Highlights

Sustainable production practices are a powerful means to address the multifaceted drivers of biodiversity loss while achieving sustained yields, nutritious foods, and jobs. We identified World Bank and International Finance Corporation lending projects that demonstrate the plausibility of achieving economic–ecological win–wins that could be adapted to various contexts, replicated, and scaled, although these projects are not yet commonplace.

World Bank and International Finance Corporation support for climate-smart agriculture has enhanced resilience to shocks, but some practices can harm biodiversity because of negative environmental effects.

The World Bank’s use of forest carbon finance within landscapes has contributed to increased yields and revenues, while meeting targets for avoided deforestation and carbon sequestration. Forest carbon programs have fallen short of targets to restore degraded forest landscapes and have missed opportunities to track biodiversity gains.

There is limited assurance of biodiversity outcomes in the forest production sector because of weak tracking of the implementation of sustainable forest management plans. Reporting on forest certification was also frequently lacking in project documentation. A systematic rationale for species selection was absent in half of the forestry projects, constraining assessment of likely biodiversity outcomes and ecosystem resilience.

The World Bank is advancing elements of fisheries management with potential biodiversity gains, but there is uneven application across Global Practices, and most projects are struggling to reconcile the long-term need for enhanced fisheries management with short-term food security and income needs.

We identified four key factors of effectiveness in World Bank and International Finance Corporation support for integrating biodiversity into production areas: fostering interministerial collaboration and strong information flows, aligning finance with emerging sustainability regulations and markets, reducing adoption costs and risks through innovative financing and strengthening land and resource tenure and rights, and identifying entry points where production systems are reaching biological limits.

Sustainable production practices are a powerful means to address the multifaceted drivers of biodiversity loss while achieving sustained yield, jobs, and income gains. As stated by the World Bank, solutions to the global biodiversity crisis inevitably lie in the economic sectors that exert the greatest pressure on nature, including food, land use, and ocean use.1 As stated in Unlocking Nature-Smart Development, these economic sectors find themselves at a crossroads: they are central to achieving the Sustainable Development Goals and satisfying the needs of a growing population, but their expanding footprint is also unsustainable (World Bank Group 2021). When soil, fish stocks, forests, and water supplies are degraded or destroyed, productivity drops and jobs disappear. Sustainable practices maintain or even improve these resources so that jobs can be sustained from one generation to the next. In this chapter, we cover World Bank and IFC efforts to integrate biodiversity into three production areas: (i) agriculture and agribusiness, (ii) forestry, and (iii) fisheries and aquaculture. We then present cross-cutting lessons across these areas, derived from our portfolio review, case studies, and interviews. In this chapter, we do not cover other competing land uses with large footprints, such as extractives, energy, or infrastructure, nor do we address the wider built environment.

World Bank Agriculture Investments

Integrating biodiversity into agriculture yields long-term benefits for productivity, human health, and welfare. Biodiversity supports ecosystem services such as pollination and soil fertility, enhancing crop productivity. Biodiverse systems offer resilience to climate variability, disasters, and diseases, ensuring stable food production (Halwart 1998; Jarvis 2007; Pullin and White 2011). Mixed farming systems contribute to better nutrition and health, while local economies benefit from diversified income sources and sustainable agriculture jobs (Garrity et al. 2010). The use of natural predators and crop diversity also lowers pesticide dependence and reduces health and nutrition risks (IPBES 2016, 2019).

The World Bank has long championed biodiversity-positive approaches in agricultural production systems. In Biodiversity and Agriculture, it was stated that “without biodiversity, agriculture cannot progress” (World Bank 1996, vii) to maintain ecological balance and productivity; Integrating Biodiversity in Agricultural Intensification developed strategies for incorporating agrobiodiversity into intensified agricultural systems (World Bank 1999); and in Biodiversity, Climate Change, and Adaptation, the World Bank advocated for genetic diversity and ecosystem-based approaches to achieve resilient production systems (World Bank 2008). The World Bank’s forthcoming report, Reboot Development: The Economics of a Livable Planet, examines the interconnectedness of agriculture and biodiversity, demonstrating how agriculture affects and depends on biodiversity and ecosystem services, and how sustainable solutions can enhance agricultural resilience while preserving biodiversity.

