We have been profligate with the Earth’s resources, and the natural capital humans have relied on to flourish – air, water, soil, biodiversity, and a stable climate – is rapidly degrading, threatening the health of our planet and our well-being as a species. However, by investing in nature we can not only halt these losses, but create a stronger economy and society.
Investing in natural capital is critical to meeting the UN Sustainable Development Goals (SDGs) and creating “a better and more sustainable future for all.” However, in a first-of-its-kind study, we found that global investment in select nature-related SDGs is falling far below what is needed to achieve these goals by 2030, which is about $774 billion a year in additional public and private investment.
Building on that work, the Green Growth Knowledge Partnership (GGKP) and Basque Centre for Climate Change (BC3) applied the same methodology to 20 countries representing 59% of world population, 54% of world gross domestic product (GDP), 39% of global land area, and 59% of global greenhouse gas (GHG) emissions. The study, The Natural Capital Gap and the SDGs: Costs and Benefits of Meeting the Targets in Twenty Countries, found that for every nature-related SDG target analysed the benefits of investing in natural capital outweigh the costs. Investing in countries’ natural capital not only creates multiple benefits for people and planet, but is a net-positive financial investment.
By the numbers
The assessment looked at the relevant natural capital – defined as an asset that generates goods and services that have an economic value – associated with specific SDG targets to determine the estimated cost and benefit to each country for meeting its SDG targets by 2030. The SDGs evaluated were:
SDG2: Zero Hunger
SDG3: Good Health and Well-being
SDG6: Clean Water and Sanitation
SDG9: Industry, Innovation, and Infrastructure
SDG11: Sustainable Cities and Communities
SDG12: Responsible Consumption and Production
SDG13: Climate Action
SDG15: Life on Land
For example, SDG9 and SDG13 were assessed using targets 9.4 and 13.2, respectively, though both had the same relevant natural capital: atmosphere to sustain a stable climate. The success of meeting those targets, and the cost and benefits, was measured by analysing reductions in GHG emissions.
The benefit-cost ratios (BCRs) of achieving these eight SDGs targets varied greatly by natural capital type and country. However, when the 20 countries were assessed as a whole, it became clear that investing in natural capital and closing the current financing gap would be net-beneficial for each country and each target. The current financing gap is estimated to be between US$62 billion and US$621 billion annually for the 2021-2030 period.
The greatest gains after investment come from meeting the targets for forests, wetlands, protected areas, and air quality. While achieving the SDG targets for climate change, air quality, protected areas, and water quality require the highest levels of expenditure. Yet, we can see from this and the table below that the targets that cost the most can also provide the largest economic benefits.
Net benefits of meeting the selected SDG targets, (US$ billion)
Note: “N.A.” means data are not available. A: Agricultural land remediation is based on estimates of remaining pledge under the Bonn Challenge. Countries with “no data” did not commit to the Bonn Challenge, except for USA that already met their pledge. B: In calculating the cost, the average of the “With 1.5°C Climate Target” and “With No Additional Climate Investment” was taken. C: Estimates are for the 2°C target. D: Refers to reducing the rate of deforestation and loss of wetlands by half and increasing protected areas. Deforestation is based on FAO data.
In practice
A healthy planet is key to a resilient, equitable economy. Furthermore, an economy that enhances the Earth’s natural resources rather than depleting them will not only be stronger, but help us meet our long-term societal goals.
Governments often have limited resources and must carefully choose which programs to fund and which policies to pursue. The methodology developed here can assist countries as they craft their budgets and policy priorities by providing data on which natural capital investments will have the greatest economic return.
For instance, the BCRs developed from this study reveal that:
- Every US$1 invested in marine protected areas in Senegal and Tanzania generates over US$5,000 in economic value (a 5000 BCR).
- Investments in air quality have the highest impact in developed countries (BCRs of 113-1,333) with lower but still significant returns in developing countries (ranging from 1 to 32 BCRs).
- Angola, Nigeria, Brazil, China, South Africa, France, and Germany have BCRs of over 100 for wetland conservation.
A BCR of 1 means that the investment in that natural capital pays for itself, so a BCR of 100 generates a return on investment 100 times the cost.
Shares of net benefits (per cent) for meeting natural capital-related SDG targets with respect to total net benefits in selected countries by 2030
We are currently in a decade of action, where the well-being of humanity – social, economic, environmental – will be determined by whether we can meet the goals we have set for ourselves. By protecting our environment and investing in nature, we can strengthen our economy and address many of our most important global challenges, from poverty and inequality to climate change and biodiversity loss. Our methodology for assessing the costs and benefits of meeting natural capital-related SDGs and identifying the current financing gap is another tool for governments, businesses, and foundations to use as they determine where to invest their resources.
We will continue to build upon this work by expanding our assessment to include an additional 20 countries, as well as releasing a regional report that looks at the natural capital solutions for the African countries already assessed.