UCL Institute for Innovation and Public Purpose


IIPP researchers outline the role governments should take to deliver global biodiversity targets

29 June 2023

IIPP researchers warn that an increasing reliance on large-scale private finance to fund biodiversity targets poses contradictions in delivering conservation outcomes and propose public oversight of private nature-related financial mechanisms.

Conservation golas

The Kunming-Montreal Global Biodiversity Framework (GBF) was adopted at the COP15 conference in December 2022. This landmark agreement saw governments across the world commit to bold targets to reverse unprecedented nature loss, including protecting 30% of our planet’s land and seas by 2030. However, previous international efforts have repeatedly failed. It estimated that investment in nature is approximately 5-7 times lower than required.

An influential narrative now calls for the ‘global biodiversity funding gap’ to be primarily plugged by private financial actors. Governments are too politically and fiscally constrained to substantially increase investments in nature in the current political climate, it is argued. Instead, their role is best suited to ‘de-risking’ nature as an asset class to mobilize the large-scale financial flows mainstream investors such as pension funds.

But will relying on mainstream private investors ensure that nature investments deliver the global biodiversity targets at the pace and scale urgently needed?

A new paper published in the world-leading scientific journal Nature Ecology & Evolution by IIPP’s Research Fellow Katie Kedward and Associate Professor Dr. Josh Ryan-Collins co-authored by Dr. Sophus zu Ermgassen (Oxford University) and Dr. Sven Wunder (European Forest Institute), calls this perspective into question.

The authors show that inherent conflicts between attracting large-scale private finance and achieving ecological outcomes have been vastly underplayed. Many essential conservation projects are complex public goods that require patient investment, a high tolerance for uncertainty, robust governance, and the inclusion of local communities. By contrast, large-scale private investors face requirements to allocate funds according to competitive (often short-term) returns, standardized criteria, large transaction sizes, and limits on downside risk.

Impact evaluations of emerging nature-related asset classes, such as biodiversity offsets and credits, suggest that this difficult balancing act is currently being tilted towards ensuring market returns rather than good conservation outcomes. Meanwhile, governance mechanisms that might mitigate this trade-off are almost exclusively driven by private sector–led bodies, where greenwashing, conflicts of interest, and perverse incentives are all at play.

Given these challenges, Katie Kedward and her co-authors argue that effective nature-related investments will require more, rather than less, of a role for ambitious public policy. As governments turn to implementing the GBF targets, a more proactive regulatory role will be needed for public bodies to ensure the robust governance of biodiversity-related financial mechanisms. Emphasis should be placed on appropriately resourcing and empowering environment regulatory agencies and ensuring coordination with financial authorities.

The paper’s authors also articulate the critical economic case for public investment in nature projects that will always be poorly provided for by the private sector. Conservation projects with high immediate costs, significant long-term gains, uncertain and hard-to-monetise future benefits may be inherently more suited to public investment. One such example is protecting wetlands from economic development and funding conservation work to restore their ecological potential.

The primary macroeconomic case for such public investment is that healthy functioning ecosystems will ensure the resilience and productivity of future economic activity. But the creation of green jobs may also help to generate political legitimacy for increased public spending on conservation. For instance, President Franklin Roosevelt’s 1930s ‘New Deal’ included a Civilian Conservation Corps that employed over 2.5 million people to plant over 3 billion trees in response to the Dust Bowl environmental crisis.

IIPP’s Associate Professor in Economics and Finance Josh Ryan-Collins says:

“The argument that there is no public money available for nature does not hold sway. We know that governments across the world spend around $500 billion per year on public subsidies that are harmful to nature. Reorienting such subsidies to be spent in a nature-smart way is a low-hanging fruit solution to an urgent crisis. Public financial institutions should also be deployed to invest in local conservation. These institutions’ investments are external to government balance sheets in many countries and public banks also have mandates to prioritise social over financial returns.”

IIPP’s Research Fellow Katie Kedward says:

“We do not aim to draw a false dichotomy between public and private finance for nature. Rather, redressing the balance in the public debate is key. Ambitious policy coordination and strategic public investment will enable private actors to invest in nature asset classes in ways that ensure ecological outcomes are achieved. The nature recovery is an urgent mission to be incorporated into emerging green industrial policy approaches.”

Katie Kedward and Josh Ryan-Collins continue to engage with UK and European policymakers, such as the Network for Greening the Financial System – a network of over 100 central banks and financial supervisors – on these topics. For more information, you can read an open-access version of the Nature Ecology & Evolution paper here:

Kedward, K., zu Ermgassen, S., Ryan-Collins, J. et al. Heavy reliance on private finance alone will not deliver conservation goals. Nat Ecol Evol (2023). DOI: 10.1038/s41559-023-02098-6.  Open access: rdcu.be/delt5