Climate-smart agriculture projects enhance resilience to shocks, but some practices may harm biodiversity because of negative environmental effects. Climate-smart agriculture is a suite of farming practices and technologies that can boost productivity, enhance resilience, and reduce GHG emissions.2 The World Bank approved 247 agriculture lending projects between FY15 and FY24.3 Over this period, the percentage of these projects that indicate they apply climate-smart agriculture tools has grown from 30 percent to 90 percent. Although climate-smart agricultural practices and technologies can contribute to resilience (FAO 2013, 2021; World Bank 2020), those involving improved or modified varieties and intensified use of chemical inputs may generate negative environmental externalities—including elevated emissions, nutrient runoff, and degradation of soil and water resources—particularly where safe use and regulation are weak (Giller et al. 2021; Hellin and Fisher 2019; Sumberg et al. 2023). Most climate-smart agriculture projects do not clarify how they followed environmental and social criteria to evaluate trade-offs of high-input models, balancing yield maximization and short-term productivity with emission reductions, long-term sustainability, and labor demands (FAO 2013, 2021; Giller et al. 2021; Hellin and Fisher 2019; Sumberg et al. 2023). Managing these trade-offs is crucial to adapting strategies to local contexts and optimizing benefits across food security, livelihoods, adaptation, mitigation, and biodiversity goals (FAO 2013, 2021; Saj et al. 2017).

We identified World Bank agricultural projects that demonstrate that economic–ecological win–win projects are possible, although these projects are not yet commonplace. Seventeen of 247 agriculture lending projects in 10 countries (including 6 projects in China and 2 each in Panama and Zambia) had explicit designs that aligned with the literature on how to achieve biodiversity-positive outcomes.4 These projects demonstrated how to achieve and measure ecological and economic gains by using biodiversity-compatible approaches aligned with good practices in the literature. These practices included agroforestry, intercropping, composting, cover cropping, and integrated pest management—practices that have demonstrated strong potential to enhance resilience while sustaining environmental integrity and reducing reliance on external inputs (FAO 2013, 2021; Lipper et al. 2014; Saj et al. 2017; Tripathi et al. 2022). Although other projects may be achieving biodiversity gains, these are neither explicitly defined nor tracked with proxies that can be validated in line with metrics in the literature. On completion, 7 closed and validated projects, rated moderately satisfactory or higher, enhanced productivity, income, and yield sustainability. Specific results included increased plant and crop diversity, increased organic matter in soil, reduced deforestation and agrochemical use, and increased certification (for example, organic farming, sustainable agricultural practices, and reduced emissions). Illustrative results follow; a deeper analysis, including of contextual factors, is required to support the needed replication and scale.

• The China Climate Smart Staple Crop Production Project (FY15–21), rated satisfactory, reduced fertilizer and pesticide use, increased crop residue retention, and integrated trees into croplands, increasing yields by 8 percent and incomes by 14 percent.5
• The Panama Sustainable Production Systems and Conservation of Biodiversity Project (FY15–20), rated satisfactory, mainstreamed biodiversity-friendly practices across 1,611 hectares of certified production landscapes. Business alliances and targeted support to more than 33,000 beneficiaries, including Indigenous and women farmers, generated an average internal rate of return of 36 percent and reinforced the market value of sustainable farming.6
• The Viet Nam Sustainable Agriculture Transformation Project (FY15–22), rated highly satisfactory, demonstrated that integrated technology packages reduced fertilizer and pesticide use by 35 percent and 48 percent, respectively; increased net profits by 32 percent; and raised rice yields by 5–10 percent, while also reducing postharvest losses and GHG emissions (box 4.1).

The World Bank has also positioned itself as a leader on the issue of repurposing perverse agricultural subsidies whose environmental harm undermines productivity and intended long-term welfare gains, but it is too soon to evaluate results. The World Bank’s 2023 report Detox Development: Repurposing Environmentally Harmful Subsidies highlights the role of perverse agricultural subsidies in causing deforestation, soil degradation, GHG emissions, and inefficient resource allocation and in further entrenching inequality (Damania et al. 2023). The World Bank has led this dialogue, as exhibited at COP28 in 2023, where it issued the Declaration on Sustainable Agriculture, Resilient Food Systems and Climate Action. This leadership led to 160 governments making a pledge to revisit their agrifood system policies to achieve more sustainable and equitable food systems. Pursuant to this, the World Bank catalyzed the Food Systems 2030 Multi-Donor Trust Fund, housed in the World Bank, which is supporting 40 Agricultural Public Expenditure Reviews to identify reform options, together with seven pilot operations focused on repurposing perverse subsidies.

