CAF - Biodiversity and productive development

Biodiversity and Productive Development: Extractivist traps and symbiotic innovation ecosystems in Latin America & the Caribbean Amir LebdiouiBIODIVERSITY AND PRODUCTIVE DEVELOPMENT: EXTRACTIVIST TRAPS AND SYMBIOTIC INNOVATION ECOSYSTEMS IN LATIN AMERICA & THE CARIBBEAN This publication was released under CAF’s Executive Presidency of Sergio Díaz-Granados and the Corporate Vice Presidency of Strategic Programming of Christian Asinelli. AUTHOR Amir Lebdioui, Director, Technology and Industrialisation for Development (TIDE) Centre of the University of Oxford. PUBLISHER CAF —Development Bank of Latin America and the Caribbean— and the Technology and Industrialisation for Development (TIDE) Centre of the University of Oxford.

CAF’S CLIMATE ACTION AND POSITIVE BIODIVERSITY MANAGEMENT

Alicia Montalvo, Manager

EDITORIAL MANAGEMENT

Strategic Communication Department - CAF GRAPHIC DESIGN Simple (holasimple.com) Copyright © 2025 CAF – Development Bank of Latin America and the Caribbean – All rights reserved. Total or partial reproduction of this publication, as well as its storage in a data retrieval system or transmission in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—is prohibited without prior consent.The contents of this publication are the sole responsibility of the author and do not reflect or imply any political position of CAF (nor of any of their member countries or authorities) nor the University of Oxford. This work is published under the Creative Commons Attribution-NonCommercialNoDerivatives 4.0 International License (http://creativecommons.org/by-nc-nd/4.0/).This report was written and authored by Amir Lebdioui, Associate Professor and Director of the TIDE Centre at the University of Oxford, whose work benefited from the valuable contributions of the CAF team, in particular Alicia Montalvo, Mauricio Velasquez, Martin Brasa, María Moreno Córdoba, Rolando Andrade, and Ignacio Lorenzo. The report also benefited from excellent

benefited from the valuable contributions of the CAF team, in particular Alicia Montalvo, Mauricio Velasquez, Martin Brasa, María Moreno Córdoba, Rolando Andrade, and Ignacio Lorenzo. The report also benefited from excellent research assistance by Shashwat Koirala and Sara Torres Raisbeck. The CAF team and the author also wish to express their appreciation for the collective insights, guidance, and support of numerous external individuals and organizations. Special thanks also go to stakeholders who are actively shaping the future of biodiversity and innovation ecosystems across Latin America and the Caribbean. More specifically, for their inputs, we extend our sincere gratitude to: • Adriana Abdenur (former advisor in the Brazilian Presidency, co-President of the Global Fund for a New Economy, and co-founder of Plataforma CIPO) • Andres Valenciano (CEO of Democraciasmas and senior advisor at the TIDE centre) • Angel Melguizo (partner at ARGIA and senior advisor at the TIDE centre)

• Anna Stewart Ibarra (Executive Director, Inter-American Institute for Global Change Research) • Annabelle Aish (Project Lead «Bioinspire-Muséum» at the French Natural History Museum)
• Brigitte Baptiste (Rector at Universidad EAN, Colombia)
• Carlota Perez (Honorary Professor, UCL IIPP)- Dalila Aldana Aranda (CINVESTAV, Mexico) • Deuza Santos (Innovation and Entrepreneurship Management Coordinator at the National Institute for Amazonian Research – INPA)

ACKNOWLEDGEMENTS• Diego Inclán (Executive Director, National Institute of Biodiversity - INABIO, Ecuador) • Donovan Campbell (Professor of Environmental Geography, University of the West Indies, Jamaica) • Hernando García Martínez (General Director, Alexander Von Humboldt Institute • Jan Yves Remy (Director of the Shridath Ramphal Centre for International Trade Law, Policy and Services, University of the West Indies) • Luz Marina Mantilla (General Director of the Instituto Amazónico de Investigaciones Científicas SINCHI, Colombia)

