Toolbox on Financing Nature-Based Solutions

The report examines the application of blended finance to scale Nature-based Solutions (NbS), highlighting that while no single approach exists, tools like guarantees, technical assistance, and the engagement of direct beneficiaries are critical for de-risking investments. Through 12 case studies, it demonstrates how concessional capital can be used to build ecosystems, prove commercial viability, and mobilize private investment in nascent markets. Key examples include the Galápagos Debt Conversion and the Seychelles Blue Bond, which use credit enhancements to lower the cost of capital for marine conservation.

• Guarantees are identified as the most catalytic instruments for attracting private capital to NbS because they de-risk investments and create a safer environment for testing new solutions, particularly when combined with capacity-building support.
• The public sector is essential for scaling NbS not only through direct funding and technical support but also by establishing regulatory environments and incentives that create new revenue streams for nature.
• Ecosystem building—combining technical assistance (TA) and concessional capital—is vital to prepare the investment pipeline to receive capital, as directing funds to unready projects can discourage private investors.
• Revenue streams for NbS can be generated by identifying specific stakeholders who benefit from nature's public goods—such as insurance companies, utility companies, and social enterprises—and incentivizing them to pay for those benefits.
• The Galápagos Debt Conversion used a blue bond and political risk insurance from the DFC to restructure USD 1.6 billion of debt, resulting in USD 1.126 billion in fiscal savings and USD 450 million for the Galápagos Life Fund.
• The Seychelles Blue Bond raised US$ 15 million by using a World Bank partial guarantee and a GEF concessional loan to reduce the effective interest rate from 6.5% to 2.8%, making the bond sustainable despite high country risk.
• The AGRI3 Fund uses a blended structure to provide guarantees to financial intermediaries, mobilizing over USD 200 million in private capital to support sustainable agriculture and forest conservation.
• The Food Securities Fund (FSF) addresses the working capital gap for agri-SMEs by providing loans conditional on sustainable development metrics, using guarantees from large value chain partners to mitigate credit risk.
• The Restoration Seed Capital Facility (RSCF) acts as an incubator for forest landscape restoration funds by providing conditional grants across three stages: fund development, pipeline construction, and project co-financing.
• The Living Amazon Mechanism (LAM) utilizes a Receivables Fund and an Enabling Conditions Facility to support bioeconomy cooperatives in Brazil, leveraging an anchor offtaker (Natura) to reduce risk.

APA

Brasil-Leigh, A., Byrd, R., Käfer, P., Miao, G., Ruiz-Sierra, M., Vieira, A., & Wallock, W. (2024). Toolbox on Financing Nature-Based Solutions. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2024/09/Report-Toolbox-on-Financing-Nature-Based-Solutions.pdf

Chicago

Brasil-Leigh, Amanda, Rosaly Byrd, Phillipe Käfer, Gaoyi Miao, Maria Ruiz-Sierra, Arthur Vieira, and William Wallock. Toolbox on Financing Nature-Based Solutions. Climate Policy Initiative, 2024. https://www.climatepolicyinitiative.org/wp-content/uploads/2024/09/Report-Toolbox-on-Financing-Nature-Based-Solutions.pdf.

Wikipedia

{{cite report |last1=Brasil-Leigh |first1=Amanda |last2=Byrd |first2=Rosaly |last3=Käfer |first3=Phillipe |last4=Miao |first4=Gaoyi |last5=Ruiz-Sierra |first5=Maria |last6=Vieira |first6=Arthur |last7=Wallock |first7=William |title=Toolbox on Financing Nature-Based Solutions |publisher=Climate Policy Initiative |date=September 2024 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2024/09/Report-Toolbox-on-Financing-Nature-Based-Solutions.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{brasilleigh2024toolbox, author = {Brasil-Leigh, Amanda and Byrd, Rosaly and Käfer, Phillipe and Miao, Gaoyi and Ruiz-Sierra, Maria and Vieira, Arthur and Wallock, William}, title = {{Toolbox on Financing Nature-Based Solutions}}, institution = {Climate Policy Initiative}, year = {2024}, month = sep, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2024/09/Report-Toolbox-on-Financing-Nature-Based-Solutions.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }