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Can investing in nature save us from ourselves?

February 11, 2021 por Juan Pablo Bonilla Leave a Comment


Nature is humanity’s most important asset. It provides us with the raw ingredients for most modern medicine, the air we breathe and the food we put on our tables. All economic activities also fundamentally rely on these services to some extent, with estimates suggesting that a massive USD 44 trillion – over half of global GDP— of the global economy is highly or moderately dependent on nature. 

We have also seen when humans and nature clash, zoonotic diseases, such as the novel coronavirus, can be unleashed with devastating costs to human life, jobs and our economies. The global economy contracted by an estimated 3.5% in 2020 due to the COVID-19 pandemic. In Latin America and the Caribbean – the world’s hardest hit region – estimates of 7.4% are even grimmer.  

Despite the value of nature in all aspects of our livelihoods, culture and well-being, the destruction of forests and other habitats is driving the fastest decline in biodiversity than at any time in human history. None of the 20 objectives of the Aichi targets of the UN Convention on Biological Diversity set in 2010 have been reached. Instead, around 1 million species are threatened with extinction, and our destruction of natural systems and increasing greenhouse gas emissions could push the Paris Agreement goal of limiting global warming to 1.5 degrees Celsius beyond reach.

On February 2, Professor Sir Partha Dasgupta, under commission of the UK Treasury, presented his independent Review on the Economics of Biodiversity. A first of its kind, it calls for urgent and transformative change in how we think, act and measure economic success to protect and enhance our prosperity and the natural world.  The Review points out that, thus far, our systems and decision-making processes have failed to reflect how the global economy is embedded in nature. It argues we must fundamentally change how we think about and approach economics if we are to reverse biodiversity loss, protect and enhance our prosperity and prevent climate breakdown.

For the world’s biodiversity superpower, Latin America and the Caribbean, the Review is a call to action. The region holds around 40% of the world’s biodiversity and 50% of its tropical forests. These ecosystem services generate more than USD $15 trillion per year in value through coastal protection for cities, drinking water, agricultural inputs, erosion control and air filtration. Natural systems also underpin the livelihoods and cultures of millions of people, who are being hit especially hard by the pandemic.

The Dasgupta Review makes clear that the global financial system has a transformative role to play. We need both public and private financial actors to play a greater role in ensuring finance flows towards enhancing natural assets and sustainable consumption rather than the opposite. This will also involve businesses and financial institutions doing more to measure and disclose the impacts of their activities on nature and how dependent they are on ecosystem services.

To date, biodiversity and nature-based solutions, such as restoring mangrove forests to protect coastlines, receive scant resources. Estimates suggest that financing for global biodiversity conservation and restoration will need to rise substantially from around USD 120 billion per year currently spent to between USD $722-967 billion per year over the next ten years.

To fill this funding chasm, we need to mainstream nature-based solutions throughout government processes. Finance ministries working with others can spearhead this mainstreaming effort by determining upstream in the decision making and budgetary process where nature-based solutions may provide opportunities to meet national priorities for growth, recovery and climate and biodiversity goals all at once. This requires developing value cases that resonate with key ministries so that budget resources not normally earmarked for nature can be properly aligned. It also requires developing concrete tools to ease this integration. Credible decision making requires credible data.

But in a period of considerable fiscal constraints, public funds alone will not be able to pick up the tab.  Therefore, there is a critical need to leverage private finance – and to crowd in the growing number of private investors eager to enter this space. Private interest is high, as evidenced by the recent launch of HSBC’s Pollination investment fund, and the consistent actions of players such as Credit Suisse, Mirova, and others who seek to make a positive impact on nature and a financial return.

To effectively engage these private actors, Finance Ministries need to be more proactive and work with Environment Ministries to identify investment portfolios that are aligned to sustainable recovery and environmental interests, which can then be shopped to potential investors.

But there is an even more important role for other actors in the finance ecosystem. Innovators and entrepreneurs need to be supported to create new businesses and to experiment with new instruments, which can enhance natural assets, like species bonds or capital markets. At the same time, traditional actors, such as national development banks, insurers, and local financial institutions need to be given space to take on new roles and develop new financial products.

Other important steps are currently being taken. The Inter-American Development Bank’s Board recently approved the development of an Action Plan to mainstream biodiversity and natural capital within our organization, and to guide our support to LAC countries as they seek to mainstream nature. The UK, which will host the UN Climate Summit in November and has included nature among its top priorities, also announced plans to pledge USD $4 billion to nature by 2026. 

During this critical year for nature and the climate and securing a sustainable recovery from the pandemic, the Dasgupta Review provides a map to help us create a more sustainable and equitable future for all. As David Attenborough says we can help save nature and in doing so, save ourselves.

This article was originally published by El País.

Further reading:

For more information on the Dasgupta Review visit this UK government webpage.

Why is the Dasgupta Review on the Economics of Biodiversity a big deal?

Mainstreaming of Natural Capital and Biodiversity into Planning and Decision-Making: Cases from Latin America and the Caribbean

Impact Investment for Biodiversity Conservation: Cases from Latin America and the Caribbean

Can nature support a green and inclusive economic recovery?

Follow us on Twitter: @BIDCambioClima 

Photo: cuatrok77- Flickr.com


Filed Under: Ecosystems and Biodiversity Tagged With: Dasgupta Review, Natural Capital

Juan Pablo Bonilla

Juan Pablo Bonilla is the Manager of the Interamerican Development Bank’s Climate Change and Sustainable Development Sector (CSD). Previously, he served as Chief of Staff to the Executive Vice President of the IDB. Dr. Bonilla has worked on environmental sustainability, climate change and energy for more than 20 years, leading the IDB's Sustainable Energy and Climate Change Initiative, a major strategic step for integrating climate change and sustainability as a priority for the Bank. Before joining the IDB, he worked as Senior Specialist at the World Bank, and was a member of the United Nation's CDM Executive Board. In Colombia, after serving as the Executive Director of a new think tank Fundesarrollo, and as National Environmental Manager of ANDI, Dr. Bonilla launched new initiatives such as the National Climate Change Policy and the National Biotechnology Policy as principal advisor to the country's Vice President. Dr. Bonilla served as Deputy Minister of Environment, and acting Minister of Environment, Housing and Territorial Development. Dr. Bonilla obtained a B.A. in Civil Engineering from the Universidad Javeriana in Bogotá, Colombia, and then received a M.Sc. in Engineering Management and Systems Engineering and a Ph.D. in Environmental and Energy Management from George Washington University.

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This blog is a space to reflect about the challenges, opportunities and the progress made by Latin American and Caribbean countries on the path towards the region’s sustainable development.

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