The State of Finance for Nature in the G20 Leading by example to close the investment gap © 2022 United Nations Environment Programme ISBN: 978-92-807-3910-7 Job number: DEP/2408/NA This publication has been made possible with support from Italy’s Ministry for Ecological Transition. It may be reproduced in whole or in part and in any form for educational or non-profit services without special permission from the copyright holder, provided acknowledgement of the source is made. The United Nations Environment Programme would appreciate receiving a copy of any publication that uses this publication as a source. No use of this publication may be made for resale or any other commercial purpose whatsoever without prior permission in writing from the United Nations Environment Programme. Applications for such permission, with a statement of the purpose and extent of the reproduction, should be addressed to the Director, Communication Division, United Nations Environment Programme, P. O. 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The views expressed in this publication are those of the authors and do not necessarily reflect the views of the United Nations Environment Programme. We regret any errors or omissions that may have been unwittingly made. © Maps, photos and illustrations as specified Suggested citation United Nations Environment Programme (2022). State of Finance for Nature in the G20. Nairobi. With support and analysis from Vivid Economics Executive Executive Summary Nature-based solutions (NbS) is a category of spending by 140 per cent: an additional USD assets in which businesses, governments and 165 billion, by 2050. This additional investment citizens can invest in order to work with nature would allow G20 countries to reach a total instead of seeing it as a barrier to economic annual spending of USD 285 billion by 2050. development and progress. NbS places nature This estimate is based on an immediate action at the heart of many societal challenges, such scenario in which the international community as the climate and biodiversity crises, as well responds now to keep climate change warming at as disaster risk reduction, food security and only 2°C in order to halt land degradation and to human health. Through the improvement of stabilize biodiversity and reverse its loss by 2050 carbon sequestration on agricultural lands and at today’s levels.3 peatlands, defence from flooding by restoring mangrove populations, and the protection of Future G20 domestic investment needs to global biodiversity through forest and other land comprise 40 per cent of total global NbS conservation, nature-based solutions can help investment. This estimate only takes into account improve society today and in the future. four principal nature-based solutions: forestry, silvopasture, mangrove restoration and peatland This report finds that in 2020 the G20 countries restoration. Approximately USD 102 billion out of invested USD 120 billion in NbS.1 This represents the USD 165 billion total additional investment 92 per cent of global annual NbS investment, needed in the G20 in 2050 would be invested broadly in line with the G20’s share of the global in forestry, with USD 14 billion associated with GDP of 80 per cent.2 The vast majority of current plantation management and USD 88 billion with spending by G20 countries, USD 105 billion, is land conversion to forestry through restoration and allocated internally towards domestic government afforestation. USD 63 billion annually would be programs, a third of which is invested in programs invested in silvopasture and spent on its operation. to promote the protection of biodiversity and the landscape. The other two thirds of domestic The remaining 60 per cent of annual future government investment (USD 67 billion) funds investment lies in developing countries where water management, pollution abatement, general fiscal space to invest in NbS is limited. Future environmental protection, and measures for investment rates would be: forestry USD 101 agriculture, forestry, fishing and hunting. billion, silvopasture USD 126 billion, peatland restoration USD 7 billion, and mangrove restoration G20 official development assistance (ODA) and USD 0.5 billion. All G20 members except India private sector investment in NbS is low compared have investment grade sovereign debt, while most to spending on NbS by domestic governments. non-G20 countries do not. This means that it will The G20 currently invests approximately USD 2.4 be more expensive for non-G20 countries to borrow billion annually in NbS-relevant ODA programs money on capital markets, limiting their fiscal with a focus on biodiversity and environmental bandwidth to fulfil NbS investment. policy. The private sectors of G20 countries invest an additional USD 14 billion, the majority of which In many instances, NbS investments in is allocated to improving the sustainability of developing countries are more cost effective in supply chains or biodiversity offsets. abating climate risk. For example, the average cost of land conversion to NbS in G20 countries In order to achieve all future biodiversity, land is USD 2,600/hectare, while the average cost degradation and climate targets, G20 countries for non-G20 regions is USD 2,100/hectare. The would need to scale up their internal annual NbS situation is similar for mangrove restoration 1 Please note that analysis for this report was limited to land-related NbS. The scope in the next report will cover both the terrestrial and marine environment more comprehensively. 2 This number ranges from 74-92% because of uncertainty around the data. 3 Note: These figures are taken from the Model of Agricultural Production and its Impacts on the Environment (MAgPIE v4.1), which was used to estimate investment need for forest-based NbS (which includes reforestation and afforestation cost estimates), and taken from separately estimated figures for silvopasture (planting trees on agricultural land), mangrove restoration and peatland conservation and restoration. 3 Executive expenses, suggesting that G20 countries could (SDR); or, d) creating and expanding results- improve their economic efficiency in NbS based financing schemes, such as nature spending by investing in developing countries. performance bonds. In line with the global report on the ‘State of • In order to stimulate private finance, Finance for Nature’, it is clear that both the G20 countries have numerous policy volume of capital directed to NbS-relevant options available, such as: a) incentivizing assets and activities and the share of private corporate and financial institutions to finance are currently insufficient to meet the disclose nature-related risks; b) aligning climate, biodiversity and other human-induced portfolios to become ‘nature positive’ and crises. The investment case for NbS could be strengthening risk management to reduce strengthened through a combination of regulation the potential for negative impacts on nature and economic incentives. G20 countries, which by clients, suppliers, etc.; c) strengthening are among the richest nations on the planet, have the investment case for NbS by harnessing a special responsibility to lead by example to the potential of carbon markets and other reduce the gap between current NbS investment nascent markets for ecosystem systems; and, and what is needed to address the climate crisis, d) increasing the availability of concessional and to reverse land degradation and biodiversity capital in the form of subordinate loans, loss. Opportunities to do this could involve: guarantees and grants, which is also needed to reduce the (perceived) risk for novel • G20 countries could align economic business models. recovery post Covid-19 with both the Paris Agreement and future agreements on In the wake of the dire warnings from the latest biodiversity, focusing economies on being Intergovernmental Panel on Climate Change consistent with the 1.5°C warming above (IPCC) report, and in the context of the world pre-industrial levels, as well as halting and summit on transforming food systems, the role reversing the loss of biodiversity. (Vivid of investment in NbS is clear: it tackles these Economics & Finance for Biodiversity interlinked crises. Initiative 2021; United Nations Environment Programme [UNEP], Global Recovery This report is a first step in measuring NbS Observatory, University of Oxford, 2021) investments in G20 countries and therefore has a number of limitations that should be addressed • From a public funding perspective, G20 in future iterations. First, the scope only covers countries could pledge to: a) increase terrestrial ecosystems. Secondly, the data used ODA spending to help developing countries in this report has limitations in tracking public to reduce the NbS investment gap; and and especially private investment in NbS due to b) increase domestic expenditure for the lack of internationally comparable datasets NbS-relevant sectors, including through and NbS markers. The data presented in this repurposing agricultural subsidies. Other report cannot be disaggregated by sex to conduct opportunities relate to: c) requesting a gender analysis due to a lack of quantifiable multilateral development banks (MDBs) to metrics. Thirdly, it focuses on existing investment expand NbS-relevant lending or debt relief but does not estimate the benefits of investing to developing countries by supporting the in nature. Finally, it focuses on NbS positive issuance of IMF Special Drawing Rights investments and does not report on capital flows that negatively affect nature. 4 Executive Table of Contents 1. Introduction 6 2. Current financial flows into NbS in the G20 10 3. Future investment needs 14 4. Spending gap analysis 17 5. Options to close the NbS investment gap 21 A. Appendix 25 5 1Introduction Chapter 1 Nature-based Solutions (NbS) can contribute to to account for the full value of services that nature the transition towards a net zero carbon, nature provides. Redirecting existing harmful financing, positive global economy by putting nature at such as subsidies that encourage deforestation the heart of addressing economic and societal or environmental destruction, towards NbS can challenges. Estimates suggest that more drive green growth and job creation while tackling than half the world’s GDP (USD 40 trillion) is the twin goals of the Paris Agreement on climate moderately or highly dependent on nature and change and the anticipated Kunming Agreement its services. (Intergovernmental Science-Policy on biodiversity. Incorporating NbS into financial Platform on Biodiversity and Ecosystem Services and economic systems means that the two goals [IPBES] 2019; World Economic Forum 2020) of sustainable natural resource management and NbS can support the global economy, and can socioeconomic growth can be addressed. specifically contribute to achieving the objectives of the three Rio Conventions, by mitigating Recent global reports, such as the IPBES and adapting to the adverse effects of climate report on biodiversity and climate change change, supporting environmental services, and the Dasgupta Review on the economics restoring degraded land, and halting and reversing of climate change, summarize the scientific biodiversity depletion. A healthy planet is also grounds for policies that place us on a pathway good for business and economies, because our towards sustainability.