Today’s suggested listening is ‘Heartbreaker’ by Crazy P, released on their album ‘When we on’ back in 2011:
Every time that bass kicks in, it gets me!
There is a slightly awkward contradiction sitting in the latest crop of reports on nature finance. On the one hand, the market appears to be growing rather quickly. Gaining Ground, the new assessment from Forest Trends and The Nature Conservancy, estimates that private investment in nature has increased fivefold over the past decade, with more than $14 billion deployed in 2025 and at least $61.4 billion committed between 2016 and 2025. It identifies another $183.5 billion of announced allocations ahead.
On the other hand, the equally substantial Financing Nature: A Mid-Decade Update, from the Paulson Institute, The Nature Conservancy and WWF, concludes that the biodiversity finance gap has widened rather than narrowed. On the broader BloombergNEF definition it now stands at around $1.3 trillion a year, while the authors make the uncomfortable point that financial flows damaging nature continue to grow faster than those protecting it.
Both things can clearly be true, and indeed, in some sense that may be the most interesting thing about them. The temptation is to treat one number as evidence that nature finance is finally succeeding and the other as evidence that it plainly is not. I’m not sure either conclusion tells us very much. The more useful question is what lies underneath the growth in private investment, because that starts to reveal which parts of nature finance capital markets have learned to finance, and which parts they still haven’t.
The difference between those two is considerable, so let’s follow the cashflow. The largest category in Gaining Ground is sustainable agriculture, accounting for $32.8 billion of deployment over the decade. Much of that sits in large farmland acquisitions, agricultural lending and food-system corporate transactions carrying some form of sustainability mandate. Forestry, another familiar real-asset category, remains significant too. That shouldn’t surprise us, as farmland produces crops, and forests produce timber. Both have long investment histories, observable asset values, identifiable owners and, crucially, cashflows that existed before anybody added the words ‘natural capital’ to an investment memorandum.
The really interesting number appears elsewhere in the report. Mixed landscape portfolios, which combine commercial production and conservation across landscapes and deliberately pursue multiple revenue streams, have attracted just $166.4 million, less than 1% of the capital tracked - that seems worth dwelling on for just a moment. We may be witnessing rapid growth in investment associated with nature without yet seeing anything like the same progress in financing the functions of nature itself.
There is nothing wrong with that as markets usually begin with things they understand. Existing asset classes acquire new characteristics before entirely new asset classes emerge. Farmland becomes regenerative farmland, and forestry adds carbon income. Real assets begin incorporating biodiversity, water and resilience into their underwriting. This is real progress and may be exactly how a new market ought to develop. But if most of the capital is still ultimately relying on agricultural production, timber, established carbon revenues or regulatory obligations, then the fact that investment has acquired a nature label does not necessarily mean finance has solved the harder problem.
That problem begins when the economic value comes from something the ecosystem does for somebody else. Where does that value go? And this is where another of the reports becomes especially useful. The Invisible Dividend, produced by 500 Global and ALTÉRRA, starts from climate adaptation rather than biodiversity finance, but I think it is describing much the same structural problem. Its central argument is that adaptation creates substantial economic value which the financial system struggles to capture. So if you like a supply chain doesn’t break, a crop doesn’t fail, a flood doesn’t reach the houses it otherwise would have reached, and an insurer does not pay the claim it expected to pay. Those benefits are perfectly real, but they generally appear on someone else’s balance sheet rather than on the balance sheet of whoever financed the intervention. The paper calls this the ‘invisible dividend’. I rather like the phrase, although I think what it describes extends well beyond climate adaptation.
Consider an upland peatland restoration project that reduces downstream flood peaks. The asset sits with one landowner, the intervention may be financed by another party, but the benefit appears in fewer flooded properties, less interruption to a road or railway, lower claims for an insurer, perhaps lower operating or capital costs for a water company, and reduced emergency expenditure for the public sector. Who actually owns that benefit? Or take healthier agricultural soils that retain more water through a dry summer. The farmer may capture some of the value through yield stability, but a food processor may benefit from greater supply reliability, a lender from a borrower less likely to default, an insurer from lower loss volatility, a water company from lower abstraction pressure and government from less need for emergency support. Once again, the value exists; what is much harder to find is its owner.
