Context: Recently, the United Nations has released the State of Finance for Nature Report 2020 which found that approximately $133 billion currently flows into nature-based solutions annually (using 2020 as base year).

• It analyzes the investment flow in nature-based solutions (NbS) and identifies the future investment needed to meet the climate change, biodiversity and land degradation targets (set in three Rio Conventions).

Key Highlights

• The annual investments in nature-based solutions (NbS) will have to be tripled by 2030 and increase four-fold by 2050 from the current level of investments.
• The Nature-based solutions refer to sustainable management and use of nature to tackle socio-environmental challenges.
• It found that approximately $133 billion currently flows into nature-based solutions annually (using 2020 as base year).
• The public funds make up 86 per cent and private finance 14 per cent of these investments.
• It estimated existing public and private investment directed to NbS.
• The investments of $133 billion comprise about 0.10 per cent of global gross domestic product, most of which come from public sources.
• The largest proportion of this investment is carried out by public financial services providers, including the governments, development finance institutions (DFIs), environmental / climate funds.
• It represents 86 per cent of total investment flows to protect biodiversity and landscapes, mixed with activities such as sustainable forestry.
• The public sector spending for the same is dominated by the United States and China, followed by Japan, Germany and Australia.
• The US tops the list with approximately $36 billion a year in NbS spending, and is closely followed by China with $31 billion.
• The countries such as Brazil, India and Saudi Arabia are likely spending large amounts of money too, but they do not report internationally comparable data.

The following contribute to 14 per cent of total NbS financing equal to $18 billion a year, mostly through investments in sustainable supply chains and biodiversity offsets:

• Commercial financial institutions
• Investors including insurance companies, asset management firms
• Philanthropies including foundations and endowments

Future commitments under State of Finance for Nature Report

• The public and private actors will need to scale up their annual investments by at least four times to meet future climate, biodiversity and land degradation targets.
• By 2050, total investment of nature needs will amount to $8.1 trillion, while annual investment should reach $536 billion annually by 2050.
• It called for a comprehensive system and framework for labelling, tracking, reporting and verifying the state of finance for NbS.
• It recommended reforming taxes, repurposed agricultural policies and trade-related tariffs and harnessing the potential of carbon markets.

About State of Finance for Nature Report

• It was jointly produced by the United Nations Environment Programme, the World Economic Forum and the Economics of Land Degradation.
• Its purpose is to provide up-to-date information about public and private sector finance that is channelled to activities and assets that can be considered NbS and to present estimates of the future needs.
• It complements the vast array of existing literature and processes that monitor specific flows of environment or development finance.