(IPBES 2019; Dasgupta livelihoods depend on nature. Emerging research, 2021) Nature-based solutions and ecosystem- such as the Dasgupta Review (2021) and the based approaches have emerged as crucial State of Global Finance for Nature (2021), have instruments for delivering multiple benefits, made the economic case for triple action to tackle including addressing climate change mitigation, the climate, land degradation and biodiversity adaptation and biodiversity loss: reducing flood crises clearer and more compelling than ever. risk, filtering air pollutants, providing reliable The loss of biodiversity poses enormous risks to supplies of drinking water, strengthening food human prosperity and wellbeing with disparities security, contributing towards business and felt between genders. Investing in nature also job opportunities, gender empowerment and, provides multiple benefits, such as reducing more broadly, achieving the 2030 Sustainable the risk of future pandemics and accelerating Development Goals. The G20 countries have global efforts to mitigate and adapt to climate also recognized that protected areas are a change. Investing in nature-based solutions such principal tool for halting biodiversity loss, and as transitioning to deforestation-free sustainable would support efforts to protect at least 30 per agricultural production, natural infrastructure, etc. cent of global land and at least 30 per cent of is smart from both a public and private sector the global ocean, with at least 10 per cent under perspective, for reasons including: (i) economic strict protection, by 2030, according to national gains from job creation and from more productive circumstances and approaches. sustainable natural resource use; (ii) avoiding the losses and costs required for protecting The G20 member states have expressed their communities from hazards; and (iii) other social commitment to taking the necessary actions to and environmental benefits. (Global Center on put nature and biodiversity on a path to recovery Adaptation 2020; World Resources Institute 2020) by 2030, for the benefit of people and the planet, It is far cheaper to prevent environmental damage and achieving the vision of ‘Living in Harmony than to pay for its restoration afterwards. The with Nature’ by 2050. (G20 2021) They recognize most cost-effective policies are those that take a the importance of advancing policies that protect comprehensive approach towards appropriately and restore nature due to its cost-effectiveness valuing, protecting and restoring nature. and ability to provide multiple social, environmental and economic benefits. In 2021, they agreed to Investment flows into nature need to increase join efforts to advance together within a structured while shifting away from harmful activities. and ambitious agenda around ten key goals: (i) Studies have shown that governments spend investment in nature as a means to address joint around USD 500 billion per year globally to socioeconomic and environmental challenges; support activities that potentially harm nature. (ii) creation of an International Environmental (Organisation for Economic Co-operation and Experts Network to boost capacity building; (iii) Development [OECD] 2020) Public and private protection and restoration of degraded lands financial flows that are harmful to the biosphere for an inclusive and sustainable recovery; (iv) significantly outweigh the investment aimed at sustainable water management; (v) protection of protecting and restoring it. Political and economic oceans and seas; (vi) reduction in marine plastic systems and financial markets have so far failed litter; (vii) improvements in sustainable and circular 7 Chapter 1 resource use; (viii) investment in circular cities; (ix) improvements in education, capacity-building and training; and, (x) growth of green finance and blue finance measures. G20 countries recognize that 2021 is a critical year for increasing commitments towards tackling the crises of climate change, biodiversity loss and pollution exacerbated by unsustainable natural resource use. Nearly thirty years after the signing of the Rio Conventions, there are opportunities to build international cooperation through the UNFCCC and the Paris Agreement, the anticipated Kunming post-2020 Global Biodiversity Framework to be adopted at CBD COP15, and the Land Degradation Neutrality goal championed by the UNCCD, among others. 8 Chapter 1 1.1 This report This report builds on a global study (2021) This report focuses specifically on how G20 entitled ‘State of Finance for Nature – Tripling countries are currently directing capital flows Investments in Nature-based Solutions by to NbS-relevant assets and activities, and how 2030’ (‘The Global Report’). The Global Report much additional investment is needed to tackle estimates the current rate of investment in NbS the climate, biodiversity and land degradation globally and compares it to future investment crisis. The analysis includes data from all needs to meet the objectives set out by the three G20 members in order to assess the current Rio Conventions: the United Nations Framework investment in NbS, covering both private and Convention on Climate Change, the United public financial flows. Given the improved quality Nations Convention to Combat Desertification and coverage of public and private sector data and the Convention on Biological Diversity (CBD). available for G20 countries, the methodology provides a more accurate picture and analysis of The Global Report finds that approximately USD NbS investment needs and gaps for the G20 than 133 billion currently flows into land-related NbS does the global methodology. The report also annually (using circa 2020 as the base year), provides recommendations, both technical and with public finance making up 86 per cent of the policy-related, to support decision-making among funds and private finance contributing 14 per G20 countries. Like the global report, this report cent. Over a third of the public funds, which total is limited to land-related NbS and focuses USD 115 billion annually, is invested by national exclusively on disbursed investments, as opposed governments in the protection of biodiversity and raised or pledged capital. We endeavour to focus landscapes domestically. Nearly two thirds are on both the marine and terrestrial environment in spent on forest restoration, peatland restoration, future reports. regenerative agriculture, water conservation and natural pollution control systems. The private sector finance for NbS amounts to an additional annual USD 18 billion. This investment spans biodiversity offsets, sustainable supply chains, and private equity impact investing, and includes smaller amounts from philanthropic and private foundations. The total volume of finance flowing into nature is considerably less than the financial flow towards climate finance. Future investment in NbS would need to at least triple in real terms by 2030 and increase four- fold by 2050 if the world is to meet its climate change, biodiversity and land degradation targets. This acceleration would equate to a cumulative total investment of up to USD 8.1 trillion, and a future annual investment rate of over USD 536 billion. Forest-based solutions alone would amount to USD 203 billion annually, followed by silvopasture at USD 193 billion, peatland restoration at USD 7 billion, and mangrove restoration at USD 0.5 billion. This report does not cover all types of NbS, and notably those in the marine environment were excluded. These will be included in future editions. 9 2 Current financial flows into NbS in the G20 Chapter 2 According to G20-specific data, current G20 with agriculture, forestry, fishing and hunting investment in NbS is estimated to total USD 120 measures. Public ODA accounts for an additional billion annually, as shown in Figure 1. Domestic USD 2.4 billion in G20 NbS public expenditure. government spending accounts for the vast The private sector contributes a meagre USD 14 majority of overall NbS investment, at USD 105 billion to NbS, with a third of private contributions billion. Within domestic investment, approximately focused on supporting sustainable supply chains. USD 71 billion is allocated annually to the protection of biodiversity and landscapes, along Figure 1. Classification of NbS finance, in USD billions Domestic Government Private Capital Sustainable supply chains, $5b Water resources, conservation and Pollution Impact land management, abatement, invest- pollution control wastewater mgt, Biodiversity ments, and other natural and offsets, $4B $3b resources budget, environmental $17b protection, $10b Conservation NGOs, $1.8B Other Public ODA Protection of biodiversity and landscape, $38b Agro, forestry & fishing, $33b Environmental policy and other, $7b $2.4b Domestic Government Private Capital Public ODA Source: Vivid Economics, adapted from OECD, IMF and other public data sources. According to the Global Report data, G20 There is a significant need for benchmarks, investments comprise 82 per cent of global standards and markers to track public and NbS spending.4 (UNEP 2021) The data used private NbS investment. The estimates for G20 by the global report estimates the current domestic and private investment are uncertain G20 contribution to NbS investment at USD because countries and companies do not directly 110 billion, contributing 74 per cent of total report their NbS spending. Data for domestic global NbS spending. Additional data collected government spending was collected from annual specifically on the G20 since the publication national budgets and national reports. The same of the Global Report means that the updated set of assumptions as employed in the global estimate of USD 120 billion spent by the report were used to extract NbS-specific values G20 on NbS would comprise 92 per cent of from overall spending amounts. The data for total global NbS investment. Despite G20 private spending from the global report was counties having more fiscal leeway to make transformed to yield the proportion of G20 private these investments, the estimated share of spending relative to the rest of the world, based investment in NbS by the G20 is broadly similar on GDP. ODA data was directly obtained from the to the G20’s current share of global GDP: OECD and thus is comparatively more accurate. approximately 80 per cent. (G20 2021) 4 This number ranges from 74-90% because of uncertainty around the data. 11 Chapter 2 2.1 Domestic government investment The vast majority of current G20 NbS investment An additional third of G20 domestic NbS spending, is concentrated in domestic government programs, USD 33 billion, is focused on sustainable at USD 105 billion. Public sector domestic agriculture, forestry, fishing and hunting. This financing from the G20 contributes 87 per cent NbS category includes projects that promote of the total USD 120 billion invested in NbS by the biodiversity by improving agroecological systems, G20 annually, as can be seen in Figure 2. Domestic or that increase the carbon sequestration potential public finance is allocated across five key sectors: of soil by promoting soil health. The final third the protection of biodiversity and landscape; of domestic investment is distributed across agriculture, forestry, fishing and hunting, and water an additional three categories: water resources, management; pollution abatement; and general pollution abatement and general environmental environmental protection. More than one third of protection. Actions such as water conservation, total domestic government NbS spending, USD 38 wastewater management and environmental policy billion, is assigned to the protection of biodiversity measures fall within these categories. and the landscape. This category includes funding for initiatives such as conservation programs for endangered species or the establishment and maintenance of national parks. Figure 2. G20 public-sector finance of NbS in 2018, by category $180’000 $160’000 $140’000 $120’000 $100’000 $80’000 $60’000 $40’000 $20’000 $- Total Agro, forestry & fishing Water resources, Pollution abatement, Protection of Environmental conservation and land wastewater biodiversity and policy and other management, pollution management and landscape control and other natural environmental resources budget protection Note: The dark blue bars indicate the midpoint estimate and the light blue vertical lines the uncertainty range. Source: Vivid Economics. 