Deep Dive: Nature-Based Solutions - What's Working, What Isn't, and What's Next

Nature-based solutions (NBS) have emerged as one of the most promising and contested strategies in the global fight against climate change. From reforestation projects in the Amazon to peatland restoration in Scotland, these interventions harness the power of ecosystems to sequester carbon, enhance biodiversity, and build climate resilience. Yet as investment surges and corporate buyers scramble to secure high-quality credits, fundamental questions persist about efficacy, permanence, and scalability. This deep dive examines the current state of nature-based solutions, analyzing what interventions are delivering measurable results, where critical failures are occurring, and what trajectories will define the sector through 2030 and beyond.

Why Nature-Based Solutions Matter

The urgency behind NBS adoption stems from a stark reality: global forests currently absorb approximately 7.6 billion tonnes of CO₂ annually, representing roughly 20% of total anthropogenic emissions. No engineered carbon capture technology comes close to matching this scale. The Forestry and Land Use carbon market, valued at $25.8 billion in 2024, is projected to reach $105.2 billion by 2034, reflecting a compound annual growth rate of 15.7%. Forest-based projects already account for approximately 50% of all credits issued in the voluntary carbon market (VCM).

However, this growth trajectory collides with a sobering financing gap. Private investment in forest finance reached approximately $9 billion in 2024, but estimates indicate that $460 billion annually will be required by 2030 to meet global climate and biodiversity targets. This represents a 20-fold increase from current levels, a gap that cannot be closed through incremental improvements alone.

The quality dimension compounds these challenges. High-quality NBS credits now command approximately $14.80 per tonne, while lower-quality credits trade at just $3.50 per tonne. This four-fold price differential reflects buyer sophistication and the market's emerging ability to distinguish between projects with robust methodologies and those plagued by additionality and permanence concerns.

Understanding Nature-Based Solutions: Core Concepts

Nature-based solutions encompass a spectrum of interventions that leverage natural ecosystems for climate mitigation and adaptation. The primary categories include:

Forest Carbon Projects involve afforestation (planting trees on previously non-forested land), reforestation (restoring degraded forest areas), and avoided deforestation (REDD+ projects that prevent conversion of existing forests). Typical sequestration rates range from 1 to 2 tonnes of CO₂ per acre per year, though this varies significantly based on species, climate, and management practices.

Blue Carbon Initiatives focus on coastal and marine ecosystems, particularly mangroves, seagrass meadows, and salt marshes. These ecosystems sequester carbon at rates up to five times higher than terrestrial forests on a per-hectare basis, while providing critical co-benefits including coastal protection and fisheries habitat.

Peatland Restoration addresses degraded peatlands, which store approximately twice as much carbon as all the world's forests combined. When drained for agriculture or forestry, peatlands become significant emission sources. Rewetting and restoration can halt these emissions and gradually restore carbon sequestration capacity.

Regenerative Agriculture integrates practices such as cover cropping, reduced tillage, and agroforestry to enhance soil carbon storage while maintaining productive agricultural landscapes.

What's Working: Success Factors in NBS Implementation

Quality Frameworks Are Driving Market Maturation

The Integrity Council for the Voluntary Carbon Market (ICVCM) has established Core Carbon Principles (CCPs) that set threshold requirements for credit quality. Projects meeting CCP criteria demonstrate additionality, permanence, and robust measurement, reporting, and verification (MRV) protocols. Verra's Verified Carbon Standard (VCS) and Gold Standard certification provide additional layers of assurance, with Gold Standard projects commanding premium pricing due to mandatory sustainable development co-benefit requirements.

The market is responding to these quality signals. In 2024, 18 NBS offtake agreements were announced, collectively covering more than 20 million tonnes of carbon at prices exceeding $20 per tonne. These long-term purchase agreements provide project developers with the revenue certainty needed to secure financing for implementation at scale.

Corporate Buyers Are Becoming More Sophisticated

Leading corporate buyers have moved beyond simple offset procurement toward portfolio approaches that blend high-quality removals with emissions reductions. Microsoft's January 2025 agreement with Re.green for 3.5 million carbon credits from Brazilian reforestation projects exemplifies this shift. The deal, structured over multiple years, reflects Microsoft's commitment to carbon removal credits that meet stringent additionality and permanence criteria.

