One of the events I was most excited to attend at London Climate Action Week a few weeks ago was the launch of The Nature Conservancy’s Gaining Ground — State of Private Investment in Nature report, published in collaboration with Forest Trends. It’s a 10-year update on how much private money is flowing into the sector, following Forest Trends’ influential 2016 State of Private Investment in Conservation report.
The headline is striking: $61.4 billion committed between 2016 and 2025, with more than $14 billion in 2025 alone (up from $2.8 billion in 2016) — a fivefold increase in annual investment. According to the report, money is now “moving into the heart of mainstream investment strategies.”
That was exciting news to everyone at the launch after spending the day getting grilled in the London heat. Since then, I’ve seen the report referenced across LinkedIn, newsletters and industry media. Rightly so. It’s a huge and important piece of work.
But as I dug into the numbers back home, I was wondering what exactly we were measuring here, and realized there are at least two ways of defining nature finance:
One is by where the money goes. If capital flows into agriculture, forestry or other businesses closely tied to natural systems, it counts as nature finance. The other is by what the money is paying for. Is someone paying for healthier ecosystems? For restoration? For ecological outcomes that wouldn’t have happened otherwise?
The difference is subtle but important: financing businesses that depend on nature isn’t the same thing as financing nature conservation or restoration itself.
Reading the report, I realized the authors are mostly measuring the first. But many of us — including me at first glance — read the headline number as evidence of the second.
Is “sustainable” agriculture really a nature investment?
More than half of the investments tracked in the report — $32.8 billion over the past decade — flowed into agricultural transactions. The majority of those were concentrated in “a small number of large farmland acquisitions, agri-lending facilities, and food system corporate transactions” carrying some kind of ESG label.
Meanwhile, more innovative regenerative agriculture transition finance, which the authors note “differs substantially in its ecological ambition,” remains a relatively small segment. This is where that distinction starts to matter.
Buying farmland isn’t the same as buying ecological outcomes. Farming practices can generate environmental benefits, but don’t do so automatically. In the US, farmland acquisitions made up a significant part of this category, but the investment thesis is primarily financial: inflation hedging and portfolio diversification. Maybe those investments produce ecological improvements, but that’s not really what investors are paying for.
Pedro Fernandes, Agribusiness Director at Itaú BBA, Latin America’s largest corporate investment bank, was one of the panelists in London and described what he sees as some of the most innovative work in this category. One property they financed went from degraded farmland to a productive cotton operation in just four years.
“Usually you have to plant rice for a couple of years, then soybeans, then corn, then after ten years you can plant cotton. But with the right technology, we went to cotton in four years. That’s what we’re now seeing in sustainable agriculture.”
That’s an intriguing example. Restoring degraded farmland is a huge opportunity in Brazil’s Cerrado, and I imagined some clever mix of precision agriculture and new nature technologies. So I asked him after the panel how they’d done it. The answer: heavy investment in fertilizers to correct the soil’s pH, backed by three years of significant negative cash flow before seeing returns.
Yes, that’s potentially impactful if it means old-growth ecosystems elsewhere are spared from conversion into farmland. But walking away from that conversation, I doubted whether I’d categorize this as nature finance. Itaú is financing more productive agriculture. It may come with ecological benefits, but they aren’t what the capital is being deployed to buy.
Maybe that’s just where the market is today. But I don’t think it’s what most people picture when they hear the term “nature finance.”
What investors aren’t paying for
The Brazil discussion prompted Dr. Bernadette Arakwiye, Rwanda’s Minister of Environment, who was sitting in the audience, to ask a good question.
Her country is small, she said, so it can’t compete if scale is measured purely by hectares. Is there an appetite for more integrated projects that restore ecosystems while delivering broader benefits to communities?
It struck me that she was asking the same question from a different angle. If the investments that scale most easily are farmland and forestry, who is financing ecosystems that don’t naturally generate financial returns, but that we now want to classify as infrastructure?
That question becomes even more interesting when you look at where the money has been flowing over the past 10 years. North America received $20.8 billion. Latin America $15.3 billion. Asia and Oceania $6.3 billion each. Europe $4.1 billion. Africa just $2.3 billion.
Those numbers don’t line up with where some of the world’s biggest ecological needs and opportunities are. So are there investment models from the US and Brazil that could transfer to countries facing very different ecological, economic and institutional realities?
