Deep dive: Nature-based solutions — what's working, what's not, and what's next

Global investment in nature-based solutions reached $154 billion annually in 2024, yet a landmark Nature Communications study analyzing 2,346 projects covering approximately one billion tons of CO2 equivalent revealed that only 16% of carbon credits represent actual emission reductions. This stark disconnect between capital deployment and climate impact defines the central challenge facing nature-based solutions today. The gap between current investment and the $384 billion needed by 2025 stands at $230 billion annually, according to UNEP's State of Finance for Nature report. Meanwhile, private finance has surged 11-fold since 2020, reaching $102 billion in circulation—yet governments still provide 83% of all nature-based funding. Understanding what's actually working, what's failing, and what comes next is no longer an academic exercise; it's essential for anyone deploying capital or designing policy in this space.

Why It Matters

Nature-based solutions (NbS) occupy a unique position in climate strategy: they can simultaneously deliver carbon sequestration, biodiversity protection, water security, and community resilience. The IPCC estimates that NbS can provide up to 30% of the mitigation needed by 2030 to limit warming to 1.5°C. No other climate intervention category offers this multi-benefit potential at comparable scale.

The economic stakes are substantial. Nature loss is projected to cost the global economy $5 trillion within five years, according to World Economic Forum estimates. Conversely, the transition to nature-positive systems represents a $10 trillion annual business opportunity by 2030, per the Nature Positive Initiative's analysis.

For corporations, nature-related risks are becoming financially material. Over 300 companies have now adopted the Task Force on Nature-related Financial Disclosures (TNFD) framework, and regulatory pressure is accelerating—policies targeting deforestation doubled in 2023. Supply chain exposure to nature degradation affects industries from agriculture to pharmaceuticals, making NbS investment a risk management imperative rather than merely a voluntary sustainability commitment.

Yet the sector faces a credibility crisis. High-profile investigations into forest carbon projects have revealed systematic overcrediting, shaking buyer confidence and triggering market contraction. Voluntary carbon market transaction volumes fell approximately 25% in 2024, with only 182 million tons retired—the lowest since 2018.

Key Concepts

Nature-based solutions (NbS) encompass actions that protect, sustainably manage, or restore natural and modified ecosystems while simultaneously providing human well-being benefits and addressing societal challenges including climate change, food security, water security, and disaster risk.

Additionality refers to whether climate benefits would have occurred without the intervention. A reforestation project on land that would have regenerated naturally lacks additionality; protection of a forest under no real deforestation threat similarly fails this test. The Integrity Council for the Voluntary Carbon Market (ICVCM) approved only 7 methodologies by June 2024, representing just 1.2% of all credits ever issued—a 98.8% rejection rate signaling massive quality problems in existing markets.

Permanence concerns whether sequestered carbon will remain stored. Forest carbon faces reversal risks from wildfires, disease, illegal logging, and land-use changes. Unlike geological storage, nature-based carbon isn't guaranteed for the 100+ year timeframe that atmospheric CO2 persists.

Leakage occurs when protecting one area simply displaces harmful activity elsewhere. Preventing deforestation in one jurisdiction may push agricultural expansion to neighboring regions, negating net climate benefit.

Measurement, Reporting, and Verification (MRV) has evolved from periodic field audits to continuous digital monitoring using satellite imagery, LiDAR, acoustic sensors, and environmental DNA. This shift is essential for addressing the integrity crisis but requires significant upfront investment.

What's Working

Digital MRV and Remote Sensing

The integration of AI, satellite data, and IoT sensors has transformed project monitoring from expensive periodic audits to continuous verification. Pachama, a San Francisco-based startup, uses machine learning combined with satellite imagery to measure carbon stored in forests, enabling real-time detection of disturbances like fires or illegal logging. This approach reduces verification costs while increasing accuracy and transparency.

NatureMetrics has pioneered environmental DNA (eDNA) techniques for biodiversity monitoring, allowing projects to demonstrate ecosystem health improvements with scientific rigor. The company's genetic sampling methods detect species presence without physical observation, providing cost-effective biodiversity metrics that were previously impossible to collect at scale.