International Finance Corporation’s Agriculture Investment and Advisory

Integrating biodiversity considerations into agribusiness delivers strong financial, risk mitigation, and reputational returns, including in emerging markets. Biodiversity-friendly practices—such as agroforestry, integrated pest management, and landscape restoration—have been shown to enhance yields and quality, reduce input costs, and provide access to green finance and premium markets. They also mitigate climate, pest, and supply chain risks; support compliance with tightening sustainability regulations (for example, the EU Regulation on Deforestation-free Products); and strengthen brand value amid rising consumer and investor demand for sustainable sourcing. Conversely, biodiversity loss increases exposure to yield volatility, regulatory penalties, and reputational damage. Integrating biodiversity is thus not only environmentally beneficial but also a core business strategy that supports long-term profitability, resilience, and market competitiveness.

A quarter of IFC’s agricultural investments included practices with potential biodiversity benefits. Twenty-seven of 107 IFC-financed investments in the agricultural industry (crop and animal production, excluding aquaculture) approved between FY15 and FY24 included practices with potential biodiversity benefits.7 Most investments focused on coffee (also in combination with other crops, such as cashew, cocoa, cotton, various spices, nuts, and tea) and sugarcane. Half of the projects (54 percent) were in Africa: there were several in Côte d’Ivoire, Ethiopia, Madagascar, South Africa, and Zambia, along with single projects in Malawi, Senegal, and the East Africa region, and an Africa regional project. Twenty percent were in Latin America (mostly in Brazil), and 15 percent were in East Asia and Pacific (mostly in Viet Nam).

Three-quarters of IFC’s sustainable agribusiness investments use internationally recognized traceability and certification systems, which are promising for achieving positive biodiversity outcomes. Internationally recognized systems include Good Agricultural Practices certification for soil, water, and pesticide management; the BONSUCRO system addressing biodiversity risk management in the sugarcane sector; and Rainforest Alliance certification for habitat and species protection, wildlife corridors, and pollution control. Proprietary systems such as Nespresso AAA and the Olam Sustainability Framework are improving environmental criteria but often lack independent verification.

IFC agribusiness investments with effective certification schemes often occur in vertically integrated models, with companies committed to sustainability. Ten sustainable investments were mature and reviewed, revealing greater success in biodiversity outcomes for projects linked to vertically integrated models. For example, an Asian fiberboard plant showed successful certification for a small plantation extension, and a southern African fruit producer expanded existing certifications to 180 hectares. Conversely, landscape-level efforts yielded less positive results in addressing the drivers of biodiversity loss, such as unsuccessful deforestation-free cocoa shares in West Africa and nonreporting on traceability by an agribusiness distributor in Latin America. An exploratory case study in Brazil examined successful soy certification schemes amid high deforestation rates in a biodiverse region (box 4.2). Many of the bigger brands represented in this portfolio are pledging sustainable sourcing to gain competitive advantages in certain growing market segments.

Three IFC agribusiness investments show the potential of supporting regenerative agricultural practices. Regenerative agriculture aims to improve soil health and ecosystems by rebuilding soil structure, sequestering carbon, and enhancing biodiversity. These principles can be applied throughout the agribusiness value chain, from farm inputs to consumer markets. We found three IFC projects using regenerative agriculture: Bhutanese farmers planting hazelnut trees to retain soil, offset carbon dioxide, and prevent deforestation; a Brazilian sugarcane project implementing sustainable practices to restore native vegetation; and an African coffee revival project planting native trees to protect rainforests.

