Greening the Stimulus: Investing in Nature

Executive Summary – Report Preview

Governments around the world are injecting unprecedented sums into rebuilding economies disrupted by COVID-19. Spending on this scale, totalling US$13 trillion as of December 2020, represents a once-in-a generation opportunity to prime the economy to deliver greater equality, prosperity and resilience. Unfortunately, analysis of COVID-19 stimulus commitments to date suggests that investments are further entrenching unsustainable economic pathways, resulting in a high risk of stranded assets, accelerated climate change and continued depletion of natural capital.

This paper presents a global assessment of the economic, environmental and social benefits of directing stimulus towards a set of nature-based interventions that have so far been largely overlooked by governments. These nature-based solution (NBS) interventions tackle societal challenges such as climate change, air pollution and rising inequality, through the protection, sustainable management and restoration of nature.
1 This portfolio of opportunities – available in all countries and selected for their suitability for stimulus spending – involves the restoration of the world’s natural ecosystems and the increased integration of nature into our cities and farming systems, both terrestrial and marine. These interventions are not exhaustive, and need not crowd out other green stimulus measures.
2 They can be coupled with other proven green investments, for example into renewable energy and electric grids, to ensure a diversified portfolio of investments.

The key finding of our work is that investment in nature yields superior short-run economic returns compared to more traditional stimulus measures – as well as very significant long-run benefits. The analysis demonstrates that by directing less than 5% of the total stimulus to date (US$552 billion) into these NBS3 outperforms a business-as-usual (BAU) stimulus investment scenario globally, by delivering:

More jobs and higher incomes: An NBS-focused stimulus creates about 7% more jobs globally than the BAU scenario and stimulates 8% more short-term domestic economic activity. NBS interventions are more labour-intensive than typical stimulus interventions and more effectively target segments of the labour market hardest hit by the pandemic, so they are more effective at creating new job opportunities for displaced workers. They also rely on fewer imported inputs and so are less prone to ‘leakage’ than the BAU scenario, where efforts to increase domestic demand dissipate around the global economy.
Accelerated decarbonisation: The modelled portfolio sequesters 2.2 billion tonnes per year of carbon
dioxide equivalent over 20 years, reducing global net annual greenhouse gas emissions by 4%.
Protection of nature: Many of the NBS interventions focus on habitat protection and restoration, including forests, wetlands and peatlands, covering millions of hectares of degraded ecosystems globally. Restoring this land would contribute substantially to stemming biodiversity losses, and recovery of important ecosystem services such as air and water quality improvement.
Improved climate resilience: NBS improve resilience to floods and droughts. Indicative analysis, accounting for projected increases in risks without further investment, suggest that NBS interventions would reduce the financial impact of floods by US$23 billion annually, which represents 57% of the US$46 billion in worldwide economic losses caused by floods in 2019.4

This study provides an overarching case for governments to develop detailed investment and financing strategies to roll out NBS. The global analysis presented in this paper favours a conservative approach, considering only a selection of potential NBS options and capping the level of investment well below the potential level. It does not examine in detail financial mechanisms and supporting policy frameworks that could best exploit the opportunities for NBS, which over the longer term could establish sustainable markets for NBS. Further work can build on this to develop these models, with tailoring for varying institutional contexts.

Client

Finance for Biodiversity (F4B), Food and Land Use Coalition

Sectors:

Agriculture, Forestry & Land Use

Capabilities:

Ecosystems & Natural Capital

Regions:

Global

Products:

I3M