Jurisdictional Approaches

Rather than isolated project-based crediting, jurisdictional approaches align carbon finance with government-level accountability for deforestation. This structure reduces leakage risk because the entire jurisdiction—not just a project boundary—is monitored. Countries like Costa Rica and Gabon have demonstrated that national-level REDD+ programs can deliver verified emission reductions while maintaining governmental responsibility for outcomes.

The Forest Carbon Partnership Facility's Emission Reductions Payment Agreements have shown that jurisdictional approaches can mobilize significant finance while building local institutional capacity. These programs require comprehensive land-use planning, benefit-sharing mechanisms, and transparent governance—conditions that project-based approaches often lack.

Corporate Pre-Purchase Commitments

Leading companies have shifted from spot-market credit purchases to long-term offtake agreements that provide upfront capital for project development. Microsoft's $500 million climate innovation fund includes significant allocations to nature-based carbon removal, with advance market commitments that derisk project development. Stripe Climate similarly aggregates corporate demand into guaranteed purchase agreements, enabling suppliers to invest in quality improvements.

These structures address a fundamental barrier: nature projects require years of development before generating credits, but traditional markets only pay upon delivery. Advance commitments bridge this financing gap while allowing buyers to secure high-integrity supply.

What's Not Working

Legacy Carbon Credit Methodologies

The evidence is now overwhelming: the majority of credits issued under older methodologies do not represent real emission reductions. The Nature Communications study found forest conservation credits achieved only 25% of claimed impact, improved forest management showed no statistically significant reductions, and cookstove projects delivered just 11% of claimed benefits.

The problem isn't inherent to nature-based approaches—it's methodological. Projects used unrealistic reference scenarios, inflating baseline deforestation rates to generate credits from forests that were never genuinely threatened. The Integrity Council's 98.8% rejection rate for legacy methodologies reflects this systemic failure.

Corporate response has been hesitant. According to research published in Nature Communications, 87% of offsets purchased by the top 20 corporate buyers carry high risk of not delivering real reductions. Companies have begun shifting language from "offsets" to "contributions," acknowledging that credits don't represent ton-for-ton equivalence with their emissions.

Voluntary Market Fragmentation

The voluntary carbon market lacks binding standards, creating a race to the bottom on credit quality. Multiple registries apply inconsistent methodologies, and buyers struggle to assess comparative quality. Average prices remain depressed at $6.34 per ton in 2024—insufficient to fund genuinely additional projects in most contexts.

The market's fragmentation also undermines price discovery. Without transparent quality ratings, high-integrity projects compete directly with low-cost, low-quality alternatives. Buyers seeking the cheapest credits inadvertently select the projects with the least real impact.

Project-Level Governance Failures

Many NbS projects suffer from weak governance, inadequate benefit-sharing with local communities, and insufficient long-term stewardship commitments. Projects structured primarily to generate tradeable credits often underweight the social dimensions that determine long-term success.

When communities don't benefit equitably from carbon revenues, they lack incentive to maintain project integrity. Land tenure conflicts, unclear benefit distribution, and external decision-making have undermined projects across Africa, Asia, and Latin America.

Key Performance Indicators by Project Type

Project Type	Baseline Metric	Target Range	Top Quartile
Reforestation	Survival rate (Year 5)	70-85%	>90%
Reforestation	Carbon sequestration (tCO2e/ha/yr)	5-15	>20
Forest Protection	Avoided deforestation vs. baseline	50-75%	>85%
Mangrove Restoration	Area successfully restored	60-80%	>90%
Mangrove Restoration	Blue carbon sequestration (tCO2e/ha/yr)	8-25	>30
Agroforestry	Yield improvement vs. baseline	15-35%	>50%
Wetland Restoration	Hydrological function recovery	60-75%	>85%
Urban Green Infrastructure	Surface temperature reduction (°C)	2-5	>6

Verification frequency: Top-performing projects now use continuous satellite monitoring with quarterly ground-truthing, replacing annual audits that missed seasonal dynamics and discrete events like fires.

Key Players

Established Leaders

The Nature Conservancy (TNC) — The world's largest conservation organization, operating in 76 countries with over 125 million acres protected. TNC has pioneered innovative financing mechanisms including debt-for-nature swaps in Belize and the Seychelles, converting sovereign debt into conservation commitments.

