Nature-based solutions explained: types, co-benefits, and investment frameworks

Global investment in nature-based solutions (NbS) reached $200 billion in 2022, yet this figure represents less than one third of the $542 billion needed annually by 2030 to meet climate, biodiversity, and land degradation targets, according to the UN Environment Programme's 2024 State of Finance for Nature report. NbS currently deliver roughly 37% of the cost-effective mitigation needed through 2030 to hold warming below 2 degrees Celsius, sequestering or avoiding up to 11.7 GtCO2e per year at a cost below $100 per tonne. Despite this potential, private sector flows account for only 18% of total NbS finance, exposing a massive gap between ecological opportunity and capital deployment. Organizations from Salesforce to Nestlé are now building NbS into their climate strategies, while dedicated funds like the HSBC Pollination Climate Asset Management fund and the Landscape Finance Lab are pioneering new financial vehicles to channel institutional capital toward ecosystems at scale.

Why It Matters

Nature-based solutions address climate change, biodiversity loss, and social vulnerability simultaneously, a convergence that purely technological interventions cannot replicate. The Intergovernmental Panel on Climate Change (IPCC) Sixth Assessment Report confirmed that protecting and restoring ecosystems is among the most effective and lowest-cost mitigation strategies available this decade. Forest conservation alone avoids 3.6 to 4.4 GtCO2e of annual emissions, while reforestation and improved forest management could sequester an additional 3.9 GtCO2e per year globally (Griscom et al., 2017; IPCC AR6 WGIII, 2022).

Beyond carbon, NbS generate measurable co-benefits that strengthen the economic case. Mangrove forests reduce coastal flood damages by an estimated $65 billion annually worldwide (Beck et al., 2018). Urban green infrastructure lowers ambient temperatures by 2 to 8 degrees Celsius in heat-stressed neighborhoods. Restored wetlands filter pollutants at a fraction of the cost of engineered water treatment facilities, with constructed wetlands delivering water purification services valued at $3,000 to $7,000 per hectare per year in many temperate regions.

Regulatory drivers are accelerating. The EU Nature Restoration Law, adopted in 2024, mandates restoration of at least 20% of EU land and sea areas by 2030. The Kunming-Montreal Global Biodiversity Framework requires parties to effectively conserve 30% of land, inland waters, and coastal and marine areas by 2030 (the "30x30" target). The Taskforce on Nature-related Financial Disclosures (TNFD) published its final recommendations in September 2023, and by early 2025 over 500 organizations had committed to TNFD adoption, creating new disclosure expectations for companies with nature-related dependencies.

Key Concepts

Major NbS Categories

Forest-based solutions encompass reforestation, afforestation, avoided deforestation (REDD+), and improved forest management. Tropical forests store approximately 200 to 250 tonnes of carbon per hectare in aboveground biomass, making avoided deforestation the highest-impact NbS pathway. Reforestation projects typically sequester 5 to 15 tCO2e per hectare per year over 20 to 40 year horizons, depending on species and region.

Wetland and peatland restoration targets some of the most carbon-dense ecosystems on Earth. Peatlands cover only 3% of the global land surface but store roughly 30% of all soil carbon. Drained peatlands emit approximately 1.9 GtCO2e annually. Rewetting degraded peatlands can reduce these emissions by 50 to 80% within a few years while restoring flood attenuation and water filtration services.

Blue carbon ecosystems include mangroves, seagrass meadows, and tidal marshes. Per unit area, these coastal habitats sequester carbon at rates 2 to 4 times greater than mature tropical forests. Mangroves alone store an estimated 6.4 GtC in their soils globally. However, these ecosystems are disappearing rapidly, with 35% of global mangrove area lost since the 1980s.

Agricultural and grassland NbS include agroforestry, cover cropping, silvopasture, and grassland restoration. Agroforestry systems can sequester 2 to 9 tCO2e per hectare per year while increasing farm incomes by 20 to 50% through diversified revenue streams. Regenerative grazing practices on degraded grasslands can rebuild 0.5 to 3 tCO2e per hectare per year of soil organic carbon.