• Jan Yves Remy (Director of the Shridath Ramphal Centre for International Trade Law, Policy and Services, University of the West Indies) • Luz Marina Mantilla (General Director of the Instituto Amazónico de Investigaciones Científicas SINCHI, Colombia) • Marc-Olivier Coppens (Director of the UCL Centre for Nature-Inspired Engineering) • Marcela Morales (Director at Pousaz Philantropies) • Mauricio Diazgranados (Chief Science Officer and Dean of the International Plant Science Center, New York Botanical Garden) • Sabrina Fernandes (Head of Research at the Alameda Institute and Senior Advisor, TIDE centre) • Sandra Vilardy, PhD in Ecology and Environment, University of Los Andes • Sarah Wyatt (Senior Biodiversity Specialist, The Global Environmental Facility)6

Biodiversity and Productive Development: Extractivist traps and symbiotic innovation ecosystems in Latin America & the Caribbean Key messages • The region’s trajectory in terms of biodiversity-development dilemma or synergy largely depends on the type of finance mobilised: shortterm extractive capital locks in degradation, while long-term, patient capital aligned with natural-capital accounting underpins sustainable, inclusive prosperity through nature-centred knowledge economy. • Low R&D investment rates and limited innovation capabilities leave most LAC economies stuck in the middle-income trap. The volume of R&D spending needed to close the gap in LAC needs to increase from about USD35 billion a year currently to at least USD130 billion annually. But an increase of R&D investment, a new direction for innovation is also needed for the region to leap to the innovation frontier. In LAC, biodiversity provides as entry door to leapfrogging into disruptive innovation activities in order to break the middle income trap. • Nature-inspired innovation must be prioritised over nature-based solutions: Not all “bioeconomy” models are developmental. Without capability building, fair governance, and local value-sharing, bioeconomy often translated into a biologicalization of extractivism. Amongst different types of biodiversity-based development models, bio-inspired

• Nature-inspired innovation must be prioritised over nature-based solutions: Not all “bioeconomy” models are developmental. Without capability building, fair governance, and local value-sharing, bioeconomy often translated into a biologicalization of extractivism. Amongst different types of biodiversity-based development models, bio-inspired innovation offers the most scalable and least ecologically constrained path for long-term biodiversity-based productive development. • Territorial inequality in terms of science and innovation capabilities have generated cognitive extractivism. LAC’s biodiverse areas in LAC are often the poorest in terms scientific and innovation capacity. Spatially rebalancing R&D with investment in the innovation capacity and local value creation is both a fairness and efficiency imperative. • We need new biodiversity finance taxonomic classifications that do not just answer how much is spent and on what habitat, but also how it builds capabilities, who benefits, where value is captured, and whether the result is durable without endless subsidies. This can be done by introducing a new label of biodiversity-oriented productive investment, along with outcomes reporting. • Development banks have can play a catalytic investment role as they can mobilise patient capital, absorb first-mover risks, and align financial in-7

