Why Is Nature Restoration Hard to Finance? The Decisions Behind the Funding Gap

Nature restoration is hard to finance because the value it creates rarely arrives as a contracted cash flow to the party doing the work. Benefits spread across landholders, communities, companies and the public, while costs land early and on one balance sheet. Add long ecological timelines, unresolved land rights and expensive measurement, and most projects fail on a specific decision long before they fail on ambition.

The scale of the imbalance is public. UNEP's State of Finance for Nature series estimated in 2023 that global finance flows of about $7 trillion a year are fuelling the climate, biodiversity and land degradation crises. That headline describes money moving in the wrong direction across a whole economy. A founder or project developer needs to know which part of that system is stopping their own project.

Ecological value and project revenue sit in different places

A restored landscape can support biodiversity, water regulation, soil health, climate resilience and local livelihoods. Much of that value is economic in the broad sense. Very little of it turns into an invoice the project developer can send. An investor asks a narrower question than an ecologist. The investor asks who pays, for what, under which contract, and whether that revenue can carry the capital being requested.

Projects that blur the two get read as philanthropy with a spreadsheet attached. Projects that name the revenue line, however small, get read as businesses with an ecological product. The gap between those two readings is often the whole fundraising problem.

The finance function is starting to read nature in the same terms. The Taskforce on Nature-related Financial Disclosures (TNFD) and Accounting for Sustainability (A4S) have published a guide for CFOs that brings nature-related issues into the decisions a finance team already owns. A restoration finance case gets stronger when it connects the ecological evidence to the revenue line in terms a CFO can defend.

Keep three layers apart

A credible case keeps three layers apart and then shows how they connect. Ecological value is what changes in the living system. Economic value is who gains from that change. Cash flow is the money that reaches the project, from a named payer, under a contract, over a stated period. Investors fund the third layer. They trust the first two when the links between them are on the page.

Start with the ecological layer. Describe the condition today, the intervention, the expected outcome, the time it takes and how progress will be measured. A financial instrument chosen first and fitted onto a landscape reads backwards to an investor. Then name who gains economically, and label what can be counted. An estimate of avoided loss is a useful number for a public funder and a weak one for a lender, because nobody has contracted to pay it. Readers trust a story more when it marks its own soft numbers.

The weakest move in nature finance material runs like this. Nature provides trillions in economic value, therefore this project is investable. The first statement can be true while the second stays unproven. The missing steps are ownership, rights, payment mechanism, demand, contract, timing, cost and risk.

The people who benefit are rarely the people who pay

A landholder may carry the cost of restoration while a town downstream gains flood protection. A food company may value a stable supply region. A government may value resilience and a biodiversity target met. Society at large gains habitat that nobody owns.

When the beneficiary and the payer are different parties, the commercial model has to connect them. That connection can run through public funding, corporate procurement, payments for ecosystem services, carbon or biodiversity credits where a credible method and buyer exist, philanthropy, or a blend. The OECD lists these coordination problems among the general investment barriers for biodiversity. The right mix depends on the site and the buyers, and a finance case that names none of them reads as a hope.

Someone has to make that connection work on the ground. The project developer assembles rights, evidence, contracts, capital and delivery into one intervention. That coordination is hard to show, because no single technical task captures it. Wolfgang Baum of Fairventures Worldwide, which works with thousands of farmers on forest restoration in Indonesia and Uganda, described the job in his interview with us. “The farmer will only see an income if they can sell their products at an attractive price, so there must be a reliable company that can purchase their goods. We negotiate the relationship and connect the two sides of the business.” The landholder's decision depends on a buyer further down the chain, and the developer holds the two together.

"The market" is too vague to count as a payer. Name the organisation or payer type and the decision behind the payment. A corporation might pay for compliance, supply resilience, a voluntary target or risk reduction. A public institution might pay for flood protection, water quality or a biodiversity commitment. The reason tells an investor how durable the revenue is likely to be. Government can also appear as regulator, landowner, grant maker, guarantor or provider of public infrastructure. Say which outcomes are public goods and which are private revenue, because the two attract different money on different terms.

