A report into the climate, biodiversity and land degradation crises reveals that, to tackle these matters, a total investment in nature of $8.1-trillion is required over the next three decades, amounting to $536-billion a year by 2050.
United Nations Environment Programme (UNEP) executive director Inger Andersen states that the report is a “wake-up call for governments, financial institutions and businesses to invest in nature”, including turning the focus towards aspects such as reforestation, regenerative agriculture and the restoration of the world’s oceans.
She says countries and leaders of industry will have an opportunity to do so at the upcoming summits related to climate, biodiversity land degradation and food systems, and in the context of the UN Decade on Ecosystem Restoration (2021 – 2030).
Using 2020 as a base year, the ‘State of Finance for Nature’ report, released on May 27, finds that yearly investments in nature-based solutions will have to triple by 2030, and increase four-fold by 2050, from the current investments of $133-billion a year.
The report was produced by the World Economic Forum, the UNEP, and the Economics of Land Degradation Initiative – hosted by the Deutsche Gesellschaft für Internationale Zusammenarbeit and in collaboration with Vivid Economics.
It urges governments, financial institutions and businesses to overcome this investment gap by placing nature at the centre of economic decision-making in the future.
It also stresses the need to rapidly accelerate capital flows to nature-based solutions by making nature central to public and private sector decision-making related to societal challenges, including tackling the climate and biodiversity crises.
CLOSING THE GAP BY 2050
The report points to structural transformations being required to close the $4.1-trillion finance gap between now and 2050, by building back more sustainably, by repurposing harmful agricultural and fossil fuel subsidies and by creating economic and regulatory incentives.
However, the report finds that nature currently only accounts for 2.5% of projected economic stimulus spending and, as such, that private capital will also have to be scaled up dramatically to close the investment gap.
Further, the suite of solutions needed to make this happen involve the development and scaling up of revenue flows from ecosystem services and the use of blended finance models as a means to crowd in private capital.
This also requires risk-sharing from private sector entities, the report suggests.
WEF tropical forest alliance head Justin Adams says the report underlines the urgency and the criticality of increasing investment in nature.
“It highlights how little is invested today – $133-billion represents only 0.1% of global gross domestic product, and a tripling of this feels like a no-brainer given the enhanced resilience this would provide to the global and local economies,” he says.
Adams adds that studies show investment into nature is also good for business. “Some $10-trillion in business opportunity and 395-million new jobs could be created by investing in nature-positive solutions.”
Andersen notes that biodiversity loss is already costing the global economy 10% of its output each year.
“If we do not sufficiently finance nature-based solutions, we will impact the capacities of countries to make progress on other vital areas such as education, health and employment. If we do not save nature now, we will not be able to achieve sustainable development,” she says.
REIMAGINE, RECREATE, RESTORE
According to the report, forest-based solutions alone, including the management, conservation and restoration of forests, will require $203-billion in total yearly expenditure globally. This investment equates to just over $25 a year for every citizen in 2021.
The report calls for coupling investments in restoration action with financing conservation measures. This could result in forest and agro-forestry (the combination of food production and tree growing) area increases of about 300-million hectares by 2050, relative to 2020.
Meanwhile, while a number of private sector led initiatives have already emerged, the report stresses the need for companies and financial institutions to increasingly be part of the solution by sharing the risk and committing to boost finance and investment in nature-based solutions in an ambitious way and with clear, time-bound targets.
While investments in nature-based solutions cannot be a substitute for deep decarbonisation of all sectors of the economy, they can contribute to the required pace and scale of climate change mitigation and adaptation, the report finds.