Mobilizing Domestic Private Capital for Nature-Based Solutions in Emerging Economies

Abstract

Achieving the Net Zero commitments set by nations requires adequate financing from multiple sources. In developing countries, finance for climate and nature, thus far, has primarily been mobilized from the domestic public sector and international financial institutions. In contrast, contributions from the domestic private sector have been minimal. While equity has been at the core of the argument for mobilizing climate finance primarily from developed countries, the failure to muster a paltry USD 100 billion proves that alternative options must be explored. The domestic private market in many developing countries has the potential to support climate and nature investment, but it remains largely untapped. With the bulk of low-cost Nature Based Solutions (NbS)potential in the global south, investment in NbS provides the rare opportunity to directly impact the lives of low-income communities disproportionately affected by climate change. Mobilizing investment for NbS within the domestic economy has the potential to provide a predictable source of capital for NbS projects, deepen the domestic capital and carbon market, and, more importantly, reduce the country’s reliance on international support anchored on conditionalities.