Asia has been spending more on nature-based solutions than any other region, but it must still help the world more than triple nature finance and reroute a much larger sum flowing to harmful investments, according to the United Nations Environment Programme (UNEP).
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The new State of Finance for Nature 2026, published Thursday, found that government expenditure on nature-based solutions (NBS) was highest in Asia at US$93 billion in 2023, followed by North America at US$59 billion and Europe at US$34 billion.
“The $93 billion Asian figure is primarily driven by China, which has substantial government expenditure across the NBS-relevant budget categories we track,” said Nathalie Olsen, team lead of UNEP’s climate finance unit, to Eco-Business.
However, current spending on nature falls far below what is needed to address climate change, biodiversity loss and ecosystem degradation, the report found.
“To meet global biodiversity, climate and land restoration targets, nature-based solutions investment must increase 2.5 times to US$571 billion annually by 2030 – equivalent to just 0.5 per cent of global gross domestic product,” UNEP said.
Financing needs are more dire in Southeast Asia, where investments in nature must increase sevenfold from US$8 billion to US$54 billion annually by 2030, it added.
Globally, finance flows continue to be heavily skewed toward nature-negative activities, which threaten ecosystems, economies and human well-being, UNEP said.
In 2023, a total of US$7.3 trillion went to nature-negative activities around the world in 2023. More than half – US$4.9 trillion – was from private sources and highly concentrated in the utilities, industrial, energy and basic materials sectors.
“For every US$1 the world invests in protecting nature, it spends US$20 destroying it,” UNEP said. “Nearly half our global economy significantly depends on nature and yet governments, business and finance continue to erode our collective nature bank account.”
Meanwhile, US$2.4 trillion was made up of government subsidies to environmentally harmful fossil fuels, agriculture, water, transport and construction activities.
“If you follow the money, you see the size of the challenge ahead of us. We can either invest into nature’s destruction or power its recovery – there is no middle ground,” said Inger Andersen, executive director of UNEP.
UNEP’s report introduced a new framework aimed at helping governments and businesses reform their investments away from nature-negative activities and towards more nature-positive outcomes.
Titled the Nature transition X-curve, it calls for the phasing out of activities that cause nature loss and phasing in finance for activities that support nature.
“Transformative change on this scale is challenging but possible,” the report said, giving the example of how reforestation of degraded land at a national scale in Costa Rica was supported by funds raised through a fossil fuel levy.
Opportunities for private finance
Asia has also been the largest recipient of mobilised private finance – which refers to private capital that has been leveraged through public development finance mechanisms like guarantees, co-financing arrangements or syndicated loans – for nature-based solutions at US$426 million in 2023, UNEP said.
However, private finance for nature only reached US$23.4 trillion in 2023, one tenth of total financing flows, though this was up by over 7 per cent since 2022. This includes green and sustainability-link bonds where proceeds were used for biodiversity, as well as philanthropy, biodiversity offsets, carbon credits and payment for ecosystem services.
Biodiversity offsets mobilised the largest share of private nature-based solution finance at US$7.1 billion, followed by payment for ecosystem services.
But most of the private sector’s contribution to nature-positive outcomes, which include mitigation and transition finance as well as reducing harm across existing portfolios, might be underreported and undervalued, said UNEP. These categories are not currently measured or tracked in systems that account for financing flows to nature-based solutions.
“Institutions may be delivering substantial nature benefits through supply chain improvements, circular economy investments and sectoral transitions that remain invisible in current tracking systems,” UNEP said.
Of the private financing flows to nature that were tracked, biodiversity-related bonds issuances in China, South Korea and France were found to have been composed almost entirely of private-sector funds in 2023.
UNEP suggested that the issuance of green bonds which de-risk private finance, such as those which raise money to improve flood protection of cities, could be used to increase private investment into nature.
“Sustainability-linked loans and bonds with a nature component are increasing,” it said, citing Sustainable Fitch data that showed the issuance of green and sustainability bonds featuring terrestrial and aquatic biodiversity increased from 5 per cent in 2020 to 16 per cent in 2023.
