biodiversity and eco- Area Management Effectiveness Tracking Tool, Forest-Poverty system services; and in building a portfolio of projects addressing Toolkit) to assess awareness of the tools and staff ’s ability to apply biodiversity and ecosystem services-based innovative financing. them. Where necessary, additional guidance and training will be Doing so should help the WBG take advantage of GEF resources developed to fill any gaps identified, including improved monitor- that have risen in the GEF 6 replenishment round. The ongoing WBG ing and evaluation. Based on these exercises, annual work plans restructuring presents an excellent strategic opportunity to define will be developed for internal capacity building and knowledge a strategy to increase portfolio impact by increasing targeting and sharing events. (ST) reducing portfolio fragmentation. (MT) The BioCOP will use the abovementioned skills mapping to populate the SkillFinder function on SPARK jointly with staff to 4.3 BUILDING CAPACITY FOR THE SCIENCE OF allow for easier location of subject-matter experts inside and out- DELIVERY side of the community. (ST) Reconstitute and improve Biodiversity Community of Practice (BioCOP) to function among others as the central vehicle for biodiversity knowledge management. Beyond 4.4 CREATING CONSTITUENCY AND LEVERAGING biodiversity practitioners, BioCOP will be expanded to include OUR EXPERIENCE interested members of other relevant GPGs (for example, energy, Develop a comprehensive, two- to three-year communica- infrastructure, water), as well as IFC and Multilateral Investment tions strategy that identifies a broad vision for the biodiversity prac- Guarantee Agency (MIGA) staff. To drive knowledge exchange, it will tice, key policy, financial and other targets, key internal and external A G R I C U LT U R E A N D E N V I R O N M E N TA L S E R V I C E S D I S C U S S I O N PA P E R 1 1 28 CHAPTER 4 — IMPROVING THE WBG’S ENGAGEMENT IN BIODIVERSIT Y audiences, and the tools, events, champions, and communications 4.5 WORKING IN PARTNERSHIP products that will help to reach these strategic goals. Flowing from Selectively engage in partnerships that are aligned with the this strategy will be annual communications work plans which WBG twin goals and sustainable development, including identify staffing and budget to deliver on the key strategic goals. the broad vision and priorities of the Biodiversity Roadmap. The communications strategy will build on the broad experience Global impact is increasingly achieved through concerted partner- already gathered over many years of WBG operations and partner- ships. The WBG’s convening power and brand leverage have the ships while also identifying opportunities to further expand the potential of taking such engagements to impact. The WBG has been constituency in support of the Biodiversity Roadmap. The WBG engaged in a number of existing partnerships with relevance to will also make an effort to disseminate its knowledge and lessons biodiversity such as the Critical Ecosystems Partnership Facility, Save on successful approaches to investments in biodiversity, includ- Our Species, TerrAfrica, and the Global Tiger Initiative. New growing ing by liaising more with the academic community to exchange partnerships such as WAVES, NPI Alliance, and the NCD, or emerging knowledge. (ST) ones such as the Global Partnership on Oceans, the engagement in wildlife crime through ICCWC, are good examples of engagements Develop a strong set of key messages and “stories” that that are aligned with the broader agenda of inclusive green growth reinforce the broad vision and priorities of the Biodiversity and the priority areas identified in the Biodiversity Roadmap. (LT) Roadmap. A supportive online communications strategy—with tailored web and social media tools in a range of languages—will Develop a partnership strategy with principles and criteria be developed to ensure target audiences have immediate access to strengthen the strategic focus of WBG engagements. This to new research, analysis, and developments emerging from the should ensure that engagements are aligned with the WBG objec- biodiversity practice. Success will be measured through a clear, tives and portfolio and designed to avoid the WBG being merely an upfront set of key indicators ranging from web traffic and Twitter underwriter without a clear role and function. This strategy would followers, to uptake of key messages by identified audiences and also seek to better link the WBG’s role in partnerships to its own stakeholders. (ST) portfolio of projects. 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Data. http://data.worldbank.org/topic/agriculture-and Cambridge University Press, Cambridge. -rural-development I N V E S T I N G I N N AT U R A L C A P I TA L F O R E R A D I C AT I N G E X T R E M E P O V E R T Y A N D B O O S T I N G S H A R E D P R O S P E R I T Y Agriculture and Environmental Services 1818 H Street, NW Washington, D.C. 20433 USA Telephone: 202-473-1000 Internet: www.worldbank.org/environment