Investing in natural infrastructure for a shared lifelong future

“Natural infrastructure” is a term that describes more than these ingenious living bridges – it covers all ecosystem-generated solutions that meet the basic and practical needs of daily existence: freshwater wetlands that provide flood protection, water supply and water purification services. Mangroves and coral reefs that can absorb the shock of storm surges and protect communities from rising sea levels. And forests that clean the air, regulate microclimates and remove carbon from the atmosphere.

To “Build a Shared Future for All Life”, which is the theme of this year’s International Day for Biological Diversity, recognition of the efficiency and cost-effectiveness of natural infrastructure – and a commensurate increase in investment for the maintenance and construction of natural infrastructure – is paramount.

The G20 Global Infrastructure Outlook indicates that $94 trillion in investment is needed by 2040 to close infrastructure gaps, and another $3.5 trillion is needed to ensure universal household access drinking water and electricity by 2030. But infrastructure can also pose a major threat to biodiversity. and ecosystem functioning. The impact of roads on deforestation and habitat fragmentation is well documented. According to the World Economic Forum’s (WEF) Future of Nature and Business report, 29% of threats to biodiversity are caused by infrastructure development, including roads, dams and power generation facilities .

Research from the International Institute for Sustainable Development shows that nature-based infrastructure (NBI) provides equally efficient and more resilient infrastructure services, up to 50% cheaper than traditional “grey” infrastructure. Additionally, NBI adds 28% more value than gray infrastructure, which in dollar terms translates to $489 billion per year. These additional values ​​come from the variety of ecosystem services provided and enhanced by NBI. If the world met its current global infrastructure needs, but traded just over 11% of traditional or “grey” infrastructure with NBI, we would save $248 billion each year.

It seems obvious. But too often, investing in nature-based solutions suffers from the invisibility of nature’s value in financial and economic calculations. Natural capital does not generate investment capital commensurate with its value because nature has traditionally been seen as an unlimited resource that humanity can exploit without account.

Traditional infrastructure assessments focus only on a narrow set of financial indicators that do not measure the underlying value of nature – or the cost of its loss. This results in a disproportionate flow of investment into gray infrastructure, regardless of its relative inefficiency compared to the costs of natural infrastructure (in many cases), and regardless of the negative impacts of infrastructure development on nature. This must change immediately to determine the true costs and benefits of infrastructure projects.

Transforming investment incentives

How can we encourage increased investment in natural infrastructure, as well as natural infrastructure financing policies and mechanisms designed to maximize social goals and enhance biodiversity?

Insurance company Swiss Re stresses that investing in infrastructure is not just about providing finance. The biggest constraint to unlocking private finance is the dearth of well-structured and bankable project pipelines.

According to WWF’s recent survey of 30 global infrastructure investors, insufficient environmental, social and governance (ESG) data – and in particular insufficient ESG factors related to climate and nature, including biodiversity and pollution – is a major impediment to increased investment in sustainable infrastructure. Investors are also looking to identify key asset classes in which to concentrate these ESG factors when making infrastructure investment decisions.

Along with real estate and commodities, nature and natural infrastructure must be recognized by the financial world as an asset class worthy of investment and preservation. We know that ecosystem services from the natural world are worth at least $125 trillion, which would make it the 2n/a– the largest asset class in the world. This $125 trillion can either be nurtured and thrive or be allowed to degrade and shrink exponentially without investment, causing the very foundations of our well-being and prosperity to crumble.

It is time nature was recognized as an asset – an asset to nurture and an asset to invest in.

Some encouraging initiatives will help bring about this transformation.

In 2018, Nature Conservancy, Swiss Re and the government of the Mexican state of Quintana Roo partnered to develop the first coral reef insurance policy covering 160 kilometers of coastline, including the Cancun tourist gateway. In this policy, coral reefs are recognized as natural infrastructure, equivalent to man-made coastal defenses such as breakwaters, by virtue of the protection they provide to communities, businesses and built infrastructure in coastal cities. The insurance policy covered the repair and rebuilding of coral reefs after multiple storms, providing communities with the financial resources needed to manage the reefs and prevent coastal erosion.

In 2021, the US government announced a $1.2 trillion infrastructure package. This includes $40 billion for projects related to natural infrastructure and conservation, recognizing nature’s role in building the resilience of physical and natural systems, to control flooding, to provide drinking water, and Moreover.

The Task Force on Nature-Related Financial Disclosures (TNFD) works to provide a risk management and disclosure framework for investors and companies to report and act on evolving nature-related risks. nature, with the aim of shifting global financial flows from negative nature to nature. positive results. The materiality of nature-related risks is too often invisible – actual or potential costs associated with nature degradation being passed on to consumers, society as a whole or other third parties, rather than being integrated into company balance sheets. A reporting framework that identifies the impact of nature on immediate financial performance, or the longer-term financial risks that may arise, puts nature on the balance sheet, and no longer an invisible externality. Aligning global financial flows with nature is an essential pathway to protecting biodiversity, supporting communities, achieving climate goals and meeting the Sustainable Development Goals.

In Meghalaya, if people had not started building living bridges, there would have been a large amount of wasted investment and effort in constructing ad hoc synthetic structures, which in turn would have led to loss of lives, livelihoods and cultural erosion. It is a remarkable example of the resilience, cost-effectiveness and efficiency of natural infrastructure – an inspiration that the world would do well to follow.

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