Investing in nature
Glen Echo, Happy Valley Forest, ON (Photo by Graham Kent)
While nature is incredibly valuable, protecting it is not all that profitable.
Nature conservation, as a result, has been chronically underfunded, and 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 is $598-824 billion U.S., globally. It has been estimated that the funding needed in Canada alone is $15-20 billion U.S. a year. To succeed in protecting our incredible natural ecosystems, Canada needs to leverage funding from a wide variety of public as well as non-public, non-traditional sources. There is a clear need to create investable assets and models to attract both public and private sector capital.
Investment opportunities in natural capital
Scaling conservation finance — a mechanism through which a financial investment into an ecosystem is made that aims to conserve the values of the ecosystem for the long term — presents an incredible opportunity waiting to be seized. In many cases, this involves the creation of market-based mechanisms that are able to attract private capital into new or existing markets that might not otherwise be available to investors, particularly those that are seeking investment returns that combine both financial returns and nonfinancial ‘impact’ returns. This evolving landscape of conservation finance identifies opportunities for participation from the broader investment community, including retail investors, mainstream institutional investors and pension funds, impact investors and corporations increasingly focused on a triple bottom line of serving people, planet and profit.
The value of biodiversity and intact ecosystems
When we lose nature, we also lose the enormous benefits that nature provides to society. And the natural systems of the Earth are rapidly changing because of human activity. These impacts have given rise to the twinned crises of biodiversity loss and climate change, but also water and food security, air pollution, water quality, flooding and soil erosion. In addition, there is growing evidence that our connection to nature supports health and well-being. By protecting nature, we are also protecting the incredible value that nature provides to people (often for free).
There are many ecosystem services that have monetary value to various stakeholders, such as carbon sequestration or flood risk mitigation. Monetizing these services allows stakeholders to create mechanisms and products to measure, finance and promote conservation initiatives, based on the outcomes they provide. One of the best examples of this type of market development is in connection with the monetization of carbon, which has become an internationally traded commodity, with clearly defined greenhouse gas reduction benefits. NCC’s Darkwoods Forest Carbon Project is one such example of a successful project developed to capitalize on this market.