Financing ecosystem restoration

The global community has outlined ambitious ecosystem restoration targets. Yet implementation is slow, and a lack of funding is a key barrier to upscaling restoration activities. Most restoration projects are funded by public institutions and recent high-level initiatives have emphasised the need to scale private finance in restoration. Private finance can be channelled into restoration through various financial mechanisms but is held back by a lack of return-making investment opportunities. Various institutions have now been created to commodify previously non-market ecosystem services and make them investable, most prominently voluntary carbon markets and biodiversity compliance market-like mechanisms, such as biodiversity-offsetting systems targeting the achievement of 'no net loss' of biodiversity for a given regulated sector. However, attracting private finance into restoration comes with risks, as private finance objectives in restoration often are misaligned with wider social and ecological objectives. Private finance mechanisms to date have tended to underinvest in monitoring and impact evaluation mechanisms and to favour investments in cost-effective nature-based solutions such as plantation monocultures over naturally regenerated ecosystems. Many technological and institutional solutions have been proposed, but these cannot mitigate all risks. Therefore, scaling of ecosystem restoration through market-like mechanisms requires substantial fundamental investments in governance and civil society oversight to ensure that ecological integrity and social equity is safeguarded. Here, we outline the high-level policy landscape driving restoration finance and explore the roles and potential of both public and private investment in restoration. We explain how some common mechanisms for drawing private investment into restoration work in practice. Then, we discuss some of the shortcomings of past private finance initiatives for ecosystem restoration and highlight essential lessons for how to safeguard the ecological and social outcomes of private investments in ecosystem restoration.