Post date 21 Sep 2026 (original LinkedIn date)
Original LinkedIn version· 1,997 words
‘In your eyes‘ is one of my favourite Peter Gabriel tracks (there are many) - what I didn’t know about it tho was that Youssou N’Dour and Jim Kerr both sang backing vocals for him for this song. From the album ‘So‘, released in 1986
My gut is that nature finance has spent much of the past decade trying to answer a deceptively simple question: what is nature worth? Helped along by the wonderful Dasgupta Review in the eaerly years of this decade, perhaps we now actually have an answer! There is ample reason to be cheerful for that too. From the blindingly obvious, if the services provided by healthy ecosystems remain invisible to economic decision-making, they will continue to be treated as if they were free, inexhaustible or somebody else’s problem; to the more nuanced versions. The effort to measure ecosystem services, natural capital, biodiversity uplift, carbon sequestration and avoided damage has therefore become essential. Without some means of describing what nature does in terms that economic actors can recognise, it is difficult to see how nature ever moves from the margins of financial decision-making into the mainstream.
But there is a possibility that, in concentrating so hard on valuing natural assets, we have been drawing the boundary around the problem in the wrong place. Two recent pieces of work have prompted me to think about this rather differently. The first, Connect to Change, from the Built Environment Collective, is not really a nature finance paper at all. Its focus is systems thinking in the built environment, but I believe that its central proposition is immediately transferable. Buildings and infrastructure, it argues, should not be understood as isolated projects or assets. They sit within wider systems, and much of their value lies in the services those systems provide and the outcomes they enable.
The second, from the Green Finance Institute, WWF and the UK Centre for Ecology & Hydrology, develops a methodology for Nature-Positive Transition Pathways. It begins from a different problem: the UK has nature targets, but much less clarity about how sectors move from where they are today to a position consistent with those targets. The gap is not simply one of ambition. It concerns sequencing, incentives, investment requirements, commercial viability and the practical conditions that allow action to happen.
Taken together, to me the two papers suggest a useful shift in emphasis for nature finance. The next stage may be less about finding ever more sophisticated ways to put a price on nature, and more about understanding the systems in which nature operates, the transitions those systems need to make and the institutional arrangements that determine whether value can actually be converted into investable cash flows. That may sound like a distinction without much difference, but I don’t think it actually is.
Consider a catchment - we can begin by identifying a wetland, a stretch of peatland or a woodland that would benefit from restoration. We can estimate the carbon, biodiversity or water benefits associated with that intervention and then ask who might pay for them. This has become a familiar route into project development. Let’s pause for a second tho, and come at this in a slightly different way. An alternative is to begin with the performance of the catchment as a whole. Perhaps it is producing a combination of high flood losses, rising water-treatment costs, drought vulnerability, agricultural stress, transport disruption and poor ecological condition. Those problems may appear in different budgets and sit with different organisations, but that does not make them independent of one another. They may simply be different consequences of the way the same system is currently functioning.
The Built Environment Collective’s systems approach is fabulously useful here because it starts with outcomes, then asks how the system produces them, where the leverage points lie and which interventions might alter performance. In a nature finance context, that clarifies the appropriate order of enquiry. Instead of beginning with an asset and searching for monetisable benefits, we begin with the outcome we are trying to improve and work backwards through the system.
That alone is already a useful change, but there’s more. The Nature-Positive Transition Pathways work adds another dimension, because a system map is static while a transition is not. Knowing where the system fails does not tell us how it moves from one state to another. The pathway approach forces us to ask what has to change, in what order, at what scale, who needs to act and what prevents them from doing so. It also asks whether the proposed actions are cost-effective against alternatives, whether supply chains and technologies are ready, whether regulation enables or constrains action, and whether the benefits are sufficient to justify investment. And that strikes me as particularly relevant to nature finance because it suggests that the financial product should appear rather later in the process than it often does.
We have become very good at inventing financial instruments (I’m as guilty as anyone!). Water resilience bonds, blended-finance vehicles, biodiversity credits, outcome contracts and Nature-as-a-Service structures can all be useful, but each of them is only useful if it solves a clearly identified problem. Starting with the instrument risks turning the exercise into a search for somewhere to deploy it. Perhaps a better question is what is stopping an economically valuable improvement in system performance from happening?
Sometimes the answer will be straightforward - a business does not invest because the intervention is not cost-effective. Sometimes the economics are attractive, but the benefits sit largely with somebody else. Sometimes several organisations benefit, but no single party captures enough value to act, and sometimes the benefit is real but too uncertain, too long-dated or too difficult to contract around. In other cases, the principal barrier may be regulation, procurement practice, a lack of data or simple institutional fragmentation. It is important to recognise that these are different problems and they require different responses.