Biodiversity and Productive Development: Extractivist traps and symbiotic innovation ecosystems in Latin America & the Caribbean struments towards key pressure points in regional biodiversity-based innovation ecosystems. Beyond financing, development banks can support regional science cooperation, fund shared scientific infrastructure, embed R&D components in loans, and bridge the finance–science divide. • Development finance institutions such as CAF can fulfil a key role as architects of the scientific commons that underpin a regional biodiversity-based innovation ecosystems but only with stronger science-policy integration. The voice of scientific institutions in LAC is critical, gathering decades of experience and understanding of specific challenges and opportunities in local innovation and natural ecosystems. The Chicó-Bogotá Declaration for Positive Biodiversity in Latin America and the Caribbean, launched in 2024, provides a historic step forwards towards institutionalising scienexperience and understanding of specific challenges and opportunities in local innovation and natural ecosystems. The Chicó-Bogotá Declaration for Positive Biodiversity in Latin America and the Caribbean, launched in 2024, provides a historic step forwards towards institutionalising scientific knowledge into policy and financial decision making in the region.8 Biodiversity and Productive Development: Extractivist traps and symbiotic innovation ecosystems in Latin America & the Caribbean About CAF CAF is a multilateral financial institution whose mission is to support the sustainable development of its shareholder countries and the integration of Latin America and the Caribbean. It serves the public and private sectors, supplying multiple products and services to a wide portfolio of clients formed by the shareholder States, private companies and financial institutions. In its management policies, it integrates social and environmental variables and includes eco-efficiency and sustainability criteria in all its operations. The Strategy for the 2022-2026 period aims to transform CAF into the green bank and the sustainable and inclusive growth of Latin America and the Caribbean, and position it as a region of solutions to global challenges. Its formulation was a comprehensive exercise that involved all areas of the organization and development experts, and is framed in the mission of “supporting shareholder countries to achieve sustainable development and regional integration through the offering of financial instruments and knowledge services”.9 Biodiversity and Productive Development: Extractivist traps and symbiotic innovation ecosystems in Latin America & the Caribbean About the University of Oxford’s TIDE centre The Technology and Industrialisation for Development (TIDE) centre is a research centre based within the University of Oxford. Since its formal creation in 2008, the centre has served as a global nerve centre for cutting-edge, interdisciplinary research into the development of technology and industrialisation in the developing world. For almost two decades, the centre’s research projects have focused on enhancing our collective understanding of how technological capabilities can enhance development, thereby helping policymakers access informed counsel and insights that can serve as the basis for useful policy lessons.

veloping world. For almost two decades, the centre’s research projects have focused on enhancing our collective understanding of how technological capabilities can enhance development, thereby helping policymakers access informed counsel and insights that can serve as the basis for useful policy lessons. With increasing disparities in technological capabilities and the challenge to achieve ecological sustainability, the centre’s mission is to push the knowledge frontiers for economic and innovation policies that deliver local prosperity and true sustainability for all.T able of content Foreword Executive Summary

1. Biodiversity in Latin America & the Caribbean: from a developmental dilemma to a developmental nexus Biodiversity in Latin America and its vital economic functions Threats to biodiversity From a biodiversity-development dilemma to a biodiversity-development nexus

2. The productive development agenda and its urgency in Latin America and the Caribbean Latin America’s structural characteristics and exposure to climate and transition risks The relevance of productive diversification Innovation, R&D spending, and the binding constraints of the middle-income trap

3. Varieties of biodiversity-based economic models and their differentiated impact on productive development The rise of the concept of bioeconomy, its promises and its shortcomings

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45Payments for Ecosystem Services (PES) and Biodiversity credits Eco-tourism Bio-utilisation and the principles of biotrade

4. Leveraging biodiversity as LAC’s entry door for science and innovation leapfrogging Biodiversity as a critical input for three types of innovations From bio-utilisation to bio-inspired innovation: from nature-based to nature-inspired The bio-inspired innovation panorama in LAC and vectors for expansion of capabilities

5. Bio-Intelligence: The Greening of Artificial intelligence as a window of opportunity in LAC Overview of the opportunities of AI and constraints posed by resource-intensity The greening of AI: a window of opportunity for LAC?

Can AI learn from nature? From a

and vectors for expansion of capabilities

5. Bio-Intelligence: The Greening of Artificial intelligence as a window of opportunity in LAC Overview of the opportunities of AI and constraints posed by resource-intensity The greening of AI: a window of opportunity for LAC?

Can AI learn from nature? From a Resource intensive AI to a symbiotic AI Bio-inspiration as the innovation frontier for an AI-Biodiversity symbiosis Barriers for symbiotic AI in LAC 50 52

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806. Ways forward: catalytic investments and the role of development finance From a rentier to a developmental model of biodiversity finance: refining taxonomies The role of directional and patient finance in innovation ecosystems Bringing the voice of science closer to policy and development finance through scientific advisory councils

7. Scientific cooperation at the sub-regional, national, regional and international levels Bringing national scientific institutions at the core of biodiversity-based innovation ecosystems: from national to regional capacity-building Sub-Regional Disparities and the Territorial Challenge for LAC’s biodiverse areas International Scientific Cooperation and the matter of Knowledge Sovereignty