Ecological time and capital time run at different speeds

Ecosystems recover over years and decades. Most capital wants liquidity or measurable progress far sooner. That creates a sequencing problem, and the project has to solve it on paper before anyone commits.

Set out what can be measured in year one, which interim milestones honestly indicate progress, which revenues can start early, and which capital is willing to wait for the rest. A restoration story that compresses twenty years of ecological change into one impact claim hides the exact structure an investor needs to see.

Land rights, governance and local value decide what is possible

Restoration happens on a specific piece of land with a specific set of people attached to it. Ownership, use rights, customary claims, stewardship duties, the effect of a change in title and the question of who can make decisions all sit underneath the investment case. They often matter more than any communication layer. The landholder weighs opportunity cost, long-term obligations, revenue, liability and stewardship. If restoration restricts grazing or timber, the economics of that trade-off belong on the page. Land access is a negotiated input with a price attached.

A project with unresolved rights stays unfinanceable whatever the deck says. The World Bank's Blueprints for Private Investment in Ecosystem Restoration treats project structure and enabling conditions as the starting point for private capital. Communication makes a sound structure legible. The structure itself comes from rights, contracts and governance.

Local value distribution belongs in the same layer. The UN Decade on Ecosystem Restoration's principles and standards of practice, written for the people who plan and run projects, treat participation, rights and fair sharing of benefits as part of how restoration is done. Communities can hold formal or customary rights, local knowledge, labour and long-term exposure to whatever the project does. They may be decision makers, employees, suppliers, co-owners, beneficiaries or rights holders, and often several of these at once. "Community engagement" describes an activity. The case needs the relationship. Restoration that ignores the people living with it creates social, political and delivery risk. The investment case should say who receives jobs, revenue, land access or decision rights, who carries restrictions or opportunity cost, and how conflicts get handled. For many projects those answers decide whether the intervention survives long enough to produce the ecological outcome.

Measurement turns claims into obligations

Once a project sells an outcome or raises capital against biodiversity, carbon or water results, the evidence has to match the claim. That means a baseline, a clear split between what is measured and what is modelled, a view on attribution, and an answer for what happens if the outcome underperforms. The more money attached to the ecological claim, the more weight the evidence has to carry.

Measurement also costs money, and for small sites it can take a large share of the budget. TNFD has also set out recommendations for upgrading the nature data value chain because market participants still struggle to get decision-grade nature data. Our guide What Is Nature Tech? covers the data layer behind that evidence.

Keep the evidence in two registers. A project can have strong ecological evidence and weak commercial evidence, or the reverse, and separate registers stop a strong nature story from disguising a weak business model. The impact register holds the baseline, intervention, outcome, uncertainty and verification. The revenue register holds the buyer, contract status, price, duration, conditions, renewal terms and payment history. Community benefit belongs in both. If livelihoods are part of the value proposition, show the mechanism, whether that is jobs, ownership, revenue share, procurement or decision rights.

Where payments or claims depend on outcomes, the verifier becomes part of the market infrastructure. Say what is measured, which method applies, who is independent, what uncertainty remains and who can rely on the result. Clear rules on who collects the data, who checks it and who holds it make the whole project easier to trust. Risk needs the same precision. Name the party that carries reversal, performance, fire, weather, legal and delivery risk under the actual structure. Some of those risks can be insured or guaranteed and others cannot, so insurance belongs in the case only where a named provider covers a named risk.

Ticket size, buyer demand and capital fit

Many restoration projects are local and small against the ticket sizes institutional investors prefer. Diligence, legal work, monitoring and development can then consume a large share of the capital raised. Aggregation helps some models, and brings its own questions about quality, governance and standardisation. Scale comes from repeatable quality and governance as much as from added hectares.

Buyer demand has a similar shape. A company can state strong nature ambitions and still have no procurement route, internal budget or standard for what it will buy. A buyer can believe in a project and still be unable to sign for it. Until a buyer has a mechanism to pay, the demand stays on the sustainability page.