One-quarter of IFC’s agriculture- and agribusiness-related advisory projects are potentially supporting more sustainable practices. IFC implemented 67 advisory projects in Manufacturing, Agribusiness, and Services between FY15 and FY24. Of these, 17 may yield sustainability benefits, mostly in Africa (35 percent) and Latin America and the Caribbean (35 percent). Identified sustainable practices include crop rotation, soil management techniques, avoided deforestation, and certification or traceability schemes. The crops and locations for such work were varied and included projects focused on soy, sugar, mangos, pepper, rice, and coffee. A lack of appropriate indicators limits our ability to validate outcomes. However, avoided deforestation goals—included in 7 of the 17 good practice advisory projects—have the potential to protect biodiversity and ecosystem services. Certification and traceability mechanisms using internationally accepted standards—also identified in 7 projects—are a good proxy for biodiversity protection. A good practice example was IFC’s support for sustainable pepper production in Viet Nam, which supported a company to build a 100 percent sustainable, traceable, and certified pepper supply chain. These advisory services responded to a set of push and pull factors, including soil and land degradation resulting from conventional agricultural practices; overuse of agrochemicals, fertilizers, and other nonsustainable practices; and global and regional policy shifts, such as the EU Regulation on Deforestation-free Products.

It is difficult to identify examples of the World Bank and IFC working together in production areas to achieve biodiversity outcomes. As the Bank Group has identified agribusiness (and relatedly, agribusiness jobs) as a priority client engagement area, it will be incumbent on the Bank Group to identify complementary actions to support sustainable agrifood system transformations at the country level. One good practice example from the portfolio is IFC’s and the World Bank’s support for sustainable, high-quality coffee in Ethiopia. IFC complemented a loan transaction to a multinational company known for its premium portioned coffee systems with an advisory initiative to increase farmer productivity by integrating a broad range of ecological considerations and wildlife preservation in the region of Oromia (Ethiopia). The BioCarbon Fund was leveraged to support training on shade trees, prevention of deforestation, and improvement of the quality of coffee produced in line with the company’s certification requirements.

Sustainable Forest Management

Healthy forests—and the ecosystem services they provide—underpin resilient production landscapes. Forests mitigate climate change. They store about 861 gigatons of carbon (nearly a century’s worth of current annual fossil fuel emissions) and absorb approximately 7.6 billion tons of carbon dioxide each year (about 1.5 times the United States’ annual emissions), yet their clearance releases 12–20 percent of global GHG emissions (Harris et al. 2021; WRI 2022).8 Forests regulate local temperature and rainfall, enrich soils, recharge water, and supply habitat for pollinators and pest control species, cutting reliance on synthetic inputs.9 Globally, they generate $1.5 trillion for national economies and support more than 19 million jobs, and it is estimated that the economic value of biodiversity to commercial forest productivity is up to $490 billion per year (Liang et al. 2016). Integrating trees into fields and pastures through agroforestry and silvopastoral systems diversifies incomes and strengthens resilience (FAO 2022b), while production forests—whether natural or plantation—provide timber and nontimber products vital to rural and Indigenous communities.10 Sustainable forest management can balance economic, social, and ecological goals,11 but progress is challenged by habitat fragmentation, undervalued ecosystem services, limited PES or biodiversity credits, tenure insecurity, fragmented mandates, weak enforcement, and critical data gaps on ecological thresholds.12

Forest Carbon Finance

World Bank investments in forest carbon have contributed to increased yields and revenues for farmers, while meeting targets on avoided deforestation and on carbon sequestration through the implementation of integrated mosaic approaches. Avoided deforestation preserves biodiversity and species habitats (Betts et al. 2017). The Forest Carbon Partnership Facility (FCPF) and the Forest Investment Program are two of the largest trust funds, globally, that focus on avoided deforestation, sustainable forest management, and integrated land use, with a combined total approved financing of $1.9 billion. Many of the carbon projects have implemented mosaic approaches—a patchwork design of different land uses that can support biodiversity conservation and productive livelihoods. As of December 2024, FCPF projects achieved 188 percent of the program target for avoided deforestation, totaling 14.5 million hectares across Costa Rica, Côte d’Ivoire, Indonesia, and Viet Nam.13 FCPF activities in Ghana are credited with increasing average farm yields by 25 percent in rehabilitated areas and increasing revenues for tree nurseries (Baastel 2024).

