Biodiversity Finance in Indonesia
Understanding the relationship between biodiversity and climate finance is crucial because biodiversity loss and climate change are interconnected problems. Climate change can cause habitat loss and alteration, shift species distributions, and disrupt the timing of key biological events such as flowering, breeding, and migration. Some species are unable to adapt to these rapid changes, leading to declines or even extinctions. Effective climate solutions can enhance biodiversity, for instance, by preserving and restoring natural habitats that sequester carbon. However, some climate solutions, like certain renewable energy projects or large-scale biofuel plantations, can harm biodiversity if not carefully managed. Therefore, integrated approaches that consider both climate and biodiversity outcomes are essential for sustainable progress.
Biodiversity finance, through instruments like biodiversity credits, presents a promising yet challenging path toward sustainable conservation funding. Integrating biodiversity conservation into climate finance strategies is essential for addressing the interconnected crises of biodiversity loss and climate change. Biodiversity credits allow private sector investment in conservation but must overcome issues of integrity and credibility.
Globally and nationally, numerous initiatives are underway to establish a unified framework for biodiversity financing, integrating both mandatory and voluntary biodiversity credits. In Indonesia, these efforts are particularly dynamic and diverse. For instance, BIOFIN Indonesia is dedicated to strengthening the national biodiversity financing framework and bridging the financial gap for conserving and sustainably using biological diversity. Through the ecological fiscal transfer (EFT) mechanism, BIOFIN provides local governments with guidelines for allocating financial assistance towards conservation and environmental preservation, thereby enhancing environmental management and encouraging sub-provincial governments to prioritize these efforts, as seen with the Central Java Governor Regulation No. 61/2023.
Meanwhile, the Indonesia Public Agency for Environment Fund Management (BPDLH) acts as a central hub for financing environmental programs in the country. This includes initiatives such as green bonds and grants that account for carbon and environmental values, highlighted in a comprehensive 2020 Climate Policy Institute report. Additionally, private sector and non-government organizations have been proactive, with entities like Verra developing guidance materials for Climate, Community, and Biodiversity (CCB) projects that uphold high conservation values.
The establishment of the International Advisory Group on Biodiversity Credits in 2023 further supports these endeavors. This group focuses on critical aspects such as measurement, demand, supply, stewardship, and governance. Similarly, the Science Based Targets (for Nature) Network has been instrumental in preparing related guidance for companies, ensuring that business practices align with biodiversity conservation goals.
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