The earth’s ecosystems have been significantly compromised, a cumulative investment of up to the tune of US$8.1 trillion is required to protect ecosystems by 2050, a UN report says.
Essentially, annual investment towards this target ought to at least triple in real terms by 2030, and quadruple by 2050. Percentage-wise, the world needs just 0.1% of global GDP every year. This is supposed to finance a restorative agriculture, forests, pollution management and protected areas to close a US$4.1 trillion financial gap by 2050.
On a yearly basis, this investment is expected to reach US$536 billion by 2050. Following this rate of financing, forest-based solutions alone would amount to US$203 billion annually, followed by silvopasture with US$193 billion annually.
The report’s authors highlight that “more than half of the world’s total GDP is moderately or highly dependent on nature. Agriculture, food and beverages and construction are largest sectors that are dependent on nature and these generate US$8 trillion in gross value added.”
Inger Andersen, Executive Director, UN Environment Programme, Klaus Schwab, Founder and Executive Chairman, World Economic Forum commented:
“The new “State of Finance for Nature” report assesses how much public and private investment is being directed towards nature-based solutions and provides insights into the extent to which governments, businesses and financiers are “walking-the-talk”.
“By comparing existing capital flows to recognised investment needs, the report quantifies how serious governments, businesses and financiers really are about tackling the biodiversity, land degradation and climate crises.
“The findings are clear: we are not investing nearly enough in nature. Indeed, investments in nature-based solutions will have to triple by 2030 and increase by four-fold by 2050 if we are to have a shot at solving the planetary emergency.”
Inger Andersen, Executive Director, UN Environment Programme
Public and Private Investment in Nature-based Solutions
Currently, the report finds that approximately US$ 133 billion per year is invested in nature-based solutions; of this amount, public funds make up 86 percent and private finance 14 percent.
One-third of a total of US$ 115 billion per year in public funds is channelled by national governments into protection of biodiversity and landscapes. More so, nearly two-thirds is spent on forest restoration, peatland restoration, regenerative agriculture, water conservation and natural pollution control systems.
On the other hand, private sector finance of nature-based solutions amounts to US$ 18 billion per year. Accordingly, this spans biodiversity offsets, sustainable supply chains, private equity impact investment and smaller amounts from philanthropic and private foundations.
Considering the scale of financing, the report indicates that the total volume of finance flowing into ecosystems is considerably smaller than the flow of climate finance.
Albeit, in order to ensure that humanity does not breach the safety limits of the planetary boundaries, the authors propose a fundamental shift in mind set, transforming relationship with nature.
Accordingly, the benefits accrued from nature have no financial market value, despite underpinning current and future prosperity.
“From government policies related to procurement, taxation, trade and regulation, to the way businesses and financial institutions make decisions on investment, risk and disclosure, it is vital that we hardwire into our economic system the value of nature in a profound way,” Andersen said.
“This is a fundamental rethink, from engineering to architecture, from city planning to financial systems and agriculture. We need to incorporate the regenerative dimension to nature in all our systems.”
READ ALSO: Fitch assigns ‘B’ rating to Guaranty Trust Bank Ghana; Outlook stable