However, forest carbon programs have fallen short on targets to restore degraded forest landscapes and have missed opportunities to systematically monitor and report on biodiversity gains. As of December 2024, FCPF Emission Reductions program countries had achieved just 1.5 percent of the end-of-project target of 18.5 million hectares of restored forest (FCPF 2024). The BioCarbon Fund has faced similar challenges. Projects funded through the Initiative for Sustainable Forest Landscapes aim to reforest or afforest 162,500 hectares of land by FY31. However, as of 2024, only 8 percent of this target had been achieved (BioCarbon Fund ISFL 2024). Moreover, attributing biodiversity benefits to these programs is challenging because of a lack of monitoring, with only 3 of 70 World Bank–financed forest carbon projects including relevant biodiversity indicators. The Forest Investment Program midterm evaluation reached similar conclusions, finding that biodiversity benefits may be present but that “quantitative monitoring of biological diversity has been sparse” (Indufor and ICF 2024). Several FCPF countries attempted to capture biodiversity gains as well, but these efforts—undertaken in Indonesia, Madagascar, Mozambique, and Viet Nam—were not systematic and not validated and thus could not be aggregated and used for decision-making.

Forest Production

There is limited assurance of biodiversity outcomes in the forest production sector because of weak implementation tracking of sustainable forest management plans. The World Bank’s sustainable forest management portfolio of 83 lending projects shows the potential to contribute to biodiversity outcomes by promoting practices that conserve forest ecosystems. However, the absence of systematic reporting on the implementation of sustainable forest management plans—including key elements such as zoning, biodiversity safeguards, and enforcement measures—limits the ability to verify whether the intended biodiversity benefits are being realized. Of the 35 projects that included support for sustainable forest management plans, only 4 reported on actual implementation practices. As a result, the World Bank lacks a reliable basis to assess the effectiveness of its forestry investments in delivering biodiversity-positive results. A good practice project—the Belarus Forestry Development Project—monitored and reported on thinning practices in young and middle-aged production forests according to approved management plans; thinning can lead to biodiversity benefits by increasing habitat complexity and supporting various plant and animal communities.

Reporting on forest certification, which is required by the safeguard policies and the ESF, was also lacking in project documentation. Certification verifies sustainable harvesting practices, responds to negative trends, and protects biodiversity. Despite the safeguard policies and the ESF requiring certification, only six production forest projects documented certification or traceability in their project documentation. For example, Ghana’s Tree Crop Diversification Project monitors traceable tree crop area, certification in cocoa, and price premiums for certified cocoa, and the Lao PDR Landscapes and Livelihoods Project reports on the production forest area certified for controlled wood or sustainable forest management. Some development policy operations focused on forest governance (that are not covered by the safeguard policies and ESF) also provide relevant information on forest management, including in the Lao PDR Green Resilient Growth development policy operations (1 and 2), which tracked certified areas for sustainable management. The Madagascar Reengagement development policy operation had a governance indicator on transparency regarding seized precious wood logs. The limited reporting on these metrics reveals a gap in ensuring the sustainable and lawful management of production forests that can maintain biodiversity benefits.

A lack of systematic articulation of species selection in one-half of the forestry projects—particularly the rationale for choosing native versus exotic species—limits the ability to assess the projects’ biodiversity outcomes and long-term ecosystem resilience. Half of the forest production projects that include tree planting specify whether they support the restoration or planting of native species. The remaining projects either do not clarify the species used or favor fast-growing, often exotic, monocultures for quicker economic returns and ease of management—particularly where supply chains favor uniform products such as eucalyptus or pine. However, this flexibility comes at a cost: monocultures reduce ecological resilience, provide limited habitat for native fauna, and weaken key ecosystem functions such as pollination, soil regeneration, and water retention. Using native species in forest production is critical to sustaining biodiversity, as native trees maintain local ecological networks, provide habitats and food for indigenous fauna, and support long-term sustainability by enhancing the regenerative capacity of ecosystems (Chazdon et al. 2020). The absence of explicit trade-off analysis in project design—especially on balancing short-term productivity with long-term biodiversity gains—undermines the potential to achieve both environmental and economic outcomes. Projects such as the Côte d’Ivoire Forest Investment Program (FY18–23) stand out by planting native mahogany, tiama, and medicinal trees in cocoa agroforestry systems, and the Côte d’Ivoire Forest Investment Project Phase 2 (FY22–) commits to native species restoration in sensitive areas (box 4.3). The Rwanda Volcanoes Community Resilience Project (FY24–) requires that at least 20 percent of the species used be native and empowers local communities to grow and supply these seedlings.

