Biodiversity¬Climate change

Experts call for justification of Financing for Nature-Based Solutions

Dar es Salaam. Experts from Multilateral Development Banks (MDBs) call for a shift in perspective towards considering the “cost of inaction” as a valuable reminder of the importance of investing in nature-based solutions (NbS).

While NbS are increasingly recognized as cost-effective and sustainable approaches to addressing environmental challenges like climate change, securing funding remains a challenge. Traditional cost-benefit analyses often overlook their long-term economic benefits.

At a panel discussion on nature-based infrastructure during a COP 28 side event on December 9th, experts emphasized the need to consider the cost of inaction when evaluating investments in NbS. They argued that failing to invest in nature can lead to even greater costs down the road.

Dr Olufunso Somorin, Regional Principal Officer for the African Development Bank (AFDB) said nature-based solutions are essentials to climate change and biodiversity loss to water scarcity and food security but facing number of challenges in its implementation.

He said addressing the financing challenges and recognizing the full economic value of NbS can help to unlock their immense potential for sustainable development.

He mentioned some of the challenges as limited appreciation for the economic value of nature as governments and decision-makers often prioritize short-term economic gains over long-term benefits, neglecting the economic value of ecosystem services provided by nature.

He said another challenge is competing priorities and limited resources: because governments often face competing priorities and limited resources, making it difficult to allocate funds towards large-scale NbS projects.

He also mentioned difficulties in quantifying non-monetary benefits as traditional economic models struggle to capture the full value of NbS, particularly non-monetary benefits like carbon sequestration, improved water quality, and enhanced biodiversity.

Dr Olufunso Somorin speaking at a side event in COP28

Despite these challenges, Somorin remains optimistic about the future he suggests solutions to overcome the financing challenges including combining grants, loans, and other financial instruments can make NbS projects more affordable and attractive to investors.

He suggests to bring stakeholders together through platforms like roundtables can increase awareness and understanding of NbS benefits, leading to greater support and investment.

Global Lead for Biodiversity Finance and Climate Business at the International Finance Corporation (IFC), Irina Likhacheva believes that nature-based solutions (NbS) can deliver substantial financial benefits to companies.

She said incorporating NbS into business operations presents a compelling opportunity for companies to achieve their financial goals while contributing to a more sustainable future.

He suggested Governments, financial institutions, and civil society organizations must work together to create an enabling environment that encourages private sector investment in NbS. By doing so, we can unlock the immense potential of these solutions to address the environmental challenges we face today.

Rose Mwebanza, Africa Director for the UN Environment Programme, Mwebanza emphasizes the need for a collaborative, suggesting Engineers, planners, financiers, and environmental experts need to work together to create resilient infrastructure that is both nature-friendly and cost-effective.

He also suggests investing in NBS upfront can save money in the long run by avoiding costly repairs and reconstruction after disasters as cost of inaction is far greater than the initial investment in NbS.

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