The State of
Finance for
Nature in the G20
Leading by example to close
the investment gap

© 2022 United Nations Environment Programme

ISBN: 978-92-807-3910-7
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United Nations Environment Programme (2022). State of Finance for Nature in the G20. Nairobi.

With support and analysis fromVivid Economics

Executive

Executive Summary
Nature-based solutions (NbS) is a category ofassets in which businesses, governments andcitizens can invest in order to work with nature
instead of seeing it as a barrier to economic
development and progress. NbS places nature
at the heart of many societal challenges, suchas the climate and biodiversity crises, as well
as disaster risk reduction, food security andhuman health. Through the improvement ofcarbon sequestration on agricultural lands andpeatlands, defence from flooding by restoring
mangrove populations, and the protection of
global biodiversity through forest and other landconservation, nature-based solutions can help
improve society today and in the future.
This report finds that in 2020 the G20 countries
invested USD 120 billion in NbS.1 This represents
92 per cent of global annual NbS investment,
broadly in line with the G20’s share of the global
GDP of 80 per cent.2 The vast majority of current
spending by G20 countries, USD 105 billion, is
allocated internally towards domestic government
programs, a third of which is invested in programs
to promote the protection of biodiversity andthe landscape. The other two thirds of domestic
government investment (USD 67 billion) funds
water management, pollution abatement, generalenvironmental protection, and measures for
agriculture, forestry, fishing and hunting.
G20 official development assistance (ODA) andprivate sector investment in NbS is low comparedto spending on NbS by domestic governments.
The G20 currently invests approximately USD 2.4
billion annually in NbS-relevant ODA programswith a focus on biodiversity and environmental
policy. The private sectors of G20 countries invest
an additional USD 14 billion, the majority of whichis allocated to improving the sustainability ofsupply chains or biodiversity offsets.
In order to achieve all future biodiversity, landdegradation and climate targets, G20 countries
would need to scale up their internal annual NbS

spending by 140 per cent: an additional USD
165 billion, by 2050. This additional investment
would allow G20 countries to reach a total
annual spending of USD 285 billion by 2050.
This estimate is based on an immediate action
scenario in which the international community
responds now to keep climate change warming at
only 2°C in order to halt land degradation and tostabilize biodiversity and reverse its loss by 2050
at today’s levels.3
Future G20 domestic investment needs tocomprise 40 per cent of total global NbS
investment. This estimate only takes into accountfour principal nature-based solutions: forestry,silvopasture, mangrove restoration and peatland
restoration. Approximately USD 102 billion out of
the USD 165 billion total additional investment
needed in the G20 in 2050 would be invested
in forestry, with USD 14 billion associated withplantation management and USD 88 billion withland conversion to forestry through restoration andafforestation. USD 63 billion annually would be
invested in silvopasture and spent on its operation.
The remaining 60 per cent of annual future
investment lies in developing countries where
fiscal space to invest in NbS is limited. Future
investment rates would be: forestry USD 101
billion, silvopasture USD 126 billion, peatland
restoration USD 7 billion, and mangrove restoration
USD 0.5 billion. All G20 members except India
have investment grade sovereign debt, while most
non-G20 countries do not. This means that it will
be more expensive for non-G20 countries to borrowmoney on capital markets, limiting their fiscal
bandwidth to fulfil NbS investment.
In many instances, NbS investments indeveloping countries are more cost effective inabating climate risk. For example, the average
cost of land conversion to NbS in G20 countries
is USD 2,600/hectare, while the average costfor non-G20 regions is USD 2,100/hectare. The
situation is similar for mangrove restoration

Please note that analysis for this report was limited to land-related NbS. The scope in the next report will cover both the terrestrial
and marine environment more comprehensively.
2
This number ranges from 74-92% because of uncertainty around the data.
3
Note: These figures are taken from the Model of Agricultural Production and its Impacts on the Environment (MAgPIE v4.1), which
was used to estimate investment need for forest-based NbS (which includes reforestation and afforestation cost estimates), andtaken from separately estimated figures for silvopasture (planting trees on agricultural land), mangrove restoration and peatland
conservation and restoration.
1

3

Executive

expenses, suggesting that G20 countries could
improve their economic efficiency in NbS
spending by investing in developing countries.
In line with the global report on the ‘State of
Finance for Nature’, it is clear that both thevolume of capital directed to NbS-relevant
assets and activities and the share of private
finance are currently insufficient to meet theclimate, biodiversity and other human-induced
crises. The investment case for NbS could be
strengthened through a combination of regulationand economic incentives. G20 countries, which
are among the richest nations on the planet, havea special responsibility to lead by example toreduce the gap between current NbS investment
and what is needed to address the climate crisis,
and to reverse land degradation and biodiversity
loss. Opportunities to do this could involve:••

4

G20 countries could align economic
recovery post Covid-19 with both the Paris
Agreement and future agreements on
biodiversity, focusing economies on being
consistent with the 1.5°C warming above
pre-industrial levels, as well as halting andreversing the loss of biodiversity. (Vivid
Economics & Finance for Biodiversity
Initiative 2021; United Nations Environment
Programme [UNEP], Global Recovery
Observatory, University of Oxford, 2021)
From a public funding perspective, G20
countries could pledge to: a) increase
ODA spending to help developing countries
to reduce the NbS investment gap; andb) increase domestic expenditure for
NbS-relevant sectors, including throughrepurposing agricultural subsidies. Other
opportunities relate to: c) requesting
multilateral development banks (MDBs) to
expand NbS-relevant lending or debt relief
to developing countries by supporting theissuance of IMF Special Drawing Rights(SDR); or, d) creating and expanding resultsbased financing schemes, such as nature
performance bonds.
•

In order to stimulate private finance,
G20 countries have numerous policy
options available, such as: a) incentivizing
corporate and financial institutions todisclose nature-related risks; b) aligning
portfolios to become ‘nature positive’ andstrengthening risk management to reduce
the potential for negative impacts on natureby clients, suppliers, etc.; c) strengthening
the investment case for NbS by harnessing
the potential of carbon markets and othernascent markets for ecosystem systems; and,d) increasing the availability of concessional
capital in the form of subordinate loans,guarantees and grants, which is also needed
to reduce the (perceived) risk for novel
business models.

In the wake of the dire warnings from the latest
Intergovernmental Panel on Climate Change(IPCC) report, and in the context of the world
summit on transforming food systems, the roleof investment in NbS is clear: it tackles theseinterlinked crises.
This report is a first step in measuring NbS
investments in G20 countries and therefore has
a number of limitations that should be addressedin future iterations. First, the scope only covers
terrestrial ecosystems. Secondly, the data usedin this report has limitations in tracking public
and especially private investment in NbS due tothe lack of internationally comparable datasets
and NbS markers. The data presented in thisreport cannot be disaggregated by sex to conduct
a gender analysis due to a lack of quantifiable
metrics. Thirdly, it focuses on existing investment
but does not estimate the benefits of investingin nature. Finally, it focuses on NbS positive
investments and does not report on capital flowsthat negatively affect nature.

Executive

Table of Contents

5

1. Introduction

6

2. Current financial flows into NbS in the G20

10

3. Future investment needs

14

4. Spending gap analysis

17

5. Options to close the NbS investment gap

21

A. Appendix

25

1

Introduction

Chapter 1

Nature-based Solutions (NbS) can contribute to
the transition towards a net zero carbon, nature
positive global economy by putting nature at
the heart of addressing economic and societal
challenges. Estimates suggest that morethan half the world’s GDP (USD 40 trillion) is
moderately or highly dependent on nature andits services. (Intergovernmental Science-Policy
Platform on Biodiversity and Ecosystem Services[IPBES] 2019; World Economic Forum 2020)
NbS can support the global economy, and canspecifically contribute to achieving the objectivesof the three Rio Conventions, by mitigating
and adapting to the adverse effects of climatechange, supporting environmental services,
restoring degraded land, and halting and reversing
biodiversity depletion. A healthy planet is also
good for business and economies, because ourlivelihoods depend on nature. Emerging research,such as the Dasgupta Review (2021) and theState of Global Finance for Nature (2021), havemade the economic case for triple action to tackle
the climate, land degradation and biodiversity
crises clearer and more compelling than ever.
The loss of biodiversity poses enormous risks tohuman prosperity and wellbeing with disparities
felt between genders. Investing in nature also
provides multiple benefits, such as reducing
the risk of future pandemics and accelerating
global efforts to mitigate and adapt to climatechange. Investing in nature-based solutions suchas transitioning to deforestation-free sustainableagricultural production, natural infrastructure, etc.
is smart from both a public and private sector
perspective, for reasons including: (i) economic
gains from job creation and from more productive
sustainable natural resource use; (ii) avoiding
the losses and costs required for protecting
communities from hazards; and (iii) other socialand environmental benefits. (Global Center on
Adaptation 2020; World Resources Institute 2020)
It is far cheaper to prevent environmental damage
than to pay for its restoration afterwards. The
most cost-effective policies are those that take acomprehensive approach towards appropriately
valuing, protecting and restoring nature.
Investment flows into nature need to increase
while shifting away from harmful activities.
Studies have shown that governments spend
around USD 500 billion per year globally tosupport activities that potentially harm nature.
(Organisation for Economic Co-operation andDevelopment [OECD] 2020) Public and private
financial flows that are harmful to the biospheresignificantly outweigh the investment aimed at
protecting and restoring it. Political and economic
systems and financial markets have so far failed