12 Chapter 2 2.2 ODA and private sector investment Despite large domestic public investments in NbS by the G20, ODA and private sector investments remain small. The G20 currently provides USD 2.4 billion annually to NbS-focused ODA programs, which makes up only 2 per cent of overall G20 NbS investment. The largest category of ODA spending is biodiversity projects at USD 880 million. An additional USD 740 million is allocated annually to environmental policy and education initiatives. The final USD 900 million is assigned to a combination of agriculture, forestry and water basin projects. The private sector contributes 60 per cent of total national GDP in most G20 countries but invests just USD 14 billion annually in NbS, 11 per cent of overall G20 NbS spending. (International Monetary Fund [IMF] 2013) The majority of this investment, USD 9 billion, is spent on sustainable supply chain initiatives and biodiversity offsets. The additional USD 5 billion of private sector spending comes from private equity investing, conservation NGOs and additional miscellaneous sources. 13 3 Future investment needs Chapter 3 3.1 G20 domestic investment needs In order to achieve all future biodiversity, land responds now to keep climate change warming degradation and climate targets, G20 countries at only 2°C, to halt land degradation, and to would need to scale up their total annual NbS stabilize biodiversity and reverse its loss by 2050 spending by 140 per cent, an additional USD 165 at today’s levels.5 Economic modelling predicts billion, by 2050 (see Table 1). The G20 could the costs of transitioning from a business-as- increase domestic spending by USD 125 billion usual trajectory to a trajectory that fulfils climate by 2030 and USD 140 billion by 2040 to meet this change, biodiversity and land degradation targets. target. This additional investment would allow The methodology (see Appendix for more detail) G20 countries to reach a total annual domestic estimates the future NbS investment needs in G20 spending of USD 270 billion by 2050 (the current countries under the immediate action scenario annual domestic spending of 105 billion plus the targets for four asset types: forest, peatland, increase in domestic spending of 165 billion). This mangroves and agroforestry. Peatland and increase in spending is 40 per cent of all future mangrove restoration have not been estimated global investment needs. for individual G20 countries, due to an absence of country level data, but are included in the global This estimate is based on an immediate action NbS estimates (see Table 1). scenario, in which the international community Table 1. Summary of future G20 investment needs G20 additional annual Type of NbS investment need Global future investment (2021-2050) USD billion need, excluding G20 Forest management 14 21 Land restoration - forestry 88 80 Silvopasture - capital expenses 3 6 Silvopasture - operational expenses 60 120 Peatland restoration - 7 Mangrove restoration - 0.5 Total 165 235 Note on G20 figures: This table summarizes the additional annual spending needed by the G20, assuming that the current annual G20 spending of USD 120 billion remains constant. Note on Global figures: This table shows the additional annual spending needed, assuming current annual world spending of USD 130 billion. Additionally, there was insufficient data to calculate peatland restoration and mangrove NbS for the G20 countries. Source: Vivid Economics own calculations for the G20 figures and United Nations Environment Programme (2021). State of Finance for Nature 2021 for the global figures. Across the G20 member states, future An additional USD 63 billion in NbS spending investment need is concentrated in the forestry needs for the G20 is in capital and operational space, with an increase of USD 88 billion and expenses for silvopasture (the integration of USD 14 billion per year for land restoration to forests and livestock grazing). forestry and for forest management, respectively. 5 Note: These figures are taken from the Model of Agricultural Production and its Impacts on the Environment (MAgPIE v4.1), which was used to estimate investment need for forest based NbS (which includes reforestation and afforestation cost estimates), and taken from separately estimated figures for Silvopasture (planting trees on agricultural land), mangrove restoration and peatland conservation and restoration. 15 Chapter 3 3.2 Global investment needs By 2050, global NbS spending will need to This estimate is based on an immediate action increase from current levels by around USD scenario and considers six categories: forest 400 billion to a total annual expenditure of USD management, land restoration to forestry, 536 billion to achieve all global sustainability silvopasture capital and operating expenses, targets. (UNEP 2021) This is more than peatland restoration, and mangrove restoration, quadrupling the total global NbS investment. as described in Table 1.6 Table 2. NbS in scope Forestry Peatland Mangroves Regenerative agriculture Managed afforestation Restore (NPI and non-NPI); new Peatland Mangrove timber plantations restoration restoration Switch to sustainable Improve management of timber Trees in cropland; plantations silvopasture Note: Empty boxes are not included in this study Source: Vivid Economics The largest proportion of future needs is in commonly known and supported with scientific non-G20 countries, with USD 235 billion to meet and economic research, with peatlands and Rio Convention objectives. Outside the G20, mangrove research emerging. Additionally, there the region with the largest investment needs are more areas where forestry and silvopasture is sub-Saharan Africa, which will require an can be implemented, compared to peatland or estimated increase of USD 54 billion in annual mangrove restoration. However, peatland and spending to achieve all climate and conservation mangrove ecosystems hold a disproportate and targets. An additional USD 100 billion will be substantial amount of carbon per land area than needed for land restoration to forestry and forest any other type of ecosystem - with peatlands management, and USD 45 billion will be needed alone storing more than twice the amount of in Latin America. Finally, peatland and mangrove carbon as all the world’s forests combined restoration will require an additional USD 7 billion (Crump 2017). and USD 0.5 billion, respectively. The high values for forestry and silvopasture future investment needs do not imply that these NbS categories are more important for achieving sustainability goals. Rather, the larger numbers reveal that these NbS are more 6 Additional information on overall global estimates for NbS spending can be found in the State of Finance for Nature 2021 report. 16 4 Spending gap analysis Chapter 4 The spending gap in countries that are not part Non-G20 countries may not have enough fiscal of the G20 is larger and more difficult to bridge space and access to global finance to allow them than in G20 countries. Current G20 spending to make sufficient investment in NbS, especially (USD 120 billion annually) is 42 per cent of the after the Covid-19 pandemic. Figure 3 compares total future spending needs of member states (an annual NbS future spending needs and long- additional average of USD 165 billion annually). term sovereign debt ratings, an indicator of ease Overall global future needs for NbS spending are of access to global financial markets. All G20 much greater, however, with a global increase of members except India have investment grade more than four times the current spending levels sovereign debt, while most non-G20 countries needed. Excluding the G20, a total additional NbS do not. This coincides with high investment investment of USD 235 billion is required annually needs, meaning that it will be more expensive by 2050. This value is 58 per cent of the additional for developing countries to borrow money on total global NbS future needs, despite the fact capital markets, but limited fiscal ability and ODA that these countries contribute only 20 per cent expenditures by rich countries mean that it will be of the world’s GDP. It is important to highlight more difficult to close the NbS investment gap. that the size of the gap presented in this report is conservative. The future spending estimates span only some of the current spending categories, and thus the gap is probably underestimated and the true increase in spending will need to be higher. Figure 3. Annual NbS future spending needs and sovereign debt investment grade 90 Above investment grade 80 Below investment grade 70 60 50 40 30 20 10 0 CHA CAZ IND USA EUR JPN LAM OAS REF SSA MEA NEU G20 Contains G20 Non G20 country Note: Three letter code signifies country/region. CAZ = Canada, Australia, New Zealand. CHA = China. EUR = European Union. IND = India. JPN = Japan. LAM = Latin America (including Brazil, Argentina, Mexico). MEA = Middle East and North Africa. NEU = Europe, excluding European Union members. OAS = Asia (including South Korea). REF = Former Soviet Union (including Russia). SSA = Sub-Saharan Africa. USA = United States. Annual average of foreign currency long-term sovereign debt ratings by Moody’s, Standard & Poor’s, and Fitch Ratings. Source: Vivid Economics based on World Bank and Bloomberg data. 18 Additional NbS investment needs in 2050 (USD billion) Chapter 4 The larger the government debt to GDP ratio, Although the G20 member states have the the greater the annual NbS future spending resources to achieve all domestic NbS spending need, revealing the challenge of funding NbS goals, these countries may not be the most investment outside the G20. The G20 countries cost-efficient place to target NbS spending. For tend to have a lower government debt to GDP example, higher land prices in G20 countries ratio compared to future spending needs than mean that NbS project capital expenses based on non-G20 regions. A significant exception to this land conversion costs per hectare are significantly pattern is China, which has a low government greater in many G20 countries than in non-G20 debt to GDP ratio but high annual future spending countries, as can be seen in Figure 4. needs. This future investment value is primarily caused by the considerable opportunity for land restoration to forestry within the country. Figure 4. NbS project capital expenses (land conversion cost), USD per ha 6000 5000 4000 3000 2000 1000 0 EUR CAN DEA CHA IND USA ANZ RUS BRA OAS NEU REF LAM SAS MEA SSA G20 Countains G20 Non G20 country Note: Three letter code signifies country/region. CAZ = Canada, Australia, New Zealand. CHA = China. EUR = European Union. IND = India. JPN = Japan. LAM = Latin America (including Brazil, Argentina, Mexico). MEA = Middle East and North Africa. NEU = Europe, excluding European Union members. OAS = Asia (including South Korea). REF = Former Soviet Union (including Russia). SSA = Sub-Saharan Africa. USA = United States. Source: Vivid Economics 19 Land converstion (USD per ha) Chapter 4 There are many opportunities for NbS investment within non-G20 countries that are more cost effective than investing in the same NbS within the G20 member states. As seen in Figure 4, NbS capital land conversion costs are up to USD 2,600 per hectare in G20 countries. In contrast, costs are up to USD 2,100 per hectare in non-G20 regions.7 This price difference means that Europe or Canada would be able to preserve more than three times as much land by conducting afforestation projects in Sub-Saharan Africa or Latin America than within their own countries with the same budget. The same efficiency principle holds for other NbS categories, suggesting that the G20 member states would improve efficiency by investing in NbS outside their own countries. For example, average mangrove restoration costs in the southeastern US are estimated as USD 45,000 per ha, while average mangrove restoration costs in the rest of the Caribbean are estimated as only USD 23,000 per ha, despite both regions being in the same geographic area. (Menendez et al. 2020) These large investment cost differentials suggest that this efficiency principle should be considered when allocating NbS funding both domestically and abroad. 