Driving nature-positive action and scale through markets

We are at the confluence of the twin biodiversity and climate crises: inextricably linked – and compounding. Until recently, these crises have been addressed separately from each other, with their interconnectedness not fully realised. Yet in addition to climate-related impacts, more than half the world’s GDP – USD 44 trillion – is at immediate risk due to nature loss, and the finance gap to fund solution in this space remains substantial with the UN Environment Programme’s 2023 State of Finance for Nature Report estimating that USD 4 trillion is required to bridge the gap by 2050.??

To achieve global goals on climate, biodiversity, and land repair, total investment in nature must amount to USD 8 trillion by 2050. Significant global gains were made in achieving the Kunming-Montreal Global Biodiversity Protocol – or “Paris Agreement for Nature” – two years ago. In Australia, the federal government have launched a Nature Positive Plan including committed to protect 30% of Australia’s land and seas by 2030, legislating a nature repair market, establishing an independent Environment Protection Agency (EPA) and Environment Information Australia.

However, there are a number of opportunities to better address the nature-positive agenda more strategically, including:?

Progressing solutions for the climate AND nature crisis - concurrently??

The global net zero transition which is underway offers an enormous opportunity to integrate the protection and restoration of nature. Climate change and nature loss or damage are interconnected – addressing these challenges in parallel through the integration of net zero and nature positive planning, at the appropriate scales, will mitigate economic risks for Australian business and communities and catalyse an emerging source of economic advantage.??

Scaling up and re-deploying climate and nature finance globally??

Failure to adopt sustainable practices and investments put businesses and economies at risk. Stalling nature loss and making investments with nature positive outcomes can create new business opportunities to the scale of $10 trillion annually and create 395 million jobs by 2030. Investing in nature and nature-based solutions is therefore not only an ecological imperative, it is also is a socioeconomic one. The UNEP State of Finance for Nature Report (2023) states that close to USD 7 trillion each year is still flowing into nature-degrading activities. These nature-negative financial flows can be repurposed or re-deployed into nature-positive ones to achieve climate change, biodiversity and land degradation targets, funding for example, nature-based solutions (as part of a toolkit of broader solutions). This will require annual investments to TRIPLE by 2030 to meet Rio Convention targets. We know that there is a substantial economic opportunity associated with repurposing, but the turnaround will be significant, and will require both government and private sector participation.?

Stepping up private sector engagement ?

Business and organisations are increasingly assessing their impacts and dependencies on nature – looking to disclose this through accounting frameworks (TNFD), and setting nature-positive goals and priorities (such as no-deforestation policy, restoring and repairing natural habitat within a company’s operations). Corporate entities are increasingly looking to address nature and climate repair in tandem, particularly post Global Biodiversity Framework. The time is ripe for the private sector to prioritise nature, alongside net-zero transition targets – and to take a leading role and close the finance investment gap. The UNEP Report shows that in 2022 investments in nature-based solutions were primarily from public sources at around 82% vs. 18% from the private sector. This investment split needs to shift. Financial flows must be made compatible with climate and nature goals! Successful examples of nature investments abound among innovative and traditional private-sector players alike. Now is the moment to extend and scale these early successes.?

Utilising, building on and scaling up existing solution frameworks – such as Nature-based climate solutions?

Carbon markets are a critical tool to create economic value for the climate mitigation through natural ecosystems, both marine and terrestrial (forests, vegetation and soils). These market-based mechanisms provide business with a clear framework to invest in nature and climate positive solutions. They also bring nature on to the accounts.?

Australia has nearly 12 years of demonstrable experience in carbon markets, through the Australian Carbon Credit Unit (ACCU) Scheme. What is unique in Australia is that the bulk of the projects, around 80%, are land-sector projects – or nature-based solutions most of them delivering co-benefits (or additional environmental, social and economic attributes).??

We also have state government schemes that build on the ACCU Scheme to prioritise investment in biodiversity outcomes – such as the QLD Government Land Restoration Fund.??