8. Concluding remarks: building the Next Innovation Frontier in Latin America and the Caribbean Reference list

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96 102 106 109 113List of Figures Figure 1: Distribution of Large Marine Ecosystems and terrestrial biomes in Latin America and the Caribbean Figure 2: Biodiversity Index based on the total number of amphibian, bird, fish, mammal, reptile, and vascular plant species, by country. Figure 3: The role of finance in vicious or virtuous biodiversity-economic interactions Figure 4: Commodity dependent nations in LAC by dominant export product group, 2019–2021 Figure 5: Expenditure on Research and

and vascular plant species, by country. Figure 3: The role of finance in vicious or virtuous biodiversity-economic interactions Figure 4: Commodity dependent nations in LAC by dominant export product group, 2019–2021 Figure 5: Expenditure on Research and Development by World Region (% GDP) for the most recently available years Figure 6: 8. Mapping of selected R&D centres in Latin America and the Caribbean Figure 7: Middle income trap: three types of strategies and the role of biodiversity Figure 8: Percentage of US-based ecotourism operators offering products by country. Figure 9: Selected examples of bio-ingredients, their origins and industry applications in Latin America and the Caribbean Figure 10: Evolution of biomimicry-related research and patents (Da Vinci Index)

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55 62Figure 11: Bioinspired innovation’s forecasted impact on employment in 2030 Figure 12: From biodiversity to R&D value. Forms, processes, and ecosystems Figure 13: 11. Matching of hurdles for biodiversitybased innovation with potential solutions Figure 14: From a resource-intensive to a symbiotic AI Figure 15. Visual Map of the Atlas of Nature’s Solutions Figure 16: Cooperation and interactions of various stakeholders within a biodiversitybased innovation ecosystem Figure 17: Models of scientific engagement in decision-making institutions Figure 18: Subregional innovation index in LAC’s major economies List of T ables Table 1: List of national bioeconomy strategies in Latin America and the Caribbean Table 2: Tradable services based on biodiversity: strengths and limitations

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9816 Biodiversity and Productive Development: Extractivist traps and symbiotic innovation ecosystems in Latin America & the Caribbean Foreword Latin America and the Caribbean hold more than half of the planet’s biodiversity. This wealth is not only a global environmental responsibility but also one of the region’s most powerful engines for development. Yet, for too long, biodiversity has been treated as something to preserve, not as something to learn from. At CAF, we believe that sustainability and development must go hand in hand. The dual crises of climate change and biodiversity loss have revealed the limits of extractive growth models, but they have also opened new opportunities for innovation. This report developed in collaboration between CAF and Amir Lebdioui, from the University of Oxford, comes at a decisive moment. It invites us to see biodiversity in a new light: as the foundation of a more inclusive, resilient, and knowledge-based economy. Latin America and the Caribbean can no longer afford to remain suppliers of raw materials or biodiversity samples. We must become creators of value and innovation, transforming our biological richness into ideas, products, and solutions that serve both people and the planet. That is the central message and intention of this work, The findings here reinforce CAF’s own vision: that development finance must evolve. For too long, biodiversity finance has focused primarily on conservation but not on livelihoods. While these efforts remain essential, they are not enough.