7 Note: The three datapoints that include G20 regions (the bars in the included G20 section of Figure 4) are probably positively skewed due to the presence of G20 countries in the data. The ability to exclude the G20 countries from these data points would probably make the price per ha much lower, further providing an example of increased efficiency for investments. 20 5 Options to close the NbS investment gap Chapter 5 The governments of G20 countries could play a key role in mobilizing financial resources, sending clear signals and creating an enabling environment for investment in nature. There is currently an investment gap in achieving the global environmental objectives set out by the three Rio Conventions. The people of the G20 countries carry out the majority of global economic and financial activity and they have the capacity for leadership and decisive action. The world would benefit from a transition in global finance away from the current unsustainable use of Earth’s resources towards activities that protect and restore the biosphere and support the sustainable use of its natural assets. G20 countries can carry out needed studies to calculate future NbS investment needs for restoration of peatland and mangrove ecosystems to enhance country level data and decision making. The G20 could commit to investing in nature. In order to close the investment gap, the G20 could adopt policies that will increase domestic finance levels accordingly. These policies could include a range of financial and economic instruments that would channel public and private capital towards activities and assets that protect and restore nature. This includes support for NbS via policy and regulation, and by measuring, valuing and reporting on NbS at country level, creating a comprehensive national strategy that could be supported by the inclusion of restoration practices into the Nationally Determined Contributions (NDCs) of G20 countries while prohibiting further ecosystem degradation. 5.1 Align economic recovery post Covid-19 with international nature and climate agreements, scale up domestic spending, repurpose fiscal policies & trade tariffs The G20 could align post Covid-19 economic recovery with both the Paris Agreement and any future biodiversity agreement, focusing economies on being consistent with 1.5°C warming above pre-industrial levels, as well as halting and reversing the loss of biodiversity. Although some G20 countries have put in place ambitious plans to build back better, many other G20 nations seem to be building back as usual. (Vivid Economics and Finance for Biodiversity Initiative 2021; UNEP, Global Recovery Observatory, University of Oxford 2021) With debt levels rising, this reduces the fiscal leeway to shift capital flows towards nature and climate-positive activities and assets in the near future. Part of aligning post-Covid economic growth involves scaling up the internal annual NbS of the G20 spending by 140 per cent, an additional USD 165 billion annually, by 2050, as well as making agricultural subsidies nature-positive. These spending changes could be applied in the public and private sector, and would include land restoration to forestry, silvopasture, peatlands, and mangroves. A recently-released United Nations report found that around USD 470 billion in public funding for the agricultural sector consists mostly of price incentives, such as import tariffs and export subsidies, as well as fiscal subsidies which are tied to the production of a specific commodity or input. (UNEP, United Nations Development Programme [UNDP], Food and Agriculture Organisation of the United Nations [FAO] 2021) Many of these are inefficient, distort food prices, damage people’s health, and are often inequitable, putting big agri- business ahead of smallholder farmers, a large proportion of whom are women. On the other hand, some USD 110 billion supports infrastructure, research and development, and benefits the general agricultural sector. Reconfiguring support for agricultural producers, rather than eliminating it, means it can be used to help end poverty, eradicate hunger, achieve food security, improve nutrition, promote sustainable agriculture, foster sustainable consumption and production, mitigate the climate crisis, nurture nature, limit pollution and reduce inequalities. 22 Chapter 5 5.2 Scale up ODA, improve development finance and standardize NbS investment Having recognized the additional challenges faced by lower income developing countries in mobilizing financial resources to meet climate, nature and land degradation targets, the G20 could commit to assisting developing countries to meet their financial obligations under the Rio Conventions. A specific set of actions would be needed. The links between finance, climate, biodiversity and land degradation suggest that such actions will be fundamental for achieving global sustainability targets. Governments, public sector institutions and development finance institutions (DFI) could serve as cornerstone investors to supply catalytic and core capital to protect and restore nature. Cornerstone investment could include the creation and expansion of results-based financing schemes, such as nature performance bonds, the resilience bonds market, credit facilities for habitat restoration, nature-positive land use and water quality improvement, debt-for-nature swaps, blended finance mechanisms, credit guarantees and results-based payments for REDD+. International financial institutions such as multilateral development banks (MDBs) could adjust existing financing mechanisms to ensure financial support is aligned with nature goals. These adjustments need not compromise the short-term aims of these financial flows nor the historic mandates of institutions focused on economic development. Four main actions could drive outcomes: Foreign investment by DFIs in the agricultural sector could be channelled (exclusively) through green credit lines, to achieve overall nature, restoration and climate- positive outcomes. The knowledge and financial infrastructure already exists in most biodiversity-rich developing countries, and DFIs could provide timely support. IMF lending and Special Drawing Rights (from developed to developing countries) could include conditions on the maintainance and extension of environmental regulations. In some locations, there is pressure to unwind such regulations, which would confer no material benefit in addressing the current Covid-19 crisis, and could threaten the ability of these sectors to trade internationally in the future. This could be complemented with official development assistance to provide direct budgetary top-ups and technical assistance for enforcement agencies. Debt relief could be tied to existing and accelerated commitments to improved spatial planning practices which extend protected natural areas and accelerate forest restoration projects. These conditions could accelerate the implementation of existing international commitments, such as the Paris Agreement, aligned with Nationally Determined Contributions. Such activities could help to support both rural communities, including gender equality, and nature. Budgetary commitments to these activities could be forward-looking and persist beyond the current crisis period. More ambitiously, shareholders of international financial institutions could push for more profound transformations that prioritize NbS. These transformations could involve the extension of mandates specifically to involve nature-positive investments. It could also require managers to stress test their portfolios to properly account for nature-related risks. Finally, credit risk assessment and due diligence processes could incorporate assessments that take nature into account. G20 countries could assign organisations to report on G20 financial resource targets and commitments to support nature, which would work in collaboration with other relevant entities. This includes the need to develop a global methodology and standardized approach to classify, measure and value NbS in a way that allows cross-country comparison and analysis, and is meaningful for investment decision-making. 23 Chapter 5 5.3 Strengthen the investment case for private sector investment Private sector investment in NbS-relevant activities and assets is too small in volume and size because the investment case is often not strong enough. For example, demand for forest-carbon is still voluntary rather than compliance-driven, and there are limited ways at present to transfer credit risk that banks, investors and corporates are unable to absorb. Governments can create stable, predictable revenues from ecosystems such as forest carbon to entice private investment in NbS. The provision of public goods and services, such as carbon sequestration by forests and carbon storage in peatlands, remains unrewarded by firm, stable and predictable cashflows. There is a lack of proper control over access and royalties, leading to the over-exploitation of common access resources, such as fisheries and water; and the benefits (for example in health) of other services such as flood risk management, regional climate regulation, pest control and citizen access to nature are massively undervalued. These distortions in economic incentives reduce the private returns to investment in NbS and hence discourage investors. Members of the G20 could work together to develop new and innovative investment products and nature markets. The objective could be to scale and transform investment opportunities in NbS, such as carbon finance, to protect and restore ecosystems, using blended finance structures to increase impactful investment in high nature value locations The G20 could help to close the finance gap by engaging the private sector and unlocking investments to scale up NbS finance. For example, transforming sustainable supply chains and corporate commitments to achieve net-zero emissions and nature positive trajectories could directly increase voluntary private NbS investment. Governments could also create nature markets to reward the transition towards sustainable and regenerative food production, including sustainable forestry and agriculture, and wider innovation in sustainable food systems. They could build on the existing Taskforce on Climate-related Financial Disclosure (TCFD) by supporting a new reporting framework for the disclosure of effects and risks related to nature for individual companies, scheduled to be released in 2023 by the Taskforce on Nature-related Financial Disclosure. To guide future investments, the G20 could consider models that have an intersectional approach to the gender-NbS investments in support of women as drivers of net zero, nature-positive and resilient economies. 24 A Appendix8 Annex A.1 Investment by public and private sectors in NbS Estimating current investments began with the selection of data sources and the development of a methodology to extract NbS data. Figure A 1. MAgPIE: structure of the optimization process Step 1 Step 2 Step 3 Step 4 Step 5 Step 6 Review data Select and Estimate NbS Aggregate Filter and Visualize sets and download investment from and assess harmonize data and report reports data public and uncertainty to avoid double results private sources counting Source: Vivid Economics. Step 1: Review data sets and reports The team reviewed secondary sources complemented by stakeholder interviews. The most closely related studies found were: 1. The Financing Nature Report (TNC, Cornell and Paulson 2020): This report is a global review of financing into biodiversity conservation. It uses a narrow definition of NbS as climate finance channeled through carbon markets, totaling USD 0.8 –1.4 billion per year in 2019. It also found a USD 124 - 143 billion flow of finance into biodiversity protection in 2019. The report does not distinguish between private and public flows. 