Jun 25, 2021 03:05 PM EDT
A total investment in nature of USD 8.1 trillion is required between now and 2050 - while annual investment should reach USD 536 billion annually by 2050 - in order to successfully tackle the interlinked climate, biodiversity, and land degradation crises, according to the State of Finance for Nature report released today.
The report finds that annual investments in nature-based solutions will have to triple by 2030 and increase four-fold by 2050 from the current investments into nature-based solutions of USD 133 billion (using 2020 as base year).
The authors of the report - produced by the UN Environment Programme (UNEP), the World Economic Forum (WEF) and the Economics of Land Degradation (ELD) Initiative hosted by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) in collaboration with Vivid Economics - urge Governments, financial institutions and businesses to overcome this investment gap by placing nature at the heart of economic decision-making in the future. They stress 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.
Unlocking the potential of nature-based solutions to close the finance gap by 2050
Structural transformations are needed to close the USD 4.1 trillion finance gap between now and 2050, by building back more sustainably in the wake of the Covid-19 pandemic, but also by repurposing harmful agricultural and fossil fuel subsidies and creating other economic and regulatory incentives. Investing in nature supports human, animal and planetary health, improves quality of life, and creates jobs. However, nature currently only accounts for 2.5% of projected economic stimulus spending in the wake of Covid-19. Private capital will also have to be scaled up dramatically to close the investment gap. Developing and scaling up revenue flows from ecosystem services and using blended finance models as a means to crowd in private capital are among the suite of solutions needed to make this happen, which also requires risk-sharing from private sector entities.
"Biodiversity loss is already costing the global economy 10 percent 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," said UNEP Executive Director, Inger Andersen.
"The report is a wake-up call for Governments, financial institutions and businesses to invest in nature -- including reforestation, regenerative agriculture, and restoration of our Ocean," she said, adding that 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).
Investing smarter: Reimagine, recreate, restore
Forest-based solutions alone, including the management, conservation and restoration of forests, will require USD 203 billion in total annual expenditure globally, according to the report. That is equivalent to just over USD 25 per 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 approximately 300 million hectares by 2050, relative to 2020.
The upcoming summits on climate, biodiversity, land degradation and food systems, as well as the launch of the UN Decade on Ecosystem Restoration on 5 June 2021 provides an opportunity to harness political and business momentum to align the economic recovery with the Paris Agreement and the anticipated post-2020 Global Biodiversity Framework, and thus be consistent with limiting warming to 1.5° C above pre-industrial levels, as well as halting and reversing the loss of biodiversity.
Making nature a business and investment case
The report's authors say the annual investment of the private sector in nature-based solutions was equal to USD 18 billion in 2018. Private finance only accounts for 14%, including capital mobilized through sustainable agricultural and forestry supply chains, private equity investments, biodiversity offsets financed by private sectors, philanthropic capital, private finance leveraged by multilateral organizations and forest and other land use-related carbon markets.
In climate finance, private sector investment accounts for most capital flows (56% according to the Climate Policy Initiative). The scaling up of private capital for nature-based solutions is one of the central challenges of the next few years with a specific focus on investing in nature to support sustainable economic growth in the 21st century.
Investors, developers, market infrastructure makers, customers and beneficiaries can play roles in creating a market where nature-based solutions access new sources of revenue, increases resilience of commercial activities, reduces costs or contributes to reputation and purpose.
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 decarbonization of all sectors of the economy, they can contribute to the required pace and scale of climate change mitigation and adaptation.
Following the pandemic, natural calamities, and major employment shifts, a startling new study on the online news site News Nation shows that 1 in 4 Americans don't have an emergency fund.
Generational wealth is a facet of wealth management that is often misunderstood. Labeled trust fund babies, rich kids, and lucky breaks, those who receive an inheritance from families are rare.
Social media has successfully made it to the mainstream consciousness of over half the global population. DataReportal's latest study shows that over 4.33 billion people worldwide are using some form of social networking site this year. That's why it's no wonder many tech companies are interested in investing or forming the next Facebook, Twitter, or YouTube to capture the hearts and minds of the general population.
Ease of access, freedom to choose in which to invest the money and lines of credit designed according to the needs of consumers, are some of the characteristics that have made consumer credit one of the most important financing products in the world’s market.
While researchers have suggested that individuals who base their self-worth on their financial success often feel lonely in everyday life, a newly published study by the University at Buffalo and Harvard Business School has taken initial steps to better understand why this link exists.
The younger generations are willing to put their money where their mouth is when it comes to sustainable living.
An international research team led by NUST MISIS has developed a new iron-cobalt-nickel nanocomposite with tunable magnetic properties. The nanocomposite could be used to protect money and securities from counterfeiting. The study was published in Nanomaterials.
Bank credit officers are more likely to approve loan applications earlier and later in the day, while 'decision fatigue' around midday is associated with defaulting to the safer option of saying no.
After graduating or leaving college, many students face a difficult choice: Try to pay off their student loans as fast as possible to save on interest, or enroll in an income-based repayment plan, which offers affordable payments based on their income and forgives any balance remaining after 20 or 25 years.