The Invisible Dividend uses several examples to make exactly this point. It describes adaptation investments whose benefits spread to governments, banks, insurers and supply-chain counterparties that played no role in financing them. In one case the report observes that the beneficiary can already quantify the value: catastrophe modelling allows a reinsurer to estimate the expected loss that an intervention has reduced. What remains absent is the financial mechanism through which part of that benefit returns to whoever paid to create it. That feels like a much more consequential problem than whether we can attach another valuation to nature. We have become increasingly good at demonstrating that ecosystem services have economic value. However, we are still rather poor at determining whose value it is.
The boundary matters
A third report helps with the geography. Investing in Critical Systems, from the Landscape Finance Lab and Equilibrium Research, argues that nature investment should often be organised at landscape scale because this is large enough to contain ecological processes but still sufficiently bounded to allow governance, collaboration and investment. I fully agree. Landscapes might be catchments, coasts, administrative areas or even corporate supply sheds. That fits rather neatly with something I have been returning to in these pieces for some time. The financial boundary and the physical boundary frequently do not coincide. A farmer’s field has an ownership boundary, but the water doesn’t care about it. A company’s balance sheet has an accounting boundary, but floodwater doesn’t respect that much either. And an insurer has a portfolio boundary, but drought, fire and ecosystem degradation care little for it and operate across landscapes.
If the underlying ecological service is produced at catchment or landscape scale, financing it plot by plot may miss the point. The same report explicitly argues that landscape finance can aggregate projects, establish governance and combine different forms of capital across multiple interventions. There is something important in that, although I would take the argument one step further. Aggregation solves the scale of the project. It does not necessarily solve the source of the revenue. Fifty £1 million restoration schemes can certainly be bundled into a £50 million investment vehicle, but if none of the fifty has a credible payer, the aggregation has produced a larger financing problem rather than an investable asset. Landscape finance becomes genuinely interesting when the larger boundary does something else: when it brings enough of the beneficiaries inside the structure that some of the externality begins to disappear.
A catchment might contain the land managers carrying out restoration, but also the water company, infrastructure operators, local authority, major employers and perhaps insurers whose exposures improve because that catchment functions better. At that point aggregation isn’t merely about reaching institutional ticket size. It starts to become a mechanism for internalising value that previously leaked across boundaries. Let’s then agree that nature is infrastructure. What follows?
A fourth report makes another valuable point. One of the central recommendations in Financing Nature is that governments should treat nature as “critical infrastructure, not a free input”, recognising it as productive capital underpinning food, water, fertile soils, energy and economic stability. Given how often I have used and heard used by others the phrase “nature as infrastructure”, I am hardly going to disagree. But I increasingly think that saying it is the easy part. If a wetland is infrastructure, where is its revenue? If healthy soil is infrastructure, who purchases the service? If an upstream catchment is protecting a railway or a housing development downstream, where is the contractual relationship connecting those two things?
The report itself gets close to the same conclusion. It argues that disclosure is necessary but insufficient because telling an investor what nature-related risks exist does not tell them what they can invest in. Scaling nature-positive investment requires credible revenue models, payments for ecosystem services, offtake arrangements, compliance markets or measurable productivity and resilience benefits that ultimately reach the bottom line; and that distinction is, I think, fundamental.
Recognition is not revenue.
Calling something natural capital doesn’t create a cashflow, measuring an ecosystem service doesn’t create a buyer, and mapping a critical natural asset doesn’t create a market. Aggregating projects doesn’t create demand, and while blended finance can improve the economics of a transaction, it cannot permanently substitute for an absent customer.
Perhaps this is why the most successful parts of nature finance identified in these reports share a common characteristic. There is an obligation, an existing commodity, or an identifiable source of cash. Agriculture has crops, forestry has timber, carbon has credits, and US mitigation banking has regulated demand. The Gaining Ground report is especially clear that restoration investment tied to regulatory markets has attracted institutional capital in ways that voluntary markets generally have not. Capital has not suddenly become more charitable, rather the revenue became underwritable.