2. Global landscape of climate finance (CPI 2019): This report is a review of global climate finance, updated in December 2020. It has no specific NbS definition. The report estimated the climate finance flowing into the land use sector in 2019 as USD 21 billion - USD 7 billion for disaster risk management and USD 13 billion for water and waste. The report had no figure for private finance flows into NbS. 3. Climate finance report (joint MDB publication 2019): This report is a review of total MDB financing globally. It contains no explicit NbS definition. It estimated investment in land use sectors in 2019 as USD 1.7 billion, and water and wastewater as USD 1.6 billion. 4. A comprehensive overview of Global Biodiversity Finance (OECD 2020): This report is a global review of financing into biodiversity conservation. It has no specific NbS definition. It found total expenditure in biodiversity conservation to be USD 78 - 91 billion per year (2015-2017 average) and private flows to be USD 6.6-14 billion per year. 5. Nature-based solutions policy brief (Carbon Disclosure Project 2020): This brief focuses on a survey- based assessment of corporate investment into NbS. Fifteen per cent of a total of 459 responding companies were investing in NbS. The brief did not contain information on the value invested. 8 This appendix has been reproduced based on the State of Finance for Nature report, with adjustments for the differences in methodologies. 26 Annex Step 2: Select and download the data This study relies on two main data sources for the amount of finance of NbS in the public sector: data collected from domestic public expenditure (COFOG)9 and data collected from the Creditor Reporting System (CRS) of the Aid Activity database10 from the Organization for Economic Cooperation and Development (OECD). The COFOG data contains government expenditure for 11 of the 20 G20 countries (Australia, China, France, Germany, Italy, Japan, Russia, South Africa, Turkey, United Kingdom and the USA). Additional datasets, primarily official annual government budgets, were consulted for the United States,11 China,12 India,13 Canada,14 Mexico,15 Korea,16 Argentina,17 Brazil,18 and Indonesia.19, 20, 21 It was not possible to find data on NbS government expenditure for Saudi Arabia. The CRS Aid Activity data contains expenditure targeted at global environmental objectives for official development assistance (ODA). The database presents basic data on where aid goes, the purposes it serves and the policies it aims to implement, on a comparable basis. The CRS covers 144 countries, with data collected at the donor level. This database included data on NbS investment donations for all G20 countries except Argentina, China, India, Indonesia, Mexico, and South Africa. Specific to the private sector, the team identified sources of NbS finance in the literature and datasets that covered those sources. OECD data contains figures for philanthropies and foundations. This study extended the dataset by including figures from recent studies on biodiversity, conservation, ecosystem- based services, supply chains and voluntary carbon markets. 9 This part of the dataset refers to the Classification of the Functions of Government (COFOG), which provides first- and second level COFOG, on government expenditure data from the System of National Accounts according to the purpose for which the funds are used. First-level COFOG splits expenditure data into ten “functional” groups or sub-sectors of expenditures (such as defence, education and social protection), and the second level COFOG further splits each first-level group into up to nine sub-groups. For this report, second level data is extracted and triangulated against both OECD sectoral guidance on inclusions and exclusions within each category and sub-categories, and other major reports and studies in each of the sectors that can potentially contribute to NbS, including those on biodiversity, peatland, and agriculture. Studies are referenced in the bibliography section. 10 CRS data is monitored and analyzed by the OECD Development Assistance Committee (DAC). Data is collected on individual projects and programmes, with a focus on financial data. Within CRS, this study focuses on selected sectors and references for sectors relevant to NbS financing. A sector in this database refers to the main purpose category (e.g., health, agriculture, forestry, energy) of the intervention. The sectors represent first-level data. The sub-sector represents second-level data, which (as described above) goes into further detail and from which data linked to NbS is extracted. The data is subsequently cross-referenced with key sectoral studies. 11 U.S. Government Federal Spending database (2021). Retrieved from: http://usaspending.gov/. 12 CBD Financial Reporting Framework for China. 13 The Biodiversity Finance Initiative (2017). The Biodiversity Expenditure Review. Retrieved from: https://www.biodiversityfinance.net/ knowledge-product/biodiversity-expenditure-review-ber. 14 Department of Finance Canada (2018). Equality + Growth. Retrieved from: budget-2018-en.pdf. 15 Secretaria de hacienda y credito publico (2021). Criterios generales de politica econonomica para la iniciativa de ley de ingresos y el proyecto de presupuesto de egresos de la federacion correspondientes al ejercicio fiscal (2021). Retrieved from: https://www. finanzaspublicas.hacienda.gob.mx/work/models/Finanzas_Publicas/docs/paquete_economico/cgpe/cgpe_2021.pdf. 16 Korean Ministry of Economy and Finance (2018). 2018 Budget Proposal. Retrieved from: Press Releases (moef.go.kr). 17 Presidencia de la Nacion. El gasto publico social y el presupuesto 2018. Retrieved from: https://www.argentina.gob.ar/sites/ default/files/politicassociales-publicaciones-informe-gasto-social-2018.pdf. 18 World Wildlife Fund (2018). Financiamento publico em meio ambiente (2018). Retrieved from: https://d3nehc6yl9qzo4.cloudfront. net/downloads/financiamentomma_final2_web.pdf. 19 Indonesia Food Security Budget 2010-2020. 20 Indonesia Infrastructure Budget 2015-2020. 21 The World Bank Group. (2020). Spending for Better Results. 27 Annex Table A 1. Data sources on private-sector finance of NbS used in this and previous published work Data used in this report Category OECD Report data Paulson Report data OECD Paulson Mixed / Report Report Other Sustainable Data focuses on PEFC Data taken from four sectors supply chains and FSC only (forestry and (forestry, agriculture excl. palm oil, xagriculture) palm oil, fisheries) Data from Bennett et al Biodiversity (2017). Figure focuses Figures are higher because report offsets on biodiversity offset spans public and private finance xprogrammes in 33 of biodiversity offsets. countries. Private Data taken from GIIN Impact equity impact Not present in report Investing 2020; Impact Assets x investments portal ; SOPIC. Conservation Data from five largest NGOs conservation NGOs Paulson Report combines these x two categories. The OECD and Paulson Report both rely on the Expenditure from 14 out same data sources. Philanthropy of 26 philanthropies that x reported to OECD. Private finance leveraged by OECD Report and Paulson Report use data from GEF and multilateral OECD DAC. This report includes GCF data. x x x orgs. Combines transactions Paulson Report does not Forest and from both voluntary and disaggregate public and private land use compliance markets. investments into carbon markets. carbon Higher risk of double This report uses the Paulson x x markets counting with public- approach for voluntary forest sector funding. carbon markets and REDD+ only. Water quality Both reports use same trading & data source (Bennett and Report includes a broad x offsets Ruef 2016) “natural infrastructure” category encompassing watershed and coastal protection. It is unclear Payment for Specifically, private-sector to what extent these are private ecosystem payments for watershed sector investments in NbS. x services services. Note: OECD Report (2020). “Comprehensive Overview of Global Biodiversity Finance”. Deutz et al. (2020). “Financing Nature: Closing the global Biodiversity Financing Gap”. The Paulson Institute, The Nature Conservancy, Cornell Atkinson Center for Sustainability. Source: Vivid Economics. The data was collated and checked against published reports and academic articles for both the private and public sectors. Cross-referencing and checking between sources reduced the potential for double counting, but this risk has not been totally eliminated, particularly within the public sector data from OECD and specific government budgets. The OECD recognizes that there may be some double counting in its dataset, for example in the case of biodiversity and forestry-related activities. 28 Annex Step 3: Estimate NbS investment from public and private sources Estimates of the amount of public money flowing into NbS-relevant sectors were obtained and the proportion of each directed towards NbS was extracted. As there is no existing classification and tagging of this data for NbS, this study employed multipliers (scaling factors) from existing literature, together with sectoral guidance from the OECD, to scale down the volume of investment within each sector on the basis of the proportion of activities within that sector that can more confidently be defined as NbS. All numbers were peer-reviewed.22 Table A 2. Scaling factors used to assess the proportion of investment categories related to the NbS framework used for domestic public spending Sector Scaling Factors Agriculture, forestry, fishing and hunting 0.1 Waste water management 0.1 Pollution abatement 0.2 Protection of biodiversity and landscape 0.9 Environmental protection n.e.c. 0.2 Agriculture, forestry, fishing and hunting 0.1 Source: Vivid Economics based on expert assessments. Table A 3. Scaling factors used to assess the proportion of investment categories related to the NbS framework used for ODA spending Sector Scaling Factors 14010: Water sector policy and administrative management 0.4 14015: Water resources conservation (including data collection) 0.7 14040: River basins development 1.0 31110: Agricultural policy and administrative management 0.1 31120: Agricultural development 0.1 31130: Agricultural land resources 0.9 31140: Agricultural water resources 0.1 31210: Forestry policy and administrative management 0.9 31220: Forestry development 1.0 32162: Forest industries 0.6 41010: Environmental policy and administrative management 0.5 41020: Biosphere protection 0.6 41030: Biodiversity 1.0 41040: Site preservation 0.1 41081: Environmental education/training 0.4 41082: Environmental research 0.4 Source: Vivid Economics based on expert assessments. 22 List and resumé of reviewers available upon request. 