Conservation International — A global nonprofit with 30+ years of experience protecting critical ecosystems, now deeply engaged in climate finance through initiatives like the Climate Finance Collective that mobilizes private capital for nature-based solutions.

World Resources Institute (WRI) — A research organization providing the analytical backbone for NbS policy, including Global Forest Watch satellite monitoring and Forest Landscape Restoration tools used by governments and project developers worldwide.

Salesforce — Among corporations, Salesforce has led integration of nature technology into business operations, deploying satellite monitoring and AI to verify nature investments across supply chains, as documented in the Nature Tech 2024 report.

Emerging Startups

Pachama — Uses AI and satellite imagery for forest carbon monitoring and verification, helping companies invest in reforestation projects with transparent, data-driven impact measurement. Has become a leading platform for corporate carbon credit procurement.

MORFO — A French startup deploying drone-based reforestation technology capable of processing 50 hectares daily, planting 180 seed pods per minute in terrain inaccessible to manual reforestation crews.

NatureMetrics — Pioneers DNA-based biodiversity monitoring, enabling projects to prove species recovery and ecosystem health improvements with scientific precision previously impossible at scale.

Terraformation — Operates the Seed to Carbon Forest Accelerator, providing financing, software, and technical support to early-stage forestry teams, bridging the gap between project conception and revenue generation.

goodcarbon — Berlin-based platform using proprietary technology to identify optimal land for reforestation, raised €5.25 million in 2024 to scale high-integrity carbon project development.

Key Investors & Funders

Lowercarbon Capital — Led by Chris Sacca, this fund has made 17 investments in reforestation, ecosystem restoration, and biochar companies across seed to late-stage.

Breakthrough Energy Ventures — Bill Gates-founded fund backing decarbonization and natural environment solutions with patient capital and technical expertise.

ADB Ventures — Asian Development Bank's venture arm with seven nature-based solution investments, focusing on climate adaptation in vulnerable Asian markets.

UNDP BIOFIN — The Biodiversity Finance Initiative has unlocked $2.7 billion for nature in 2025, supporting countries with comprehensive biodiversity finance plans.

Global Environment Facility (GEF) — Provides grants and blended finance for NbS at scale, with over $23 billion mobilized since 1991.

Examples

The Nature Conservancy's Belize Debt Conversion

In 2021, TNC facilitated a $553 million debt restructuring for Belize, converting sovereign debt into a blue loan with Conservation Funding Agreement. Belize committed to protecting 30% of its ocean by 2026 while saving $180 million in debt payments over 20 years. The mechanism—now replicated in Barbados, Ecuador, and Gabon—demonstrates that national-scale conservation can be financed through creative restructuring rather than additional aid. By 2024, Belize had expanded marine protected areas covering 50% of territorial waters, achieving 95% of its 2030 conservation target a decade early.

Microsoft's Carbon Removal Procurement

Microsoft's Climate Innovation Fund has deployed over $500 million since 2020, with substantial allocations to nature-based carbon removal. The company's approach differs from typical offset purchasing: it conducts rigorous technical due diligence, pays premium prices ($20-50+ per ton versus market average of $6), and provides multi-year offtake agreements that derisk supplier investment. In 2024, Microsoft published its Criteria for High-Quality Carbon Credits, establishing transparency standards now used by other corporate buyers. Their portfolio includes forest restoration in Latin America, mangrove projects in Asia, and innovative soil carbon initiatives.

MORFO's Drone Reforestation in Brazil

French startup MORFO has deployed industrial-scale drone reforestation across degraded lands in Brazil and Africa. Unlike manual planting, drones can access steep terrain, flood zones, and remote areas at costs 70% below traditional methods. In a 2024 pilot covering 1,000 hectares in the Amazon, MORFO achieved 82% seedling survival rates using proprietary seed pod technology that includes mycorrhizal fungi and protective coatings. The company's approach addresses a critical bottleneck: the world needs to restore 350 million hectares of forest by 2030 to meet climate targets, but current planting capacity is orders of magnitude insufficient. By 2025, MORFO aims to restore 10,000 hectares annually.