7

to account for the full value of services that natureprovides. Redirecting existing harmful financing,such as subsidies that encourage deforestationor environmental destruction, towards NbS candrive green growth and job creation while tackling
the twin goals of the Paris Agreement on climatechange and the anticipated Kunming Agreement
on biodiversity. Incorporating NbS into financial
and economic systems means that the two goalsof sustainable natural resource management andsocioeconomic growth can be addressed.
Recent global reports, such as the IPBES
report on biodiversity and climate change
and the Dasgupta Review on the economics
of climate change, summarize the scientificgrounds for policies that place us on a pathway
towards sustainability.(IPBES 2019; Dasgupta
2021) Nature-based solutions and ecosystembased approaches have emerged as crucial
instruments for delivering multiple benefits,
including addressing climate change mitigation,
adaptation and biodiversity loss: reducing floodrisk, filtering air pollutants, providing reliablesupplies of drinking water, strengthening foodsecurity, contributing towards business andjob opportunities, gender empowerment and,more broadly, achieving the 2030 Sustainable
Development Goals. The G20 countries havealso recognized that protected areas are aprincipal tool for halting biodiversity loss, andwould support efforts to protect at least 30 per
cent of global land and at least 30 per cent of
the global ocean, with at least 10 per cent understrict protection, by 2030, according to national
circumstances and approaches.
The G20 member states have expressed theircommitment to taking the necessary actions to
put nature and biodiversity on a path to recovery
by 2030, for the benefit of people and the planet,
and achieving the vision of ‘Living in Harmony
with Nature’ by 2050. (G20 2021) They recognize
the importance of advancing policies that protect
and restore nature due to its cost-effectivenessand ability to provide multiple social, environmental
and economic benefits. In 2021, they agreed tojoin efforts to advance together within a structured
and ambitious agenda around ten key goals: (i)investment in nature as a means to address joint
socioeconomic and environmental challenges;(ii) creation of an International Environmental
Experts Network to boost capacity building; (iii)
protection and restoration of degraded lands
for an inclusive and sustainable recovery; (iv)sustainable water management; (v) protection ofoceans and seas; (vi) reduction in marine plastic
litter; (vii) improvements in sustainable and circularChapter 1

resource use; (viii) investment in circular cities; (ix)
improvements in education, capacity-building andtraining; and, (x) growth of green finance and blue
finance measures.
G20 countries recognize that 2021 is a
critical year for increasing commitments
towards tackling the crises of climate change,
biodiversity loss and pollution exacerbated byunsustainable natural resource use. Nearly thirty
years after the signing of the Rio Conventions,
there are opportunities to build international
cooperation through the UNFCCC and the Paris
Agreement, the anticipated Kunming post-2020
Global Biodiversity Framework to be adopted at
CBD COP15, and the Land Degradation Neutrality
goal championed by the UNCCD, among others.

8Chapter 1

1.1 This report
This report builds on a global study (2021)
entitled ‘State of Finance for Nature – Tripling
Investments in Nature-based Solutions by
2030’ (‘The Global Report’). The Global Report
estimates the current rate of investment in NbS
globally and compares it to future investment
needs to meet the objectives set out by the three
Rio Conventions: the United Nations Framework
Convention on Climate Change, the United
Nations Convention to Combat Desertificationand the Convention on Biological Diversity (CBD).
The Global Report finds that approximately USD
133 billion currently flows into land-related NbS
annually (using circa 2020 as the base year),with public finance making up 86 per cent of thefunds and private finance contributing 14 percent. Over a third of the public funds, which total
USD 115 billion annually, is invested by national
governments in the protection of biodiversity andlandscapes domestically. Nearly two thirds are
spent on forest restoration, peatland restoration,
regenerative agriculture, water conservation andnatural pollution control systems. The private
sector finance for NbS amounts to an additional
annual USD 18 billion. This investment spansbiodiversity offsets, sustainable supply chains,and private equity impact investing, and includes
smaller amounts from philanthropic and private
foundations. The total volume of finance flowing
into nature is considerably less than the financial
flow towards climate finance.
Future investment in NbS would need to at least
triple in real terms by 2030 and increase fourfold by 2050 if the world is to meet its climatechange, biodiversity and land degradation targets.
This acceleration would equate to a cumulative
total investment of up to USD 8.1 trillion, anda future annual investment rate of over USD
536 billion. Forest-based solutions alone would
amount to USD 203 billion annually, followedby silvopasture at USD 193 billion, peatland
restoration at USD 7 billion, and mangrove
restoration at USD 0.5 billion. This report does notcover all types of NbS, and notably those in themarine environment were excluded. These will be
included in future editions.

9This report focuses specifically on how G20
countries are currently directing capital flows
to NbS-relevant assets and activities, and how
much additional investment is needed to tackle
the climate, biodiversity and land degradation
crisis. The analysis includes data from all
G20 members in order to assess the current
investment in NbS, covering both private andpublic financial flows. Given the improved quality
and coverage of public and private sector data
available for G20 countries, the methodology
provides a more accurate picture and analysis of
NbS investment needs and gaps for the G20 thandoes the global methodology. The report also
provides recommendations, both technical andpolicy-related, to support decision-making among
G20 countries. Like the global report, this reportis limited to land-related NbS and focuses
exclusively on disbursed investments, as opposed
raised or pledged capital. We endeavour to focus
on both the marine and terrestrial environment in
future reports.

2

Current financial
flows into NbS
in the G20

Chapter 2

According to G20-specific data, current G20
investment in NbS is estimated to total USD 120
billion annually, as shown in Figure 1. Domestic
government spending accounts for the vast
majority of overall NbS investment, at USD 105
billion. Within domestic investment, approximately
USD 71 billion is allocated annually to theprotection of biodiversity and landscapes, alongwith agriculture, forestry, fishing and hunting
measures. Public ODA accounts for an additional
USD 2.4 billion in G20 NbS public expenditure.
The private sector contributes a meagre USD 14
billion to NbS, with a third of private contributions
focused on supporting sustainable supply chains.

Figure 1. Classification of NbS finance, in USD billions
Private Capital

Domestic Government

Sustainable supply
chains, $5b

Water resources,
conservation andland management,
pollution control
and other natural
resources budget,$17b

Pollution
abatement,
wastewater mgt,
andenvironmental
protection, $10b

Biodiversity
offsets, $4B

Impactinvestments,$3b

Conservation
NGOs, $1.8B

Other

Public ODA
Protection of biodiversity and landscape, $38b

Agro, forestry & fishing, $33b

Domestic Government

Environmental policy and other, $7b

Private Capital$2.4b

Public ODA

Source: Vivid Economics, adapted from OECD, IMF and other public data sources.

According to the Global Report data, G20
investments comprise 82 per cent of global
NbS spending. 4 (UNEP 2021) The data usedby the global report estimates the current
G20 contribution to NbS investment at USD
110 billion, contributing 74 per cent of total
global NbS spending. Additional data collected
specifically on the G20 since the publicationof the Global Report means that the updated
estimate of USD 120 billion spent by theG20 on NbS would comprise 92 per cent of
total global NbS investment. Despite G20
counties having more fiscal leeway to makethese investments, the estimated share ofinvestment in NbS by the G20 is broadly similar
to the G20’s current share of global GDP:approximately 80 per cent. (G20 2021)

4

11

There is a significant need for benchmarks,
standards and markers to track public andprivate NbS investment. The estimates for G20
domestic and private investment are uncertain
because countries and companies do not directly
report their NbS spending. Data for domestic
government spending was collected from annual
national budgets and national reports. The same
set of assumptions as employed in the global
report were used to extract NbS-specific values
from overall spending amounts. The data forprivate spending from the global report wastransformed to yield the proportion of G20 private
spending relative to the rest of the world, basedon GDP. ODA data was directly obtained from theOECD and thus is comparatively more accurate.

This number ranges from 74-90% because of uncertainty around the data.

Chapter 2

2.1 Domestic government investment
The vast majority of current G20 NbS investment
is concentrated in domestic government programs,
at USD 105 billion. Public sector domestic
financing from the G20 contributes 87 per centof the total USD 120 billion invested in NbS by theG20 annually, as can be seen in Figure 2. Domestic
public finance is allocated across five key sectors:
the protection of biodiversity and landscape;agriculture, forestry, fishing and hunting, and water
management; pollution abatement; and generalenvironmental protection. More than one third of
total domestic government NbS spending, USD 38
billion, is assigned to the protection of biodiversity
and the landscape. This category includes funding
for initiatives such as conservation programs forendangered species or the establishment andmaintenance of national parks.

An additional third of G20 domestic NbS spending,
USD 33 billion, is focused on sustainableagriculture, forestry, fishing and hunting. ThisNbS category includes projects that promotebiodiversity by improving agroecological systems,
or that increase the carbon sequestration potentialof soil by promoting soil health. The final thirdof domestic investment is distributed acrossan additional three categories: water resources,
pollution abatement and general environmental
protection. Actions such as water conservation,
wastewater management and environmental policy
measures fall within these categories.

Figure 2. G20 public-sector finance of NbS in 2018, by category$180’000$160’000$140’000$120’000$100’000$80’000$60’000$40’000$20’000$TotalAgro, forestry & fishing

Pollution abatement,
Water resources,
wastewater
conservation and land
management andmanagement, pollution
environmental
control and other naturalprotection
resources budget

Protection of
biodiversity andlandscapeEnvironmental
policy and other

Note: The dark blue bars indicate the midpoint estimate and the light blue vertical lines the uncertainty range.
Source: Vivid Economics.
12

Chapter 2

2.2 ODA and private sector investment
Despite large domestic public investments
in NbS by the G20, ODA and private sector
investments remain small. The G20 currently
provides USD 2.4 billion annually to NbS-focused
ODA programs, which makes up only 2 per centof overall G20 NbS investment. The largest
category of ODA spending is biodiversity projects
at USD 880 million. An additional USD 740 million
is allocated annually to environmental policy andeducation initiatives. The final USD 900 million is
assigned to a combination of agriculture, forestry
and water basin projects.
The private sector contributes 60 per cent of
total national GDP in most G20 countries but
invests just USD 14 billion annually in NbS,
11 per cent of overall G20 NbS spending.
(International Monetary Fund [IMF] 2013) The
majority of this investment, USD 9 billion, isspent on sustainable supply chain initiatives
and biodiversity offsets. The additional USD 5
billion of private sector spending comes fromprivate equity investing, conservation NGOs andadditional miscellaneous sources.

