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FEATURE STORYMarch 1, 2023

Financing Ecosystem Restoration: A Q&A with Fiona Stewart

The United Nations Decade on Ecosystem Restoration aims to prevent, halt and reverse the degradation of ecosystems on every continent and in every ocean. With support from PROGREEN, the World Bank is currently chairing the UN Decade’s Finance Task Force. The importance of restoration is increasingly recognized — but how is the world going to finance the action urgently needed? We asked Fiona Stewart, Lead Financial Sector Specialist at the World Bank, to explain more about the Task Force’s plans to help unlock the financing needed to meet the Decade’s goal of restoring one billion hectares by 2030.   

Could you briefly explain why increasing financing for ecosystem restoration is so important?

Humanity depends profoundly on healthy and resilient ecosystems to provide our food and raw materials, drinking water, clean air, and the stability of the climate system. More than half of global gross domestic product (GDP) is generated in industries such as agriculture and construction that use these services. However, our current demands on nature far outweigh its ability to regenerate. At least 20 percent of land surface is now degraded, and this degradation is risking the services that our livelihoods and economies rely on. 

Although the importance of restoration is increasingly recognized, more action and funding are urgently needed. Many pledges from governments and organizations remain unfunded, presenting ongoing challenges to financing large-scale restoration. The challenge is that while the upfront costs of restoration are recognized, the long-term benefits are often overlooked.

What is the role of the UN Decade Finance Task Force in helping to make a compelling economic and business case for restoration and how is it planning to accomplish this? 

The Finance Task Force aims to spur actions that will increase financing to meet the UN Decade’s goals by building awareness of the long-term economic benefits for restoration investments, fostering political will, and supporting further analysis of investment opportunities. This means showing relevant decision makers—such as governments and donors, financial institutions, and private companies—the market potential and providing them with the tools and knowledge needed to turn opportunities, theories, and commitments into restoration investments.

The scale of the converging climate change, nature loss, and land degradation crises requires coordinated action across sectors to address these complex and pressing challenges. It is exactly this sort of collaboration that the Task Force aims to support through its research, publications, and broader efforts.

As a first step, the Task Force published Unlocking Restoration Finance — A Stocktake Report, which gives an overview of the current challenges to and opportunities for increasing public and private investment in restoration and looks at innovative approaches to financing restoration activities. Other outputs will include reviewing key financial sector regulations, developing a restoration cost/benefit database and training, and creating templates for replicable investment structures.

You mentioned that restoration has enormous potential to generate benefits for investors, can you explain how this works and what it would look like on the ground?

A range of factors, such as population growth, increased consumption, and climate change, are converging to increase demand and decrease supply of ecosystem services. This can increase the value and investment potential of ecosystem services. Every dollar invested in restoration activities, for example, provides an estimated $7-30 return in economic benefits. Developing and expanding payments for ecosystem services programs and markets are key to unlocking increased private investment in restoration.

There is no one path to increasing investment in restoration, but as we get better at assessing the true value of nature, a range of locally appropriate initiatives have the potential to strengthen the investment case for ecosystem restoration and financially benefit local communities, companies, and financial institutions. 

For example, the voluntary carbon market, the market for biodiversity credits, and national or regional water markets are all expanding and attracting interest.  We’re also seeing growth in the ecotourism industry and increasing value of sustainably manufactured products. Insurance markets are also taking steps to better account for increased resilience from restoration, which can result in reduced insurance premiums and ultimately cost savings.

With many compelling opportunities to invest in restoration, why is there still a significant financing gap and how will the Task Force help address key barriers?

The high up-front costs of restoration often obscure the long-term benefits of restoration, made more challenging by the fact that the social and environmental advantages are not easily monetized. The UN estimates that the annual global economic returns of restoring land and reducing degradation, greenhouse gas emissions and biodiversity loss could be as high as $US 125-140 trillion, but we need to make a better business case to help companies and financial institutions better understand the costs and benefits associated with these investments.

Investment opportunities are growing but there are key regulatory barriers that need to be addressed, such as unsustainable taxes and subsidies that incentivize degradation, a lack of financial policy to encourage investment, and land and sea tenure uncertainty.

The Task Force is working with partners to develop and publish information that addresses some of these challenges and share knowledge critical for investment decision making. A key focus is improving restoration data and analytics and working with the public and private sectors on areas such as incorporating restoration into financial regulations and developing the biodiversity credit market to support companies on their nature positive journey while scaling up restoration finance. 


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