Nature has a funding gap

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For most of economic history, nature has been treated like an all-you-can-eat buffet with no bill at the end. Forests filtered water, mangroves absorbed storm surges, and pollinators kept $800 billion worth of agriculture humming along. Nobody sent an invoice.

That arrangement is starting to break down. A sweeping United Nations report released this month found that the global economy’s focus on growth is actively degrading the natural systems it depends on, with the costs running into trillions of dollars annually.

More than half of the world’s GDP is moderately or highly dependent on nature. And a growing field of researchers and investors is racing to figure out what that dependency is worth — before more of it disappears.

The gap between what nature needs and what it gets

Welcome to nature finance, the effort to channel investment toward protecting and restoring ecosystems. The global biodiversity financing gap has ballooned to $942 billion per year, according to the UN Environment Programme. Only $208 billion currently flows toward biodiversity, meaning roughly 80% of what’s needed simply isn’t showing up.

Private capital is finally arriving, even if it’s arriving late. Private finance for nature jumped from $9.4 billion in 2020 to $102 billion in 2024, growth that reflects new interest but also an expanded definition of what counts as nature finance. Green and resilience bonds hit a cumulative $5.7 trillion in issuance that same year.

Newer instruments are gaining traction, too. Biodiversity credits, which let companies purchase measured units of conservation, are being piloted in Costa Rica and Colombia. Australia launched a market that lets landholders earn and trade biodiversity certificates.

These are real, functioning mechanisms. But they remain small relative to the problem, in part because nature has been invisible on balance sheets for so long that financial systems don’t know how to account for it. GDP measures the value of timber harvested from a forest but not the value of the forest standing there filtering water and sequestering carbon.

A growing field called natural capital accounting is trying to fix that. The core idea is straightforward. Just as a business tracks its physical and financial assets, natural capital accounting tallies up the economic value of a country’s ecosystems and the services they provide, from flood prevention to crop pollination to carbon storage. It’s an attempt to make visible what traditional economics has treated as free.

Stanford’s Natural Capital Alliance recently helped Colombia calculate that ecosystems in the Upper Sinú Basin deliver around $100 million annually to hydropower and clean water. Canada, New Zealand, and the E.U. have launched their own initiatives.

It’s worth pausing here. Turning nature into a line item on a balance sheet is a distinctly Western idea, and not everyone thinks it’s a good one. Indigenous leaders and some ecologists argue that assigning dollar values to ecosystems reduces living systems to commodities and extends the same extractive logic that caused the damage in the first place.

That tension doesn’t resolve neatly. But the Western economic framework has already won the argument in practice, if not in principle. The money is flowing through spreadsheets and bond markets whether anyone likes it or not.

The pragmatic bet behind natural capital accounting is that if nature has to compete inside that system, it should at least show up with a number attached.

The money problem has a money problem

In the United States, just 2% to 3% of philanthropic giving goes to environmental causes. Nature isn’t losing a funding competition. It’s barely in one.

Still, the money that is moving is moving fast. At last year’s COP30, Norway pledged $3 billion to protect tropical forests. It also helped launch a fund designed to help cattle ranchers in Brazil’s Amazon $AMZN -0.77% region transition to more sustainable practices.

HSBC launched a $1 billion natural capital fund targeting reforestation, and companies like Unilever and General Mills $GIS -0.24% are scaling regenerative agriculture.

But the political backdrop is volatile. The Trump administration terminated the National Nature Assessment, a first-of-its-kind federal effort to evaluate nature across the U.S. In Europe, the Nature Restoration Law barely survived a legislative fight.

The irony is that the economic case has never been stronger. Mangroves prevent more than $65 billion in property damage annually. American birders alone spent an estimated $107.6 billion in 2022, almost six times what the NFL brings in. Letting these systems collapse isn’t just an environmental failure. It’s a financial one.

Investing in nature could unlock $10 trillion in annual economic value by 2030, according to the World Economic Forum. But “could” is doing a lot of heavy lifting in that sentence. For now, most of the biggest numbers in nature finance are still projections, not results.

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