13

3

Futureinvestment
needsChapter 3

3.1 G20 domestic investment needs
In order to achieve all future biodiversity, landdegradation and climate targets, G20 countries
would need to scale up their total annual NbS
spending by 140 per cent, an additional USD 165
billion, by 2050 (see Table 1). The G20 could
increase domestic spending by USD 125 billion
by 2030 and USD 140 billion by 2040 to meet thistarget. This additional investment would allow
G20 countries to reach a total annual domestic
spending of USD 270 billion by 2050 (the current
annual domestic spending of 105 billion plus theincrease in domestic spending of 165 billion). This
increase in spending is 40 per cent of all future
global investment needs.
This estimate is based on an immediate action
scenario, in which the international community

responds now to keep climate change warming
at only 2°C, to halt land degradation, and tostabilize biodiversity and reverse its loss by 2050
at today’s levels.5 Economic modelling predicts
the costs of transitioning from a business-asusual trajectory to a trajectory that fulfils climatechange, biodiversity and land degradation targets.
The methodology (see Appendix for more detail)estimates the future NbS investment needs in G20
countries under the immediate action scenario
targets for four asset types: forest, peatland,
mangroves and agroforestry. Peatland andmangrove restoration have not been estimatedfor individual G20 countries, due to an absence ofcountry level data, but are included in the global
NbS estimates (see Table 1).

Table 1. Summary of future G20 investment needs

G20 additional annual
investment need
(2021-2050) USD billion

Global future investment
need, excluding G20

Forest management

14

21

Land restoration - forestry

88

80

Silvopasture - capital expenses

3

6

Silvopasture - operational
expenses

60

120

Peatland restoration-

7

Mangrove restoration

-

0.5

165

235

Type of NbS

Total

Note on G20 figures: This table summarizes the additional annual spending needed by the G20, assuming that the current
annual G20 spending of USD 120 billion remains constant.
Note on Global figures: This table shows the additional annual spending needed, assuming current annual world spending of USD
130 billion. Additionally, there was insufficient data to calculate peatland restoration and mangrove NbS for the G20 countries.
Source: Vivid Economics own calculations for the G20 figures and United Nations Environment Programme (2021). State of
Finance for Nature 2021 for the global figures.

Across the G20 member states, future
investment need is concentrated in the forestry
space, with an increase of USD 88 billion and
USD 14 billion per year for land restoration toforestry and for forest management, respectively.

An additional USD 63 billion in NbS spendingneeds for the G20 is in capital and operational
expenses for silvopasture (the integration offorests and livestock grazing).

5Note: These figures are taken from the Model of Agricultural Production and its Impacts on the Environment(MAgPIE v4.1), which was used to estimate investment need for forest based NbS (which includes reforestation
and afforestation cost estimates), and taken from separately estimated figures for Silvopasture (planting trees on
agricultural land), mangrove restoration and peatland conservation and restoration.

15

Chapter 3

3.2 Global investment needs
By 2050, global NbS spending will need toincrease from current levels by around USD
400 billion to a total annual expenditure of USD
536 billion to achieve all global sustainability
targets. (UNEP 2021) This is more thanquadrupling the total global NbS investment.

This estimate is based on an immediate action
scenario and considers six categories: forest
management, land restoration to forestry,silvopasture capital and operating expenses,
peatland restoration, and mangrove restoration,
as described in Table 1.6

Table 2. NbS in scope

Forestry

PeatlandMangroves

RestoreManaged afforestation(NPI and non-NPI); newtimber plantations

Peatlandrestoration

Mangrove
restoration

Improve

Switch to sustainable
management of timber
plantations

Regenerative
agriculture

Trees in cropland;silvopastureNote: Empty boxes are not included in this study
Source: Vivid Economics

The largest proportion of future needs is in
non-G20 countries, with USD 235 billion to meet
Rio Convention objectives. Outside the G20,
the region with the largest investment needs
is sub-Saharan Africa, which will require an
estimated increase of USD 54 billion in annual
spending to achieve all climate and conservation
targets. An additional USD 100 billion will beneeded for land restoration to forestry and forest
management, and USD 45 billion will be neededin Latin America. Finally, peatland and mangrove
restoration will require an additional USD 7 billion
and USD 0.5 billion, respectively.

commonly known and supported with scientificand economic research, with peatlands andmangrove research emerging. Additionally, there
are more areas where forestry and silvopasture
can be implemented, compared to peatland or
mangrove restoration. However, peatland andmangrove ecosystems hold a disproportate andsubstantial amount of carbon per land area thanany other type of ecosystem - with peatlands
alone storing more than twice the amount ofcarbon as all the world’s forests combined(Crump 2017).

The high values for forestry and silvopasture
future investment needs do not imply thatthese NbS categories are more important forachieving sustainability goals. Rather, thelarger numbers reveal that these NbS are more
Additional information on overall global estimates for NbS spending can be found in the State of Financefor Nature 2021 report.

6

16

4

Spending
gap analysis

Chapter 4

Non-G20 countries may not have enough fiscal
space and access to global finance to allow themto make sufficient investment in NbS, especiallyafter the Covid-19 pandemic. Figure 3 compares
annual NbS future spending needs and longterm sovereign debt ratings, an indicator of easeof access to global financial markets. All G20
members except India have investment grade
sovereign debt, while most non-G20 countries
do not. This coincides with high investment
needs, meaning that it will be more expensive
for developing countries to borrow money oncapital markets, but limited fiscal ability and ODA
expenditures by rich countries mean that it will be
more difficult to close the NbS investment gap.

The spending gap in countries that are not partof the G20 is larger and more difficult to bridge
than in G20 countries. Current G20 spending(USD 120 billion annually) is 42 per cent of thetotal future spending needs of member states (anadditional average of USD 165 billion annually).
Overall global future needs for NbS spending aremuch greater, however, with a global increase of
more than four times the current spending levels
needed. Excluding the G20, a total additional NbS
investment of USD 235 billion is required annuallyby 2050. This value is 58 per cent of the additional
total global NbS future needs, despite the factthat these countries contribute only 20 per centof the world’s GDP. It is important to highlightthat the size of the gap presented in this report isconservative. The future spending estimates span
only some of the current spending categories, andthus the gap is probably underestimated and thetrue increase in spending will need to be higher.

Figure 3. Annual NbS future spending needs and sovereign debt investment grade
90

Above investment grade

80

Below investment grade

Additional NbS investment needs in 2050 (USD billion)

70

60

50

40

30

20

10

0

CHA

CAZ

IND

USA

EUR

JPN

LAM

G20

OAS

REF

Contains G20
country

SSA

MEA

NEU

Non G20

Note: Three letter code signifies country/region. CAZ = Canada, Australia, New Zealand. CHA = China. EUR = European Union.
IND = India. JPN = Japan. LAM = Latin America (including Brazil, Argentina, Mexico). MEA = Middle East and North Africa.
NEU = Europe, excluding European Union members. OAS = Asia (including South Korea). REF = Former Soviet Union (including
Russia). SSA = Sub-Saharan Africa. USA = United States. Annual average of foreign currency long-term sovereign debt ratings by
Moody’s, Standard & Poor’s, and Fitch Ratings.
Source: Vivid Economics based on World Bank and Bloomberg data.
18

Chapter 4

The larger the government debt to GDP ratio,
the greater the annual NbS future spending
need, revealing the challenge of funding NbS
investment outside the G20. The G20 countries
tend to have a lower government debt to GDP
ratio compared to future spending needs than
non-G20 regions. A significant exception to thispattern is China, which has a low government
debt to GDP ratio but high annual future spendingneeds. This future investment value is primarily
caused by the considerable opportunity for land
restoration to forestry within the country.

Although the G20 member states have theresources to achieve all domestic NbS spending
goals, these countries may not be the mostcost-efficient place to target NbS spending. For
example, higher land prices in G20 countries
mean that NbS project capital expenses based onland conversion costs per hectare are significantly
greater in many G20 countries than in non-G20
countries, as can be seen in Figure 4.

Figure 4. NbS project capital expenses (land conversion cost), USD per haLand converstion (USD per ha)

6000

5000

4000

3000

2000

1000

0

EUR

CAN

DEA

CHA

IND

G20

USA

ANZ

RUS

BRA

OAS

NEU

REF

LAM

Countains G20
country

SAS

MEA

SSA

Non G20

Note: Three letter code signifies country/region. CAZ = Canada, Australia, New Zealand. CHA = China. EUR =European Union. IND = India. JPN = Japan. LAM = Latin America (including Brazil, Argentina, Mexico). MEA =Middle East and North Africa. NEU = Europe, excluding European Union members. OAS = Asia (including South
Korea). REF = Former Soviet Union (including Russia). SSA = Sub-Saharan Africa. USA = United States.
Source: Vivid Economics

19

Chapter 4

There are many opportunities for NbS investment
within non-G20 countries that are more costeffective than investing in the same NbS within
the G20 member states. As seen in Figure 4,
NbS capital land conversion costs are up to USD
2,600 per hectare in G20 countries. In contrast,
costs are up to USD 2,100 per hectare in non-G20
regions.7 This price difference means that Europe
or Canada would be able to preserve morethan three times as much land by conducting
afforestation projects in Sub-Saharan Africa or
Latin America than within their own countries withthe same budget.
The same efficiency principle holds for other
NbS categories, suggesting that the G20
member states would improve efficiency byinvesting in NbS outside their own countries.
For example, average mangrove restoration
costs in the southeastern US are estimated as
USD 45,000 per ha, while average mangrove
restoration costs in the rest of the Caribbean are
estimated as only USD 23,000 per ha, despite
both regions being in the same geographic area.
(Menendez et al. 2020) These large investment
cost differentials suggest that this efficiency
principle should be considered when allocating
NbS funding both domestically and abroad.

Note: The three datapoints that include G20 regions (the bars in the included G20 section of Figure 4) are probably positively skewed
due to the presence of G20 countries in the data. The ability to exclude the G20 countries from these data points would probably
make the price per ha much lower, further providing an example of increased efficiency for investments.