Who owns the challenge?
This brings me back to my title. Perhaps the central question in the next stage of nature finance isn’t who owns nature. Property law generally has an answer to that. I instead believe that it is who owns the economic consequence of nature working better. And we can push that question further still: who owns the reduced flood loss, who owns the avoided water-treatment cost, who owns greater agricultural yield stability, who owns a reduction in expected insurance claims and who owns the lower probability of an infrastructure failure? At present, the answer is often that it’s really unclear, while everybody benefits a little. That may be fine for economic value, but it is a poor foundation for private investment.
Public goods will always remain part of the story, and there are ecological functions for which trying to manufacture a private revenue stream would be artificial or undesirable. Financing Nature is right to recognise that public money remains essential where private economics simply do not exist. But not every ecosystem service is a pure public good - some benefits are spatially identifiable and some beneficiaries can be named. Some avoided costs can be estimated, and some risks already have prices attached to them.
And here I think The Invisible Dividend makes perhaps the most useful contribution of the four reports. Its adaptation argument is that insurers are potentially different from many other beneficiaries because they already price the counterfactual. Expected annual loss and catastrophe exposure sit inside their existing models. The conceptual leap is therefore not to persuade them that resilience has value, but to construct an instrument through which a portion of the value they already recognise can travel back towards the capital that created it. That is a very different financing challenge and potentially a much more soluble one.
What exactly are we financing?
So, I come away from these reports rather more optimistic about nature finance than the $1.3 trillion gap would suggest, but perhaps less convinced by some of the headline claims about how far the market has already travelled. The easy part, relatively speaking, is beginning to scale. We know how to invest institutional money in land, forestry, agriculture, established environmental markets and conventional assets with improved nature outcomes. More capital is entering, managers are becoming more sophisticated, and revenue stacking is increasingly common.
But the next phase is harder because the object being financed shifts. It is no longer simply an asset that happens to have better environmental characteristics, rather it is the performance of a natural system. A catchment that stores more water, a landscape that produces more reliable food, a wetland that reduces treatment costs, a floodplain that alters the distribution of downstream losses, a coastal ecosystem that changes expected storm damage. Those things already produce economic value. The four reports, in rather different ways, provide plenty of evidence for that. What they also reveal is how often the value falls outside the asset producing it, which makes the unresolved challenge less about valuation than architecture.
We need ways of matching the geography of ecological function to the geography of economic exposure, identifying enough of the beneficiaries to understand where value is being created, and then constructing contracts through which some portion of that value can support the intervention responsible for producing it. Not everywhere, certainly not for every ecological service, and absolutely not as an excuse for government to withdraw from financing public goods. But often enough to create something we still largely lack: durable cashflows attached directly to the performance of natural systems.
Perhaps that is the point at which nature finance really starts becoming something different. Because we have worked out how to finance what nature does, not because we have finally found a way to turn nature into another commodity. And once we look at it in those terms, the question is no longer simply how much capital nature needs. It becomes who already benefits when the system works, who loses when it fails, and why aren’t those relationships yet visible in the financial architecture? Is that where the next market is hiding?
References
Bennett, G., Lucena, L., Burns, C. and Watkins, K. (2026), Gaining Ground: State of Private Investment in Nature 2026, Forest Trends Ecosystem Marketplace and The Nature Conservancy.
Dudley, N., Chatterton, P., Timmins, H. L., Garrett, L. and Gigov, A. (2025), Investing in Critical Systems: A Guide to Investing in Nature at Scale, Landscape Finance Lab and Equilibrium Research.
Karkar, N., Park, J., Zhou, L. and Kiel, S. (2026), The Invisible Dividend: Unlocking Private Capital for Climate Resilience, 500 Global and ALTÉRRA.
Zhu, L., Townshend, T., Niu, R., Krueger, L., Deutz, A. and Bender, K. (2026), Financing Nature: A Mid-Decade Update: From Isolated Progress to Implementation at Scale, Paulson Institute, The Nature Conservancy and World Wildlife Fund.