both people and the planet. That is the central message and intention of this work, The findings here reinforce CAF’s own vision: that development finance must evolve. For too long, biodiversity finance has focused primarily on conservation but not on livelihoods. While these efforts remain essential, they are not enough. Development banks such as CAF have a unique role to play in bridging these agendas: providing patient capital, fostering innovation, and catalysing partnerships among governments, scientific institutions, and the private sector.17 Biodiversity and Productive Development: Extractivist traps and symbiotic innovation ecosystems in Latin America & the Caribbean CAF is advancing this vision through initiatives such as the Chicó Declaration, which calls for integrating science into public policy and finance, and through efforts to strengthen regional networks of research, data, and innovation infrastructure. This publication also reflects CAF’s growing commitment to a Positive Biodiversity agenda: one that recognises that nature and development are not opposing forces but inseparable partners. The task ahead is to scale up this approach, embedding biodiversity in industrial strategies, education systems, and financial instruments across the region. The opportunities are immense, but so are the responsibilities. At CAF, we see this report not as an end but as a starting point and a valuable contribution to a regional dialogue about how Latin America and the Caribbean can lead the world in the age of biodiversity-based innovation. The time has come to move from protecting biodiversity to learning, innovating, and prospering with it. Alicia Montalvo Manager of Climate Action and Positive Biodiversity, CAF-Development Bank of the Latin America and the Caribbean-.18 Biodiversity and Productive Development: Extractivist traps and symbiotic innovation ecosystems in Latin America & the Caribbean Executive Summary From a biodiversity-development dilemma to a biodiversitydevelopment nexus Latin America and the Caribbean (LAC) is a global biodiversity hotspot, making it a critical player for our planet’s health and in the sustainability agenda. Home to a vast share of the world’s mammals, reptiles, birds, and amphibians, the region provides

dilemma to a biodiversitydevelopment nexus Latin America and the Caribbean (LAC) is a global biodiversity hotspot, making it a critical player for our planet’s health and in the sustainability agenda. Home to a vast share of the world’s mammals, reptiles, birds, and amphibians, the region provides ecosystem services from which the whole world benefits and has pioneered legal recognition of nature’s rights. Yet in the face of pressing needs for economic development and job creation, biodiversity remains pressured by extractivist models that prioritise short-term gains. This report argues that biodiversity is not only a natural asset to preserve but a productive frontier to cultivate, capable of anchoring structural transformation, quality employment, and environmental resilience. The economic and ecological risks of the integration of LAC economies as raw materials providers in global value chains are reinforced in the context of the transition to a low carbon economy, given the region’s endowment in the critical minerals that are necessary as inputs for low carbon technologies. However, the most critical material that the region disposes of is not a mined metal, but it is its rich biodiversity.

Many questions arise: What are the main tensions between biodiversity and productive development? How is biodiversity linked to the challenge of the middle-income trap? What are the shortcoming of existing bioeconomy strategies? How can biodiversity be truly leveraged to nurture a new age of technological innovation in LAC? And what is the role of development banks in supporting that process?

The need to rethink the relationship between biodiversity and economic development is urgent. Moving forward, LAC countries have a unique opportunity to harness their biodiversity in way that breaks free of an unhelpful dichotomy between nature and productive development. To that end, this report provides a review of different models through which the region’s biodiversity drives productive development and emphasizes the importance of integrating biodiversity into economic, innovation and industrial19 Biodiversity and Productive Development: Extractivist traps and symbiotic innovation ecosystems in Latin America & the Caribbean development strategies across the LAC region, before discussing the binding constraints and policy pathways to achieve a virtuous biodiversity-development nexus .

es the importance of integrating biodiversity into economic, innovation and industrial19 Biodiversity and Productive Development: Extractivist traps and symbiotic innovation ecosystems in Latin America & the Caribbean development strategies across the LAC region, before discussing the binding constraints and policy pathways to achieve a virtuous biodiversity-development nexus .

