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Mobilising Private Finance for Nature-Based Solutions
Context:
Nature-based solutions (NbS) offer cost-effective and sustainable pathways to tackle climate change, biodiversity loss, and land degradation while driving sustainable development.
- Despite their potential to generate significant economic benefits, private-sector investment remains inadequate due to high perceived risks, data gaps, and market inefficiencies.
State of Climate Degradation Today:
- The world faces unprecedented climate challenges: rising global temperatures, extreme weather events, and rapid natural resource depletion.
- With 40% of the planet’s land degraded, biodiversity loss is at historic levels, threatening ecosystems and economies.
- Over half of the global GDP ($44 trillion) is at risk due to nature loss, potentially shrinking global GDP by 2.3% annually ($2.7 trillion) by 2030, disproportionately impacting poorer nations.
Necessity of NbS:
- Nature-based solutions (NbS) address interconnected crises of climate change, biodiversity loss, and land degradation.
- Approaches like ecosystem restoration, reforestation, and coastal habitat protection enhance resilience, mitigate risks, and support sustainable development. They are practical, scalable, and complement traditional climate adaptation strategies.
Economic Advantage of NbS:
- Integrating nature considerations into corporate strategies can unlock $10 trillion in annual business opportunities and create 395 million jobs by 2030.
Examples of NbS:
- Mangrove Forests & Coral Reefs: Act as natural barriers against storm surges and floods.
- Peatland Conservation (Indonesia): Prevents fire damage, saving $19 per $1 invested.
- Urban Green Spaces (Singapore, Medellín): Reduce heat island effects and improve air quality.
- Agroforestry: Enhances soil health, water retention, and farmer incomes.
- Case studies like Indonesia’s peatland conservation demonstrate high returns—$19 saved per $1 invested. NbS also reduces economic risks, supports sustainability goals, and attracts long-term investments.
Benefits of NbS – Strategic and Cost-Effective:
- Economic Mitigation: Mangroves and coral reefs reduce flood damages by $57 billion annually.
- Resilience Enhancement: Restored ecosystems adapt communities to climate shocks.
- Co-benefits: NbS ensure biodiversity, food security, and sustainable livelihoods, delivering ecosystem services worth $170 billion annually.
Growing Global Commitments to NbS:
International frameworks increasingly recognise NbS as vital for sustainable development and climate resilience:
- Sendai Framework: Advocates ecosystem-based disaster risk reduction.
- Convention on Biological Diversity (CBD): Promotes biodiversity conservation through NbS.
- UNCCD: Highlights NbS for land restoration and desertification combat.
- Bonn Challenge: Targets restoring 350 million hectares of degraded land by 2030.
- Paris Agreement: Positions NbS as essential for climate mitigation and adaptation goals.
Current Investments in NbS:
- Total investment in 2022: $200 billion (far below the $600 billion annual target for 2030).
- Public sector: Contributed 82% ($165 billion), focused on biodiversity and landscapes.
- Private sector: Contributed 17% ($35 billion), mainly in sustainable supply chains and biodiversity offsets.
Recommendations for Mobilising Private Finance:
To close the funding gap, strategic measures are essential:
- Innovative Financial Instruments: Use green bonds, blended finance, and NbS-linked carbon credits.
- Regulatory Incentives: Tax benefits, subsidies, and mandatory NbS in corporate strategies.
- Public-Private Partnerships (PPPs): Leverage collective resources for large-scale NbS projects.
- Supply Chain Integration: Encourage sustainable practices that prioritise ecosystem preservation.
