Increasing funding in natural capital over the next six years could deliver more than 20 times the return on investment, while bridging the nature finance gap could generate trillions of dollars in earnings, a report revealed on Wednesday.

The study, published by the UN Environment Programme (UNEP)’s World Conservation Monitoring Centre, was commissioned by the Green Growth Knowledge Partnership (GGKP), a UN-backed initiative dedicated to the transition to a green economy.

According to the authors, $7.4 trillion would need to be invested by 2030 to meet nine nature-related UN Sustainable Development Goals (SDGs) linked to topics such as conservation, restoration, use of natural resources, and pollution reduction.

Researchers estimated that those investments would generate the economic equivalent of $152 trillion, which is equal to $20 for every $1 invested.

The report focused on 40 countries representing 80% of world GDP, 78% of the global human population, and 81% of global greenhouse emissions.

BENEFITS

While the nature financing gap varies from country to country, safeguarding important ecosystems and tackling air pollution have been reported as resulting in significant benefits almost everywhere.

Based on the analysis, the highest return on investment in most countries came from protecting and maintaining natural ecosystems (32 countries out of 40) and restoring degraded agricultural land (seven out of 40).

“Protecting and restoring natural and agricultural ecosystems to the extent required to meet the SDGs will see their economic value alone increase by over 200%,” the report said.

Closing nature financing gaps around air pollution would generate the greatest returns, with the US, India, and China standing to benefit the most.

Notably, the report showed how greater investments in nature provide a crucial boost to low, lower and middle income countries’ GDPs.

“Seven out of the 10 countries with most to gain from closing the natural capital gap are in Sub-Saharan Africa, with the greatest benefits connected to investment in water and sanitation, ecosystems, and agricultural land remediation,” UN Development Programme (UNDP) said.

More broadly, boosting investments towards SDG targets linked to nature positive activities will lead to:

• Avoiding nearly 4.5 million premature deaths every year between 2021 and 2030.
• Avoiding more than 27 mln hectares of deforestation over the same period.
• Reducing natural resource extraction by nearly 18 billion tonnes.
• Restoring more than 250 mln ha of agricultural land.
• Increasing terrestrial protected areas by 396,000 ha and marine protected areas by 218,000 ha.

“Without a healthy, thriving environment, there is no way to achieve our sustainable development goals,” said Adriana Zacarias Farah, officer in charge at report commissioners GGKP.

“As this report demonstrates, closing the gap between our current stock of natural capital and what is needed to meet the UN SDG is not only a good economic investment but has enormous benefits for people and the environment,” she said.

KEY ACTIONS

As the UNDP stressed, while the benefits of investments in natural capital outweigh the costs, channelling resources to meet the investment needed remains a challenge.

To reach the target, the report advised governments to remove economic incentives that encourage unsustainable use of natural capital, as also required by the Kunming-Montreal Global Biodiversity Framework.

Governments spend around $500 bln every year on subsidies that are potentially harmful to biodiversity, the OECD estimated in 2020.

A separate report by the WWF recently claimed EU countries are directing between €34 bln and €48 bln of European subsidies annually into activities that harm biodiversity, with the majority of them allocated to agriculture.

“Subsidy reform is challenging given the financially vested interests that subsidies themselves create, but they must be tackled – with measures to support those who lose out where appropriate – to ensure more efficient and sustainable resource use,” the report said.

Governments should also boost protected areas and implement nature-based solutions, as they are seen as an opportunity to deliver benefits across multiple SDG targets.

“With climate change becoming a more dominant driver of biodiversity loss, and well-functioning ecosystems being important from both a mitigation and adaptation perspective, the need to maximise the synergies and minimise the trade-offs between investments to meet climate and nature goals is critical,” the report said.

UNEP also suggested that countries move ‘beyond GDP’ as a measurement of determining holistic returns, citing New Zealand and Bhutan’s efforts to develop different measurement frameworks that capture a broader range of issues that influence human well-being.

A recent study by the EU Commission also highlighted the importance of creating a new indicator to supplement the traditional GDP, encouraging member states to use the gross ecosystem product (GEP), which accounts for the monetary value of the benefits that individuals receive from ecosystems.

By Giada Ferraglioni – giada@carbon-pulse.com

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