7

20

5

Options toclose the NbS
investment gap

Chapter 5

The governments of G20 countries could play a key role in mobilizing financial resources, sending clear
signals and creating an enabling environment for investment in nature. There is currently an investment
gap in achieving the global environmental objectives set out by the three Rio Conventions. The peopleof the G20 countries carry out the majority of global economic and financial activity and they have thecapacity for leadership and decisive action. The world would benefit from a transition in global financeaway from the current unsustainable use of Earth’s resources towards activities that protect and restore
the biosphere and support the sustainable use of its natural assets. G20 countries can carry out needed
studies to calculate future NbS investment needs for restoration of peatland and mangrove ecosystems toenhance country level data and decision making.
The G20 could commit to investing in nature. In order to close the investment gap, the G20 could adopt
policies that will increase domestic finance levels accordingly. These policies could include a range offinancial and economic instruments that would channel public and private capital towards activities andassets that protect and restore nature. This includes support for NbS via policy and regulation, and bymeasuring, valuing and reporting on NbS at country level, creating a comprehensive national strategy that
could be supported by the inclusion of restoration practices into the Nationally Determined Contributions(NDCs) of G20 countries while prohibiting further ecosystem degradation.

5.1 Align economic recovery post Covid-19 with international
nature and climate agreements, scale up domestic
spending, repurpose fiscal policies & trade tariffs
The G20 could align post Covid-19 economic recovery with both the Paris Agreement and any future
biodiversity agreement, focusing economies on being consistent with 1.5°C warming above pre-industrial
levels, as well as halting and reversing the loss of biodiversity. Although some G20 countries have put
in place ambitious plans to build back better, many other G20 nations seem to be building back as
usual. (Vivid Economics and Finance for Biodiversity Initiative 2021; UNEP, Global Recovery Observatory,
University of Oxford 2021) With debt levels rising, this reduces the fiscal leeway to shift capital flows
towards nature and climate-positive activities and assets in the near future.
Part of aligning post-Covid economic growth involves scaling up the internal annual NbS of the G20
spending by 140 per cent, an additional USD 165 billion annually, by 2050, as well as making agricultural
subsidies nature-positive. These spending changes could be applied in the public and private sector, andwould include land restoration to forestry, silvopasture, peatlands, and mangroves. A recently-released
United Nations report found that around USD 470 billion in public funding for the agricultural sector
consists mostly of price incentives, such as import tariffs and export subsidies, as well as fiscal subsidies
which are tied to the production of a specific commodity or input. (UNEP, United Nations Development
Programme [UNDP], Food and Agriculture Organisation of the United Nations [FAO] 2021) Many of these
are inefficient, distort food prices, damage people’s health, and are often inequitable, putting big agribusiness ahead of smallholder farmers, a large proportion of whom are women. On the other hand, some
USD 110 billion supports infrastructure, research and development, and benefits the general agricultural
sector. Reconfiguring support for agricultural producers, rather than eliminating it, means it can be used
to help end poverty, eradicate hunger, achieve food security, improve nutrition, promote sustainableagriculture, foster sustainable consumption and production, mitigate the climate crisis, nurture nature, limit
pollution and reduce inequalities.

22

Chapter 5

5.2 Scale up ODA, improve development finance andstandardize NbS investment
Having recognized the additional challenges faced by lower income developing countries in mobilizing
financial resources to meet climate, nature and land degradation targets, the G20 could commit to assistingdeveloping countries to meet their financial obligations under the Rio Conventions. A specific set of actions
would be needed. The links between finance, climate, biodiversity and land degradation suggest that suchactions will be fundamental for achieving global sustainability targets.
Governments, public sector institutions and development finance institutions (DFI) could serve as
cornerstone investors to supply catalytic and core capital to protect and restore nature. Cornerstone
investment could include the creation and expansion of results-based financing schemes, such as nature
performance bonds, the resilience bonds market, credit facilities for habitat restoration, nature-positive land
use and water quality improvement, debt-for-nature swaps, blended finance mechanisms, credit guarantees
and results-based payments for REDD+.
International financial institutions such as multilateral development banks (MDBs) could adjust existing
financing mechanisms to ensure financial support is aligned with nature goals. These adjustments need notcompromise the short-term aims of these financial flows nor the historic mandates of institutions focused on
economic development. Four main actions could drive outcomes:
Foreign investment by DFIs in the agricultural sector could be channelled (exclusively)
through green credit lines, to achieve overall nature, restoration and climatepositive outcomes. The knowledge and financial infrastructure already exists in most
biodiversity-rich developing countries, and DFIs could provide timely support.
IMF lending and Special Drawing Rights (from developed to developing countries)
could include conditions on the maintainance and extension of environmental
regulations. In some locations, there is pressure to unwind such regulations, which
would confer no material benefit in addressing the current Covid-19 crisis, and could
threaten the ability of these sectors to trade internationally in the future. This could becomplemented with official development assistance to provide direct budgetary top-ups
and technical assistance for enforcement agencies.
Debt relief could be tied to existing and accelerated commitments to improved
spatial planning practices which extend protected natural areas and accelerate forest
restoration projects. These conditions could accelerate the implementation of existing
international commitments, such as the Paris Agreement, aligned with Nationally
Determined Contributions. Such activities could help to support both rural communities,
including gender equality, and nature. Budgetary commitments to these activities could
be forward-looking and persist beyond the current crisis period.
More ambitiously, shareholders of international financial institutions could push formore profound transformations that prioritize NbS. These transformations could
involve the extension of mandates specifically to involve nature-positive investments.
It could also require managers to stress test their portfolios to properly account for
nature-related risks. Finally, credit risk assessment and due diligence processes could
incorporate assessments that take nature into account.
G20 countries could assign organisations to report on G20 financial resource targets and commitments
to support nature, which would work in collaboration with other relevant entities. This includes the needto develop a global methodology and standardized approach to classify, measure and value NbS in a waythat allows cross-country comparison and analysis, and is meaningful for investment decision-making.
23

Chapter 5

5.3 Strengthen the investment case for private sector investment
Private sector investment in NbS-relevant activities and assets is too small in volume and size
because the investment case is often not strong enough. For example, demand for forest-carbon is still
voluntary rather than compliance-driven, and there are limited ways at present to transfer credit risk thatbanks, investors and corporates are unable to absorb.
Governments can create stable, predictable revenues from ecosystems such as forest carbon to enticeprivate investment in NbS. The provision of public goods and services, such as carbon sequestration by
forests and carbon storage in peatlands, remains unrewarded by firm, stable and predictable cashflows.
There is a lack of proper control over access and royalties, leading to the over-exploitation of common
access resources, such as fisheries and water; and the benefits (for example in health) of other services
such as flood risk management, regional climate regulation, pest control and citizen access to nature
are massively undervalued. These distortions in economic incentives reduce the private returns toinvestment in NbS and hence discourage investors.
Members of the G20 could work together to develop new and innovative investment products andnature markets. The objective could be to scale and transform investment opportunities in NbS, suchas carbon finance, to protect and restore ecosystems, using blended finance structures to increase
impactful investment in high nature value locations
The G20 could help to close the finance gap by engaging the private sector and unlocking investments
to scale up NbS finance. For example, transforming sustainable supply chains and corporate
commitments to achieve net-zero emissions and nature positive trajectories could directly increase
voluntary private NbS investment. Governments could also create nature markets to reward thetransition towards sustainable and regenerative food production, including sustainable forestry andagriculture, and wider innovation in sustainable food systems. They could build on the existing Taskforce
on Climate-related Financial Disclosure (TCFD) by supporting a new reporting framework for thedisclosure of effects and risks related to nature for individual companies, scheduled to be released in
2023 by the Taskforce on Nature-related Financial Disclosure.
To guide future investments, the G20 could consider models that have an intersectional approach to
the gender-NbS investments in support of women as drivers of net zero, nature-positive and resilient
economies.

24

A

Appendix8AnnexA.1 Investment by public and private sectors in NbS
Estimating current investments began with the selection of data sources and the development of amethodology to extract NbS data.

Figure A 1. MAgPIE: structure of the optimization process

Step 1

Step 2

Step 3

Step 4

Step 5

Step 6

Review data
sets andreports

Select anddownloaddata

Estimate NbS
investment frompublic andprivate sources

Aggregate
and assess
uncertainty

Filter andharmonize data
to avoid double
counting

Visualize
and reportresults

Source: Vivid Economics.

Step 1: Review data sets and reports
The team reviewed secondary sources complemented by stakeholder interviews. The most closely related
studies found were:1.

The Financing Nature Report (TNC, Cornell and Paulson 2020): This report is a global review of financing
into biodiversity conservation. It uses a narrow definition of NbS as climate finance channeled through carbon
markets, totaling USD 0.8 –1.4 billion per year in 2019. It also found a USD 124 - 143 billion flow of financeinto biodiversity protection in 2019. The report does not distinguish between private and public flows.

2.

Global landscape of climate finance (CPI 2019): This report is a review of global climate finance,
updated in December 2020. It has no specific NbS definition. The report estimated the climate financeflowing into the land use sector in 2019 as USD 21 billion - USD 7 billion for disaster risk management
and USD 13 billion for water and waste. The report had no figure for private finance flows into NbS.

3.

Climate finance report (joint MDB publication 2019): This report is a review of total MDB financing
globally. It contains no explicit NbS definition. It estimated investment in land use sectors in 2019 as USD
1.7 billion, and water and wastewater as USD 1.6 billion.

4.

A comprehensive overview of Global Biodiversity Finance (OECD 2020): This report is a global review
of financing into biodiversity conservation. It has no specific NbS definition. It found total expenditure in
biodiversity conservation to be USD 78 - 91 billion per year (2015-2017 average) and private flows to be
USD 6.6-14 billion per year.

5.

Nature-based solutions policy brief (Carbon Disclosure Project 2020): This brief focuses on a surveybased assessment of corporate investment into NbS. Fifteen per cent of a total of 459 responding
companies were investing in NbS. The brief did not contain information on the value invested.

This appendix has been reproduced based on the State of Finance for Nature report, with adjustments for thedifferences in methodologies.