Urban NbS comprise green roofs, urban forests, bioswales, and permeable surfaces. Cities deploying urban NbS at scale report stormwater runoff reductions of 20 to 40%, energy cost savings from reduced cooling demand, and measurable improvements in mental health outcomes for residents near green spaces.

Investment and Finance Frameworks

NbS investment frameworks have matured considerably since 2023. Blended finance structures combine concessional public capital with private investment to de-risk projects. The World Bank's PROGREEN multi-donor trust fund has allocated $346 million across 42 countries for landscape restoration. Green bonds increasingly fund NbS, with the International Capital Market Association (ICMA) adding explicit NbS eligibility criteria to its Green Bond Principles in 2024.

Results-based payment mechanisms tie financial flows to verified outcomes. Carbon credits remain the dominant revenue stream for private NbS investment, with REDD+ credits trading at $5 to $15 per tonne and high-quality reforestation credits reaching $25 to $50 per tonne on voluntary markets in 2025. Biodiversity credits represent an emerging complementary revenue stream, with pilot markets in Australia, the UK, and Colombia pricing credits at $15 to $75 per biodiversity unit depending on methodology.

MRV Approaches

Measurement, reporting, and verification for NbS has shifted toward technology-enabled approaches. Satellite remote sensing (from providers like Planet and Maxar) now delivers sub-meter resolution imagery for near-real-time deforestation monitoring. LiDAR-based biomass estimation reduces aboveground carbon measurement uncertainty from plus or minus 40% to plus or minus 10 to 15%. eDNA sampling enables rapid biodiversity assessments at a fraction of the cost of traditional field surveys. The Integrity Council for the Voluntary Carbon Market (ICVCM) Core Carbon Principles, finalized in 2024, set minimum MRV standards for carbon credit methodologies, including NbS pathways.

How It Works

NbS project development follows a lifecycle spanning site assessment, design, implementation, monitoring, and credit issuance. At the site level, ecological baseline surveys establish pre-intervention carbon stocks, biodiversity metrics, and hydrological conditions. Project developers then design interventions aligned with validated methodologies from standards bodies such as Verra (VCS), Gold Standard, or Plan Vivo.

Implementation typically involves partnerships between local communities, governments, and project developers. Community engagement is critical: REDD+ projects with strong community governance structures show permanence rates above 90% over 20-year horizons, while top-down projects without local buy-in experience leakage and reversal rates of 15 to 30%. Free, prior, and informed consent (FPIC) protocols are now standard requirements under major carbon credit standards.

Revenue generation occurs through multiple stacked streams. A mangrove restoration project, for example, might generate carbon credits (primary revenue), biodiversity credits (supplementary revenue), coastal protection value (captured through insurance premium reductions or government payments for ecosystem services), and sustainable aquaculture income (community livelihoods). This revenue stacking approach is essential because carbon credit revenue alone rarely covers full project costs for NbS with long establishment periods.

What's Working

Corporate procurement is scaling rapidly. Salesforce committed to conserving or restoring 100 million trees through its sustainability program and by 2025 had funded the conservation of over 60 million trees across projects in multiple countries. Microsoft's Climate Innovation Fund has allocated over $100 million toward nature-based carbon removal projects, including partnerships with NCX (formerly SilviaTerra) for improved forest management across 3 million acres of US timberland.

Blended finance vehicles are unlocking institutional capital. The HSBC Pollination Climate Asset Management partnership launched a $1 billion natural capital fund targeting institutional investors, deploying capital into sustainable forestry, regenerative agriculture, and blue carbon across Asia-Pacific, with first investments closing in 2024. Mirova's Land Degradation Neutrality Fund (managed by the UN Convention to Combat Desertification) reached $208 million and has invested across 30 projects in developing countries, demonstrating that risk-adjusted returns of 3 to 5% are achievable.

Technology-enabled MRV is reducing costs and increasing credibility. Pachama uses satellite imagery and machine learning to verify forest carbon projects, reducing verification costs by up to 70% compared to traditional field-based audits. The company has assessed over 150 forest carbon projects across 30 countries. Similarly, Chloris Geospatial provides continuous above-ground biomass monitoring for over 300 million hectares, enabling near-real-time carbon accounting.