29 Annex Step 4: Aggregate and assess uncertainty The confidence and reliability of NbS estimates depends on the granularity of the data. In order to account for data disparities, the data was classified by ranges of data estimates, with the upper bounds reflecting a more comprehensive list of NbS activities and the lower bounds reflecting a narrower definition of NbS. The final estimates are simply the midpoint between the upper and lower bounds. For example, the CRS dataset contains disaggregated categories for ODA related to the environment, as reported by donors to OECD. In this case, reliability is high, so the uncertainty range is low. In other sectors, confidence and reliability are low, such as agriculture, where both NbS-specific and non-NbS activities are recorded, so the uncertainty range is high. Table A 4 below lays out the framework used to classify sectors, sub-sectors and activities, their relevance and their level of certainty or uncertainty. Uncertainty remains, as the inclusion of cross-sectoral data reduces granularity while providing the benefit of a more comprehensive and comparable dataset. Examining asset level data has helped build granularity, but at the expense of comparability. Table A 4. Methodological framework used to assess uncertainty based on the granularity of data provided Range High uncertainty Low uncertainty Relevance Low Medium High Estimate of share of NbS 1-33 per cent 34-66 per cent 67-100 per cent Level First-level data Second-level data Third-level data Source type Fund/flow level Expenditure level Earmarked Asset level/project programme level level Regenerative agriculture, soil Agricultural preservation, shade agriculture Example Agriculture land resources, agricultural water Water conservation measure and resources agricultural waste water reuse and repurposing Note: The level of the data (first, second or third level) is a statistical classification to characterize the granularity of the data. First level is less granular than second and third level. Source: Vivid Economics. Step 5: Filter and harmonize data to avoid double counting The data is triangulated between sources and the definitions are assessed to exclude repeated transactions. The act of combining datasets can lead to double counting where categories overlap. Previous literature points to the risk of double counting, which arises when the same transaction is included multiple times. The emergence of new financial instruments means that the boundaries between private and public sector flows into NbS are increasingly blurred. In order to prevent double counting, the focus of the analysis is exclusively on expenditure figures, either through the COFOG database or country- specific annual budgets. Step 6: Visualize and report results The way in which the results are presented conveys the level of uncertainty in the estimates with error bars. 30 Annex A.2 Future NbS investment needs To determine future investment needs, estimates are modelled using MAgPIE23 (Model of Agricultural Production and its Impact on the Environment), a global land use allocation model designed to explore land competition dynamics in the context of carbon policy. The model takes a set of policy input assumptions and estimates the least costly way in which the land use sector can meet demand for agricultural products. Key outputs from the model include cost of action and land use change (Figure A 2 describes the basic structure of the model). Figure A 2. MAgPIE: structure of the optimization process INPUTS MAgPIE OUTPUTS Food Demand Investments Land conversion Emissions • Population • Technological change • Investments to convert • GDP • Irrigation investments to new land use type • Dietary choices Costs of afforestation, • Demand elasticities technological change, irrigation expansion, production Optimization Policies and climate action Food and land prices • Emissions constraint or carbon price Land use change (Mha) • Bioenergy demand • Land protections Change in agricultural land (Mha) Biophysical and climate data Technical mitigation Trade • Temperature increase • Investments into mitigation • Regional demand is met Crop production and yields associated with SSP scenario measures such as ruminant by domestic production • Biophysical constraints of vaccines and imports crops and vegetation Source: Vivid Economics. This work compared two sets of scenarios: the first set focuses on the additional costs needed to achieve international climate targets, and the second estimates the additional costs needed to achieve biodiversity targets. Each set includes at least two scenarios for comparison: a baseline and a policy scenario. The difference in costs between each policy scenario and the baseline scenario represents the additional investment needed to achieve the respective climate and biodiversity targets, such that for each time period, t: Investment Needst = Costst, Policy Scenario - Costst, Baseline Scenario The methodology behind the modelling exercise is laid out in the following sections. First, model assumptions are defined and an overview of the differences across the scenarios is provided for each set of scenarios. The model interactions and how key assumptions will affect results are then analyzed. Finally, how the modelled outputs fit into the analysis of future investment needs is described. 23 Vivid Economics is currently using MAgPIE v4.1. The latest version, MAgPIE 4.3, models peatland restoration (see Humpenöder et al., 2020). 31 Annex Climate targets: assumptions The modelling exercise starts with the development of two scenarios, each characterized by a set of assumptions. Two scenarios developed by Vivid Economics for the United Nations Principles for Responsible Investment are compared in order to study the additional costs needed to achieve climate targets: the Inevitable Policy Response Forecast Policy Scenario and the corresponding Baseline Scenario. A list of assumptions is given below: • Population and GDP: Growth projections align with SSP2 of the Shared Socioeconomic Pathways (SSP) (O’Neill et al. 2014; Riahi et al. 2017). This assumption implies a gradual increase in GDP, from about USD 130,000 billion in 2020 up to over USD 300,000 billion in 2050. Global population growth is moderate and levels off in the second half of the century, after reaching ~9.2 billion people in 2050. • Trade: Trade liberalization will increase across the board, with crop products achieving higher levels of liberalization than livestock products. • Cost of investments: Investment in technological change is aligned with historical trends. • Protected areas: Both scenarios include strict nature reserves, wilderness area and natural parks (IUCN I and II categories). The difference between the Forecast Policy Scenario and the Baseline Scenario is based on several policy assumptions: 1. NDC commitments involving the afforestation and regeneration of natural land. The Baseline Scenario only includes current nationally implemented policies, while the Forecast Policy Scenario integrates national NDC commitments. The NDC commitments are all the future sustainability policies and targets that a country publicly reported for the Paris Agreement.24 2. 2C-aligned carbon price trajectory. A carbon price is introduced in the agriculture and forestry sectors in the Forecast Policy Scenario, but not in the Baseline Scenario.25 The price applied to CO2 is half that applied to all other gases to reflect challenges in regulating deforestation and rewarding afforestation. 3. 2C-aligned bioenergy trajectory. In the Forecast Policy Scenario, bioenergy production in the land use system allows the energy sector to reduce its emissions using BECCS.26 4. Ruminant meat fadeout. In the Forecast Policy Scenario, global ruminant meat demand declines by 25 per cent by 2050 relative to the Baseline Scenario, where it remains constant. 24 Information on NDC commitments has been extracted from country reports, while information on currently implemented policies refers to policies implemented before 2015. 25 These trajectories are available as part of a database of integrated assessment modelling (IAM) exercises run by the Potsdam Institute for Climate Impact Research (PIK). 26 Bioenergy with Carbon Capture and Storage (BECCS). 32 Annex Table A 4. Key assumptions in the MAgPIE model Variable Description Source Baseline scenario Policy scenario Consistent with a 1. GHG price Defines global price trajectories for CO , IIASA* 2 database and No carbon price carbon budget of 950 trajectory N2O, CH4. PIK GtCO2e (<2C), 2030 phase-in 2. Reduction Lowers economic incentive for CO2 factor for CO emissions reduction from avoided 2 price deforestation and afforestation - Not relevant 50 per cent compared to carbon price level. 3. Bioenergy Defines demand for second generation IIASA Consistent Consistent with a trajectory bioenergy crops (only used for fuel database and with current carbon budget of 950 production, not for food). PIK commitments GtCO2e (<2C) 4. Population Sets trajectories based on SSPs (Shared SSP2 - “middle-of-the-road” consistent Socioeconomic Pathways). SSP database pathways 5. GDP Sets trajectories based on SSPs. SSP database SSP2 - “middle-of-the-road” consistent pathways Level of area protection is based on IUCN categories. The default (WDPA) includes IUCN WDPA* categories I 6. Protected and II. The WDPA protection covers (Leclère et al. IUCN categories I and II (no change areas approximately 400 Mha of the terrestrial 2018)* from current levels) land surface. Alternatively, protection can be extended to include other areas, such as biodiversity hotspots. Defines decline in proportion of calories Share of Gradual global 7. Ruminant from ruminant meat in total meat (Bodirsky et ruminant meat ruminant meat meat fadeout demand relative to baseline scenario al. n.d) in diets remains demand declines by where it is treated as constant. constant. 25 per cent by 2050 Defines change in current trade patterns. Traded goods can be allocated in one of two trade pools: one based on historical 8. Trade trends and another one where goods are (Schmitz et Historic self-sufficiency ratios liberalization traded based on comparative advantage. al. 2012) maintained, trade with historic partners, Trade liberalization implies a higher limited free trade percentage on goods being traded in the “comparative advantage pool”. 9. Future costs Selected options for the expected costs (Dietrich et al. Trajectories for future investment costs of investment of future productivity improvement. 2014) in line with historical trends Notes: *shared socioeconomic pathways *International Institute for Applied Systems Analysis (IIASA) Source: Vivid Economics. 33 Annex Biodiversity targets: assumptions Two scenarios developed by Vivid Economics for the UK Treasury’s Dasgupta Review of the Economics of Biodiversity are compared to study the additional costs needed to achieve biodiversity targets: the Immediate Action Scenario and the Baseline Scenario. As with the previous set of scenarios, assumptions of the population, GDP, trade and cost of investment remain unchanged across scenarios. Both scenarios include a diet shift of 25 per cent away from ruminant meat by 2050 (relative to a baseline in which it remains constant). The Immediate Action Scenario differs from the Baseline Scenario in terms of policy and biodiversity ambition. As with the IPR scenarios, one (Immediate Action) is more ambitious and includes NDC commitments on the afforestation and regeneration of natural land, as well as 2C-aligned carbon prices and biodiversity supply pathways. Protected areas also expand under the Immediate Action Scenario to include ~21-24 per cent of global land area to cover all categories of protected areas under the World Database of Protected Areas (WDPA) as well as key biodiversity hotspots. Table A 6. Immediate and delayed action scenarios differ in assumptions regarding scale of policy action Immediate action Variable Description Source (includes immediate Baseline high ambition) scenario SSP2 RCP2.6 IIASA database consistent trajectory 1. GHG price Defines global price trajectories for and PIK integrated with carbon prices No carbon trajectory CO2, N2O, CH4. assessment phasing-in globally price modelling exercise in 2020 (higher for immediate action) 2. Reduction Lowers economic incentive for CO2 factor for CO emissions reduction from avoided 2 price deforestation and afforestation - 0.5 - compared to carbon price level. 