Conservation finance: Making nature investable

Misty Darkwoods forest, BC (Photo by Bruce Kirkby)

Misty Darkwoods forest, BC (Photo by Bruce Kirkby)

May 4, 2021 | by Jesse Hudecki

While nature is incredibly valuable, protecting it has not been all that profitable.

Nature conservation, as a result, has been chronically underfunded. Investments in conservation to date have been disproportionately funded by governments and a relatively small number of philanthropic foundations. To be most effective, conservation globally requires significantly more funding. Estimates of the annual biodiversity funding gap range from US$598 to $824 billion globally. It has been estimated that the funding needed in Canada alone is US$15 to $20 billion a year. Canada, home to nine per cent of the planet’s forests and one–quarter of its wetlands, can and should be a natural leader in closing this gap.

Conservation finance provides a set of tools by which a financial investment into an ecosystem can be made to conserve, and in some cases actually restore, the ecological values of the ecosystem for the long term. Leveraging this tool kit is not only necessary for Canada to reduce the biodiversity funding gap but is essential if we are to to meet the Government of Canada’s targets of cutting greenhouse gas emissions by up to 45 per cent and protecting 30 per cent of our lands by 2030. It also presents an incredible opportunity waiting to be seized.

When we lose nature, we also lose the enormous benefits that nature provides to society. These types of human activities have given rise not only to the twinned crises of biodiversity loss and climate change, they also impact water quality and food security and contribute to more air pollution, flooding and soil erosion, among other effects. By protecting nature, we are also protecting the incredibly valuable outcomes that nature provides to people (often for free).

At the Nature Conservancy of Canada (NCC), we have close to 60 years' experience in conserving and restoring wetlands, grasslands, forests and other ecosystems. By demonstrating clear outcomes of nature conservation, such as the vast amounts of carbon stored and captured on an ongoing basis in our landscapes, we can increase our understanding of the importance of nature.

Many ecosystem services, such as carbon storage and sequestration, flood risk mitigation and water purification, already have monetary values attributed to them. Monetizing these services, or at least estimating their value, allows for the creation of mechanisms and products to measure, finance and further promote conservation initiatives, based on the outcomes they provide. Unfortunately, investing in ecosystem protection using traditional investment vehicles is challenging. While benefits often accrue over time and are valued in different ways by a diverse range of stakeholders, often significant up-front capital is needed to invest in the initial protection or restoration activities that give rise to these benefits in the first instance.

In many cases, this requires the creation of new market-based mechanisms to attract private capital into new or existing markets, for investors seeking outcomes that combine both financial and non-financial impact returns. On May 11, NCC is hosting a special summit to further advance the conversation between government, finance and environmental practitioners. Making Nature Investable will offer a platform for discussions about how to best unleash the power and potential of private investment to help meet our climate mitigation and biodiversity conservation objectives.

Over the last three billion years, nature has perfected the process of evolution. Now it’s our turn to help evolve the conservation finance landscape and leverage the power of the financial markets to protect nature as our powerful ally.

Find out more about the Making Nature Investable summit and register today >

About the Author

Jesse Hudecki is the manager of conservation finance at the Nature Conservancy of Canada.

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