Does financing biodiversity reduce biodiversity loss? Evidence from EU funding of science and innovation

Andre Poyser

Review of Finance, 2026, vol. 30, issue 1, 273-319

Abstract: Recent calls for greater private capital in biodiversity finance often overlook the question of effectiveness. This article interrogates the assumption that the increased financing being called for directly reduces species-level loss. Using data on European Union-funded projects across twenty-six countries over two decades, I discover that conservation funding has been most effective in supporting forest preservation, but largely ineffective for other ecological-based measures of biodiversity. Applying a dynamic difference-in-differences framework, I show that conservation funding generally yields minimal ecological gains. In contrast, funding for biodiversity research expands biodiversity data coverage, though additional investment produces little marginal improvement. A geospatial analysis of bird sightings reveals delayed and spatially dependent impacts on avian biodiversity near funded projects. Additionally, I explore biotechnology-related biodiversity projects as a channel for private investment. These projects generate patents and genetic resources that can be commercialized, suggesting pathways for aligning biodiversity outcomes with investor incentives.

Keywords: biodiversity finance; biodiversity loss; science and innovation; conservation biotechnology (search for similar items in EconPapers)
JEL-codes: G12 G30 Q57 (search for similar items in EconPapers)
Date: 2026
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