Beyond bio-extractivist models In that perspective, LAC has witnessed a range of pioneering efforts to leverage the economic value of biodiversity, since the 1990s, within varying outcomes and degrees of success. The region’s experimentations with various types of biodiversity-based activities, ranging from payments for ecosystem services, ecotourism, bioprospecting, provides critical lessons. Many LAC governments have increasingly turned towards the so-called ‘bioeconomy’, which can be defined as the production, utilization and conservation of biological resources to provide information, products, processes and services in various economic sectors. In recent years, many governments such as in Argentina, Brazil, Colombia, and Costa Rica have published bio-economy strategies to promote sustainable development. However, the bio-economy encompasses a wide range of activities that exhibit varying degrees of extractivism and impact on nature. For instance, many agro-based activities (such as Açaí-based bio-utilisation) lead to deforestation and biodiversity loss when they are scaled up. This report therefore clarifies that not all “bioeconomy” is developmental. Left unchecked, parts of the bioeconomy can simply biologise old extractivism, by replacing fossil feedstocks with biological ones while preserving unequal value capture, weak learning, and ecological pressure. The report distinguish among different varieties of biodiversity-based economic models, from Payment for Ecosystem Services/ biodiversity credits, ecotourism, bio-utilisation, and bio-inspiration. Each of those models present benefits and limitations, and their development must be carefully assessed to avoid negative economic and environmental consequences. However, the region’s potential has been limited by a narrow focus on bio-utilisation, with far less attention provided to other types of biodiversity-centred innomodels present benefits and limitations, and their development must be carefully assessed to avoid negative economic and environmental consequences. However, the region’s potential has been limited by a narrow focus on bio-utilisation, with far less attention provided to other types of biodiversity-centred innovation fields with high potential for technological disruption. Bio-utilisation (or bioprospecting) involves the use of biological materials (e.g. organic acids and phenolic compounds from fruits such as Açaí) for economic purposes (and solutions development through that process are often oriented towards the agriculture, phar -20 Biodiversity and Productive Development: Extractivist traps and symbiotic innovation ecosystems in Latin America & the Caribbean maceuticals and cosmetics industries). Meanwhile, bio-inspiration implies learning from innovative solutions found in nature to solve human challenges, especially in manufacturing, construction, and energy. Bio-inspired innovation remains the least explored biodiversity-based economic model across LAC, yet it offers the most scalable and least ecologically constrained path for long-term productive and technological development because it draws on nature’s design principles rather than continuous biomass extraction. As this innovation method does not rely on extracting any physical material from nature, it not present the same ecological limits to scalability as bio-utilisation. A virtuous biodiversity-development nexus indeed requires a shift away from the exploitation of biodiversity towards leveraging the potential of biodiversity to drive innovations that can help push the technology frontier in various fields such as biotechnology, renewable energy, mobility and digital tech. Yet, the development of more bio-inspired could also face a similar risk of becoming concentrated in large private companies that often engage in biopiracy practices. Ensuring that the economic benefits of bio-inspired innovation reach marginalized populations in rural areas of countries therefore requires strong capacity-building at the local level and targeted safeguards for intellectual property rights for bio-inspiration as it falls between the cracks of the Nagoya protocol on the use of genetic resources and associated traditional knowledge.

Biodiversity as a vector for science and innovation in Latin America and the Caribbean

quires strong capacity-building at the local level and targeted safeguards for intellectual property rights for bio-inspiration as it falls between the cracks of the Nagoya protocol on the use of genetic resources and associated traditional knowledge.

Biodiversity as a vector for science and innovation in Latin America and the Caribbean Innovation is not an outcome of development, but a means to achieve economic development, which is why innovation capabilities are a key binding constraint for the middle-income trap. In Latin America and the Caribbean, low rates of investment in R&D have considerably contributed to economic stagnation and the persistence of the middle income trap in many nations. The region’s average R&D expenditure (as a share of GDP) is amongst the lowest in the world (<0.6%), and more than half of the little existing R&D expenditure is financed through public funds, providing fiscal constraints on increasing the rate of investment. The volume of R&D spending needed to close the gap in LAC needs to increase from about USD35 billion a year currently to at least USD130 billion annually21 Biodiversity and Productive Development: Extractivist traps and symbiotic innovation ecosystems in Latin America & the Caribbean to reach the global average of R&D spending as a share of GDP. Catalytic investments by national and regional development banks, such as CAF, will be critical in reaching this target, notably by crowding in more private investments into R&D. But besides the volume R&D investment, the direction of R&D efforts also matters to leap to the innovation frontier. In that regards, while biodiversity-centred innovation presents tremendous opportunities as a bank of ideas for innovation, a variety of financing hurdles, policy inconsistencies, and institutional factors have led to the persistence of important coordination failures that hinder the expansion and diffusion of biodiversity-based R&D. Creating and strengthening technological capabilities has often not been easy in LAC economies