In a world facing escalating environmental crises, nature-based solutions (NbS) emerge as a beacon of hope, offering a path to restore ecosystems while addressing urgent societal challenges. From coastal wetlands to urban forests, NbS harness the power of healthy ecosystems to deliver climate resilience, biodiversity gains, and human well-being.

Yet unlocking their full potential requires robust financing. Today, global investments in NbS reach less than half the necessary scale, leaving a significant gap in our collective ability to meet climate, biodiversity, and water security goals. This article explores the strategies, mechanisms, and inspiring success stories that can mobilize the funding needed to regenerate nature and safeguard our future.

Understanding Nature-Based Solutions

Nature-based solutions are defined as deliberate interventions to protect, sustainably manage, or restore natural and modified ecosystems in ways that address societal challenges. They range from mangrove restoration for coastal defense to green roofs in urban centers. What sets NbS apart is their reliance on the intrinsic functions of living systems to deliver tangible benefits.

Critically, NbS go beyond simply reducing environmental impacts. They require active stewardship or restoration of ecosystems, ensuring that natural processes are harnessed to stabilize shorelines, filter water, sequester carbon, and support community health.

Key Examples and Transformational Impact

Across the globe, communities and governments are implementing NbS that demonstrate remarkable outcomes:

• Restoring coastal marshes and mangrove ecosystems to buffer storm surges and sequester carbon.
• Creating rain gardens and urban forests to reduce heat islands and improve air quality.
• Protecting and reforesting natural woodlands to preserve biodiversity and supply timber sustainably.

In Mumbai, a 3.2-acre urban forest initiative has the potential to cool temperatures by 3°C while offering green refuge to local residents. Meanwhile, mangrove restoration in Southeast Asia not only fortifies shorelines against rising seas but also sustains fisheries and stores up to 1,000 tons of carbon per hectare.

Financing Flows: Current Status and Funding Gaps

Global investments in nature-based solutions stand at roughly USD 154 billion annually. However, experts agree that we must reach USD 384 billion each year by 2025—more than double current levels—to align with global climate and biodiversity targets.

This USD 230 billion annual gap must be bridged through innovative approaches, blending public commitments with private capital and emerging finance instruments. Forest-specific funding has nearly doubled to USD 23.5 billion per year, but this still represents less than 2% of total climate finance, despite forests absorbing one-fifth of global CO₂ emissions annually.

Unlocking Co-Benefits Across Global Frameworks

A powerful advantage of NbS is their capacity to deliver multiple benefits simultaneously. Well-designed projects can advance goals under:

• The Paris Agreement on climate mitigation.
• The Sustainable Development Goals, including clean water (SDG 6) and sustainable cities (SDG 11).
• The Kunming-Montreal Global Biodiversity Framework for ecosystem protection.

For example, mangrove restoration not only deters coastal erosion but also supports livelihoods through enhanced fisheries and stores carbon, making it a true multi-benefit climate solution.

Innovative Financial Mechanisms

To scale NbS funding, stakeholders are leveraging a suite of novel instruments that align investor returns with environmental performance:

• Sustainability-linked bonds and loans that tie interest rates to measurable outcomes like reforestation acreage.
• Biodiversity-focused bonds, up to 16% of issuances, dedicated to habitat protection.
• Blended finance models that combine public risk guarantees with private investment to make projects bankable.

Additionally, natural capital investment funds are gaining traction, channeling over USD 5 billion into portfolios of high-integrity nature-based assets. These vehicles demonstrate that returns and restoration can go hand in hand.

Mobilizing Public and Private Partnerships

Today, governments supply 83% of NbS finance flows, but fiscal constraints from debt and competing priorities limit their capacity to scale further. Private capital, however, has surged from USD 9.4 billion to more than USD 102 billion in just four years, driven by growing corporate net-zero commitments and expanding carbon markets.

Corporate reforestation partnerships, like those led by Nestlé and Unilever, illustrate how supply chains can be greening through agroforestry investments. Sovereign green bonds issued by Indonesia and Chile have collectively raised billions for forest protection, underscoring the potential of public-private cooperation.

Ensuring Transparency and Accountability

With more than 70% of new private forest projects adopting third-party verification standards in 2024, credibility is on the rise. Digital tools—remote sensing, AI-powered monitoring, and blockchain traceability—are enhancing reporting and investor confidence.

Science-based monitoring, reporting, and verification (MRV) now underpin 44% of NbS policies entering the pipeline, up from just 21% the year before, reflecting a growing emphasis on integrity.

Overcoming Challenges and Scaling Up

Despite momentum, significant barriers persist. Underfunding remains critical, with NbS receiving only a fraction of global climate finance. Institutional investors often shy away due to perceived risks and long payback periods. Meanwhile, deforestation pressures continue in key regions.

To bridge these gaps at a trillion-dollar scale, we must embed NbS into national climate plans, expand carbon pricing, and strengthen local governance. Broader participation from pension funds, insurers, and impact investors will be essential to mobilize the volume of capital required.

A Call to Action

Nature-based solutions offer a unique intersection of ecological restoration, social resilience, and economic opportunity. By aligning policy, finance, and community engagement, we can unlock transformational outcomes that heal landscapes, empower communities, and slow climate change.

The path ahead demands innovation, collaboration, and unwavering commitment. Yet with every mangrove replanted and every forest regenerated, we reaffirm a fundamental truth: investing in nature is an investment in our collective future.