Inside the race to invest in nature: why conservation science needs to be in the deal

DPhil student Harrison Carter and Postdoctoral Researcher Dr Sophus zu Ermgassen argue that if economic systems are to support nature recovery, ecological and social expertise must be at the table from the start.

Around the world, wildlife bonds, biodiversity and forest carbon credits, conservation loans and other financial mechanisms are being developed to help funnel private finance into conservation and restoration. The Tropical Forests Forever Facility dominated much of the nature finance conversation at COP in Belém. The Rhino Bond continues to grab headlines as a pioneering example of single-species investment. International nature targets suggest that these products will all move in one direction: up, up, up.

At the same time, this emerging field has been riddled with controversy. Scientists and journalists have raised serious questions about whether the conservation outcomes being sold are quite what they claim to be. One of the main concerns is overestimating the positive impact, and inflating the real value of conservation efforts. In normal human terms, if you buy a box of six eggs from the supermarket, you expect six eggs to be inside. Some investments in nature have faced the uncomfortable equivalent of opening the box and finding only three, and then discovering they may not be in particularly good health either.

For instance, REDD+ credits - credits generated from reducing deforestation and forest degradation - became one of the most prominent categories of voluntary forest carbon credit in the early 2020s. Yet revelations of over-crediting have had serious consequences, leading to more than US$1.1 billion being wiped from the value of the voluntary carbon market in 2023.

From the outside, and especially from the headlines, return-seeking nature finance can feel like two things at once: either the next big thing that conservation has been waiting for, or snake oil leading us down a dangerous road. The truth, inevitably, is more complicated.

That creates a strange tension. The very people who should be in the detail, conservation scientists, practitioners and communities affected by conservation, are often outside the circle. The financial language is unfamiliar. The structures can be opaque. The deals can feel like they belong to someone else, meaning they may not engage in design or critique.

That is why we wrote our review, published in Nature Reviews Biodiversity. We wanted to demystify biodiversity finance and create a meaningful bridge between conservationists and financiers.

Working with an interdisciplinary co-author team, we developed a functional breakdown of return-seeking biodiversity finance mechanisms; including loan and equity investment, a range of various bond designs, and biodiversity alongside forest carbon credits. In plain terms, we looked at what these mechanisms are designed to do: whether they primarily raise funds upfront for conservation and restoration interventions, or generate revenue from the sale of outcomes produced by those interventions.

We wanted to show not only the wide variety of mechanisms currently being used, but how money actually moves through them, who takes risk, who expects returns, and where conservation outcomes are supposed to appear.

Once you look under the bonnet, the picture becomes more nuanced than the hype suggests. There are genuinely entrepreneurial ideas emerging, and some important examples of innovation. But commercial investment in biodiversity remains a fraction of wider global financial flows. Many mechanisms are still small, uncertain and heavily shaped by government policy or public support.

We identified several crucial factors for biodiversity finance mechanisms to survive and scale:

• The reality of nature outcomes must be clear: If a biodiversity credit, forest carbon credit or wildlife bond claims to deliver a certain outcome, then that outcome must be relevant, measurable and real. If not, trust in the market can quickly come under pressure.
• Approaches must take account of the social reality. Conservation does not happen in a vacuum. Projects take place in landscapes where people live, work, hold rights, bear costs and make decisions. From a commercially pragmatic perspective, this raises a simple question - does the project have a real chance of working in practice? Poor design, weak governance or failure to engage people meaningfully can create serious unintended consequences. It can also undermine the project itself.
• Conservationists and social scientists must be involved from the beginning. Commercial, ecological and social issues are not separate. They are intertwined. Ecological failure can become commercial risk. Social conflict can undermine conservation outcomes. Weak governance can damage investor confidence. If nature finance is going to work, ecological and social expertise cannot be added at the end. It needs to be built into the deal from the beginning.

Going back to the example of forest carbon credits, a trustworthy scheme cannot simply assume that a standing forest automatically equals a saleable climate benefit. It needs strong evidence that the carbon benefit is additional, relative to threats facing the forest, and long-term monitoring to adjust for deforestation simply being displaced to nearby areas. It also needs to be commercially investable, potentially adjusting the financial structure of the project to de-risk investments. Now, carbon has a clear fungible metric measure in CO2; imagine how hard this is to do with biodiversity!

Crucially, forests are not empty carbon stores: they are lived-in landscapes shaped by land rights, livelihoods and local governance. Projects that involve communities from the start, recognise rights and share benefits fairly are more likely to endure.

Ultimately, nature finance is not simply good or bad. It is emerging, evolving and still being shaped. Conservationists do not need to watch from the sidelines. They need the confidence and language to engage, scrutinise and improve these mechanisms while they are still forming.

Our hope is that this review helps build that bridge. To tackle the biodiversity crisis, finance and conservation need to work together in meaningful and maybe uncomfortable ways. The future of nature finance will depend not only on clever financial design, but on whether those designs are commercially mature, ecologically credible and grounded in project reality.