Government-led restoration programs are delivering measurable results. China's Grain for Green program, the world's largest ecological restoration initiative, has reforested over 33 million hectares since 1999 and expanded its scope with an additional $4.5 billion allocation in 2024. Costa Rica's Payments for Ecosystem Services (PES) program increased national forest cover from 21% in 1987 to over 60% by 2024, demonstrating that sustained financial incentives can reverse deforestation at national scale.

What Isn't Working

Carbon credit quality concerns persist. A 2023 analysis published in Science found that 94% of avoided deforestation credits issued by Verra under the VM0007 methodology did not represent real emission reductions, based on inflated baseline deforestation rates. While Verra has since revised its methodologies, the reputational damage has slowed corporate purchases of REDD+ credits and depressed voluntary market prices.

Permanence risk remains a structural challenge. Forest carbon projects face reversal risks from wildfire, drought, pest outbreaks, and policy changes. California's compliance offset buffer pool lost approximately 6.8 million credits to wildfire between 2020 and 2024, exceeding projections. Insurance mechanisms and buffer pool allocations typically set aside 10 to 20% of credits, but climate change is increasing the frequency of loss events faster than actuarial models anticipated.

Funding gaps disproportionately affect the Global South. Sub-Saharan Africa receives less than 4% of global NbS finance despite hosting some of the highest-impact opportunity areas. Transaction costs for small-scale community projects often exceed $200,000, creating minimum project size thresholds that exclude many local initiatives. Capacity constraints in project development, legal frameworks, and financial intermediation compound the access gap.

Biodiversity credit markets remain nascent and fragmented. Despite pilot programs in Australia (Biodiversity Certificates), England (Biodiversity Net Gain), and Colombia, there is no globally accepted standard for biodiversity credit pricing, additionality, or equivalence. Buyers face uncertainty about what they are purchasing, and the risk of greenwashing limits corporate uptake.

Key Players

Established Leaders

• The Nature Conservancy (TNC) - global conservation organization managing over 50 million hectares of protected land and water across 79 countries
• World Wildlife Fund (WWF) - leading advocacy and on-the-ground conservation across forests, freshwater, and marine ecosystems in 100+ countries
• Conservation International - science-based conservation organization operating NbS projects spanning 30+ countries with a focus on high-biodiversity tropical regions
• IUCN (International Union for Conservation of Nature) - sets the global standard for NbS through its Global Standard for NbS framework, adopted by 100+ governments

Emerging Startups

• Pachama - AI and satellite-based MRV platform for forest carbon credit verification, backed by $79 million in venture funding
• NCX (formerly SilviaTerra) - operates the largest forest carbon marketplace in the US, covering 3+ million acres of private timberland with single-year crediting periods
• Earthly - nature-based solutions marketplace connecting corporates to vetted NbS projects with integrated impact dashboards
• Dendra Systems - combines drones, AI, and seed pods for large-scale ecosystem restoration, planting up to 100,000 seed pods per day

Key Investors and Funders

• HSBC Pollination Climate Asset Management - $1 billion natural capital fund for institutional investors targeting forests, agriculture, and blue carbon
• Mirova Natural Capital - manages the Land Degradation Neutrality Fund ($208 million) across 30+ developing country projects
• Bezos Earth Fund - committed $10 billion to climate and nature, with significant allocations to NbS and 30x30 conservation goals
• Global Environment Facility (GEF) - multilateral funder supporting NbS through $5.3 billion in its eighth replenishment cycle (2022 to 2026)

Sector-Specific KPI Benchmarks

KPI	Low Performer	Median	High Performer	Unit
Carbon sequestration rate (reforestation)	3	8	15	tCO2e/ha/yr
Carbon sequestration rate (mangrove restoration)	5	12	25	tCO2e/ha/yr
Carbon sequestration rate (peatland rewetting, avoided emissions)	10	25	40	tCO2e/ha/yr
Cost per tonne CO2e sequestered (NbS average)	50	25	5	USD/tCO2e
Project permanence rate (20-year horizon)	70	85	95	%
Community benefit-sharing ratio	10	30	60	% of revenue
MRV cost per hectare (satellite-enabled)	5	2	0.5	USD/ha/yr
Biodiversity uplift (species richness increase)	10	25	50	% increase
Private capital share of total project finance	10	25	50	%
Time from project start to first credit issuance	5	3	1.5	years

