Indeed, it is increasingly clear that if we are to stand any chance of reaching the 1.5° or 2.0° Celsius ambition laid out in the agreement, natural solutions have to be encouraged and incentivized at a similar level to the incentivizing renewable energy solutions have already seen.
To that point, there was an important announcement on the first day of the summit—by the UK, German and Norwegian governments—but it received relatively little attention from the mainstream media. The three governments entered into a joint agreement pledging $5 billion to reduce carbon emissions caused by tropical deforestation, known as REDD+ (Reducing Emissions from Deforestation and Forest Degradation). The pledge will pay around $800 million a year starting this year, with finance reaching $1 billion per year by 2020.
Their announcement also made the crucial point that investing in natural solutions is an investment in the “the vital role forests play for livelihoods, sustainable development, adaptation, biodiversity and other valuable ecosystem services they provide.”
Expanding private capital investment
Five billion dollars is a lot of money, but it is not enough. The G20 Global Infrastructure Initiative estimates that global infrastructure investment will increase to $70 trillion over the next 15 years. In the face of that scale of development pressure, we need to mobilize trillions of dollars of private capital to invest in natural solutions to climate change.
At the Global Landscapes Forum event that ran in parallel with the COP, The Nature Conservancy hosted panel discussions with the Tropical Forest Alliance 2020 to look at the ways in which we can expand private capital investment into sustainable landscapes. On the one side, we have seen an incredible increase in the level of corporate commitments—such as the New York Declaration on Forests—that provide the ambition for transforming supply chains. But on the other side, we also need to work harder to find ways to tap into the capital markets and unlock the trillions of dollars that could flow into a world of more sustainable growth.
Many projects—across a variety of sectors in agriculture and forestry—are already economically viable in their own right and can deliver greater carbon benefits. Other types of projects will require greater incentives to compensate for higher risks and/or lower returns.
At the Conservancy, we are working with business and government partners around the world on these strategies already, including nutrient management and soil carbon strategies in the United States; improved forest management strategies in the United States and Indonesia; economically viable reforestation work in China; and financial innovation that is improving cattle ranching in Kenya and Brazil.
There is of course a role for carbon markets to provide the additional incentive many of these programs need. California’s carbon market is an example of pioneering action at the sub-national level that goes some way to incentivize better land use. But there is still the potential to go much further.
And there are other examples of financial innovation already incentivizing natural solutions to development challenges. Take water funds for example—an innovative market-based solution for water security that the Conservancy has been a leading player in developing and bringing to Latin America, North America and Africa. Water funds gather investments from water users and direct the funding toward the conservation of upstream lands that filter and regulate the downstream water supply in major population centers. I recently attended the launch of the São Paulo water fund in Brazil and witnessed the significant support for this initiative from across public and private sectors. And, importantly, while the main goal may be improving water quality, these activities also benefit climate mitigation and biodiversity protection.
Land is our most precious resource. It fuels our society through food, fiber and energy production and harbours critical biodiversity. But it is also our greatest global carbon sink technology. To achieve the world’s new climate mitigation goals, we must be able to maximize the potential of our lands as a climate solution. It is a matter of choice, and that choice is ours.