100% of today’s global economy is 100% dependent on nature.In addition to the food we eat, the water we drink, and the air we breathe, nature includes all living things and the minerals under our feet. It is ever-present in the stuff of our homes and mobile phones, the movies we stream, and how we manage our health and consumption of energy.Nature and markets are inseparable since nature is fundamental to all our economic activities. Our real choice is not whether there should be nature markets – both long established markets, and those that are emerging – but rather how they can best be designed and governed to deliver equitable outcomes and sustainable positive impacts on nature and communities.The unprecedented shift towards nature markets must be harnessed to protect nature and deliver a Just Transition to a sustainable, post-carbon economy.
The world has already lost a third of its forests.At the same time, 2015 to 2022 saw the eight warmest years on record. Our world is on the brink of a climate and biodiversity emergency. The disastrous consequences of our unsustainable overuse of nature for delivering economic prosperity are being realised around the world.In response, nature is being increasingly valued and priced into markets, creating a historic opportunity to reset our unsustainable economy. The pricing of nature could catalyse a nature economy where markets work for people and the planet or, through inadequate governance, lead to accelerated biodiversity loss, climate change and inequalities.There is a small window to shape how these markets will evolve. Correctly valuing and integrating nature into businesses and markets, with adequate governance, can drive the transition to a just and sustainable post-carbon economy.
Nature and climate are a ‘twin crisis’. They are indivisible when it comes to restricting the rise of global temperatures.This is due to nature’s capacity to absorb and store carbon, its direct positive impacts on our climate, and its central role in securing livelihoods and food security.Today’s economic model has destroyed nature at unprecedented rates and as a result, accelerated the climate crisis.
The members of the Taskforce on Nature Markets informed the focus, analysis, findings and recommendations of the final report. This remarkable group is drawn from a indigenous communities, policy, legal and governance, market, technology and civil society. Meet our members.The paper was prepared by NatureFinance on behalf of the members in its role as the Secretariat, drawing on the guidance of its members and the invaluable technical inputs from its knowledge partners, as well as feedback from the wider community of practice.The Taskforce’s Knowledge Partners were also essential contributors to the analysis, findings and conclusions. Meet our Knowledge Partners. See the full paper for the list of contributors and other acknowledgements.
The rise of nature markets can play a central role in reshaping our unsustainable economy if, and only if, their design and governance is rooted in a radical and robust commitment to impact and equity.Each of the 7 Taskforce recommendations - which build on promising initiatives and best practice from around the world - could ensure that nature is consistently and effectively integrated into the wider global economy.They include:1. Aligning economic and financial architecture with an equitable, global nature economy. 2. Policy alignment of central banks and supervisors.3. Aligning public finance with the needs of an equitable, global nature economy.4. Making food commodity markets accountable to people and the planet.5. Securing improved economic benefits for nature’s stewards.6. Addressing the harmful impacts of nature crimes. 7. Converging measures of the state of nature.
We are experiencing an unprecedented historic shift towards pricing nature in global markets.The four drivers of ‘nature markets’ are:1. Public awareness and citizens’ intrinsic valuing of nature.2. The increasingly visible negative impacts of nature’s fragile condition.3. A growing understanding of the dependency of economic assets on nature.4. An explosion of cheap and timely biodata making clearer the true condition of nature.
A nature market explicitly values and trades nature. The four core types of nature markets are: Intrinsic markets - that enable the trade of nature itself, such as: - Agricultural products and minerals- Legal and illegal wild species- Oil and gas- Wildlife tourismAsset markets - that trade nature assets, such as:- Land rights- Fresh water rights - Biodiversity IPCredit markets - public purpose credit markets that seek to satisfy compliance requirements or to conserve and invest in nature, such as: - Nature-specific credits like water quality credits or voluntary biodiversity credits- Nature-related carbon credits Derivative markets - that trade financial products which directly reflect ecosystem values or ecosystem risks, such as: - Commodity derivatives- Nature-related insurance- Wildlife NFTs- Biodiversity loss insurance
The analysis in our final report took an in-depth look and set out recommendations for the reform and reshaping of of four specific nature markets that require the most urgent attention:1. Nature credit markets, especially focused on carbon markets and emerging biodiversity credit markets.2. Illegal nature markets, covering the trading of the results of nature crimes.3. Soft commodity markets, the largest and arguably the most important set of nature markets, trading the world's food supply.4. Financial markets, which have the most influence on all nature markets, shaping the global economy and the terms of its relationship with nature and climate.
Finance is the lifeblood of the global economy. Therefore, the way the global financial system deals with nature determines how aligned the global economy is with nature positive outcomes.Financial markets have the potential to pivot the entire global economy towards nature-based decision-making and away from its current unsustainable use of nature.
Pricing nature across the global economy could increase the potential for nature to be preserved, invested in, and restored. However, making nature markets work does not imply an exclusive or even primary focus on market-based solutions.Indeed, the Taskforce’s overall findings argue that most solutions are underpinned by political and policy actions needed to transform the basis on which enterprises, markets and economies use, invest in, trade, and pay for nature.
Any solution to the nature crisis will not succeed without engaging nature’s stewards in their formulation and execution. In particular, Indigenous Peoples and local communities, who currently manage over a quarter of the world’s land surface, including many of the most biodiverse regions in the world.
Send us additional questions to roberta.zandonai@naturefinance.net and we will add them, with a response, to this page.
