Some time ago I wrote a blog entitled “Making biodiversity pay: a look at new opportunities“, inspired by the COP16 talks on Biodiversity, held in October 2024. There he explored how biodiversity credits and markets could open a new door and connect conservation with economic development.
Today, after delving into different studies and learning spaces on sustainable finance and biodiversity, I feel that this view is beginning to expand it is not just about generating income to conserve, but about rethinking the entire financial architecture that sustains, or threatens, nature.
From the readings, webinars and materials analyzed, I understood a fundamental premise: biodiversity does not need money; the economy needs biodiversity.
According to PwC (2023) estimates, 55% of the world’s GDP, which is around 58 trillion dollars, is highly exposed to risks arising from nature and its ecosystem services. Yet we continue to make financial decisions as if natural capital were infinite. This “invisibility of nature” is, perhaps, one of the greatest challenges we have ahead of us.
This new approach proposes to address the financing gap from both sides: increasing positive investments while reducing financial flows that damage ecosystems, such as harmful subsidies or investments without environmental safeguards. This dual approach seems transformative to me because it invites us to think about structural changes, not just one-off projects.
In the case of Paraguay, the potential to apply innovative financial mechanisms linked to biodiversity is very high, especially in the agricultural, forestry and financial sectors. The forestry sector, for example, has grown in exports of sawn timber and wood manufactures, although it faces challenges in sustainability and responsible management of forest resources. In addition, initiatives such as “Paraguay + Verde” seek to strengthen sustainability in rural areas, improve the incomes of small producers and promote sound forestry practices.
On the other hand, the Paraguayan financial system already has sustainable partnership platforms, such as the Sustainable Finance Roundtable (SFM), a voluntary cooperation platform that promotes the integration of environmental, social, and governance (ESG) criteria in financial decisions. Through training, studies and sectoral commitments, SFM has managed to position Paraguay’s sustainable finance as a strategic axis within the national financial system, evidencing that there are actors with technical capacity and institutional will to adopt and promote new green financial instruments, aligned with the country’s sustainability and conservation objectives.
In addition, Paraguay’s recent accession to the BIOFIN initiative offers a strategic window of opportunity to strengthen environmental financial planning, identify economic gaps, and promote the integration of biodiversity into national budget processes.
With these initial conditions, productive sectors with an impact on nature, sensitized financial institutions and a national biodiversity financing process underway, Paraguay is able to explore instruments such as green tax incentives, biodiversity bonds or agricultural subsidy reforms. It is important to remember that in this country there is already the figure of Payment for Environmental Services (PES), in force since 2006, as a pioneering economic mechanism that recognizes and remunerates the benefits provided by ecosystems. Although there are still gaps in its application and scaling, this instrument is gaining strength as a key tool to encourage conservation and attract private investment towards sustainability.
Along the same lines, Paraguay has a specific framework for carbon credits based on Law No. 7190/2023 “On Carbon Credits”, which defined ownership, registration, and rules for participation in carbon markets. This law was regulated by Decree No. 3369/2025, creating structures and processes for the generation, custody and transfer of credits with integrity and traceability criteria.
In addition, Paraguay and Singapore signed the Implementation Agreement under Article 6 of the Paris Agreement, on May 23 of this year, opening a concrete path for cooperation and transactions of high-quality carbon credits; Singapore has already announced the contracting of nature-based loans that include projects in Paraguay.
With these tools, Paraguay consolidates an enabling environment to transform ecological risk into investment and resilience opportunities, aligning conservation with long-term productive competitiveness.
Perhaps the greatest lesson from this journey is to understand that financing biodiversity does not represent an expense, but a strategic investment in resilience. Every dollar spent conserving forests, soils, or water sources translates into future savings, whether from reducing climate risks, preventing disasters, or maintaining agricultural and forestry productivity.
Investing in nature implies ensuring the biophysical foundations of the economy, because healthy ecosystems sustain food security, water availability, climate stability and, therefore, the country’s competitiveness.
As I delve deeper into this process of learning and analysis, it is becoming increasingly clear to me that the future of sustainable finance lies not only in compensating for environmental loss, but in redesigning economic flows to regenerate natural value. True transformation will come when nature ceases to be an external cost and is recognized as an essential asset of development.
Valuing, protecting and restoring biodiversity is not an environmental task, but an economic and social condition for long-term resilience.