According to a new UN assessment, if the world is to reach its climate change, biodiversity, and land degradation targets, annual investments in nature-based solutions (NbS) would have to triple by 2030 and quadruple by 2050 from current levels.
The survey, titled State of Nature Finance, discovered that around $133 billion is presently invested annually in nature-based solutions (using 2020 as the base year). Public funds account for 86% of these investments, while private capital accounts for 14%.
The United Nations Environment Programme, the World Economic Forum, and the Economics of Land Degradation collaborated on the paper published on May 27, 2021.
Nature-based solutions relate to the sustainable management and use of nature to address socio-environmental concerns such as disaster risk reduction, climate change, biodiversity loss, food and water security, and human health.
This analysis quantified current governmental and private investment in NbS. The $133 billion in assets is around 0.10 percent of the world’s gross domestic product, the majority of which comes from governmental sources.
The majority of this investment is made by public financial service providers, such as governments, development finance institutions (DFIs), and environmental / climate funds, accounting for 86 percent of total investment flows for biodiversity and landscape protection, including sustainable forestry.
United States And China Dominate Public Sector
The United States and China dominate public sector spending on the same, followed by Japan, Germany, and Australia. The United States leads the list with around $36 billion in annual NbS spending, followed by China with $31 billion.
According to the paper, Brazil, India, and Saudi Arabia are likely spending significant sums of money as well, but they do not provide data that is comparable worldwide.
The following organizations generate 14% of total NbS financing, or $18 billion annually, primarily through investments in sustainable supply chains and biodiversity offsets:
• Institutions de financement commercial
• Investors, such as the insurance companies and the asset management companies
• Philanthropic organizations, such as foundations and endowments
NbS finance is far lower in size than climate finance and is primarily reliant on public funding.
Commitments For The Future
To reach future climate, biodiversity, and land degradation targets, public and private players will need to quadruple current yearly contributions. By 2050, total investment in natural resource demands will reach $8.1 trillion, with annual investment reaching $536 billion, the report stated.
Forest-based solutions would cost $203 billion each year on their own.
However, this report did not address all kinds of NbS; those found in the maritime environment were explicitly excluded.
This paper advocated for the establishment of a comprehensive system and structure for categorizing, tracking, reporting, and validating the financial health of NbS. This increases the comparability and quality of data used as input for future decision-making.
The paper proposed tax reform, repurposing agricultural policy and trade-related tariffs, and capitalizing on carbon markets’ potential.