826

Annex

Step 2: Select and download the data
This study relies on two main data sources for the amount of finance of NbS in the public sector: datacollected from domestic public expenditure (COFOG)9 and data collected from the Creditor Reporting
System (CRS) of the Aid Activity database10 from the Organization for Economic Cooperation andDevelopment (OECD).
The COFOG data contains government expenditure for 11 of the 20 G20 countries (Australia, China,
France, Germany, Italy, Japan, Russia, South Africa, Turkey, United Kingdom and the USA). Additional
datasets, primarily official annual government budgets, were consulted for the United States,11 China,12India,13 Canada,14 Mexico,15 Korea,16 Argentina,17 Brazil,18 and Indonesia.19, 20, 21 It was not possible to finddata on NbS government expenditure for Saudi Arabia.
The CRS Aid Activity data contains expenditure targeted at global environmental objectives for official
development assistance (ODA). The database presents basic data on where aid goes, the purposes it
serves and the policies it aims to implement, on a comparable basis. The CRS covers 144 countries, withdata collected at the donor level. This database included data on NbS investment donations for all G20
countries except Argentina, China, India, Indonesia, Mexico, and South Africa.
Specific to the private sector, the team identified sources of NbS finance in the literature and datasetsthat covered those sources. OECD data contains figures for philanthropies and foundations. This study
extended the dataset by including figures from recent studies on biodiversity, conservation, ecosystembased services, supply chains and voluntary carbon markets.

9This part of the dataset refers to the Classification of the Functions of Government (COFOG), which provides first- and second
level COFOG, on government expenditure data from the System of National Accounts according to the purpose for which the funds
are used. First-level COFOG splits expenditure data into ten “functional” groups or sub-sectors of expenditures (such as defence,education and social protection), and the second level COFOG further splits each first-level group into up to nine sub-groups. For
this report, second level data is extracted and triangulated against both OECD sectoral guidance on inclusions and exclusions
within each category and sub-categories, and other major reports and studies in each of the sectors that can potentially contributeto NbS, including those on biodiversity, peatland, and agriculture. Studies are referenced in the bibliography section.
10
CRS data is monitored and analyzed by the OECD Development Assistance Committee (DAC). Data is collected on individual
projects and programmes, with a focus on financial data. Within CRS, this study focuses on selected sectors and references for
sectors relevant to NbS financing. A sector in this database refers to the main purpose category (e.g., health, agriculture, forestry,
energy) of the intervention. The sectors represent first-level data. The sub-sector represents second-level data, which (as describedabove) goes into further detail and from which data linked to NbS is extracted. The data is subsequently cross-referenced with key
sectoral studies.
11
U.S. Government Federal Spending database (2021). Retrieved from: http://usaspending.gov/.
12
CBD Financial Reporting Framework for China.
13
The Biodiversity Finance Initiative (2017). The Biodiversity Expenditure Review. Retrieved from: https://www.biodiversityfinance.net/
knowledge-product/biodiversity-expenditure-review-ber.
14
Department of Finance Canada (2018). Equality + Growth. Retrieved from: budget-2018-en.pdf.
15
Secretaria de hacienda y credito publico (2021). Criterios generales de politica econonomica para la iniciativa de ley de ingresos
y el proyecto de presupuesto de egresos de la federacion correspondientes al ejercicio fiscal (2021). Retrieved from: https://www.
finanzaspublicas.hacienda.gob.mx/work/models/Finanzas_Publicas/docs/paquete_economico/cgpe/cgpe_2021.pdf.
16
Korean Ministry of Economy and Finance (2018). 2018 Budget Proposal. Retrieved from: Press Releases (moef.go.kr).
17
Presidencia de la Nacion. El gasto publico social y el presupuesto 2018. Retrieved from: https://www.argentina.gob.ar/sites/
default/files/politicassociales-publicaciones-informe-gasto-social-2018.pdf.
18
World Wildlife Fund (2018). Financiamento publico em meio ambiente (2018). Retrieved from: https://d3nehc6yl9qzo4.cloudfront.
net/downloads/financiamentomma_final2_web.pdf.
19
Indonesia Food Security Budget 2010-2020.
20
Indonesia Infrastructure Budget 2015-2020.
21
The World Bank Group. (2020). Spending for Better Results.

27

Annex

Table A 1. Data sources on private-sector finance of NbS used in this and previous published work
Data used in this report
Category

OECD Report data

Paulson Report data

Sustainablesupply chains

Data focuses on PEFC
Data taken from four sectors
and FSC only (forestry and (forestry, agriculture excl. palm oil,agriculture)palm oil, fisheries)

Biodiversity
offsets

Data from Bennett et al(2017). Figure focuseson biodiversity offset
programmes in 33
countries.

Figures are higher because reportspans public and private financeof biodiversity offsets.

Privateequity impact
investments

Not present in report

Data taken from GIIN Impact
Investing 2020; Impact Assets
portal ; SOPIC.

Conservation
NGOs

Data from five largest
conservation NGOs

Philanthropy

Expenditure from 14 outof 26 philanthropies thatreported to OECD.

Paulson Report combines thesetwo categories. The OECD andPaulson Report both rely on thesame data sources.

Private financeleveraged by
OECD Report and Paulson Report use data from GEF andmultilateralOECD DAC. This report includes GCF data.
orgs.
Forest andland use
carbonmarkets

Combines transactions
from both voluntary andcompliance markets.
Higher risk of double
counting with publicsector funding.

Water quality
trading &offsets

Both reports use samedata source (Bennett andRuef 2016)

Payment forecosystem
services

Specifically, private-sector
payments for watershed
services.

OECD
ReportMixed /
Other

x

x

x

x

x

x

Paulson Report does not
disaggregate public and private
investments into carbon markets.
This report uses the Paulson
approach for voluntary forest
carbon markets and REDD+ only.
Report includes a broad“natural infrastructure” category
encompassing watershed andcoastal protection. It is unclear
to what extent these are private
sector investments in NbS.

Paulson
Report

x

x

x

x

x

x

Note: OECD Report (2020). “Comprehensive Overview of Global Biodiversity Finance”.
Deutz et al. (2020). “Financing Nature: Closing the global Biodiversity Financing Gap”. The Paulson Institute,
The Nature Conservancy, Cornell Atkinson Center for Sustainability.
Source: Vivid Economics.

The data was collated and checked against published reports and academic articles for both the private
and public sectors. Cross-referencing and checking between sources reduced the potential for double
counting, but this risk has not been totally eliminated, particularly within the public sector data from OECDand specific government budgets. The OECD recognizes that there may be some double counting in its
dataset, for example in the case of biodiversity and forestry-related activities.

28Annex

Step 3: Estimate NbS investment from public and private sources
Estimates of the amount of public money flowing into NbS-relevant sectors were obtained and the
proportion of each directed towards NbS was extracted. As there is no existing classification and tagging
of this data for NbS, this study employed multipliers (scaling factors) from existing literature, together withsectoral guidance from the OECD, to scale down the volume of investment within each sector on the basisof the proportion of activities within that sector that can more confidently be defined as NbS. All numbers
were peer-reviewed.22

Table A 2. Scaling factors used to assess the proportion of investment categories related to the NbS

framework used for domestic public spending
Sector

Scaling Factors

Agriculture, forestry, fishing and hunting

0.1

Waste water management

0.1

Pollution abatement

0.2

Protection of biodiversity and landscape

0.9

Environmental protection n.e.c.

0.2

Agriculture, forestry, fishing and hunting

0.1

Source: Vivid Economics based on expert assessments.

Table A 3. Scaling factors used to assess the proportion of investment categories related to the NbS

framework used for ODA spending
Sector

14010: Water sector policy and administrative management

0.414015: Water resources conservation (including data collection)

0.7

14040: River basins development

1.0

31110: Agricultural policy and administrative management0.131120: Agricultural development

0.1

31130: Agricultural land resources

0.9

31140: Agricultural water resources

0.1

31210: Forestry policy and administrative management

0.931220: Forestry development

1.032162: Forest industries

0.6

41010: Environmental policy and administrative management

0.541020: Biosphere protection

0.641030: Biodiversity

1.0

41040: Site preservation

0.1

41081: Environmental education/training

0.4

41082: Environmental research

0.4

Source: Vivid Economics based on expert assessments.
22

29

Scaling Factors

List and resumé of reviewers available upon request.

Annex

Step 4: Aggregate and assess uncertainty
The confidence and reliability of NbS estimates depends on the granularity of the data. In order toaccount for data disparities, the data was classified by ranges of data estimates, with the upper bounds
reflecting a more comprehensive list of NbS activities and the lower bounds reflecting a narrower definitionof NbS. The final estimates are simply the midpoint between the upper and lower bounds. For example, theCRS dataset contains disaggregated categories for ODA related to the environment, as reported by donors
to OECD. In this case, reliability is high, so the uncertainty range is low. In other sectors, confidence andreliability are low, such as agriculture, where both NbS-specific and non-NbS activities are recorded, so theuncertainty range is high.
Table A 4 below lays out the framework used to classify sectors, sub-sectors and activities, theirrelevance and their level of certainty or uncertainty. Uncertainty remains, as the inclusion of cross-sectoral
data reduces granularity while providing the benefit of a more comprehensive and comparable dataset.
Examining asset level data has helped build granularity, but at the expense of comparability.
Table A 4. Methodological framework used to assess uncertainty based on the granularity of data provided

RangeHigh uncertainty

Low uncertainty

Relevance

Low

MediumHigh

Estimate of shareof NbS

1-33 per cent34-66 per cent67-100 per cent

LevelFirst-level data

Second-level data

Third-level data

Source type

Fund/flow level

Expenditure level

Earmarked
programme level

Agriculture

Agriculturalland resources,
agricultural water
resources

ExampleAsset level/project
level

Regenerative agriculture, soilpreservation, shade agriculture
Water conservation measure andagricultural waste water reuse andrepurposing

Note: The level of the data (first, second or third level) is a statistical classification to characterize the granularity of thedata. First level is less granular than second and third level.
Source: Vivid Economics.

Step 5: Filter and harmonize data to avoid double counting
The data is triangulated between sources and the definitions are assessed to exclude repeatedtransactions. The act of combining datasets can lead to double counting where categories overlap.
Previous literature points to the risk of double counting, which arises when the same transaction is
included multiple times. The emergence of new financial instruments means that the boundaries between
private and public sector flows into NbS are increasingly blurred. In order to prevent double counting, thefocus of the analysis is exclusively on expenditure figures, either through the COFOG database or countryspecific annual budgets.
Step 6: Visualize and report results
The way in which the results are presented conveys the level of uncertainty in the estimates with error bars.
30

AnnexA.2 Future NbS investment needs
To determine future investment needs, estimates are modelled using MAgPIE23 (Model of Agricultural
Production and its Impact on the Environment), a global land use allocation model designed to explore
land competition dynamics in the context of carbon policy. The model takes a set of policy input
assumptions and estimates the least costly way in which the land use sector can meet demand for
agricultural products. Key outputs from the model include cost of action and land use change (Figure A 2
describes the basic structure of the model).