Sustainable Fisheries and Aquaculture

The fisheries and aquaculture sector is one of the most consequential drivers of change in marine and coastal ecosystems. As such, effective fisheries management is needed to address biodiversity loss resulting from unsustainable practices. Unsustainable fisheries deplete fish stocks and damage ecosystems. Unsustainable aquaculture leads to habitat destruction, pollution, disease, and invasive species, threatening aquatic environments. Unsustainable practices decrease sector productivity, negatively affecting livelihoods, food security, and economic opportunities for coastal communities (Crowder et al. 2008; Dulvy et al. 2006; McClanahan 2022). Effective fisheries management—including implementing sustainable fishing practices, enforcing regulations, reducing bycatch, and protecting habitats—is needed to ensure sustainable production.

Blue Biodiversity Analytical Work

Although the World Bank’s Blue Biodiversity report identifies unsustainable fisheries and aquaculture as key threats to aquatic biodiversity and highlights the importance of protection, it does not adequately address the complementary role of improved fisheries management (World Bank 2024a). Effective biodiversity outcomes require not only conservation but also the integration of sustainable fisheries practices that balance ecological integrity with the social and economic needs of coastal communities. Marine protected areas and marine spatial planning—proposed as solutions in the Blue Biodiversity report—can contribute to long-term economic, social, and environmental benefits (for example, fisheries productivity, tourism, and climate and disaster resilience) but require complementary fisheries management to secure these benefits. Effective fisheries management ensures sustainable fishing within and around marine protected areas, promoting healthy ecosystems. Fisheries management is also essential for clients to improve their percentage of fish stocks “within biologically sustainable levels,” a monitored Corporate Scorecard indicator.14

Small-Scale Fisheries Investments

The World Bank is advancing elements of fisheries management, including by supporting fishing controls and rebuilding fish stocks, but these advances are concentrated in the Environment, Natural Resources, and Blue Economy Global Practice. The World Bank approved 51 fisheries-related lending projects between FY15 and FY24 (of which 48 are investment project financing and 25 are closed); these were mainly implemented by the Environment, Natural Resources, and Blue Economy (69 percent) and Agriculture and Food (20 percent) Global Practices and were mainly located in East Asia and Pacific (43 percent) and in Eastern and Southern Africa, South Asia, Western and Central Africa, and Latin America and the Caribbean (11–14 percent each). Europe and Central Asia and the Middle East and North Africa have minimal involvement, with 1 and 2 projects, respectively. About 45 percent of projects explicitly seek to support an ecosystem-based approach to fisheries management, with all but one of these projects led by Environment, Natural Resources, and Blue Economy (in Mozambique, where new fisheries shifted pressure to unassessed stocks and habitats). Evidence shows that an ecosystem-based approach to fisheries management—which balances sustainable fishing with ecosystem health by considering multiple species, habitats, and ecological interactions—is good economics. A systematic literature review indicates that an ecosystem-based approach to fisheries management can lead to higher productivity and income in fisheries (Cucuzza et al. 2021).15 Table 4.1 presents the integration of fisheries management techniques by Global Practice. These activities include direct reduced fishing efforts, enabling activities that support the control of fishing, activities explicitly designed to address environmental impacts, and proactive efforts to rebuild fish stocks.

Source: Independent Evaluation Group.

Note: AGF = Agriculture and Food; ENB = Environment, Natural Resources, and Blue Economy; FCI = Finance, Competitiveness, and Innovation; MTI = Macroeconomics, Trade, and Investment; WAT = Water. a. In Cambodia, measures already existed that enabled the government to control fishing efforts, and the project added additional protection zones.

