May 14, 2022 6:53 pm

Investments in nature must triple by 2030, the G20 must promote them among the private sector

It is very urgent to increase investments in nature to close the climate and biodiversity finance gaps and to address the need to accelerate land restoration across the globe, report says State of Nature Financingreleased this Thursday.

The publication -prepared by the United Nations Environment Program (UNEP), he World Economic Forum and the Land Degradation Economics Initiative– details that this increase in investment would be equivalent to a cumulative total of 8.1 billion dollars and a rate of future annual investment of 536,000 million dollars.

The study explains that although these are very high amounts, the world needs them if it wants to meet its objectives in terms of climate change, biodiversity and soil degradation.

The document highlights that the pace of species extinction, global warming, increasing number of extreme weather events and zoonotic diseases like COVID-19 further reinforce the need to invest in sustainable actions that improve the resilience of ecosystems and address societal challenges such as food security, climate change, water security, human health and improved resilience against the risk of catastrophes.

FAO / Marco Longari

A Tanzanian woman uses hay to prevent soil erosion.

The basis of the economy

He recalls that natural resources are the basis of the world economic system with more than half of the global Gross Domestic Product coming from them and cites the agricultural, food and construction sectors among which completely dependent on nature.

The authors of the report indicate that human activity and a economic model that prioritizes short-term growth have enormously damaged ecosystems, For this reason, it calls for a change in mentality that transforms the relationship between people and nature. Otherwise, he warns, the irrational exploitation of natural resources will generate ever greater financial losses.

“Currently, most of nature’s essential benefits do not have a value in the financial market, despite being the basis of our current and future prosperity. is vital integrate the value of nature into our economic system in a profound way, from government policies related to contracting, taxation, trade and regulation, to the way in which companies and financial institutions make decisions about investment, risk and disclosure, “says the text.

Women working in a World Food Program soil conservation program in El Salvador

WFP / Rein Skullerud

Women working in a World Food Program soil conservation program in El Salvador

investment falls short

Despite a growing interest from governments, businesses and financial institutions in nature-based solutions, the report highlights the insufficient budgets assigned to them, which by 2020 amounted to 133,000 million dollars annually.

Of those investments, 92% are made by the G20 countries and 87% of them were distributed internally to national government programs.

The analysis emphasizes that although the spending gap in non-G20 countries is larger and more difficult to close, the members of the group spend barely 2% of investment on official development assistance, while private investments are very small regardless of the fact that this sector makes up 60% of the national GDP of almost all the G20 nations.

The document urges the G20 to increase investment in less developed countries, which can often be more profitable and efficient than investing in similar nature-based solutions in-house.

The breakdown of current investment marks a 86% public funds and 14% private investment and specifies that national governments allocate more than a third of public money to protecting landscape biodiversity and nearly two-thirds to forest and peatland restoration, regenerative agriculture, water conservation and pollution control systems natural.

Private financing, on the other hand, is basically destined to biodiversity offsets, sustainable supply chains and impact investments.

Erosion is one of the main threats to soils in Latin America identified by the FAO in a new study.

UN Photo / John Olsson

Erosion is one of the main threats to soils in Latin America identified by the FAO in a new study.

Incentives to the private sector

The study emphasizes that the total volume of financing from nature is considerably less than that of climate change financing.

In this context, it calls on the G20 countries to create private investment opportunities in nature-based solutions.

The public sector provides policies and regulations that create a strong and stable revenue stream for the activities and assets of such projects. In addition, governments and public international organizations can contribute to create a conducive environment for the development and expansion of its initiatives.

Among other measures to increase private participation, governments can encourage stable and predictable markets for ecosystem services such as forest carbon or lending public money at below-market rates, the document states.

According to the report’s experts, as companies better understand the opportunities of nature-based solutions, risk reduction financial products will emerge or be strengthened, such as guarantees and insurance, to create attractive risk-return profiles aimed at more conventional large investors.

The authors also advocate systemic changes at all levels, including consumers who pay the real price of food, taking into account their environmental footprint.

“Companies and financial institutions must disclose financial risks related to climate and nature, and governments must reorient agricultural fiscal policies and tariffs related to trade”, he points out, appealing not to return to the models prior to the COVID-19 crisis, but to “build back better”.

The report presents some case studies from various parts of the world to illustrate the possibilities of tackling climate change and environmental degradation through nature-based solutions.

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