3. Bioenergy Defines demand for second IIASA database and PIK integrated SSP2 RCP2.6 SSP2 NPi trajectory generation bioenergy crops (only used for fuel production, not for food). assessment consistent trajectory consistent modelling exercise trajectory 4. Population Sets trajectories based on SSPs. SSP database SSP2 – “middle-of-the-road” consistent pathways 5. GDP Sets trajectories based on SSPs. SSP database SSP2 – “middle-of-the-road” consistent pathways 351 Mha 6. Protected WDPA categories plus all proposed Leclère et al. 2018* 2708 Mha in 2020 (no change areas areas and key biodiversity hotspots. from current levels) Defines decline in proportion of 7. Ruminant calories from ruminant meat in total 25 per cent reduction in ruminant meat fadeout meat demand relative to baseline Bodirsky et al., n.dscenario where it is treated as meat share of diet by 2050 constant. 10 per cent trade liberalization for 8. Trade Defines change in current trade liberalization patterns. Schmitz et al. 2012 secondary and livestock products in 2030, 2050, 2100 and 20 per cent for crops 9. Future costs Selected options for the expected of investment costs of future productivity Dietrich et al. 2014 Trajectories for future investment improvement. costs in line with historical trends 34 Annex Note: * The default protection in MAgPIE is defined by the WDPA protected areas. It includes IUCN WDPA categories I and II. The WDPA protection covers approximately 400 Mha of the terrestrial land surface. For a world with increased protection, this work follows a procedure similar to the Bending the Curve project, where a “potential protected area layer” is created, i.e. areas of the world that should be a priority to protect. Two criteria served for selection: (i) Expanding the WDPA protection from Cat I and II to cover all categories, and in addition to designated WDPA protected areas proposed PAs are also included (areas which are not protected, but deemed by WDPA to be prioritized for protection in the near or distant future, based on a variety of local factors). (ii) Key biodiversity hotspots, a similar layer as used in Bending the Curve. The created potential protected layer is named the WDPA+, which comes to around 2700 Mha, which is ~21-24 per cent of the terrestrial land surface and 600 per cent more than present WDPA protection. Source: Vivid Economics. Model interactions This sub-section explains how model assumptions affect system costs, focusing on the impact of climate action on transition costs. In MAgPIE, land is a limited resource which needs to be allocated to either agricultural production (food, feed and other materials) or carbon sequestration. This allocation process aims to minimize the costs incurred by the land use system in order to meet a specific demand for agricultural products. Demand for agricultural products is a function of both population and income. The former relationship is straightforward: more food and fiber will be needed to feed, clothe and supply a growing population. The latter refers to the fact that, as people become richer, their budget constraints loosen, allowing individuals to access more than enough to satisfy their essential wants. As both population and GDP are set to increase under SSP2,27 demand will grow accordingly, and the agricultural sector will have to produce more using the same amount of land. This will intensify competition for land use, leading to investment in innovation, higher production efficiency and higher food prices. Figure A 4. Examples of policy impacts on the land use sector • Model inputs include assumptions of country’s policy Population GDP Scenarios targets, including NDCs and area Carbon Policies & protection, and carbon prices Drivers Greenhouse gas policy Climate Action • The model considers targets Policies & and carbon prices as exogenous Greenhouse Nitrogen Climate Action inputs and then considers them gas policy in its optimization process Methane Soil & Food organic matter Land Costs conversion • Relative to business as usual, Material Forestry scenarios that price emissions Water Optimization show higher levels of forest land. Carbon Price Interest rate • Introducing a carbon price Land & Forest increases sequestration revenues Demand Pasture and incentivizes afforestation and reforestation Yields Urban Bioenergy Livestock Technological change Trade Factor costs • The model includes the NDC commitments of countries as Natural required levels of afforestation vegetation and land restoration. Production Crop Policy target and • Afforestation from NDC natural vegetation Processing commitments is not price driven and is not rewarded. Residues • Area protection is an input to Transport the model: all protected areas Socioeconomic data Biogeographical & climate are excluded from any type of impact data management activity. Source: Vivid Economics. 27 Assumption that remains unvaried across scenarios. 35 Annex The introduction of climate policies puts additional pressure on the land use sector, increasing the costs associated with meeting agricultural demand. Expanding area protection to include biodiversity hotspots as well as setting aside land to meet NDC commitments reduces the hectares of land available for agricultural production. The introduction of a price for greenhouse gases has two direct effects on the land use system: on the one hand, it increases production costs for emission-intensive activities, such as the production of beef and animal feed; on the other hand, it increases the benefits associated with non- productive activities, such as the regrowth of natural vegetation for carbon sequestration. The land use system faces substantial transition costs to meet demand under increasingly stringent land constraints and with cleaner/less-costly production systems, both in the form of investments to increase efficiency and of operational costs associated with more intensive production systems. Model outputs and analysis of investment needs As the model accounts for all costs in the land use sector, the direct and indirect costs of climate action are differentiated. The former category includes costs related to GHG emissions and mitigation actions. The latter category includes costs in the agricultural sector, either investments or recurring costs, which are likely to increase with policy ambition. In this case, the difference across scenarios is going to be driven by the additional pressure on the land use system due to climate action. This is because in order to reach climate and biodiversity targets, the land use sector allocates larger areas to the forestry and regrowth of natural vegetation, reducing the amount of land available for agricultural production. To “feed” an increasingly populous and rich world, agricultural producers need to become more efficient by investing in innovation and increasing spending on the overall production process. For example, firms trying to increase their crop yields will have to invest some capital in acquiring innovative machinery or developing new production systems, and to spend more money on skilled labor. Table A 7. Costs from MAgPIE Category List of costs Description The cost of input factors for producing food and Indirect costs 1. Costs of input factors materials includes labor, energy, physical inputs, non- land capital cost Indirect costs 2. Investment in technical Investment in technical change and adoption includes change and adoption R&D, adoption and irrigation expansion Indirect costs 3. Costs of processing, Costs of processing, transport and trade includes all transport and trade downstream costs to consumer Cost of land conversion from one land use to another, Indirect costs 4. Cost of land conversion including land clearing, land preparation, for agriculture or restoration Indirect cost 5. Cost of forest management Cost associated with forest management Split into a. Emissions costs associated with a Paris- Direct costs 6. Costs of climate policy aligned carbon pricing trajectory; and b. Rewards for negative emissions Source: Vivid Economics. 36 Annex The estimate examines the difference in the indirect costs of climate action to evaluate investment needs. Focusing on this category of cost allows the estimate to calculate the global spending needed to meet climate and biodiversity targets. Total investment needs between 2020 and 2050 are calculated as the difference in the cumulative discounted cashflows of the indirect costs of climate and biodiversity action between the policy and baseline scenario: 2050 𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇 𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑇𝑇𝑖𝑖𝑖𝑖𝑖𝑖𝑇𝑇 𝑖𝑖𝑖𝑖𝑖𝑖𝑛𝑛𝑖𝑖2020−2050 = ෍ Δ 𝐶𝐶𝑇𝑇𝑖𝑖𝑇𝑇𝑖𝑖𝑡𝑡 𝑡𝑡=2020 2050 = ෍ Δ 𝐶𝐶𝑇𝑇𝑖𝑖𝑇𝑇𝑖𝑖𝑡𝑡𝑡 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃 𝑆𝑆𝑃𝑃𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑃𝑃𝑃𝑃 − 𝐶𝐶𝑇𝑇𝑖𝑖𝑇𝑇𝑖𝑖𝑡𝑡𝑡 𝐵𝐵𝑆𝑆𝐵𝐵𝑆𝑆𝑃𝑃𝑃𝑃𝑆𝑆𝑆𝑆 𝑆𝑆𝑃𝑃𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑃𝑃𝑃𝑃 𝑡𝑡=2020 Off-model analysis This section provides an overview of the analysis of investment needs for NbS that are not included in the model. It starts with a discussion on the sources of data for the off-the-model analysis and concludes with an overview of the methodology and outputs. The off-model analysis focuses on three types of NbS asset: mangroves, peatlands and agroforestry: • Mangroves are dense coastal forests covering the planet’s tropical and sub-tropical belt. Mangrove forests not only sequester close to 32 Mt CO2 annually, but also protect coastal areas from extreme events, improve water and food security, and provide a safe breeding ground for marine biodiversity. This study includes the restoration of mangrove forests.28 • Peatlands are terrestrial wetland ecosystems where ‘year-round waterlogged conditions slow the process of plant decomposition to such an extent that dead plants accumulate to form peat.’29 Peatlands provide the largest natural terrestrial carbon stock storage (550 Gt CO2), but damaged peatlands contribute to approximately 5-6 per cent of GHG emissions from land use, and this can rise to 10 per cent if they are burned. This study looks at the costs related to restoring damaged and degraded peatlands, typically from overgrazing, drainage and fires.30 • Agroforestry involves ‘land use systems in which trees are grown in combination with agriculture on the same land'.31 It also includes: silvoarable agroforestry, the combination of trees and crops; forest farming, the cultivation of crops within a forest environment; and other systems that entail planting trees between fields, hedgerows, shelterbelts and riparian buffers.32 This study focuses on silvopasture, which is the combination of trees and livestock. The proposed focus on mangroves, peatlands and agroforestry in this study is due to their mitigation potential, data availability and compatibility with modelled results. Estimates collected from Griscom et al. (2020) ensure that solutions with high climate mitigation potential are included in the analysis. Table A 8 shows potential climate mitigation comparisons for different types of land. The second stage of the analysis includes data collection regarding both costs and potential future uptake for each solution. Solutions that could not be integrated into the modelled results are excluded. For instance, trees on croplands are not included in the analysis, while trees on pastureland are.33 It is assumed in the case of silvopasture that trees are planted on grazing land, with no effects on yields or production. 28 The Case for Mangroves as a Nature-based Climate Solution (Earth Security, 2020). 29 IUCN Issues Briefs – Peatlands and Climate Change. 30 Joosten, H. (2015) https://www.ramsar.org/sites/default/files/documents/library/ny_2._korrektur_anp_peatland.pdf, IPCC (2020). https://wedocs.unep.org/bitstream/handle/20.500.11822/29261/IPCCLand.pdf?sequence=1&isAllowed=y; Wetlands International (2015). https://www.wetlands.org/publications/saving-peat-less-heat-update/. 31 European Union, Article 23 of Regulation 1305/2013. 32 Mosquera-Losada MR et al. (2018). 33 This is because a methodology to integrate on-model assumptions around increase in crop yields and monoculture agriculture with off-model assumptions around silvoarable agroforestry has not yet been developed. 