The Australian carbon market is already delivering nature positive outcomes through projects. Carbon farming offers a unique solution to both the biodiversity and climate crises delivering not just biodiversity and environmental outcomes, but also economic and social benefits to regional and rural communities. As the market has developed and evolved in line with emerging best practice guidance, so too has the price, moving from an average price of around $15 a tonne 10 years ago, to $35 a tonne today, and upwards to $60-70 a tonne for environmental plantings and savannah fire management projects.??

We now have a legislated Nature Repair Market – linked to the carbon market, and interoperable to deliver substantial biodiversity and nature outcomes.?

Looking Forward?

Markets must evolve to better address both carbon and nature outcomes simultaneously. Here I outline six key recommendations to improve on nature and carbon outcomes, seizing on the net zero transition imperative.?

1. Supercharge the ACCU Scheme – we need to prioritise outcomes for nature.? ACCU methods are currently laser focussed on carbon storage or emissions avoidance and therefore do not place enough intrinsic value on or incentive for biodiversity outcomes. This narrow focus could be broadened to more fully integrate protection and enhancement of nature. Indeed, there is an opportunity cost of not taking this approach.? Recent research (Trade Off Article) has also shown that: 1) there is often substantial overlap between carbon and biodiversity priorities in regions; 2) prioritising biodiversity results in a win-win for carbon; 3) but, prioritising only carbon could result in a biodiversity loss.?
2. Develop a national framework with criteria to assess and value co-benefits in the ACCU Scheme to support transparency of biophysical, social and economic co-benefits. This will stimulate investments into nature repair, while avoiding duplication with adjacent biodiversity and nature markets. Price premiums should be given to carbon projects with verifiable biodiversity outcomes, with the stacking proposed by the new Nature Repair Market providing an assurance framework to support that premium.?
3. Creating real value for carbon and nature through price signals ? A price premium is critical to lift the viability of carbon & biodiversity projects. Currently, artificially low prices in the carbon market have seen co-benefits undervalued, or not valued. Pricing signals are another tool needed to drive investment into carbon and nature positive outcomes.?
4. Direct public monies and government programs to target outcomes that contribute to both climate AND nature repair & increasing economic value.?
5. Demonstrate business leadership and best practice? Following the lead of government, businesses can and should →

• Integrate systemic organisational planning towards a net zero economy that simultaneously addresses the protection and restoration of nature (tie in Paris Agreement and Global Biodiversity Plan). Net-zero, nature positive aligned business models should incorporate assessment of risks, impacts and dependencies on nature, and biodiversity, which should all be reported on in a transparent manner so as to align with increasingly heightened corporate disclosure requirements.??
• Engage in the voluntary carbon for nature markets to make immediate contribution investments (outside their value chain) to mitigate GHG emissions whilst generating nature positive outcomes – protecting and restoring ecosystems. Report annually on these actions (pending further guidance for nature coming with the finalisation of the TNFD).??
• Prioritise Carbon for Nature ACCU compliance CM purchasing.?
• Become a signatory to the Australian Carbon Industry Code of Conduct to support best practice integrity, transparency and accountability in the carbon market.?

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Centre regions, communities and Indigenous peoples at the heart of carbon plus nature projects ?

Carbon farming is a key vehicle for finance to flow from the city to the country, where it has an impact far beyond the specific parcel of land on which the project takes place. However, too often, regions, communities and Indigenous People miss out on these benefits. The shift towards a nature positive economy must ensure that these groups are engaged early, can participate in the market, and share in the benefits and development opportunities from these projects. Regional Natural Resource Management (NRM) plans and organisations, as well as Healthy Country Plans must be prioritised as critical tools in informing planning and establishment of carbon projects that deliver verifiable biodiversity outcomes.?

Australia already has solid frameworks and markets in place. Now is the time to turbo charge them so that we can scale financial flows, planning objectives, and strategic priorities at the pace needed to establish Australia as a global Nature Positive leader.?

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Janet Hallows is the Director Climate Programs & Nature-based Solutions at CMI. She presented a workshop associated with the Global Nature Positive Summit on 8 October in Sydney.?

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