Increasing financial flows and the role of finance in sustaining nature

Protecting and enhancing our world’s natural assets, and the biodiversity that underpins them, is crucial to achieving a sustainable, resilient economy, as well as tackling poverty, climate change and preventing future pandemics. Launched at the beginning of this year, The Dasgupta Review on the Economics of Biodiversity presents a new and comprehensive economic framework that accounts for humanity’s dependence on Nature and ambitious action on finance must underpin the change we need to see to deliver its recommendations. We must reset our relationship with nature by investing more public and private finance towards activities that protect and restore nature, combat climate change and support prosperity, and we must mainstream nature into economic decision making through all actors. At a minimum, this must be towards activities that do no harm, but increasingly also towards nature positive activities.

This session is one of three thematic deep dives on the K4D Learning Journey on International Nature that will consider some of the financial instruments that can increase finance for Nature interventions and NbS. The session will briefly cover use of public and private investment including carbon credits, bonds, payments for ecosystem services and others. It will explore the changes that are needed to redirect capital away from approaches or activities that degrade nature and towards approaches, activities and solutions that sustain nature. It will look at some of the opportunities, challenges and trade-offs that need to be navigated, explore the potential for unlocking private finance, and examine the role of bilaterals as well as other actors such as IFIs, DFIs, multilaterals etc.

The Knowledge, Evidence and Learning for Development Programme (K4D) supports the use of learning and evidence to improve the impact of development policy and programmes. It is funded by UK aid and is designed to assist the Foreign, Commonwealth and Development Office (FCDO) and other UK government departments and partners to be innovative and responsive to rapidly changing and complex development challenges.

The Taskforce for Nature-related Financial Disclosures – Neha Dutt

In this video, Neha Dutt, Policy Lead for Greening Finance at the Department for Environment, Food and Rural Affairs (Defra), outlines why nature is important for addressing the financial repercussions of climate change, and how financing efforts to tackle climate change will enable us to hit climate targets.

Learning objectives

Attendees should, following the session:

• Have greater understanding of the changes and incentives that are needed to redirect financial flows from all sources towards activities and approaches that sustain, restore and sustainably manage nature, and the challenges or potential for trade-offs that need to be managed.
• Recognise potential entry points and opportunities for action, and the roles different actors could play.
• Be more comfortable/confident discussing finance for nature, financial incentives and the way the financial system can support nature with stakeholders.
• Have a greater understanding of the finance for nature architecture including the interplay and roles of Climate Finance for nature, ODA for nature, sustainable debt, MDB finance and private finance.

Essential study materials

Specific sources listed here are required reading before this session:

1. Kapos, V., M. De Mel, C. Rosenzweig, M. Kolenda, L. Emerton, and H. Neufeldt, 2021: Chapter 6: Nature-based solutions for adaptation. In Adaptation Gap Report 2020. United Nations Environment Programme, pp. 43-76  https://unepdtu.org/wp-content/uploads/2021/01/adaptation-gap-report-2020.pdf Pages 55-63
2. Dasgupta, P. (2021), The Economics of Biodiversity: The Dasgupta Review. (London: HM Treasury). https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/962785/The_Economics_of_Biodiversity_The_Dasgupta_Review_Full_Report.pdf Pp. 467- 483
3. The World Bank. (2020). Mobilising private finance for nature. https://pubdocs.worldbank.org/en/916781601304630850/Finance-for-Nature-28-Sep-web-version.pdf Pages 9-17 (not open access)
4. Tobin-de la Puente, J. and Mitchell, A.W. (eds.), 2021. The Little Book of Investing in Nature, Global Canopy: Oxford. https://globalcanopy.org/wp-content/uploads/2021/01/LBIN_2020_EN.pdf, pages 207-210

Optional

1. Bapna, M. & Fuller, P. (2021). Nature-based Solutions for Adaptation are Underfunded- But Offer Big Benefits. World Resources Institute. https://www.wri.org/insights/nature-based-solutions-adaptation-are-underfunded-offer-big-benefits
2. Vivid Economics. (2020). Greening the Stimulus: investing in Nature. https://www.vivideconomics.com/wp-content/uploads/2020/01/210119-Greening-the-stimulus_clean.pdf
3. The Green Renaissance Podcast: Episode 4 Financing a Nature-Positive Economy. https://pod.link/1523645789/episode/05e9704452e1b34f66fc6815fcaf7554
4. OECD. (2011). Scaling up finance mechanisms for biodiversity. Paris: OECD. https://www.oecd.org/env/resources/OECD%20Finance%20for%20Biodiversity%20%5Bf%5D%20%5Blr%5D%20WEB%20SM.pdf. Pages 4-11
5. The Nature Conservancy (2018). How to scale up investments in nature. Speech by former CEO Mark Tercek. https://www.nature.org/en-us/about-us/who-we-are/our-people/mark-tercek/how-to-scale-up-investments-in-nature/
6. RSPB (2021). Transitioning to a nature-positive economy by 2030: implementing the Dasgupta Review on the economics of biodiversity. https://www.rspb.org.uk/globalassets/downloads/documents/positions/transitioning-to-a-nature-positive-economy.pdf
7. Frank, A., Silber, T., & Lamb, C. (2018). Nature to the rescue: How Nature-based Solutions are moving corporate water risk management beyond business-as-usual. South Pole. https://www.southpole.com/publications/water-white-paper-2018