The Little Book of Investing in Nature

Protecting life on earth will require nothing short of a reorganization of the global economy. That's the main message to be found in the Little Book of Investing in Nature - a message aimed at decision-makers in the public and private sectors.

In the small but ambitious book, environmental NGO Global Canopy, in partnership with AFD, explains how. 

Publication on 11 January was synchronized with this year’s edition of the One Planet Summit in Paris. It was dedicated to biodiversity and sought to rally the international community on the issue in the approach to COP15 on Biological Diversity.  To be held in Kunming, China, COP15 has been postponed to 2021, and is set to be a key event to mobilize countries and economic operators to take more decisive action to protect nature.

It is a major challenge: animal populations fell by a staggering 68% on average between 1970 and 2016 due to the pressure on their habitats, their overexploitation, the effects of climate change and pollution. Yet this animal and plant wildlife is essential: it purifies air and water, provides us with food, wood and medicinal remedies. It also shapes the landscapes in which we live.

 

Lack of financing to protect nature

The Little Book of Investing in Nature is a handbook on the many financial mechanisms through which public and private stakeholders can make a commitment and invest in biodiversity conservation over the next ten years and beyond. “Negotiators, investors and politicians can find ideas and tools in it”, says Julien Calas, a researcher specialized in biodiversity at AFD, who contributed to the handbook.

This handbook was first published at COP10 on Biological Diversity in Nagoya, Japan, in 2010. “Everyone was talking about it," says Julien Calas. "Most people weren’t familiar with the way in which financial mechanisms for biodiversity work." The authors have tracked the mounting toll on the environment, and the evolving potential of global finance.

Ten years on, the handbook remains required reading. While the financing needs of global biodiversity are estimated at between $722 billion and $967 billion a year until 2030, only about $125 billion is set aside, about six times less. “We need to wake up: it only takes 1% of global wealth to protect nature," says Calas. "Today, there’s a lack of political will and an incentive framework to generate additional resources and refocus harmful expenditure."

Between $176 billion and $250 billion a year is necessary for biodiversity conservation. The bulk of this money is needed to better protect biodiversity and reform the sectors that damage it, such as fishing, forestry, agriculture and construction. That means financing the “transformative change” of economic models, as described by the scientists of the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES).

$1 Trillion - Money that Harms the Living World  

The main obstacle to green growth is something called negative flows: governments continue to allocate over $1 trillion every year to activities that are harmful to the environment, such as fossil fuels, intensive farming and industrial fishing. “The subsidies allocated today to fossil fuels account for the bulk of these flows and it’s something that will be very damaging for biodiversity in the coming years”, says Julien Calas.

The authors of the “Little Book” urge governments to redirect these subsidies to activities that are beneficial to nature, such as organic farming and integrated land-use and water planning. They could help close the funding gap for biodiversity conservation.  

A Public Priority 

Over 80% of current biodiversity finance comes from national and international public funds. But private investments in nature are on the rise, and could account for at least 45% of the total by 2030. It is a question of survival: according to the World Economic Forum, $44 trillion of global economic activity, over half of world GDP, is tied to ecosystem services. 

With the deterioration of nature, the global economy will follow. “With Covid, we’ve just had proof that destruction of the environment on the other side of the world could have repercussions anywhere”, says Julien Calas. “Investing in nature is economically profitable for humanity.”

While certain biodiversity conservation measures have an economic cost, others can generate significant returns for economic operators, to the extent that nature could one day “finance itself” with the implementation of well-targeted measures. 

 

Chapter Highlights  

The Little Book of Investing in Nature presents over 40 financial mechanisms for this purpose and 25 case studies illustrating how governments, banks, companies and NGOs can bring about these changes.

In the chapter “Generate”, the book highlights a program to Reduce Emissions from Deforestation and Forest Degradation (REDD+). “Deliver” looks at the guarantee system, a tool that can help introduce private finance instruments into biodiversity conservation. Finally, the chapter “Catalyze” focuses on the policy-based loan allocated to Mexico by AFD.

 AFD allocates loans based on biodiversity policies, providing borrowing countries with flexible and liquid financing to support political reforms and institutional transformations. This is the case with the biodiversity conservation policy in Mexico. “We’re currently holding discussions with Mexico to help it further mainstream biodiversity into the agriculture sector”, says Julien Calas.

 At the One Planet Summit, AFD announced it would earmark 30% of its climate finance for projects that have positive effects on nature by 2025. It involves adopting nature-based solutions wherever possible. They include agroecology, water management and sanitation, green cities and coastal development.  AFD also announced that it would double all its biodiversity-related financing to almost €1 billion a year by 2025. 

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