Nature Investment Hub has contributed to a new landmark report from the Smart Prosperity Institute and Nature United, Unlocking the Economic Power of Natural Climate Solutions. This report sheds light on the untapped economic potential of Natural Climate Solutions in Canada – and makes clear that strategic action along the investment spectrum is needed. This includes seed and matching funds to support capacity building, as well as blended finance to de-risk private investment, all of which are essential to unlock this economic opportunity.
Unlocking the Economic Power of Natural Climate Solutions delves deeply into key areas:
Natural Climate Solutions provide multiple benefits at once, including environmental, social, cultural, and economic benefits.
Natural Climate Solutions present a golden opportunity to tackle climate change, boost biodiversity, and advance reconciliation in Canada. At the same time, Natural Climate Solutions can help build prosperity, competitiveness, and resilience in Canada’s economy. Through a variety of landscape-specific actions – such as protecting wetlands at risk of conversion, better managing agricultural lands, and restoring forests – Natural Climate Solutions are one of our best bets to immediately reduce emissions while creating local jobs, reducing the costs of doing business, and generating new revenue streams. Natural Climate Solutions are locally-led and regionally-specific, which helps ensure that Indigenous and rural communities are leaders and beneficiaries.
Undervaluing the benefits derived from ecosystems undermines both the cost savings and economic opportunity for communities, businesses, and governments.
The broader economic benefits of Natural Climate Solutions like clean water, healthy air, and flood protection are worth billions annually. Standard accounting approaches typically undervalue or do not account for these values. This means these solutions often go uncompensated, which suppresses investments and leaves money on the table. Canada faces significant economic risks if we do not act on Natural Climate Solutions, and substantial economic opportunity if nature is properly accounted for and invested in. For example, restoration projects can be one of the most cost-effective ways to grow the economy with investment returns up to 30:1, while also reducing emissions and conserving nature. The longer time horizon for restoration investments can help public and private investors in hedging their Natural Climate Solutions portfolios.
Hotspots across Canada are ready for investment.
Three hotspots are ripe for Natural Climate Solutions investment: the Southern Prairies Region, Southern Ontario, and British Columbia. Indigenous-led activities in these regions and across Canada are also a focal point, with evidence of a high social return on investment from Guardians programs as an example. These hotspots contain at least two different landscape types or can support multiple Natural Climate Solutions, experience significant land conversion pressures or historical loss, provide substantial economic opportunities and ecosystem services, demonstrate a supportive policy environment, and provide opportunities to attract blended finance investments.
Canadians strongly support investments in Natural Climate Solutions, which address people’s concerns about both nature and the economy.
New polling from Abacus Data commissioned by Nature United shows that 84% of Canadians – spanning all provinces, ages, genders, educational backgrounds, and political orientations – support the pursuit of more Natural Climate Solutions. Polling shows that more than 80% of Canadians want governments and the private sector to work together to realize the Natural Climate Solutions opportunity.
Four key challenges stand in the way of catalyzing Natural Climate Solutions investment in Canada.
Key challenges include:
Three key actions will help overcome the barriers, and unlock the economic power of Natural Climate Solutions.
The report recommendations focus on opportunities to make Natural Climate Solutions more investable, and more conducive for private sector participation. By working across sectors and public-private partnerships, barriers can be addressed to maximize these opportunities to scale investment in Canada more quickly. Individuals and organizations across Canada can come together to enhance, encourage, and enable Natural Climate Solutions.
Enhance includes properly accounting for benefits, building support around Indigenous-led projects, and fully valuing, counting, and compensating Natural Climate Solutions investments.
Encourage includes investing in greater data availability, accessibility, and interoperability to reduce up-front data collection costs, scaling investments in restoration, and investing in the right skills, technologies, and transitional supports.
Enable includes building public-private partnerships to diversify and de-risk action on Natural Climate Solutions and supporting improvements and innovations in the emerging offset and credit market.
Canada is positioned to unlock the economic power of Natural Climate Solutions.
All of the conditions are in place for Natural Climate Solutions to flourish in Canada: record levels of public investments in nature, Indigenous leadership, broad support from Canadians, investment-ready hotspots, and increasing interest from the private sector to invest in immediate emissions reductions that work for both people and the planet. Now is the time for leaders across sectors and communities to join forces to fill knowledge gaps, demonstrate demand for Natural Climate Solutions investments, and explore policy and market solutions needed to help the dollars flow.
Investment in Natural Climate Solutions is critical to unlocking this golden, generational opportunity for Canada, and conservation finance will be required to reach the investment needs.
Public and philanthropic investment is integral, especially at the early stages, to demonstrate the viability, scalability, and potential for environmental and economic returns. However, these alone will not be sufficient to provide the investment needed for Natural Climate Solutions. Private sector investment is needed, and Natural Climate Solutions can offer financial returns for investors, through both traditional and innovative funding mechanisms, such as impact bonds, themed funds, and carbon credits. Investors are coming to the table because they see the benefits of putting their dollars towards protecting nature’s value.
The Nature Investment Hub is a catalyst to support organizations on the ground seeking to engage in the conservation finance space, provide resources and tools, and engage investors to advance their understanding of the unique features of nature-based opportunities. Increasing investments in Natural Climate Solutions can bring returns to investors while helping communities across Canada build more resilient, inclusive, and competitive economies.