Article**: Oceans and Wetlands.
On December 9, 2023, the United Nations Environment Programme (UNEP) and its partners released the latest State of Finance for Nature report at the United Nations Climate Change Conference (COP28), which shows that nearly $7 trillion is invested annually in activities that have a direct negative impact on nature by the public and private sectors, equivalent to about 7% of global GDP. The State of Natural Finances is a series of annual reports that quantify public and private financial flows to nature-based solutions, as well as the extent to which financial flows are aligned with global targets, as well as limiting global warming to 1Investments needed to halt biodiversity loss and achieve zero land degradation below 5°C.
The report foundInvestments in nature-based solutions totaled about $200 billion in 2022, but the amount of investment that directly harms nature is more than 30 times larger. It exposes a worrying gap between the amount of funding for nature-based solutions and the amount of investment that is negative impacts on nature, and underscores the urgency of addressing interconnected crises such as climate change, biodiversity loss and land degradation.
The findings, based on an analysis of global financial flows, show that private negative financial flows amount to $5 trillion per year, 140 times more than the $35 billion of private investment in nature-based solutions. The five sectors that channel most of the negative flows – construction, electric utilities, real estate, oil and gas, and food and tobacco – account for 16 percent of total economic investment flows, but 43 percent of the negative natural flows associated with the destruction of forests, wetlands and other natural habitats.
In 2022, ** spending on environmentally harmful subsidies in the four sectors of agriculture, fossil fuels, fisheries and forestry is estimated at 17 trillion dollars. As world leaders gather in Dubai this week, reforming and repurposing environmentally harmful subsidies, particularly for fossil fuels and agriculture, will be crucial. Fossil fuel subsidies for consumers alone doubled, from $563 billion in 2021 to 11 percent in 2022$6.3 billion.
The funding gap persists
The report notes that there is a large financing gap for nature-based solutions, with only $200 billion allocated in 2022, led by the Nature-based Solution, which contributed 82% ($165 billion), while private financing remains modest at $35 billion (18% of the total funding flow for nature-based solutions). Limit climate change to 1 in order to achieve the Rio ConventionThe 5C target, and the Global Biodiversity Framework's goal of setting aside 30% of terrestrial and marine resources by 2030 and achieving zero land degradation, will have to nearly triple the flow of finance to nature-based solutions from current levels ($200 billion) to $542 billion per year by 2030 and quadruple to $737 billion by 2050.
Both public and private investment need to be significantly increased, while financial flows that adversely affect nature are redirected. While public finance will continue to play a key role, the share of private finance in nature finance is likely to increase from the current 18% to 33% by 2050.
Nature-based solutions offer a key investment opportunity as they are cost-effective and offer multiple benefits. Investment opportunities in sustainable land management could quadruple by 2050, based on the long-term profitability of sustainable food and commodity production, which is critical to catalysing private investment. Protecting diverse ecosystems is highly cost-effective, with this equivalent to 80% of the additional land needed for nature-based solutions by 2030, while absorbing only 20% of the financing for nature-based solutions. Given the scale of global degradation, restoration offers a tremendous opportunity to enhance ecosystem function and resilience to provide ecosystem services that people rely heavily on.
Urgent action is twofold: the repurposing of nature-negative finance and the expansion of investment in nature
The report indicatesDoubling or tripling investment in nature-based solutions will not be enough to achieve Rio's three goals unless the nearly $7 trillion in investment flowing to negative nature practices is drastically reduced and, ideally, repurposed to benefit nature.
Nature needs a major shift. Not only must the financial sector and businesses increase investment in nature-based solutions, but they must also implement incentives to divert money away from harmful activities and deliver positive outcomes for nature. Policies play a crucial role in creating an enabling environment for nurturing investment opportunities. Notably, the investment outlook for nature-based solutions, driven by reforms in global sectors such as food, extractive industries, real estate, and infrastructure, is booming, and these sectors are the main cause of nature's decline. These opportunities are on par with those presented by the climate crisis, providing a critical moment for change that will make an impact.
Photo: United Nations Environment Programme, UNEP).
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