WRI Report: Governments Can Unlock Billions in Finance to Restore Lands and Livelihoods
The matter of restoring the world’s 2 billion hectares of degraded land took center stage today as World Resources Institute released a new report that reveals how governments can unlock billions of dollars in restoration investment. From Costa Rica to Norway, and from Ethiopia to the U.S, there is a massive gap between the proven benefits of restoration and investments in it. For example, of the $141 billion of public climate finance allocated in 2016, less than 2 percent ($3 billion) was for land-use, even less for restoration. That’s compared to research showing conservation and restoration could deliver 37 percent of emissions reductions needed by 2030. So why aren’t more climate funds, banks, governments and portfolios investing in it?
WRI’s new report, Roots of Prosperity: The Economics and Finance of Restoring Land, identifies seven reasons why investment in restoration has not reached its potential and describes the smart policies and innovative financing models necessary to turn the tide. The report was released at the Global Landscapes Forum 2017 by Felipe Calderón, former President of Mexico; Naoko Ishii, CEO and Chairperson of the Global Environment Facility; and Andrew Steer, President and CEO of WRI.
Land degradation costs the world more than $6.3 trillion a year—equivalent to 8.3 percent of global GDP in 2016—and jeopardizes the livelihoods of half a billion people who depend on forests and land resources. On the flip side, restoring degraded lands can deliver short- and long-term gains for the economy, jobs, food security, and the planet. Research shows that $1 spent to restore forests can deliver up to $30 in economic benefits.
Momentum is moving in the right direction: governments around the world have already committed to restore nearly 160 million hectares of land through regional initiatives such as AFR100. And the investment world is starting to take note, with more than $2 billion of finance earmarked for restoring land under Initiative 20x20. But it isn’t enough.
Roots of Prosperity is the first report to bring together current research on the economics and finance of restoration, and provide policymakers with actionable guidance and real-life case studies to overcome them.
Steer added, “The kind of evidence in this report is empowering decision-makers. Put a dollar wisely into restoring land and you can get up to $30 back. The stock market can’t deliver that, but restoration can. Political momentum is gaining speed and we need to translate that into action on the ground.”
The report identifies seven key barriers to unlock restoration finance, including:
• Environmental and social benefits have no market value;
• Short-term incentives to degrade land outweigh incentives to restore it;
• Climate finance is difficult to access;
• Funding for restoration can be limited to small environmental budgets;
• Restoration projects are often too small to be attractive;
• Many restoration projects have long (10- to 20-year) investment horizons; and
• Restoration is considered a risky investment.
Solutions outlined in the report include aggregating restoration projects to reduce risk; encouraging ministries of finance, agriculture, environment and energy to work more collaboratively; removing certain agriculture subsidies; implementing a carbon tax; and leveraging private investment mechanisms like first-loss guarantees, tax credits and insurance guarantees.
The report features real-life case studies such as the phase-out of cattle subsidies in Costa Rica, which shifted incentives from land degradation to those supporting restoration, in turn boosting eco-tourism and strengthening the economy. It shows how economic analyses can identify who benefits from restoration and who pays the costs. And how governments can break through barriers, identify beneficiaries and direct funds to encourage smaller projects to grow.
“Finance is like oxygen to an economy, while economics is equivalent to blood circulation. This report talks about how to get both working for restoration so we can re-green the planet,” said Sofia Faruqi, Manager at WRI and report co-author. “The time to act is now. Inaction is the most expensive course in the long run, both in terms of money and human progress.”
President Calderón, Dr. Ishii and Dr. Steer are members of the Global Restoration Council, which met ahead of the GLF2017 to help drive political support to accelerate restoration worldwide.