Action Checklist

• Conduct nature dependency and impact assessment across supply chains using TNFD framework
• Evaluate carbon credit suppliers against ICVCM Core Carbon Principles—reject credits from non-compliant methodologies
• Shift from spot-market credit purchases to long-term offtake agreements that support project development
• Require digital MRV with satellite monitoring for all nature-based investments
• Verify community benefit-sharing arrangements and free, prior, and informed consent documentation
• Allocate portfolio across geographies and project types to diversify permanence and political risks
• Engage with jurisdictional REDD+ programs rather than standalone projects where possible
• Set internal carbon prices above $50/ton to ensure investment quality aligns with actual abatement costs
• Build internal capacity for nature-positive strategy—this is becoming a core business function, not a CSR add-on

FAQ

Q: Are nature-based carbon credits worthless given the integrity concerns? A: No, but they require careful selection. The problem lies in specific methodologies and project designs, not the fundamental approach. Credits from jurisdictional programs, projects with continuous digital MRV, and those assessed against ICVCM Core Carbon Principles can deliver genuine climate benefits. The market is undergoing a necessary quality correction—buyers should adjust procurement criteria rather than abandoning NbS entirely. High-quality nature-based credits will likely trade at $60+/ton by 2030 as supply of verified projects meets rising demand.

Q: How can organizations verify that their NbS investments are actually additional? A: Additionality verification requires examining the counterfactual: what would have happened without the intervention? Look for projects with clear documentation of baseline threats, financial analysis showing carbon revenue is necessary for viability, and third-party validation of reference scenarios. Jurisdictional programs offer advantages because government-level baselines are harder to manipulate. Ask prospective suppliers about their reference area selection, historical deforestation rates, and what independent review their baseline methodology received.

Q: What's the relationship between carbon credits and biodiversity benefits? A: Carbon and biodiversity outcomes don't automatically align. Monoculture tree plantations can sequester carbon while providing minimal habitat value. Conversely, high-biodiversity restoration may sequester less carbon initially than fast-growing commercial species. The best projects integrate both objectives from the design phase, using native species mixes, maintaining connectivity corridors, and measuring biodiversity KPIs alongside carbon. Credits with certified co-benefits traded at a 37% premium in 2023, reflecting buyer preference for multi-benefit projects.

Q: How permanent is carbon stored in nature-based projects? A: Permanence varies by project type and geography. Tropical forests face lower fire risk than temperate zones but higher deforestation pressure. Mangroves and peatlands store carbon more durably than upland forests but are more vulnerable to sea-level rise and drainage. Buyers should require permanence buffers (typically 10-20% of credits held in reserve), insurance mechanisms, and long-term monitoring commitments. The emerging consensus is that nature-based storage should be valued appropriately—perhaps not as 100-year permanent removal, but as high-impact, near-term mitigation that complements longer-duration approaches.

Q: What should buyers expect from the voluntary carbon market through 2030? A: BloombergNEF projects supply growth from 243 million tons in 2024 to 2.6 billion tons by 2030 under a high-quality scenario. Average prices are expected to rise to $60/ton as low-quality supply exits the market. Regulatory clarity around Article 6 of the Paris Agreement will determine which credits qualify for compliance use, potentially bifurcating the market. Corporate buyers should secure long-term supply agreements now while quality projects remain available at current prices.

Sources

• UNEP, "State of Finance for Nature 2024: Time to Act," United Nations Environment Programme, 2024
• Callaghan, T. et al., "Systematic assessment of the achieved emission reductions of carbon crediting projects," Nature Communications, 2024
• The Nature Conservancy & Forest Trends, "Doubling Down on Nature: State of Investment in Nature-Based Solutions for Water Security," 2025
• Integrity Council for the Voluntary Carbon Market, "Core Carbon Principles Assessment Framework," ICVCM, 2024
• BloombergNEF, "Long-Term Carbon Credit Supply Outlook 2025," 2025
• KPMG, Nature4Climate & Climate Collective, "Integrating Nature Tech: A Guide for Businesses," 2024
• UNDP BIOFIN, "Global Momentum for Nature Finance: Biodiversity Finance Initiative Annual Report," 2025
• World Economic Forum, "The Future of Nature and Business," Global Futures Report, 2024