Another audience member asked about mangroves and other ecosystems that don’t fit neatly into existing financial models. How do you attract institutional capital where there isn’t an obvious asset to insure — like a hotel in a flood-risk area — or a clear revenue stream?
That lies at the center of today’s “nature as infrastructure” conversation. A compelling idea, but one that still has few real-world examples behind it.
The report itself illustrates the challenge. Capital flowing into ecosystem restoration and conservation remains heavily dependent on concessional finance, with large year-to-year swings driven by a handful of individual transactions. The ecosystem restoration category jumped from 7% of deployments (2021–23) to 23% in 2024–25 — around $5 billion — but much of that was driven by concessional forest restoration lending and debt-for-nature swaps, particularly Ecuador’s $1.5 billion sovereign conversion.
While these are important deals, they don’t point to a rapidly maturing market for financing biodiversity outcomes. So outside carbon and biodiversity credit markets — which largely depend on regulation — what financial innovation is emerging to finance nature itself?
I didn’t hear many convincing examples that answered Dr. Arakwiye’s question.
Counting money, not outcomes
I think the report is documenting something important. Private investors are paying much more attention to natural assets, and the businesses that depend on them, than they were a decade ago.
But I also think it’s documenting something else. From a biodiversity perspective, it describes a symmetrical market failure: where nature delivers outcomes, nobody pays. Where somebody does pay, they’re often buying something else — food production, timber, farmland, inflation protection — that may have ecological outcomes tagged on as a co-benefit.
That’s why I think we should be careful with the $61 billion headline. It doesn’t tell us that a market for biodiversity is emerging. It tells us that conventional investments in natural assets are increasingly being grouped under the umbrella of nature finance.
That distinction matters. Financing businesses that depend on nature isn’t the same thing as financing nature itself.
If we don’t separate capital that’s paying for ecological outcomes from capital that’s financing businesses that happen to interact with ecosystems, we’ll struggle to understand whether we’re building a market for nature that gets us closer to the Kunming-Montreal targets agreed in 2022 — or simply relabeling parts of the existing economy.
Cover photo by Karl Wiggers on Unsplash.
Author of the report here! Thank you for the piece. This really clearly describes what has been a recurring theme as we were developing the report and once it was launched. We did our best to name the distinction (for which I use "working lands" and "wildlands" as a shorthand) and maintain it in the analysis, and I am glad to hear it more or less came through. One of the reasons we wanted to do this report was actually seeing that the "nature" allocation reported in many institutional investors' TNFD disclosures in practice is virtually always focused on sustainable/organic/regen ag or sustainable forestry. We hoped to provide some initial evidence making it clear what's really behind the "nature" label. (There is categorically not a $61 billion market for biodiversity.)
We of course need those ag/forestry investments; land use change and land degradation driven by food/feed/fiber production are a major (most years, the biggest) driver of nature loss. So I'd gently push back on this being "relabelling parts of the existing economy" - there's a real and important transition happening in those sectors that's responding to awareness of nature risk and a lot of hard work over two decades by policy makers and NGOs, which we can celebrate. It is true that ecologically healthy working lands aren't the same as wild habitat, but nature needs the former too if it's going to function at a landscape and global scale. I also have the strong sense that many ag/forestry investors ARE after specific ecological outcomes through the proxies of production shifts, for lack of more direct options. As an aside, when you look at TNFD reports, water risk and soil health degradation are frequently at the top of the list in terms of risk, with climate and biodiversity loss lower down. That's the inverse of how environmental markets have developed. (Which is ok - we don't have to turn everything into a commodity credit market.)
Still! Investments directly in ecological restoration and conservation truly aren't keeping pace, with a few exceptions. There are a lot of reasons for this, with really important implications for policy, enabling market development, catalytic capital, and probably an honest reckoning in the conservation community with what private capital can and can't do for nature where there are strong public good characteristics in play. I would really love to dig into this if there are any merry collaborators here - it'd be a great way to get more mileage out of the report dataset!
One of the problems I see with nature finance is that it still prioritizes clear, near-term cash-flows as the main criteria to determine which projects get funded and which ones don’t. Like our economy, it fails to internalize large-scale and long-term costs that arise from environmental degradation without recognizing that we live in a closed system, and as such, damages done to the African savannah will eventually reach farms in the Midwest. The bigger challenge, then, is whether we can design financial instruments and incentives that internalize these long-term systemic costs before they materialize as economic losses.