37 Annex Climate mitigation potential in 2030 (PgCO2e/year) Table A 8. Climate mitigation potential in 2030 (PgCO2e/year) 0 1 2 3 4 10 Forests Reforestation Avoided Forest Conv. Avoided Forest Mgmt. Improved Plantations Avoided Woodfuel Fire Management Ag. & Grasslands Biochar Climate Mitigation Trees in Croplands Nutrient Management Maximum with safeguards Grazing - Feed <2°C ambition Conservation Ag. Improved Rice Low cost portion of <2°C ambition Grazing - Animal Mgmt. Grazing - Optimal Int. Grazing - Legumes Avoided Grassland Conv. Wetlands Other Benefits Coastal Restoration Soil Peat Restoration Water Avoided Peat Impacts Avoided Coastal Impacts Biodiversity Air Source: Griscom et al. (2020). Because MAgPIE focuses on forests and innovation in the agricultural sector, the modelled results are integrated with some off-the-model analyses to include investment needs associated with NbS not covered by the model. This analysis is based on the available literature on capital costs and operating expenses associated with a subset of relevant NbS not covered in the modelling exercise. Table A 9 provides a list of sources, and details the type of information that is integrated into each in the analysis. 38 Annex Table A 9. List of sources for NbS not covered by MAgPIE Category Source Relevant Information Adapt Now: A Global Call For Cost-benefit analysis of mangroves Mangroves protection Leadership On Climate Resilience. protection: costs by 2030 are close to (Global Commissions on Adaptation USD 167 billion (benefits USD 1 trillion, 2019) benefit to cost ratio 6:1) The Role of the Natural Environment Mangroves restoration in Adaptation, Background Paper Median restoration costs for 2 for the Global Commission on mangroves: $0.10/m (between $0.05/2 2 Adaptation. (Kapos et al. 2019) m and $6.50/m ) Mapping Ocean Wealth Explorer and Mangrove Restoration Potential: A Restoration potential: 812,003 ha Mangroves restoration global map highlighting a critical (regional information available in the opportunity (Worthington et al. 2018) paper) Capital costs associated with Peatland restoration and The Economics of Peatland protection Restoration (Glenk and Martin-Ortega restoration: £200/ha to £10,000/ha 2018) Recurring costs: £25/ha to £400/ha per year Peatland rewetting: Peatland protection and restoration One-time costs: USD05 7000/ha Peatland restoration are key for climate change mitigation Recurring costs: USD05 200/ha (Humpenöder et al. 2020) Also includes information on total peatland restored under three different policy scenarios Silvopasture: Agroforestry Vivid Economics (all numbers in 2019 £/ha)Capital Expenditure 1298,47 Operating Expense 18,94 Source: Vivid Economics. The objective of the off-model analysis is to estimate the direct costs of future restoration and the protection of mangroves and peatland. To this end, the associated cash flows as the sum of the capital investment and the cumulative operations expenditure between the initial investment period and 2050 are calculated for each ha of protection and restoration. For peatland, the timing of the investments follows the dynamics set out in Humpenöder et al. (2020); for mangrove protection and restoration a linear increase in land protected/restored between 2020 and 2050 is assumed. The direct costs of mangrove and peatland restoration are added to the value obtained from MAgPIE to obtain the total future investment needs. Because none of these options are considered by the model, the costs calculated on and off model are mutually exclusive. 39 Annex A.3 Limitations There are several limitations and notes regarding the estimates in this report. • Land-related NbS: Like the global report, this report is limited to land-related NbS and focuses exclusively on disbursed investments, as opposed raised or pledged capital. To some extent this is due to the thematic focus of the organizations involved in issuing this report, however, another reason was data availability, especially in relation to private finance. Note that the aggregated nature of some data sets means that some marine spending might be included. The authors advise that future reports include marine NbS. • Geographic scope: This report collects data from the G20 specifically for current NbS spending and future NbS spending need predictions. These estimates include comprehensive data, as G20 NbS spending data is much more comprehensive than worldwide public investment, however, some public finances will have been omitted for the future predictions on a global scale, as not every country publishes detailed data on public NbS finances and the data was aggregated by geographic region. • Double counting: There is a risk of double counting, which arises because it is unclear in some cases whether entities are included in multiple categories within data sets. Data was triangulated between sources and definitions during the data analysis with the intent to reduce the amount of double counting, but some might remain. • Investment at the “asset level”: This report focuses on actual investment in assets rather than pledged or budgeted figures. • Data limitations and related issues: Data in the NbS space is minimal. The methodology addresses a lack of comparable data, lack of data aggregation and limited disclosure of proprietary information, however, despite precautions, the selection and use of data for this report still risks double counting and the partial quantification of costs, benefits, and effects. • Nature-neutral or negative finance: This report tracks nature-positive finance, although it might also include nature-neutral or negative finance to some extent. • ‘Neutral finance’ aligns conditionally with NbS activities, making sometimes negative and sometimes positive contributions depending on circumstances. Examples include agricultural intensification, bioenergy and timber harvesting. • ‘Negative finance’ harms ecosystems and the biosphere. Examples include the clearance of natural vegetation, and/or drainage of peatlands for commodity production, unsustainable forest management and infrastructure development. • Gender: When tracking investments into NbS, it is crucial to recognize gender dimensions, like women’s contribution to the conservation and growth of natural capital and the economic opportunities available to them in this area. To complement these linkages, national statistics should move towards gender-disaggregated data at the sector level, such as forestry and agriculture. Future reports will aim to utilize a gender lens and advocate for gender specific data to be collected across financial, economic, social, health and environment indicators. Currently, the limited availability of gender specific data is a key barrier to conduct a gender analysis. 40 List of Abbreviations AFD French Development Agency BECCS Bioenergy with Carbon Capture and Storage BEIS UK Department for Business, Energy and Industrial Strategy BFFI Biodiversity Footprint for Financial Institutions CBD Convention on Biological Diversity COFOG Classification of the Functions of Government COP Conference of the Parties CPI Climate Policy Initiative CPIC Coalition for Private Investment in Conservation CRS Creditor Reporting System DAC Development Assistance Committee DCA Development Credit Authority DFI Development Finance Institution DNB De Nederlandsche Bank ESG Environmental, Social and Governance EU European Union EUR Euro FAO Food and Agriculture Organization FONAFIFO National Forestry Financing Fund FSC Forest Stewardship Council GBP Great British Pound GCF Green Climate Fund GDP Gross Domestic Product GEF Global Environmental Facility GHG Greenhouse Gas GIIN Global Impact Investing Network GSI Greenness of Stimulus Index IATI International Aid Transparency Initiative IIASA International Institute for Applied Systems Analysis IISD International Institute for Sustainable Development IMF International Monetary Fund IPBES Intergovernmental Panel on Biodiversity and Ecosystem Services IPCC Intergovernmental Panel on Climate Change IPR Inevitable Policy Response IUCN International Union for Conservation of Nature KPI Key Performance Indicators MDB Multilateral Development Bank NbS Nature-Based Solutions NCFA Natural Capital Finance Alliance NDC Nationally Determined Contributions NCS Natural Climate Solutions NYDF New York Declaration on Forests ODA Official Development Assistance OECD Organization for Economic Co-operation and Development OOF Other Official Flows PEFC Programme for the Endorsement of Forest Certification PES Payment for Ecosystem Services PIK Potsdam Institute P4F Partnerships for Forests REDD+ Reducing Emissions from Deforestation and Forest Degradation RLU Royal Lestari Utama SAVi Sustainable Asset Valuation SOPIC State of Private Investment in Conservation SSP Shared Socioeconomic Pathways TLFF Tropical Landscape Finance Facility UK United Kingdom UN United Nations UNCCD United Nations Convention to Combat Desertification UNEP United Nations Environmental Programme UNFCCC United Nations Framework Convention on Climate Change USAID United States Agency for International Development USD United Stated Dollar WDPA World Database of Protected Areas WISE-UP Water Infrastructure Solutions from Ecosystem Services WRI World Resources Institute WWF World-Wide Fund for Nature Chapter 5 References Dasgupta, P. (2021), The Economics of Biodiversity: The Dasgupta Review. (London: HM Treasury). Global Center on Adaptation (2020). State and Trends in Adaptation Report 2020 (Vol. 1). Retrieved from: https://gca.org/reports/ G20. About the G20. Retrieved July 16, 2021, from: https://www.g20.org/about-the-g20.html G20 Ministers Communiqué. July 22, 2021. Retrieved from: 2021_07_22_ITG20_ENV_Final IMF (2013). IMF Survey: IMF Facilitates Debate on Private Sector, Growth, Jobs in Mideast. Retrieved July 15, 2021, from: https://www.imf.org/en/News/Articles/2015/09/28/04/53/socar112713a IPBES (2019). Global assessment report on biodiversity and ecosystem services of the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services. E. S. Brondizio, J. Settele, S. Díaz, and H. T. Ngo (editors). IPBES secretariat, Bonn, Germany. 1148 pages. https://doi.org/10.5281/zenodo.3831673 Menéndez, P., Losada, I. J., Torres-Ortega, S., Narayan, S., & Beck, M. W. (2020). The Global Flood Protection Benefits of Mangroves. In Scientific Reports (Vol. 10, Issue 1) . https://doi.org/10.1038/s41598-020-61136-6 OECD (2020). A Comprehensive Overview of Global Biodiversity Finance. Retrieved from: https://www.oecd. org/environment/resources/biodiversityfinance.htm UNEP, Global Recovery Observatory, University of Oxford (2021). Are We Building Back Better? Evidence from 2020 and Pathways to Inclusive Spending. Retrieved from: AWBBB.pdf (unep.org) UNEP, UNDP, FAO (2021). A multi-billion dollar opportunity: Repurposing agricultural support to transform food systems. UNEP, WEF, ELD, Vivid Economics (2021). State of Finance for Nature 2021. Retrieved from: https://www. unep.org/resources/state-finance-nature Vivid Economics & Finance for Biodiversity Initiative (2021). Greenness of Stimulus Index. Retrieved from: https://www.vivideconomics.com/wp-content/uploads/2021/07/Green-Stimulus-Index-6th-Edition_final- report.pdf World Economic Forum. (2020). Half of World’s GDP Moderately or Highly Dependent on Nature, Says New Report. Retrieved from: https://www.weforum.org/press/2020/01/half-of-world-s-gdp-moderately-or-highly- dependent-on-nature-says-new-report/ World Resources Institute (2020). Nature is An Economic Winner for COVID-19 Recovery. Retrieved from: https://www.wri.org/insights/nature-economic-winner-covid-19-recovery 43 Chapter 5 Contact Ivo Mulder: ivo.mulder@un.org Aurélia Blin: blin@un.org United Nations Environment Programme Climate Finance Unit 15 Chemin des Anemones 1219 Geneva, Switzerland In Support of: Funded by: 44