Natural capital-based approaches are becoming integral to financial tools aimed at directing billions of dollars toward projects that benefit both people and nature. The global economy’s reliance on nature is substantial, with S&P Global noting that 85% of companies in the S&P Global 1200 depend directly on natural resources. Despite this dependence, human activities are causing an unprecedented decline in ecosystems.
Governments worldwide currently contribute a significant portion of the $200 billion per year directed toward nature-based solutions. However, they cannot bridge the financing gap alone. A meeting held June 12 at Stanford University by the Natural Capital Project (NatCap) brought together representatives from governments and international financial institutions to discuss systemic changes aimed at protecting and restoring nature.
The meeting included participants such as Lyonchhen Tshering Tobgay, Prime Minister of Bhutan; Peter Van Kemseke from the Cabinet of the President of the European Commission; Rafael Dubeux from Brazil’s Ministry of Finance; and Safira Vasquez from Belize’s Ministry of Blue Economy. They discussed integrating nature into global economic frameworks and generating necessary funding.
Innovative finance mechanisms have emerged to address funding gaps for nature protection, including payment for ecosystem services, biodiversity credits, blended finance, debt-for-nature swaps, innovative loans, and green or blue bonds. Biodiversity credits offer support for long-term actions that improve ecosystems or offset negative impacts.
Green or blue bonds raise capital for projects with positive environmental benefits. For example, Belize restructured part of its national debt in exchange for marine conservation commitments through a Blue Bond initiative. Innovative loans issued by development banks provide lower interest rates in exchange for nature-positive commitments.
Payment for ecosystem services schemes have been successfully applied globally to internalize costs associated with preserving or restoring nature. An example is NatCap’s support for Africa’s first water fund benefiting farmers reliant on the Tana River.
Over two decades, NatCap has played a foundational role in valuing nature’s benefits to people through various innovations. This year, NatCap faculty director Gretchen Daily was appointed co-chair of the World Economic Forum’s Global Future Council on Natural Capital.
Daily also serves as Bing Professor of Environmental Science at Stanford University and a senior fellow at Stanford Woods Institute for the Environment.
