G20 countries urged to close spending gap on nature restoration projects

Mangrove forests in Kenya, October 2020. Replanting mangrove forests can help protect against storms and flooding. (Credit: Timothy K/Unsplash)

The world’s 20 richest countries are spending $120 billion a year on nature-based solutions – less than half of what they need to invest each year by 2050 to address the climate and biodiversity crisis facing the planet, a joint report by the United Nations and partners warned on Thursday.

Restoring natural systems such as forests and peatlands to lock up carbon dioxide, regenerative farming practices, or replanting mangrove populations to protect against storm floods: nature-based solutions (NbS) such as these are seen as crucial for stalling the climate breakdown and preserving the planet’s health.

But investment is still sorely lacking. G20 countries alone would need to increase their spending to $285bn a year by 2050 – a 140 per cent increase on 2020 levels – to keep global  warming at only 2°C, and meet targets for halting land degradation and biodiversity loss.

The State of Finance for Nature by the G20 report by the UN Environment Programme (UNEP), the World Economic Forum (WEF), and the Economics of Land Degradation Initiative, only takes into account land-related NbS, like forestry or peatland restoration.

It shows that the G20 nations account for almost all global investments (92 per cent) in such land-focused schemes, with the vast majority of the money (87 per cent) being spent internally on domestic government programmes.

For other less wealthy nations, however, the financing gap is much larger and more difficult to bridge, with just two per cent of G20 investments in 2020 going towards official development assistance.

On top of this, higher levels of government debt made worse by the Covid-19 pandemic make it difficult for many countries to borrow at attractive rates to invest in restoration or conservation projects.

“​​By 2050, emerging market investments would actually need to make up 60 per cent and the G20 40 per cent of the relative share investments,” Teresa Hartman, WEF’s Climate and Nature lead, told reporters in Geneva.

“So really, that begs the question for us of how we redirect these finance flows… to make sure that we're investing in emerging markets, where public budgets don't necessarily leave a lot of room to scale up investments in NbS?”

Increasing private sector investment. One of the solutions would be to encourage more investment from the private sector, which, at present, only accounts for 11 per cent, or $14bn, of G20 investments in nature-based solutions.

However, strengthening the investment case for nature-based schemes remains one of the biggest challenges. Compared with traditional infrastructure projects, for example, that have a fixed timeline and clearer maintenance costs, investing in the natural system presents more unknowns such as social or political changes or unforeseen weather events.

Read also: Can investing in nature help solve the water crisis in Nairobi?

“To scale up private finance, governments can boost the investment case for nature, for instance, by creating stable and predictable markets for ecosystem services like forest carbon or by using public money on below-market rates,” said Ivo Mulder, head of UNEP’s Climate Finance Unit.

Hartman added there was increasing interest in the private sector, pointing to the pledges and announcements during Cop26 in Glasgow, however, investments needed to follow.

“I think the role for the international community now is really to start taking that momentum and translating the commitments into action so that when we put out this report next year and the year after we can really benchmark that there's progressive progress on investments in nature,” she said.

Investing outside of G20 countries. The report also calls for G20 countries to increase their spending in nature-based solutions outside their own countries, arguing that cheaper land costs often make it more attractive to do so.

The significant difference in land conversion costs, for example, means that Europe or Canada would be able to preserve more than three times as much land by conducting afforestation projects in sub-Saharan Africa or Latin America than within their own countries with the same budget, according to the findings.

Outside of the G20, the region with the largest investment needs is sub-Saharan Africa, which will require an estimated increase of $54bn in annual spending to achieve all climate and conservation targets.

The authors of the report urged governments not to revert to “building back-as-usual” following the Covid-19 crisis and ensure that economic recovery plans were aligned with nature and climate targets. This comes after a UNEP report published in June last year showed that less than a fifth of global recovery spending plans were green.

“At a minimum what we would want to see in public expenditures is that we're not hurting biodiversity or accelerating climate change with any public spending that we're doing,” Hartman said.

The latest findings build on UNEP’s 2021 State of Finance report, which urged countries to close a $4.1 trillion financing gap in nature-based solutions between 2020 and 2050.

“Nature is underpinning human life. It's critical for food security; it's critical for clean water; it’s critical for human health, and livelihoods…so, we simply cannot afford to lose these systems,” Hartman added.