Unlocking the potential of private finance for forest and landscape restoration

Abstract

Private finance is necessary to scale forest and landscape restoration to deliver global commitments, yet finance levels remain insufficient. To understand why funding remains low despite growing interest, we conduct semi-structured interviews with financial actors and restoration finance practitioners to examine what incentives and barriers corporations and asset managers experience in financing restoration, and what type of restoration projects and regions different finance actors are likely to fund. Next, we assess how current financial barriers might be overcome. We find that there are market incentives for corporate entities to finance restoration for carbon drawdown, sustainable branding, and to promote sustainability in supply chains. Conversely, asset managers face strong barriers as projects are deemed high risk and with low prospects for sufficient return on investments. Through enhanced markets for restoration benefits, complementary public policies, and financial instruments, private finance for restoration can be scaled for a wider variety of restoration projects.

Applying conventional funding mechanisms to rewilding: the opportunities and challenges for funding rewilding in Europe

“…Although there still remains a long way to go in order to “de‐risk” rewilding‐based projects, innovative new nature‐based business models can help bridge the gap between investors and rewilders. Furthermore, blended finance models, that combine public and private funding, can help de‐risk investments (Löfqvist & Garrett 2022). We call on practitioners to consider a wider range of potential mechanisms to fund rewilding, and encourage investors to support novel business models.…”

“…While asset managers are increasingly interested in investing sustainably (Pinchot et al 2019) there is often misalignment in what is investment ready. To attract investment, projects must show a clear return on investment profile (Löfqvist & Garrett 2022). Since many rewilding business models are untested, risk remains high, with potential returns often small.…”