Figure A 2. MAgPIE: structure of the optimization process

INPUTS
Food Demand• Population• GDP• Dietary choices• Demand elasticities

MAgPIE
Investments

OUTPUTSLand conversion• Technological change• Irrigation investments• Investments to convert
to new land use type

Optimization

Emissions

Costs of afforestation,technological change,
irrigation expansion,
production
Food and land prices

Policies and climate action• Emissions constraint or
carbon price• Bioenergy demand• Land protections

Land use change (Mha)

Change in agricultural land (Mha)

Biophysical and climate data
• Temperature increase
associated with SSP scenario• Biophysical constraints ofcrops and vegetation

Technical mitigation• Investments into mitigation
measures such as ruminantvaccines

Trade• Regional demand is met
by domestic production
and imports

Crop production and yields

Source: Vivid Economics.

This work compared two sets of scenarios: the first set focuses on the additional costs needed to achieveinternational climate targets, and the second estimates the additional costs needed to achieve biodiversity
targets. Each set includes at least two scenarios for comparison: a baseline and a policy scenario. The
difference in costs between each policy scenario and the baseline scenario represents the additional
investment needed to achieve the respective climate and biodiversity targets, such that for each time
period, t:

Investment Needst = Costst, Policy Scenario - Costst, Baseline Scenario
The methodology behind the modelling exercise is laid out in the following sections. First, model
assumptions are defined and an overview of the differences across the scenarios is provided for each
set of scenarios. The model interactions and how key assumptions will affect results are then analyzed.
Finally, how the modelled outputs fit into the analysis of future investment needs is described.

Vivid Economics is currently using MAgPIE v4.1. The latest version, MAgPIE 4.3, models peatland
restoration (see Humpenöder et al., 2020).

23

31

AnnexClimate targets: assumptions
The modelling exercise starts with the development of two scenarios, each characterized by a setof assumptions. Two scenarios developed by Vivid Economics for the United Nations Principles for
Responsible Investment are compared in order to study the additional costs needed to achieve climate
targets: the Inevitable Policy Response Forecast Policy Scenario and the corresponding Baseline Scenario.
A list of assumptions is given below:•

Population and GDP: Growth projections align with SSP2 of the Shared Socioeconomic Pathways(SSP) (O’Neill et al. 2014; Riahi et al. 2017). This assumption implies a gradual increase in GDP, fromabout USD 130,000 billion in 2020 up to over USD 300,000 billion in 2050. Global population growth ismoderate and levels off in the second half of the century, after reaching ~9.2 billion people in 2050.

•

Trade: Trade liberalization will increase across the board, with crop products achieving higher levels of
liberalization than livestock products.

•

Cost of investments: Investment in technological change is aligned with historical trends.

•

Protected areas: Both scenarios include strict nature reserves, wilderness area and natural parks(IUCN I and II categories).

The difference between the Forecast Policy Scenario and the Baseline Scenario is based on several
policy assumptions:

1.

NDC commitments involving the afforestation and regeneration of natural land. The Baseline Scenario only
includes current nationally implemented policies, while the Forecast Policy Scenario integrates national
NDC commitments. The NDC commitments are all the future sustainability policies and targets that acountry publicly reported for the Paris Agreement.24

2.

2C-aligned carbon price trajectory. A carbon price is introduced in the agriculture and forestry sectors in
the Forecast Policy Scenario, but not in the Baseline Scenario.25 The price applied to CO2 is half that applied
to all other gases to reflect challenges in regulating deforestation and rewarding afforestation.

3.

2C-aligned bioenergy trajectory. In the Forecast Policy Scenario, bioenergy production in the land use
system allows the energy sector to reduce its emissions using BECCS.26

4.

Ruminant meat fadeout. In the Forecast Policy Scenario, global ruminant meat demand declines by 25 percent by 2050 relative to the Baseline Scenario, where it remains constant.

24
Information on NDC commitments has been extracted from country reports, while information on currently implemented policies
refers to policies implemented before 2015.
25
These trajectories are available as part of a database of integrated assessment modelling (IAM) exercises run by the Potsdam
Institute for Climate Impact Research (PIK).
26
Bioenergy with Carbon Capture and Storage (BECCS).

32

Annex

Table A 4. Key assumptions in the MAgPIE model

Variable

Description

SourceBaseline
scenario

1. GHG pricetrajectory

Defines global price trajectories for CO2,
N2O, CH4.

IIASA*
database and
PIKConsistent with acarbon budget of 950
No carbon price
GtCO2e (<2C), 2030
phase-in

2. Reduction
factor for CO2
price

Lowers economic incentive for CO2
emissions reduction from avoided
deforestation and afforestationcompared to carbon price level.

-

Not relevant

50 per cent

3. Bioenergy
trajectory

Defines demand for second generation
bioenergy crops (only used for fuelproduction, not for food).

IIASA
database and
PIKConsistent
with current
commitments

Consistent with acarbon budget of 950
GtCO2e (<2C)

4. Population

Sets trajectories based on SSPs (Shared
SSP2 - “middle-of-the-road” consistent
SSP database
Socioeconomic Pathways).
pathways

5. GDP

Sets trajectories based on SSPs.

SSP database

SSP2 - “middle-of-the-road” consistentpathways

6. Protectedareas

Level of area protection is based on
IUCN categories. The default (WDPA)
includes IUCN WDPA* categories I
and II. The WDPA protection covers
approximately 400 Mha of the terrestrial
land surface. Alternatively, protection
can be extended to include other areas,such as biodiversity hotspots.

(Leclère et al.
2018)*IUCN categories I and II (no change
from current levels)

7. Ruminantmeat fadeout

Defines decline in proportion of calories
from ruminant meat in total meat
demand relative to baseline scenario
where it is treated as constant.

(Bodirsky et
al. n.d)

Share ofruminant meatin diets remains
constant.

8. Tradeliberalization

Defines change in current trade patterns.
Traded goods can be allocated in one of
two trade pools: one based on historical
trends and another one where goods aretraded based on comparative advantage.
Trade liberalization implies a higher
percentage on goods being traded in the“comparative advantage pool”.

(Schmitz etal. 2012)

Historic self-sufficiency ratios
maintained, trade with historic partners,
limited free trade

9. Future costs
of investment

Selected options for the expected costsof future productivity improvement.

(Dietrich et al. Trajectories for future investment costs
2014)
in line with historical trends

Notes: *shared socioeconomic pathways*International Institute for Applied Systems Analysis (IIASA)
Source: Vivid Economics.

33

Policy scenario

Gradual global
ruminant meat
demand declines by
25 per cent by 2050

Annex

Biodiversity targets: assumptions
Two scenarios developed by Vivid Economics for the UK Treasury’s Dasgupta Review of the Economics ofBiodiversity are compared to study the additional costs needed to achieve biodiversity targets: the Immediate
Action Scenario and the Baseline Scenario. As with the previous set of scenarios, assumptions of the
population, GDP, trade and cost of investment remain unchanged across scenarios. Both scenarios include a
diet shift of 25 per cent away from ruminant meat by 2050 (relative to a baseline in which it remains constant).
The Immediate Action Scenario differs from the Baseline Scenario in terms of policy and biodiversity
ambition. As with the IPR scenarios, one (Immediate Action) is more ambitious and includes NDC
commitments on the afforestation and regeneration of natural land, as well as 2C-aligned carbon prices andbiodiversity supply pathways. Protected areas also expand under the Immediate Action Scenario to include~21-24 per cent of global land area to cover all categories of protected areas under the World Database ofProtected Areas (WDPA) as well as key biodiversity hotspots.
Table A 6. Immediate and delayed action scenarios differ in assumptions regarding scale of policy action

Description

SourceImmediate action(includes immediatehigh ambition)

Baseline
scenario

1. GHG pricetrajectory

Defines global price trajectories for
CO2, N2O, CH4.

IIASA databaseand PIK integrated
assessment
modelling exercise

SSP2 RCP2.6
consistent trajectorywith carbon prices
phasing-in globallyin 2020 (higher for
immediate action)

No carbon
price

2. Reduction
factor for CO2
price

Lowers economic incentive for CO2
emissions reduction from avoided
deforestation and afforestationcompared to carbon price level.

-

0.5

-

3. Bioenergy
trajectory

IIASA database
Defines demand for secondand PIK integrated
generation bioenergy crops (only usedassessment
for fuel production, not for food).
modelling exercise

SSP2 RCP2.6
consistent trajectory

SSP2 NPi
consistent
trajectory

4. Population

Sets trajectories based on SSPs.

SSP database

SSP2 – “middle-of-the-road”
consistent pathways

5. GDP

Sets trajectories based on SSPs.

SSP database

SSP2 – “middle-of-the-road”
consistent pathways

6. Protected
areas

WDPA categories plus all proposed
areas and key biodiversity hotspots.

Leclère et al. 2018*2708 Mha in 2020

7. Ruminantmeat fadeout

Defines decline in proportion ofcalories from ruminant meat in totalmeat demand relative to baseline
scenario where it is treated as
constant.

Bodirsky et al., n.d

25 per cent reduction in ruminantmeat share of diet by 2050

8. Tradeliberalization

Defines change in current tradepatterns.

Schmitz et al. 201210 per cent trade liberalization forsecondary and livestock products in
2030, 2050, 2100 and 20 per cent for
crops

Dietrich et al. 2014

Trajectories for future investment
costs in line with historical trends

Variable

Selected options for the expected
9. Future costs
costs of future productivityof investment
improvement.