Restoration also needs different kinds of capital at different stages, across development, land access, intervention, monitoring and long-term stewardship. Grant or philanthropic money can fund early work, baseline evidence, community capacity and public-good components. It works best with a defined job, written down, and a point at which it hands over to other money. A foundation that pays for a baseline survey should know which later funder relies on that survey, and on what terms. Blended finance reads as sound structure when each layer solves a specific problem. Public institutions can support enabling infrastructure or outcomes. Private investors need a contractual revenue stream, and corporate buyers may pre-purchase outcomes or services. The useful work is to set out which part of the project can carry which kind of capital, and which part remains a public or philanthropic good.

A working example from Peru

Fronterra shows the case where the structure is sound and the communication hides it. The company develops and operates forest carbon and biodiversity projects in Peru, with four projects across more than 1.6 million hectares in the Amazon and Andes, listed with the carbon standard Verra and held under long-term concessions. Those facts answer several of the questions above. The rights are long-term, the land base is large, and the projects sit inside a recognised standard.

The public face told a different story. It read like a mission-led initiative, so capital providers had to work out for themselves that they were looking at an operator. We repositioned Fronterra as a principal operator under the line "Originate. Engineer. Operate." and rebuilt the identity, website and investor deck around that role. Our Fronterra case study sets out the work. Aaron C. Leaman takes up the wider funding model in an essay for The Decision Room, The Model for Funding Nature Is Broken. A Brazil-Nut Chain Shows What Isn't.

Map every party before you write

A two-party story, developer and investor, leaves out most of the people whose decisions determine whether the project survives. Readers who know the field spot the gap quickly. A buyer's sustainability lead looks for the community. A lender looks for the land title. A verifier looks for the baseline. Each stops reading when their piece is absent.

Before writing any copy, fill in one row for every party that has to act. Record the decision they have to make, the benefit they receive, the exposure they carry, the evidence they need and the payment or obligation they take on. Then look for the gaps. Some parties receive value with no mechanism to pay. Others carry risk with too little upside. Someone is expected to maintain the outcome after the first funding ends, and often nobody has agreed to. Two parties may each be waiting for the other to commit first. Those gaps matter more than any pitch language.

Our work for Ecosystem Restoration Standard (ERS) shows one party in this system addressing several others. ERS, then called Wildsense, was building a restoration standard in a market led by Verra and Gold Standard. A standard sets the rules that projects are certified against, so credit buyers and project developers both depend on it, and they need different things from it. We recommended a name change, and the team chose Ecosystem Restoration Standard. The website we built gave credit buyers and project developers each their own route to the part of the story that answered their decision. ERS later acquired the Equitable Earth standard and has operated under that name since July 2025. Our case study covers the work under the ERS name.

Find the break in your own project

Work through the layers in order and stop at the first weak answer. That layer is where the next month of work belongs.

1. Ecology. The intervention is credible for the outcome it promises.
2. Rights. The project can legally and socially operate on this land.
3. Evidence. Progress and outcomes can be measured at a cost the project can carry.
4. Revenue. A named payer has a reason and a mechanism to pay.
5. Risk. Someone specific carries underperformance, reversal and delivery risk.
6. Capital. Each funding source matches the cash flows and risks it is asked to carry.
7. Governance. Someone stays accountable for the full time horizon.

Then write the finance story in the same order, so a reader can check each layer without hunting. The investment cases that hold up make the system legible. They show who acts, who pays, who benefits, what is measured, what is contracted, what remains uncertain and which capital belongs where. That story takes longer to build than "nature needs investment", and it gives a decision-maker something to defend. Each audience can then find its own row in a story that stays the same for everyone.

When the map is clear and each audience struggles to find its part, that is a website and routing job, and we build it.

Sources and further reading

• Global annual finance flows of $7 trillion fuelling climate, biodiversity and land degradation crises, UNEP, 2023
• Blueprints for Private Investment in Ecosystem Restoration, World Bank, 2024
• Recommendations for upgrading the nature data value chain, TNFD, 2025
• Principles for ecosystem restoration to guide the UN Decade 2021 to 2030, UN Decade on Ecosystem Restoration, 2021
• Standards of practice to guide ecosystem restoration, UN Decade on Ecosystem Restoration, 2023