This sophistication extends to due diligence practices. Major buyers now conduct site visits, review methodologies with independent experts, and require regular third-party verification. The era of purchasing credits based solely on registry listings is ending for serious corporate climate programs.

Landscape-Scale Projects Demonstrate Viability

Isolated project-level interventions are giving way to landscape and jurisdictional approaches that address leakage concerns and deliver ecosystem-wide benefits. The Scottish Wildlife Trust's peatland restoration initiative, covering 7,618 hectares and mobilizing more than £17.5 million in investment, demonstrates how national-scale programs can attract significant capital while achieving measurable climate outcomes. By operating across connected landscapes rather than fragmented parcels, such programs reduce the risk that emissions prevented in one location simply shift to another.

What Isn't Working: Critical Failures and Ongoing Challenges

The Additionality Problem Persists

Perhaps the most damaging critique of NBS credits concerns additionality, the requirement that credited carbon sequestration would not have occurred without the carbon finance incentive. Multiple investigations have documented projects claiming credit for forests that faced no realistic deforestation threat, effectively generating revenues for business-as-usual outcomes. While improved methodologies are addressing these concerns, legacy credits with questionable additionality continue to circulate, undermining market confidence.

Permanence Remains Structurally Uncertain

Forest carbon faces an inherent permanence challenge: trees can burn, die from disease, or be harvested. Climate change itself is increasing wildfire frequency and intensity in many forested regions, creating a troubling feedback loop where the very assets meant to mitigate climate change become vulnerable to its effects. Buffer pool mechanisms, where a percentage of credits are held in reserve against reversal risks, provide partial mitigation but may prove inadequate under accelerating climate stress.

Measurement Capabilities Lag Ambitions

While satellite monitoring and remote sensing have improved dramatically, ground-truthing remains expensive and inconsistent. Soil carbon measurement, critical for agricultural and peatland projects, involves substantial uncertainty ranges that complicate credit issuance. The sector awaits breakthroughs in cost-effective, accurate MRV technologies that can operate at the scale required by market growth projections.

Finance Gaps Cannot Be Closed Through Carbon Markets Alone

The arithmetic is challenging: even optimistic projections for VCM growth cannot bridge the gap between current investment levels and the $460 billion annual requirement. Carbon credit revenues represent one financing stream, but NBS at climate-relevant scale will require blended finance structures combining carbon revenues, biodiversity credits, public subsidies, concessional capital, and payments for ecosystem services beyond carbon.

Real-World Examples: Implementation and Outcomes

Example 1: Microsoft and Re.green's Brazilian Reforestation Partnership

In January 2025, Microsoft announced a landmark agreement with Re.green, a Brazilian nature-based solutions company, to purchase 3.5 million carbon credits over the contract period. The project focuses on restoring degraded lands in Brazil through native species reforestation, generating credits through the Verra VCS registry with additional biodiversity verification. The agreement represents one of the largest corporate commitments to tropical reforestation carbon removals and reflects Microsoft's strategy of prioritizing durable carbon removal over avoidance credits. Re.green's model integrates local community employment, creating socioeconomic co-benefits alongside carbon sequestration.

Example 2: Scottish Wildlife Trust Peatland Restoration Program

Scotland's peatlands store an estimated 1.6 billion tonnes of carbon, but centuries of drainage for agriculture and forestry have converted many areas from carbon sinks to sources. The Scottish Wildlife Trust, working with public and private partners, has undertaken restoration across 7,618 hectares, with investment exceeding £17.5 million. Restoration involves blocking drainage ditches, removing non-native vegetation, and reestablishing Sphagnum moss communities that drive peat accumulation. Early monitoring indicates successful rewetting and vegetation recovery, with emissions reductions estimated at 2 to 3 tonnes CO₂-equivalent per hectare annually. The program demonstrates how public-private partnerships can mobilize capital for landscape-scale restoration in developed economy contexts.

Example 3: Blue Carbon Mangrove Conservation in the Mekong Delta

Vietnam's Mekong Delta hosts approximately 75,000 hectares of mangrove forests, ecosystems that provide coastal protection, fisheries nursery habitat, and exceptional carbon sequestration capacity. A collaboration between the Vietnamese government, international NGOs, and corporate partners has protected and restored approximately 12,000 hectares under certified carbon credit methodologies. The project generates credits verified under both VCS and Climate, Community and Biodiversity (CCB) standards, commanding premium pricing due to demonstrated social and ecological co-benefits. Participating communities receive direct payments from credit revenues while benefiting from enhanced fish stocks and storm protection. The initiative illustrates how blue carbon projects can integrate climate mitigation with adaptation and livelihood objectives.