34

351 Mha(no change
from current
levels)AnnexNote: * The default protection in MAgPIE is defined by the WDPA protected areas. It includes IUCN WDPA categories I
and II. The WDPA protection covers approximately 400 Mha of the terrestrial land surface. For a world with increased
protection, this work follows a procedure similar to the Bending the Curve project, where a “potential protectedarea layer” is created, i.e. areas of the world that should be a priority to protect. Two criteria served for selection: (i)Expanding the WDPA protection from Cat I and II to cover all categories, and in addition to designated WDPA protectedareas proposed PAs are also included (areas which are not protected, but deemed by WDPA to be prioritized forprotection in the near or distant future, based on a variety of local factors). (ii) Key biodiversity hotspots, a similar layer
as used in Bending the Curve. The created potential protected layer is named the WDPA+, which comes to around 2700
Mha, which is ~21-24 per cent of the terrestrial land surface and 600 per cent more than present WDPA protection.
Source: Vivid Economics.

Model interactions
This sub-section explains how model assumptions affect system costs, focusing on the impact ofclimate action on transition costs. In MAgPIE, land is a limited resource which needs to be allocated toeither agricultural production (food, feed and other materials) or carbon sequestration. This allocation
process aims to minimize the costs incurred by the land use system in order to meet a specific demand
for agricultural products. Demand for agricultural products is a function of both population and income.
The former relationship is straightforward: more food and fiber will be needed to feed, clothe and supply
a growing population. The latter refers to the fact that, as people become richer, their budget constraints
loosen, allowing individuals to access more than enough to satisfy their essential wants. As both
population and GDP are set to increase under SSP2,27 demand will grow accordingly, and the agricultural
sector will have to produce more using the same amount of land. This will intensify competition for landuse, leading to investment in innovation, higher production efficiency and higher food prices.
Figure A 4. Examples of policy impacts on the land use sector

Population

GDP Scenarios

Drivers

Policies &Climate Action

CarbonGreenhousegas policy

Policies &Climate Action

NitrogenGreenhousegas policy• Model inputs include
assumptions of country’s policy
targets, including NDCs and area
protection, and carbon prices• The model considers targets
and carbon prices as exogenous
inputs and then considers themin its optimization process

MethaneFood

Land
conversion

Costs

Soil &
organic matter

Forestry

Material

Water

Optimization
Interest rate

Carbon Price& Forest

Land

DemandPastureUrban

YieldsBioenergy

TechnologicalchangeLivestock
Trade

Factor costs
Naturalvegetation
Production

Crop

Processing

Transport

Residues

Socioeconomic data

Source: Vivid Economics.

27

35

Assumption that remains unvaried across scenarios.

Biogeographical & climate
impact data

• Relative to business as usual,scenarios that price emissions
show higher levels of forest land.
• Introducing a carbon priceincreases sequestration revenues
and incentivizes afforestation
and reforestation• The model includes the NDC
commitments of countries as
required levels of afforestationand land restoration.
Policy target and• Afforestation from NDC
natural vegetation commitments is not price driven
and is not rewarded.
• Area protection is an input tothe model: all protected areas
are excluded from any type ofmanagement activity.

AnnexThe introduction of climate policies puts additional pressure on the land use sector, increasing thecosts associated with meeting agricultural demand. Expanding area protection to include biodiversity
hotspots as well as setting aside land to meet NDC commitments reduces the hectares of land available
for agricultural production. The introduction of a price for greenhouse gases has two direct effects on theland use system: on the one hand, it increases production costs for emission-intensive activities, such as
the production of beef and animal feed; on the other hand, it increases the benefits associated with nonproductive activities, such as the regrowth of natural vegetation for carbon sequestration. The land use
system faces substantial transition costs to meet demand under increasingly stringent land constraints
and with cleaner/less-costly production systems, both in the form of investments to increase efficiency
and of operational costs associated with more intensive production systems.
Model outputs and analysis of investment needs
As the model accounts for all costs in the land use sector, the direct and indirect costs of climate action
are differentiated. The former category includes costs related to GHG emissions and mitigation actions.
The latter category includes costs in the agricultural sector, either investments or recurring costs, which
are likely to increase with policy ambition. In this case, the difference across scenarios is going to be driven
by the additional pressure on the land use system due to climate action. This is because in order to reachclimate and biodiversity targets, the land use sector allocates larger areas to the forestry and regrowthof natural vegetation, reducing the amount of land available for agricultural production. To “feed” anincreasingly populous and rich world, agricultural producers need to become more efficient by investing ininnovation and increasing spending on the overall production process. For example, firms trying to increase
their crop yields will have to invest some capital in acquiring innovative machinery or developing new
production systems, and to spend more money on skilled labor.

Table A 7. Costs from MAgPIE

Category

List of costs

Description

Indirect costs

1. Costs of input factors

The cost of input factors for producing food andmaterials includes labor, energy, physical inputs, nonland capital cost

Indirect costs

2. Investment in technicalchange and adoption

Investment in technical change and adoption includes
R&D, adoption and irrigation expansion

Indirect costs

3. Costs of processing,transport and trade

Costs of processing, transport and trade includes all
downstream costs to consumer

Indirect costs

4. Cost of land conversion

Cost of land conversion from one land use to another,including land clearing, land preparation, for agriculture
or restoration

Indirect cost

5. Cost of forest
management

Cost associated with forest management

Direct costs

6. Costs of climate policy

Split into a. Emissions costs associated with a Parisaligned carbon pricing trajectory; and b. Rewards fornegative emissions

Source: Vivid Economics.

36

AnnexThe estimate examines the difference in the indirect costs of climate action to evaluate investment
needs. Focusing on this category of cost allows the estimate to calculate the global spending
needed to meet climate and biodiversity targets. Total investment needs between 2020 and 2050 are
calculated as the difference in the cumulative discounted cashflows of the indirect costs of climate
and biodiversity action between the policy and baseline scenario:
𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇 𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 𝑛𝑛𝑛𝑛𝑛𝑛𝑛𝑛𝑛𝑛2020−2050 =Off-model analysis

=

2050

2050

෍ Δ 𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝑡𝑡

𝑡𝑡=2020

෍ Δ 𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝑡𝑡𝑡 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃 𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆 − 𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝑡𝑡𝑡 𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵 𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆

𝑡𝑡=2020

This section provides an overview of the analysis of investment needs for NbS that are not included in themodel. It starts with a discussion on the sources of data for the off-the-model analysis and concludes withan overview of the methodology and outputs.
The off-model analysis focuses on three types of NbS asset: mangroves, peatlands and agroforestry:•

Mangroves are dense coastal forests covering the planet’s tropical and sub-tropical belt. Mangrove
forests not only sequester close to 32 Mt CO2 annually, but also protect coastal areas from extreme
events, improve water and food security, and provide a safe breeding ground for marine biodiversity.
This study includes the restoration of mangrove forests.28•

Peatlands are terrestrial wetland ecosystems where ‘year-round waterlogged conditions slow theprocess of plant decomposition to such an extent that dead plants accumulate to form peat.’29
Peatlands provide the largest natural terrestrial carbon stock storage (550 Gt CO2), but damaged
peatlands contribute to approximately 5-6 per cent of GHG emissions from land use, and this canrise to 10 per cent if they are burned. This study looks at the costs related to restoring damaged anddegraded peatlands, typically from overgrazing, drainage and fires.30•

Agroforestry involves ‘land use systems in which trees are grown in combination with agricultureon the same land'.31 It also includes: silvoarable agroforestry, the combination of trees and crops;
forest farming, the cultivation of crops within a forest environment; and other systems that entail
planting trees between fields, hedgerows, shelterbelts and riparian buffers.32 This study focuses on
silvopasture, which is the combination of trees and livestock.

The proposed focus on mangroves, peatlands and agroforestry in this study is due to their mitigation
potential, data availability and compatibility with modelled results. Estimates collected from Griscom etal. (2020) ensure that solutions with high climate mitigation potential are included in the analysis. TableA 8 shows potential climate mitigation comparisons for different types of land. The second stage ofthe analysis includes data collection regarding both costs and potential future uptake for each solution.
Solutions that could not be integrated into the modelled results are excluded. For instance, trees on
croplands are not included in the analysis, while trees on pastureland are.33 It is assumed in the case of
silvopasture that trees are planted on grazing land, with no effects on yields or production.

The Case for Mangroves as a Nature-based Climate Solution (Earth Security, 2020).
IUCN Issues Briefs – Peatlands and Climate Change.
30
Joosten, H. (2015) https://www.ramsar.org/sites/default/files/documents/library/ny_2._korrektur_anp_peatland.pdf, IPCC (2020).
https://wedocs.unep.org/bitstream/handle/20.500.11822/29261/IPCCLand.pdf?sequence=1&isAllowed=y; Wetlands International(2015). https://www.wetlands.org/publications/saving-peat-less-heat-update/.
31
European Union, Article 23 of Regulation 1305/2013.
32
Mosquera-Losada MR et al. (2018).
33
This is because a methodology to integrate on-model assumptions around increase in crop yields and monoculture agriculture with
off-model assumptions around silvoarable agroforestry has not yet been developed.
28
29

37

AnnexClimate mitigation potential in 2030
(PgCO2e/year)

Table A 8. Climate mitigation potential in 2030 (PgCO2e/year)
0

1

2

3

4

10

Forests
Reforestation
Avoided Forest Conv.
Avoided Forest Mgmt.
Improved Plantations
Avoided WoodfuelFire Management

Ag. & Grasslands
Biochar

Climate Mitigation

Trees in Croplands

Maximum with safeguards

Nutrient Management
Grazing - Feed

<2°C ambition

Conservation Ag.
Improved Rice

Low cost portion of <2°C ambition

Grazing - Animal Mgmt.
Grazing - Optimal Int.
Grazing - Legumes
Avoided Grassland Conv.

Wetlands
Coastal Restoration
Peat Restoration
Avoided Peat Impacts
Avoided Coastal Impacts

Other Benefits
Soil
Water
Biodiversity
Air

Source: Griscom et al. (2020).

Because MAgPIE focuses on forests and innovation in the agricultural sector, the modelled results areintegrated with some off-the-model analyses to include investment needs associated with NbS notcovered by the model. This analysis is based on the available literature on capital costs and operating
expenses associated with a subset of relevant NbS not covered in the modelling exercise. Table A 9
provides a list of sources, and details the type of information that is integrated into each in the analysis.

