Barriers to investment

There are four principal reasons for why the risks of investing in nature currently outweigh the returns: 

• the systemic undervaluation of nature and the absence of drivers for the private sector to invest in its conservation, restoration, and management, means that there are limited sources of revenue from nature to fund investment; 
• the uncertainty and complexity created by the lack of coherence between the approach to environmental regulation, existing public funding mechanisms, and incentives, results in very high transaction costs that create significant disincentives for investment in nature-based projects; 
• the lack of an institutional architecture and robust market governance including approved standards for measuring and accrediting nature-based projects, means that investors do not have sufficient certainty to price and manage risk over the long term; and 
• the limited capacity of the current supply chain to deliver a robust and reliable pipeline of nature-based projects means that projects cannot be readily aggregated to investment scale.