What's Next: Trajectories Through 2030

Biodiversity Credits Will Complement Carbon Markets

The emergence of biodiversity credit markets, though nascent, signals a shift toward valuing the full spectrum of ecosystem services. Projects that generate stacked credits for carbon, biodiversity, and water quality will attract premium financing, incentivizing holistic landscape management over carbon-centric approaches.

Technology Will Transform MRV

Advances in satellite imagery, LiDAR, environmental DNA sampling, and machine learning are converging to enable near-real-time, cost-effective ecosystem monitoring. Projects adopting these technologies will demonstrate credibility advantages, potentially commanding higher prices and attracting more sophisticated buyers.

Regulatory Integration Is Accelerating

Voluntary market dynamics are increasingly shaped by compliance market spillovers. The EU Carbon Border Adjustment Mechanism, Article 6 of the Paris Agreement, and national carbon pricing systems will interact with voluntary markets in complex ways, potentially creating demand surges for high-quality NBS credits while stranding non-compliant inventory.

Public Finance Will Need to Lead

Given the scale of the financing gap, public sector capital, particularly from development finance institutions and climate funds, will need to provide catalytic first-loss capital and technical assistance to de-risk NBS investments. Blended finance structures combining concessional and commercial capital offer the most realistic pathway to required investment levels.

Action Checklist

Conduct a portfolio review of existing carbon credit holdings against ICVCM Core Carbon Principles and prioritize replacement of non-compliant credits
Develop internal NBS procurement criteria specifying minimum requirements for additionality documentation, permanence mechanisms, and third-party verification
Engage with 2 to 3 NBS project developers for due diligence site visits and methodology review before committing to long-term offtake agreements
Evaluate opportunities for landscape-scale or jurisdictional program participation that addresses leakage concerns and delivers ecosystem co-benefits
Establish internal carbon pricing mechanisms that reflect true abatement costs (minimum $20 per tonne) to ensure NBS investments compete appropriately with other decarbonization options

FAQ

Q: What distinguishes high-quality NBS credits from low-quality ones? A: High-quality credits demonstrate clear additionality (the project would not have occurred without carbon finance), robust permanence mechanisms (buffer pools, insurance, or long-term monitoring commitments), third-party verification under recognized standards (Verra VCS, Gold Standard, or ICVCM CCP-approved methodologies), and transparent MRV protocols. Price differentials of four times or more between high and low-quality credits reflect market recognition of these distinctions. Buyers should request documentation of baseline scenarios, additionality assessments, and permanence safeguards before procurement.

Q: How do NBS carbon credits compare to engineered carbon removal? A: NBS credits currently offer significantly lower costs (typically $10 to $50 per tonne versus $300 to $1,000+ for direct air capture) and operate at much larger scale. However, engineered removal offers greater permanence certainty and measurement precision. Most corporate strategies now pursue portfolio approaches that include both NBS and engineered removal, with proportions shifting toward engineered solutions as costs decline. The two approaches are complementary rather than competitive for reaching net-zero targets.

Q: What are the main risks of investing in NBS projects? A: Key risks include reversal due to fire, disease, or land-use change; regulatory changes affecting credit eligibility in compliance or voluntary markets; methodology updates that invalidate existing credits; reputational risks from association with projects later found to have additionality or measurement problems; and currency and political risks for international projects. Mitigation strategies include diversification across project types and geographies, thorough due diligence, engagement with established registries, and preference for projects with buffer pool and insurance mechanisms.

Q: Can NBS scale sufficiently to meet climate targets? A: NBS can provide approximately 30% of the mitigation needed to limit warming to 1.5 degrees Celsius through 2030, but cannot substitute for emissions reductions at source. The current financing gap of roughly $450 billion annually between existing investment and required levels represents a fundamental constraint. Closing this gap requires policy interventions, blended finance innovation, and integration of carbon with biodiversity and other ecosystem service payments. NBS should be viewed as an essential complement to, not replacement for, decarbonization of energy, transport, and industrial systems.

Deep dive: nature-based solutions — what's working, what isn't, and what's next