38Annex

Table A 9. List of sources for NbS not covered by MAgPIE

Category

SourceRelevant Information

Mangroves protection

Adapt Now: A Global Call For
Leadership On Climate Resilience.
(Global Commissions on Adaptation
2019)

Cost-benefit analysis of mangrovesprotection: costs by 2030 are close to
USD 167 billion (benefits USD 1 trillion,
benefit to cost ratio 6:1)

Mangroves restoration

The Role of the Natural Environment
in Adaptation, Background Paper
for the Global Commission on
Adaptation. (Kapos et al. 2019)

Median restoration costs for
mangroves: $0.10/m2 (between $0.05/
m2 and $6.50/m2)

Mangroves restoration

Mapping Ocean Wealth Explorer andMangrove Restoration Potential: A
global map highlighting a critical
opportunity (Worthington et al. 2018)

Restoration potential: 812,003 ha(regional information available in thepaper)

Capital costs associated withThe Economics of Peatland
Peatland restoration andrestoration: £200/ha to £10,000/ha
Restoration (Glenk and Martin-Ortega
protection
Recurring costs: £25/ha to £400/ha
2018)
per year

Peatland restoration

Agroforestry

Peatland protection and restoration
are key for climate change mitigation(Humpenöder et al. 2020)

Peatland rewetting:
One-time costs: USD05 7000/ha
Recurring costs: USD05 200/ha
Also includes information on total
peatland restored under three different
policy scenarios

Vivid Economics

Silvopasture:(all numbers in 2019 £/ha)
Capital Expenditure 1298,47
Operating Expense 18,94

Source: Vivid Economics.

The objective of the off-model analysis is to estimate the direct costs of future restoration and theprotection of mangroves and peatland. To this end, the associated cash flows as the sum of the capital
investment and the cumulative operations expenditure between the initial investment period and 2050 are
calculated for each ha of protection and restoration. For peatland, the timing of the investments follows
the dynamics set out in Humpenöder et al. (2020); for mangrove protection and restoration a linear
increase in land protected/restored between 2020 and 2050 is assumed. The direct costs of mangrove andpeatland restoration are added to the value obtained from MAgPIE to obtain the total future investment
needs. Because none of these options are considered by the model, the costs calculated on and off model
are mutually exclusive.

39

Annex

A.3 Limitations
There are several limitations and notes regarding the estimates in this report.
•

Land-related NbS: Like the global report, this report is limited to land-related NbS and focuses
exclusively on disbursed investments, as opposed raised or pledged capital. To some extent this isdue to the thematic focus of the organizations involved in issuing this report, however, another reason
was data availability, especially in relation to private finance. Note that the aggregated nature of somedata sets means that some marine spending might be included. The authors advise that future reports
include marine NbS.

•

Geographic scope: This report collects data from the G20 specifically for current NbS spending andfuture NbS spending need predictions. These estimates include comprehensive data, as G20 NbS
spending data is much more comprehensive than worldwide public investment, however, some publicfinances will have been omitted for the future predictions on a global scale, as not every country
publishes detailed data on public NbS finances and the data was aggregated by geographic region.

•

Double counting: There is a risk of double counting, which arises because it is unclear in some cases
whether entities are included in multiple categories within data sets. Data was triangulated between
sources and definitions during the data analysis with the intent to reduce the amount of double
counting, but some might remain.

•

Investment at the “asset level”: This report focuses on actual investment in assets rather than pledged
or budgeted figures.

•

Data limitations and related issues: Data in the NbS space is minimal. The methodology addresses
a lack of comparable data, lack of data aggregation and limited disclosure of proprietary information,
however, despite precautions, the selection and use of data for this report still risks double counting
and the partial quantification of costs, benefits, and effects.

•

Nature-neutral or negative finance: This report tracks nature-positive finance, although it might also
include nature-neutral or negative finance to some extent.
• ‘Neutral finance’ aligns conditionally with NbS activities, making sometimes negative andsometimes positive contributions depending on circumstances. Examples include agriculturalintensification, bioenergy and timber harvesting.
• ‘Negative finance’ harms ecosystems and the biosphere. Examples include the clearance of
natural vegetation, and/or drainage of peatlands for commodity production, unsustainable forest
management and infrastructure development.

•

40

Gender: When tracking investments into NbS, it is crucial to recognize gender dimensions,like women’s contribution to the conservation and growth of natural capital and the economic
opportunities available to them in this area. To complement these linkages, national statistics should
move towards gender-disaggregated data at the sector level, such as forestry and agriculture. Futurereports will aim to utilize a gender lens and advocate for gender specific data to be collected acrossfinancial, economic, social, health and environment indicators. Currently, the limited availability ofgender specific data is a key barrier to conduct a gender analysis.

List of Abbreviations
AFD

French Development Agency

BECCS

Bioenergy with Carbon Capture and Storage

BEIS

UK Department for Business, Energy and Industrial Strategy

BFFI

Biodiversity Footprint for Financial Institutions

CBD		

Convention on Biological Diversity

COFOG		Classification of the Functions of Government

COP

Conference of the Parties

CPI

Climate Policy Initiative

CPIC

Coalition for Private Investment in Conservation

CRS

Creditor Reporting System

DAC

Development Assistance Committee

DCA		

Development Credit Authority

DFI		

Development Finance Institution

DNB

De Nederlandsche Bank

ESG

Environmental, Social and Governance

EU

European Union

EUR		

Euro

FAO		

Food and Agriculture Organization

FONAFIFO

National Forestry Financing Fund

FSC

Forest Stewardship Council

GBP

Great British Pound

GCF

Green Climate FundGDP

Gross Domestic Product

GEF

Global Environmental Facility

GHG

Greenhouse Gas

GIIN

Global Impact Investing Network

GSI

Greenness of Stimulus Index

IATIInternational Aid Transparency Initiative

IIASA

International Institute for Applied Systems Analysis

IISD

International Institute for Sustainable Development

IMF

International Monetary Fund

IPBES

Intergovernmental Panel on Biodiversity and Ecosystem Services

IPCC

Intergovernmental Panel on Climate Change

IPR

Inevitable Policy Response

IUCN

International Union for Conservation of Nature

KPI		Key Performance Indicators

MDB		

Multilateral Development Bank

NbS

Nature-Based Solutions

NCFA

Natural Capital Finance Alliance

NDC

Nationally Determined Contributions

NCS

Natural Climate Solutions

NYDF

New York Declaration on Forests

ODA

Official Development AssistanceOECD

Organization for Economic Co-operation and Development

OOF

Other Official Flows

PEFC

Programme for the Endorsement of Forest Certification

PES

Payment for Ecosystem Services

PIK

Potsdam Institute

P4F

Partnerships for Forests

REDD+

Reducing Emissions from Deforestation and Forest Degradation

RLU

Royal Lestari Utama

SAVi

Sustainable Asset Valuation

SOPIC

State of Private Investment in Conservation

SSP

Shared Socioeconomic Pathways

TLFF

Tropical Landscape Finance Facility

UK

United Kingdom

UN

United Nations

UNCCD

United Nations Convention to Combat Desertification

UNEP

United Nations Environmental Programme

UNFCCC

United Nations Framework Convention on Climate Change

USAID

United States Agency for International Development

USD

United Stated Dollar

WDPAWorld Database of Protected Areas

WISE-UP

Water Infrastructure Solutions from Ecosystem Services

WRI

World Resources Institute

WWF

World-Wide Fund for NatureChapter 5

References
Dasgupta, P. (2021), The Economics of Biodiversity: The Dasgupta Review. (London: HM Treasury).
Global Center on Adaptation (2020). State and Trends in Adaptation Report 2020 (Vol. 1). Retrieved from:https://gca.org/reports/
G20. About the G20. Retrieved July 16, 2021, from: https://www.g20.org/about-the-g20.html
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IMF (2013). IMF Survey: IMF Facilitates Debate on Private Sector, Growth, Jobs in Mideast. Retrieved July 15,
2021, from: https://www.imf.org/en/News/Articles/2015/09/28/04/53/socar112713a
IPBES (2019). Global assessment report on biodiversity and ecosystem services of the Intergovernmental
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Ngo (editors). IPBES secretariat, Bonn, Germany. 1148 pages. https://doi.org/10.5281/zenodo.3831673
Menéndez, P., Losada, I. J., Torres-Ortega, S., Narayan, S., & Beck, M. W. (2020). The Global Flood Protection
Benefits of Mangroves. In Scientific Reports (Vol. 10, Issue 1) . https://doi.org/10.1038/s41598-020-61136-6
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org/environment/resources/biodiversityfinance.htm
UNEP, Global Recovery Observatory, University of Oxford (2021). Are We Building Back Better? Evidence
from 2020 and Pathways to Inclusive Spending. Retrieved from: AWBBB.pdf (unep.org)
UNEP, UNDP, FAO (2021). A multi-billion dollar opportunity: Repurposing agricultural support to transformfood systems.
UNEP, WEF, ELD, Vivid Economics (2021). State of Finance for Nature 2021. Retrieved from: https://www.
unep.org/resources/state-finance-nature
Vivid Economics & Finance for Biodiversity Initiative (2021). Greenness of Stimulus Index. Retrieved from:https://www.vivideconomics.com/wp-content/uploads/2021/07/Green-Stimulus-Index-6th-Edition_finalreport.pdf
World Economic Forum. (2020). Half of World’s GDP Moderately or Highly Dependent on Nature, Says New
Report. Retrieved from: https://www.weforum.org/press/2020/01/half-of-world-s-gdp-moderately-or-highlydependent-on-nature-says-new-report/
World Resources Institute (2020). Nature is An Economic Winner for COVID-19 Recovery. Retrieved from:https://www.wri.org/insights/nature-economic-winner-covid-19-recovery

43

Chapter 5

Contact
Ivo Mulder: ivo.mulder@un.org
Aurélia Blin: blin@un.org

United Nations Environment Programme
Climate Finance Unit
15 Chemin des Anemones
1219 Geneva, Switzerland

In Support of:Funded by:44