Action Checklist

• Map nature-related dependencies and impacts across your value chain using the TNFD LEAP framework to identify where NbS investments could reduce physical or transition risks
• Evaluate NbS credit procurement strategies by comparing REDD+, reforestation, blue carbon, and soil carbon pathways on cost, permanence, co-benefits, and alignment with ICVCM Core Carbon Principles
• Set internal carbon prices at or above $50 per tonne to create budget space for high-integrity NbS credits rather than defaulting to the cheapest available offsets
• Engage with blended finance vehicles such as the Mirova Land Degradation Neutrality Fund or HSBC Pollination fund to diversify NbS exposure beyond direct credit purchases
• Require FPIC documentation and community benefit-sharing agreements as minimum due diligence criteria for any NbS project you fund or purchase credits from
• Integrate satellite-based monitoring tools (Pachama, Chloris Geospatial, or Planet) into ongoing verification workflows to detect reversal events and maintain portfolio-level permanence confidence
• Align NbS reporting with TNFD recommendations and Science Based Targets Network (SBTN) land targets to ensure nature commitments meet emerging regulatory and investor expectations

FAQ

Q: What distinguishes nature-based solutions from traditional conservation? A: NbS explicitly links ecosystem protection and restoration to measurable outcomes for human challenges such as climate mitigation, flood risk reduction, and food security. Traditional conservation focuses primarily on habitat and species protection. The distinction matters because NbS projects must demonstrate additionality and quantified benefits to attract carbon or biodiversity credit revenue.

Q: How do NbS credits compare to engineered carbon removal on cost and permanence? A: NbS credits typically cost $5 to $50 per tonne compared to $400 to $1,000+ for direct air capture. However, NbS permanence ranges from decades to centuries, while geological storage offers millennial-scale permanence. Many corporate net-zero strategies now combine near-term NbS procurement (for immediate mitigation) with longer-term investments in engineered removal for residual emissions.

Q: What is the biggest risk for corporate NbS buyers? A: Credit quality and reputational risk. High-profile investigations into overcredited REDD+ projects have made buyers cautious. Mitigation strategies include purchasing only ICVCM-labeled credits, requiring third-party satellite verification, diversifying across project types and geographies, and maintaining transparent public reporting on credit retirement and underlying project performance.

Q: Can NbS scale fast enough to matter for 2030 climate targets? A: Ecologically, yes. The land area needed to deliver 5 to 7 GtCO2e per year through NbS exists and has been mapped. The constraint is finance and governance. Tripling annual NbS investment from $200 billion to $542 billion by 2030 requires new public commitments, carbon market reform, and blended finance innovation. The pipeline is growing, but the pace remains below what 1.5 degree pathways demand.

Sources

• UNEP. (2024). "State of Finance for Nature 2024." United Nations Environment Programme. https://www.unep.org/resources/state-finance-nature-2024
• IPCC. (2022). "Climate Change 2022: Mitigation of Climate Change. Working Group III Contribution to the Sixth Assessment Report." Intergovernmental Panel on Climate Change. https://www.ipcc.ch/report/ar6/wg3/
• Griscom, B.W. et al. (2017). "Natural climate solutions." Proceedings of the National Academy of Sciences, 114(44), 11645-11650.
• Beck, M.W. et al. (2018). "The global flood protection savings provided by coral reefs." Nature Communications, 9, 2186.
• West, T.A.P. et al. (2023). "Action needed to make carbon offsets from forest conservation work for climate change mitigation." Science, 381(6660), 873-877.
• TNFD. (2023). "Recommendations of the Taskforce on Nature-related Financial Disclosures." https://tnfd.global/recommendations-of-the-tnfd/
• ICVCM. (2024). "Core Carbon Principles Assessment Framework." Integrity Council for the Voluntary Carbon Market. https://icvcm.org/the-core-carbon-principles/
• Seddon, N. et al. (2020). "Understanding the value and limits of nature-based solutions to climate change and other global challenges." Philosophical Transactions of the Royal Society B, 375(1794), 20190120.