Filling the financing gap for “rewilding” and ecological conservation

October 12, 2021

Elegy for a River is a beautiful exploration of two species of our rivers: water voles and white clawed crayfish. In addition to describing author Tom Moorhouse's research fieldwork, it also provides a window into the lack of funding for conservation and, more broadly, lack of momentum to make the necessary changes to sustain life on Earth.

The book's anecdotes highlight the impacts of climate change, not only from the perspective of Earth science, but also from a financial perspective. Flooding in the UK costs taxpayers approximately £1.4 billion annually, with a further £1 billion spent on flood-risk management. On the other hand, each restoration measure, such as planting trees or putting debris in upland streams, goes towards mitigating this loss. For example, by protecting homes and businesses from damage.

But conservation also provides indirect financial benefits. Restoring one habitat -- such as that of a beaver -- can have tremendous biodiversity benefits for other species, such as dragonflies, butterflies, plants, flowers, trees and fish. More broadly, "rewilding" can not only clean and tame rivers, but increase forestation for carbon capture purposes. As Moorhouse explains, NGOs such as Rewilding Britain have suggested that landowners could be paid between £500 and £1,500 per hectare to rewild forests, and that peat bogs could be worth £200 to £800.

Today, however, there remains a vast financing gap in the area of ecological conservation. If, as Moorhouse suggests, conservation is a “crisis discipline in crisis", one of the most critical components is lack of funding. The cost of protecting against additional species going extinct is estimated at $80 billion each year. To protect coastal and marine areas would add another $20 billion. According to Moorhouse’s estimates, conservation needs at least $100 billion of funding per year.

Obviously, a tremendous opportunity for sustainable finance. That said, our view of what is sustainable still needs further probing. While investing in listed equities and debt instruments of multinationals can certainly support certain sustainable goals in an indirect way, there is nothing more sustainable than investing directly in conservation. I would argue instead that rewilding and conservation projects need to become the benchmark for sustainable finance.

One critical component to filling the financing gap in this respect is developing the business case for ecological restoration. Another is finding the right blend of public and private investors who are willing to take a longer-term, multi-disciplinary view as to what constitutes a return on capital. And perhaps rethinking, more globally, the concept of “capital” as including resources provided by nature.

CPM