A particular challenge faced by the fisheries sector in implementing the ecosystem-based approach to fisheries management is reconciling the need to control fishing with the aims of achieving food security and employment. This challenge is most acute in the artisanal fishing sector. Approximately 500 million people depend on small-scale fisheries for their welfare, mainly in developing countries (FAO et al. 2023). In the least-developed countries, seafood is the primary protein source for more than 50 percent of people and serves as an important social safety net (FAO 2022a). Although properly managed artisanal fisheries can be sustainable and have minimal negative environmental impacts, unsustainable practices within these fisheries can lead to overfishing, resource depletion, and ecosystem degradation, depending on the fishing methods employed and the effectiveness of the regulatory frameworks governing these practices.

Few World Bank fisheries projects have demonstrated measurable income gains while also reducing pressure on fisheries and achieving environmental benefits. Although nearly all fisheries projects in the portfolio aimed to address livelihood constraints among small-scale fishers and aquaculture farmers—including through strategies intended to ease pressure on overexploited fisheries—only one closed project clearly demonstrated increased incomes alongside positive environmental outcomes. Although 90 percent of projects included small-scale fisheries as primary beneficiaries, and 85 percent financed interventions such as value chain development, fishery diversification, and postharvest loss reduction, only four projects reported measurable income gains (SWIOFISH [South West Indian Ocean Fisheries Governance and Shared Growth], Lake Victoria Environmental Management Project, and Peru National Program for Innovation in Fisheries and Aquaculture) and fishing restrictions that allowed stocks to recover (SWIOFISH and Togo Agricultural Sector Support Project). Even among these, only one project achieved outcomes that supported biodiversity and resource recovery while simultaneously improving livelihoods (SWIOFISH). This highlights a key implementation gap: although traditional small-scale fisheries can be environmentally sustainable when properly managed, the regulatory and monitoring frameworks needed to capture such benefits were often weak or absent. In some cases, expected social and ecological benefits were likely but unverifiable because of insufficient data collection, such as for projects in Madagascar and Mauritania.

Peru’s plan to transform its fisheries and aquaculture sector to simultaneously enhance livelihoods, food security, and marine ecosystem health yields lessons for future small-scale fisheries investments. The World Bank–supported National Program for Innovation in Fisheries and Aquaculture 2017–23 is the first of a multiphase approach designed to diversify the country’s fisheries sector to create jobs and stimulate growth, while reducing pressure on capture fisheries and, for aquaculture, improving productivity and species diversification while minimizing environmental impact. Thus, we undertook an exploratory case study to distill and share lessons on what works to achieve holistic fisheries management (box 4.4).

The most constraining factor in understanding whether fisheries management is leading to environmental and economic outcomes is the inconsistency of reporting on fisheries management plans. The adoption or use of a fisheries management plan was the most consistently used indicator in the portfolio (present in about half of the portfolio). If progress against the various activities articulated in the fisheries management plan is clearly elucidated in project reporting, then the fisheries management plan can be a good proxy for understanding productivity and biodiversity. Projects varied in their engagement in biological, economic, and social data collection, complicating the use of certain indicators as proxies for biodiversity. Only three projects included ancillary data collection to ensure proper implementation of fisheries management plans. For example, the West Africa Regional Fishery Program’s project in Liberia uses World Bank Fishery Performance Indicators to measure ecological sustainability (Anderson et al. 2015). Similar efforts are seen in projects in Cambodia and Indonesia. Most projects, however, track only the establishment of the plan.

Aquaculture

A key question for projects that support aquaculture is how to deliver increased production without irreversibly damaging associated ecosystems. Aquaculture can be damaging to marine environments if sustainable practices are not followed. Fish and shrimp farms discharge nutrient-rich effluents into surrounding waters, causing eutrophication that harms marine habitats and production (Abdullah et al. 2019). Mangroves and seabeds are often cleared for aquaculture, reducing biodiversity. High-density farms can spread disease and parasites, and antibiotics and chemicals harm other marine species. Regenerative aquaculture restores ecosystems, can improve biodiversity, and has the potential to support food and job security. Thirty percent of the World Bank fisheries projects feature aquaculture as a novel or supplementary source of food and income, including to offset livelihood impacts on fisheries. Good practices in the World Bank’s portfolio include actions to integrate multitrophic aquaculture for the efficient use of effluents for filter feeders, such as mussels, oysters, and seaweed. IFC’s experience in Ecuador provides transferable insights into how aquaculture can work with nature to deliver sustainable production and environmental outcomes (box 4.5).