This distinction between economic value and investibility seems to me particularly important. Nature finance often speaks as though demonstrating value should be enough to produce investment (not a chance!). Whereas, in practice, there are several steps in between. An intervention may create substantial value across a system, and that value then has to be captured by identifiable beneficiaries. Some part of it has to be converted into a revenue stream or avoided cost that somebody is prepared to contract against. Only then does the question arise as to whether those cash flows are investable on terms acceptable to capital providers.
A restored upstream wetland may, for example, reduce flood risk, improve water quality, increase drought resilience and reduce infrastructure disruption. Yet those benefits may be distributed between a water company, an insurer, a local authority, transport operators, farmers, businesses and households. The problem is not necessarily that the wetland lacks value, it may simply be that the institutions around it are poorly designed to aggregate that value. I think that this is where the systems perspective becomes particularly useful. Connect to Change explicitly points towards the gaps between organisational and informational silos as potential leverage points. In nature finance, those same gaps may explain why projects that make sense at system level fail to become investable at project level. That, in turn, changes the conversation with government and particularly with HM Treasury (you knew I’d get to the money peeps!).
The most productive approach is probably not to arrive with a nature project and ask how government can fund it. Nor is it to begin with a financial instrument and seek public support for making it work. The more compelling proposition is to identify a system that is producing outcomes the government is particularly keen on and then show from a systems perspective how different nature interventions can support associated economic growth and how, with some help, a range of beneficiaries can be incentivised to pay for those. Alternatively we can flip to outcomes that the government does not want, demonstrate the economic consequences of that underperformance, identify the intervention that would improve it and then show precisely why the parties who benefit are unable or unwilling to finance that intervention under current conditions. Only at that point does the question of government intervention become meaningful.
The Nature-Positive Transition Pathways report is helpful on this because it explicitly recognises that some actions may be desirable but not commercially viable under existing conditions. Its response is not simply to discard them, but to ask what policy, incentive or financial mechanism might change the economics. It also identifies a wide range of possible government levers, from tax measures and loan guarantees to regulation and public investment. For me, that is a much more interesting Treasury conversation because it does not assume that public money is the answer. The answer may be regulation, procurement reform, a guarantee, a market mechanism or policy certainty. Public capital may be necessary, but only where the diagnosis points to it.
I think that there is another implication worth drawing out. The Nature-Positive Transition Pathways work includes the idea of treating natural capital as critical infrastructure, a favourite thematic of my scribblings. That is attractive, but I think it becomes more persuasive if we can get more precise about why. Nature is not infrastructure simply because it is valuable. It becomes economically consequential infrastructure when its condition affects the performance of systems on which people and businesses depend.
Some examples to bring this idea to life: a wetland matters economically when its hydrological function changes flood losses, water-treatment costs or the resilience of downstream assets; upland peat matters when it influences water storage, flow regulation or drinking-water quality; and saltmarsh or seagrass matters when it changes the exposure of coastal communities and infrastructure to storms and erosion. So the important chain is therefore not simply from natural asset to monetary value. It runs from ecological condition to ecosystem function, from ecosystem function to system performance, and from system performance to economic and financial outcomes. And hence why ‘place’ matters so much.
The Nature-Positive Transition Pathways methodology is explicitly spatial, recognising that the location of an intervention affects its impact. Somewhat uncomfortably, a hectare of wetland in one place is not economically equivalent to a hectare somewhere else because its value depends on what it is connected to and who benefits from its function. This is one reason nature finance has always struggled with the temptation to emulate carbon a little too closely. Nature’s economic contribution is often relational ie what matters is not only what the asset is, but what it does, where it does it and for whom. This is the boundary I believe we need to redraw.
The nature finance conversation has understandably concentrated on making nature visible, measurable and valuable. The next stage is to understand more clearly the systems in which that value arises and the transition pathways through which better ecological condition translates into better economic performance. That leads to a rather different question from the one with which we started. Instead of asking how to make nature investable, perhaps we should ask what prevents an economically valuable improvement in system performance from becoming investable.
Once we can answer that, we are in a much better position to work out whether the missing ingredient is a contract, a market, regulation, risk-sharing, public capital or simply better coordination. Nature finance then becomes less about finding ways to monetise nature, and more about financing the transition to systems that work better because nature works better. Seems obvious when you think about it?!
References
Built Environment Collective, Connect to Change: Unlocking the value of systems thinking in the built environment. DOI: 10.17863/CAM.119438
Lazurko, A., Loerke, E., Grub, H., Gecchele, L., Gkoumas, V., Quint, J., Dixon, C., Murray, H., Isaac, N.J.B. & Harrison, P.A. (2026), Co-creation and evaluation of Nature-Positive Transition Pathways for the UK economy: A methodological approach. Green Finance Institute, WWF and UK Centre for Ecology & Hydrology.