As the world gathers in Sharm El-Sheikh to focus on implementing the Paris Agreement, and soon after in Montreal to agree a new Global Biodiversity Framework, world leaders must scale investment in nature-based solutions and forge a new narrative of hope.
By Margaret Kuhlow, Global Finance Practice Leader, WWF
Make no mistake, nature is unraveling, and climate and ecosystem breakdown are upon us. WWF’s Living Planet Report 2022 sets out the science. Global wildlife populations have plummeted by 69% on average since 1970, and unless we limit global heating to 1.5°C, climate change is likely to become the dominant cause of nature loss.
This dual emergency threatens not just our prosperity but our survival. As we lose natural diversity and degrade ecosystems, we restrict opportunities to harness nature-based solutions to climate change and other societal challenges. In turn, climate change further drives nature loss and lessens the resilience and productivity of natural systems.
Unprecedented floods, droughts, and storms in Pakistan, the Horn of Africa, and Florida, together with the IMF’s latest World Economic Outlook and Global Financial Stability Report and their increasing focus on climate change, show us what this dual emergency looks like in both humanitarian and economic terms.
In Pakistan, more than 1,700 people dead, 33 million displaced, a third of the country underwater, and around $30 billion in loss and damage, the country’s climate change minister, Sherry Rehman, described the floods as the “climate catastrophe of the decade.” It’s one that savagely underscores the need to invest in climate adaptation for which current finance to developing countries is 5–10 times below estimated needs.
Adaptation must include investment in nature. Nature-based solutions offer valuable protection against the economic cost of climate change, saving at least $104 billion in 2030 and $393 billion in 2050, as well as contributing to food and water security.
Yet while last month’s World Bank and IMF meetings put the spotlight on slowing growth and increasing poverty as the world fights off multiple shocks alongside the climate crisis, biodiversity finance and nature got little mention.
It’s time to change the story. Taken together, the interrelated crises of climate, nature, poverty, debt, and even inflation, contain a way forward for communities and economies enduring significant challenges. And, although we may not see it clearly yet, they also point to a different pathway for growth and renewal.
We know that economic and financial systems prioritize market- based values of nature such as food and energy production, and ignore services such as climate regulation that lack a market price but are fundamental to our collective well-being. We also know what we need to do to address this and move toward a global economy based on sustainable management of the global commons.
For investors, the climate-nature nexus is increasingly clear. Climate Week in New York saw significant interest in nature-positive investment from private equity and venture capital, for example, and the launch of Taskforce on Nature Markets to develop equitable nature markets that ensure communities benefit from protecting rather than depleting natural resources, is further evidence that the opportunity to harness private finance for nature and climate action is real.
The good news is that opportunities for scaling credible net-zero and nature-positive investment continue to grow. Food systems, for example, are responsible for 70% of global biodiversity loss on land and 50% in freshwater, and around a third of global greenhouse gas emissions. But, transforming food systems could allow us to feed at least 10 billion people, keep global heating to 1.5°C, and alleviate pressure for further conversion of natural ecosystems for agriculture.
Globally, nature-based solutions could lift a billion people out of poverty, create 80 million jobs, add $2.3 trillion in growth to the global economy, and prevent $3.7 trillion in climate-related damages. Every $1 spent on forest restoration promises to deliver up to $30 in economic benefits, and transitioning to a nature-positive economy could generate annual business opportunities worth $10 trillion and create 395 million jobs by 2030.
Delivering this nature-positive economy requires political vision and leadership.
The potential collapse of ecosystem services such as pollination and timber threatens a $2.7 trillion annual decline in global GDP by 2030, yet governments spend at least $1.8 trillion a year on environmentally harmful subsidies. They should incentivize business models and portfolios that work with nature rather than against it, and close the $4.1 trillion financing gap for nature by 2050.
At COP27, policy makers must mobilize more climate and nature finance; deliver the longstanding $100 billion climate finance pledge; join the 16 countries that have already endorsed the UK’s new 10 Point Plan for financing biodiversity; implement the policy recommendations of the Coalition of Finance Ministers for Climate Action to reduce nature-related risks; incorporate nature in transition and adaptation plans; double finance for adaptation; and act as cornerstone investors for nature-based solutions that support a just transition, especially for Africa.
In line with the recent independent report to the G20, and calls for the World Bank and Multilateral Development Banks to meet shared global challenges, including through green capital increase, they must also drive wider reform that catalyzes more private finance for emerging and developing economies, and that bridges the gap between voluntary initiatives and supportive policy and regulatory measures.
In Sharm El-Sheikh and Montreal, world leaders must use this time of jeopardy to build for the future and forge a new narrative of hope. Our economies are embedded within nature, and by investing in nature and people, we can tackle climate breakdown and transition to an equitable, net-zero, nature-positive global economy.