Factors of Effectiveness Across Production Sectors

We identified four key factors of effectiveness in World Bank and IFC support for integrating biodiversity in production areas: (i) fostering interministry collaboration and strong information flows, (ii) aligning finance with emerging sustainability regulations and markets, (iii) reducing adoption costs and risks through innovative financing while strengthening land and resource tenure and rights, and (iv) identifying entry points where production systems are reaching biological limits. These factors are now discussed in turn.

Interministerial collaboration and strong information flows facilitated the effective integration of biodiversity into production systems. This included coordination between environmental and production ministries and the translation of applied research into practical guidance delivered to firms, cooperatives, and resource users via provincial and regional offices and extension services. Production and environment ministries often have conflicting policies. Production subsidies often favor high-input monocultures, rather than diversified or biodiversity-friendly systems. Technical advice to farmers and fishers rarely includes biodiversity, and there is a limited understanding of biodiversity benefits at the extension and resource user level. In successful experiences, such as Viet Nam’s Sustainable Agriculture Transformation Project, extension advice was shifted from a top-down structure to co-learning with lower levels of government and cooperatives, focusing on site-specific trials and training on innovative technologies.

The World Bank and IFC have been able to tackle commodity-driven deforestation by strategically aligning development finance with emerging regulatory drivers—such as the EU Regulation on Deforestation-free Products—which create new markets for certified sustainable goods. In countries producing cocoa, coffee, and other forest-risk commodities, the Bank Group has effectively used the regulation as a policy entry point to support no-deforestation value chains. This support includes financing traceability systems, geolocation tools, and the certification processes required for market access. Although the EU Regulation includes incentives for governments and cooperatives to create deforestation-free supply chains, there are few direct incentives for individual farmers. Compliance is associated with high up-front and recurring costs for farmers and cooperatives, many of whom lack the institutional or financial capacity to absorb these costs independently. Therefore, effectiveness in this context also requires implementing complementary financing mechanisms during and after project closure to avoid a return to unsustainable practices once external support ends. The World Bank’s Forest Investment Program in Côte d’Ivoire has effectively targeted farmers by financing zero-deforestation contracts, creating participatory forest management plans with biodiversity considerations, and mapping flora and fauna to protect high-biodiversity areas.

World Bank and IFC support for innovative financing mechanisms has helped reduce the costs and risks of adopting sustainable practices, but these efforts need to be deepened. There are also missed opportunities related to limited support for land and resource tenure and rights. Few subsidies, price premiums, or market mechanisms reward biodiversity-positive approaches, and there are high transaction costs in switching to integrated systems (for example, agroforestry or organic farming). Innovative finance can help internalize environmental externalities and incentivize sustainable land use (Dasgupta 2021; FAO 2023). At the portfolio level, 13 of the 17 good practice World Bank agriculture projects were supported by trust funds, including the Global Environment Facility, the Korea Green Growth Trust Fund, PROGREEN, the BioCarbon Fund, and Food Systems 2030. Facilitating access to premium pricing was also a core incentive. In Zambia, under the World Bank Community Markets for Conservation Landscape Management Project, producers readily adopted sustainable practices in response to premium pricing and structured, compliance-based rewards. Preferential loan rates supported by IFC in Brazil have been key to promoting sustainable soy production. Missed opportunities are associated with the identified need to strengthen resource and land tenure rights to promote more effective resource management.

Identifying entry points where production systems are reaching ecological limits—such as degraded soils due to overexploitation—offers opportunities to promote biodiversity-positive approaches that regenerate natural capital and ensure long-term productivity and jobs. Declining soil health and fertility, falling water tables, dwindling fish stocks, and accelerated forest loss have increasingly signaled that input-intensive models are no longer viable for long-term growth, prompting producers and projects to adopt more sustainable, nature-smart practices.16 In contexts where overexploitation has triggered productivity declines, the World Bank and IFC often focused on short-term recovery or resilience measures rather than on biodiversity-positive approaches that could regenerate natural capital and restore long-term productivity. This constrained the potential for transformative outcomes in agriculture, forestry, and fisheries, where embedding biodiversity into production strategies could have aligned environmental recovery with economic revitalization.