Paying for nature: What to expect from COP16 in Colombia

Government officials, companies and nongovernmental organizations will meet this week in Cali, Colombia, for COP16 to attempt to hash out the details over how to stop losses of biodiversity, as habitat destruction and environmental degradation spread, and how to pay for potentially costly initiatives.

“We have had a catastrophic 73% decline in the average size of populations that we have studied over the last 50 years," said Lucia Ruiz Bustos, director of Conservation Areas, Earth for Life at environmental charity World Wildlife Fund, which has studied nature loss.

“That brings us to a very important conversation of tipping points—if we don’t take action right now we are in a watershed moment in which tipping points might result in devastating impacts, not only for nature but also for life as we know it," she said.

The conference hosted by the United Nations will mark the first meeting since parties in 2022 struck the Kunming-Montreal Global Biodiversity Framework—a landmark treaty which aims to halt the destruction of ecosystems and commit countries to improving diversity in the natural world, both within their own borders and globally.

Countries so far have been slow to commit to mechanisms for funding biodiversity efforts, which carry potentially high direct costs and may affect economic development. Questions over the cost the private sector should bear remain contentious.

Billions of dollars worth of subsidies, bonds and other backing are likely to be required to help restore nature, according to experts within the field. Discussions have focused on financing tools that are still undeveloped, such as biodiversity credits.

Financial institutions including banks and asset managers are expected to have an increased presence at this year’s edition of the biannual gathering, suggesting deals could be struck with both governments and private industry.

There are still debates over how countries would fund projects outside their own borders, as well as crucial questions over how to measure biodiversity and nature positivity.

Organizers are expecting four main topics for the summit: How to implement Kunming-Montreal, how to mobilize resources to improve biodiversity, who pays for genetic sequences used in products that were found within nature, and how to better use and give a voice to indigenous groups on the topic as a whole.

Here’s a breakdown:

Implementing Kunming-Montreal

The Kunming-Montreal agreement, which established global targets to protect nature and allow nature to regenerate, marked the first time governments and companies agreed to protect the building blocks of nature, much as they did in 2016 for climate in Paris.

This year, it’s about trying to put those commitments into action. Countries have been submitting plans for how they would halt nature loss and how they would pay for the efforts. Only 31 of the some 190 countries actually submitted their plans ahead of the conference, however, although some may submit them at Cali.

Astrid Schomaker, executive secretary of the U.N.’s Convention on Biological Diversity, said submitting these plans requires governments to find sources of funding, as well as a commitment from the country’s overall government, not just the environmental departments.

“For all environment conventions, the big challenge is to make sure that we have adequate financing to support developing countries in particular, to make sure they can live up to the commitments made," said Schomaker.

Mobilizing resources

Governments at the last biodiversity COP agreed to provide at least $30 billion a year in financing by 2030, with an interim target of $20 billion by 2025. Nature experts and COP16 organizers say a further $700 billion a year is needed to protect nature from all sources.

The financial community is focusing more on biodiversity. In Europe, the Corporate Sustainability Reporting Directive and more widely the Taskforce on Nature-Related Financial Disclosures are pushing companies to identify risks to their business from the loss of natural habitats and ways to solve the problem.

Major global banks including Standard Chartered of the U.K. are expected to have a presence at Cali, with the aim of providing ways of finding funds for nature. Those may include new tools such as dedicated funds and bonds, while also highlighting that many climate-related tools also apply to biodiversity in nature.

“It’s estimated that around a third of the climate mitigation we need to achieve the Paris agreement can actually be achieved through nature-based solutions," said Oliver Withers, head of nature at Standard Chartered. “So having a very credible commitment to Net Zero in the Paris target really to a certain extent is a driver for why we would have a commitment to nature."

One of the more technical topics is around digital sequencing information, and who pays for the genes found in nature that are applied to commercial and industrial products.

Scientists and researchers for years have been documenting DNA sequences found in nature that are increasingly being used by companies to create new products, from drugs to chemicals.

“The idea is that they use nature to make profits. But going forward they would need to pay nature," said Lea Reitmeier, policy analyst at the Centre for Economic Transition Expertise at the Grantham Research Institute.

Indigenous voices

The final key point on the agenda is giving greater voice to indigenous voices, with talks of a permanent body dedicated to this.

“It’s a huge priority for Colombia and it’s a big priority for us in the sense that when we talk about living in harmony with nature, which is our 2050 objective, or living at peace with nature, which is one of the themes of this COP," said Schomaker. “We have to recognize that indigenous populations and local communities do basically live at peace with nature and have been doing so for millennia."

Schomaker said that raising indigenous voices should help create more nature-based solutions in harmony with local communities.

Write to Yusuf Khan at yusuf.khan@wsj.com