Tackling climate and biodiversity crisis requires so little of world’s GDP

Tackling climate and biodiversity crisis requires so little of world’s GDP

May 28, 2021 0 By The Sun Monitor
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Geneva, Switzerland – It requires only an investment of $8.1 trillion in nature over the next three decades to successfully tackle the climate, biodiversity, and land degradation crises, according to the State of Finance for Nature report released Thursday. This amounts to $536 billion a year by 2050.

The report finds that annual investments in nature-based solutions will have to triple by 2030 and increase four-fold by 2050 from the current investments of $133 billion (using 2020 as base year).

The World Economic Forum, UN Environment Programme (UNEP), and the Economics of Land Degradation (ELD) Initiative hosted by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) in collaboration with Vivid Economics produced the report.

The report urges governments, financial institutions and businesses to overcome this investment gap by placing nature at the heart of economic decision-making in the future. It stresses the need to rapidly accelerate capital flows to nature-based solutions by making nature central to every decision in public and private sector.

Unlocking the potential of nature-based solutions

There is a need for structural transformations to close the USD 4.1 trillion finance gap between now and 2050. However, nature currently only accounts for 2.5% of projected economic stimulus spending.

Scaling up private capital is necessary to close the investment gap. Developing and scaling up revenue flows from ecosystem services and using blended finance models as a means to crowd in private capital are among the suite of solutions needed to make this happen.

This also requires risk-sharing from private sector entities.

“The State of Finance for Nature report underlines the urgency and the criticality of increasing investment in nature,” said Justin Adams, Head of the Tropical Forest Alliance at the World Economic Forum.

The report shows the meager investment at present – $133 billion represents only 0.1% of global GDP. To triple this amount, he said, could enhance resilience to the global and local economies.

Studies show this is also good for business . Investing in nature could create some $10 trillion in business opportunity and 395 million new jobs.

Biodiversity loss

“Biodiversity loss is already costing the global economy 10 percent of its output each year,” said UNEP Executive Director, Inger Andersen.

“If we do not sufficiently finance nature-based solutions, we will impact the capacities of countries to make progress on other vital areas such as education, health and employment.”

She called for saving nature now to achieve sustainable development.

“The report is a wake-up call for governments, financial institutions and businesses to invest in nature,” she stressed. These investments include reforestation, regenerative agriculture, and restoration of our Ocean.

Investing smarter: Reimagine, recreate, restore

Forest-based solutions alone, including the management, conservation and restoration of forests, requires $203 billion in total annual expenditure globally, according to the report.

That is equivalent to just over $25 per year for every citizen in 2021.

The report calls for coupling investments in restoration action with financing conservation measures. This could result in an increase in forest and agroforestry of approximately 300 million hectares by 2050, relative to 2020.

The private sector had invested in 2018 some $18 billion in nature-based solutions. Private finance only accounts for 14 percent. In climate finance, private sector investment accounts for 56 percent, according to the Climate Policy Initiative.

The scaling up of private capital for nature-based solutions is one of the central challenges of the next few years. Investors, developers, market infrastructure makers, customers and beneficiaries can play roles in creating a market. It is where nature-based solutions can access new sources of revenue, increases resilience of commercial activities, reduces costs or contributes to reputation and purpose.

Be part of the solution

While a number of private sector-led initiatives have already emerged, the report stresses the need for companies and financial institutions to increasingly be part of the solution. This is by sharing the risk and committing to boost finance and investment in nature-based solutions.

While investments in nature-based solutions cannot be a substitute for deep decarbonization of all sectors of the economy, they can contribute to the required pace and scale of climate change mitigation and adaptation.

Investing smarter: Reimagine, recreate, restore

Forest-based solutions alone will require $203 billion in total annual expenditure globally, according to the report.

That is equivalent to just over $25 per year for every citizen in 2021.

The report calls for coupling investments in restoration action with financing conservation measures. This could result to an increase in forest and agroforestry area by 300 million hectares by 2050.

The private sector had invested in 2018 some $18 billion in nature-based solutions. Private finance only accounts for 14 percent.

In climate finance, private sector investment accounts for 56 percent, according to the Climate Policy Initiative.

The scaling up of private capital for nature-based solutions is one of the central challenges of the next few years. Investors, developers, market infrastructure makers, customers and beneficiaries can play roles in creating a market.

The report stresses the need for companies and financial institutions to increasingly be part of the solution. This is by sharing the risk and committing to boost finance and investment in nature-based solutions.

Investments in nature-based solutions cannot be a substitute for deep decarbonization of all sectors of the economy, the report stressed. But they can contribute to the required pace and scale of climate change mitigation and adaptation. (amm/ PR)

PHOTO: Pixabay photo

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