Nature Investments:
Instruments and Approaches

1% of profits from

500 global businesses for nature targets can fill

1/5th of the NbS funding gap (as of 2025)
Equivalent to $43 billion per year.

Nature investments are more viable today than ever before. Environmental markets, mechanisms and instruments have gained maturity, and carbon markets are leading the path for such investments.

Carbon finance is a win-win for investors, corporations, communities and natural ecosystems, with these emerging markets serving as the cornerstone of investments in sustainable land-use. Nature investments are also contributing to the expansion of bio-economy markets that are moving the world in the direction of green growth.

Emerging Instruments

Carbon Markets

Carbon credits generated from avoided deforestation, afforestation, and ecosystem restoration provide climate benefits while creating new income streams for communities and land stewards. High-integrity carbon credits provide the highest returns and nature investors basing their investments on co-benefits of carbon sequestration, such as biodiversity protection, are positioned to derive sustainable returns in the long-term. Acorn Rabobank is investing across tree plantations and allied activities in lieu of future returns from sale of Carbon Removal Units (CRUs), which are measurable, ex post, nature-based and Plan Vivo certified units. CRUs are generated from activities focussed only on carbon removals through agroforestry, working with smallholder farmers. They use advanced remote sensing technologies to offer traceable, transparent CRUs, allowing for both offsetting and insetting.

Evolving global frameworks, including Article 6 of the Paris Agreement, have made carbon markets more structured, transparent, and lucrative.

The demand for high-integrity carbon credits—particularly those tied to forests, wetlands, and regenerative agriculture—is expected to grow exponentially.

The Taskforce on Scaling Voluntary Carbon Markets projects that demand could increase by a factor of 15 or more by 2030.

Biodiversity Credits

Biodiversity credits are financial units designed to incentivise protection and enhancement of biodiversity (like species, ecosystems and natural habitats) and deliver net positive ecosystem gains. Much like carbon credits, biodiversity credits are measurable, traceable, and tradeable over a fixed period. These credits expand beyond the focus on carbon sequestration and foster investments towards broader ecological protection and restoration.

Till 2020, the estimated value of biodiversity credits sold was between $325,000 and $1.87 million. As the market continues to evolve leading to the establishment of effective governance structures, the global demand for voluntary biodiversity credits could reach $2 billion in 2030 and $69 billion by 2050.

Nature Bonds

Nature Bonds are debt finance instruments that link investment returns with measurable environmental outcomes, often with a fixed guaranteed component and a variable component tied to specific goals.

The Amazon Reforestation Outcome Bond issued by the World Bank, with an expected nominal value of $225 million is the World’s largest outcome bond. HSBC bank served as the structurer and sole lead manager for the bond, mobilizing approximately $36 million of additional capital from investors to support reforestation activities in the Brazilian Amazon region.

The Nature Conservancy’s Nature Bonds Program that implemented projects in Seychelles, Belize, Barbados, Gabon, and The Bahamas, refinanced a total of $1.5 billion of debt, generating over $535 million for conservation.

Examples of Nature-based Solutions

Integrating environmental considerations into financial investments can protect critical ecosystems, enrich biodiversity, enhance resilience, diversify assets, and potentially increase returns.

Avoided Deforestation (REDD- Reducing Emissions from Deforestation and Forest Degradation, and the role of conservation, sustainable management of forests, and enhancement of forest carbon stocks in developing countries) projects in high-biodiversity and high-carbon density regions can generate substantial carbon credits and help preserve essential ecosystems. By engaging rural communities in the management of these ecosystems, there is also the potential of supporting rural livelihoods. 

Avoided Deforestation

Reforestation/Afforestation of degraded forest areas has potential for providing several benefits for the environment, climate, and communities. These efforts can help restore ecosystems, enhance biodiversity, revive wildlife habitats and increase carbon sequestration. They also help create green livelihoods for local communities by providing them with opportunities to sustainably interact with the restored forests. 

Reforestation/ Afforestation

Improved Forest Management (IFM) is a sustainable approach to forestry that aims to enhance forest health, productivity, and biodiversity, while optimizing carbon sequestration and reducing greenhouse gas emissions. It can also provide employment opportunities for local communities and optimize timber production. The Intergovernmental Panel on Climate Change (IPCC) recognizes sustainable forest management as one of the most effective strategies for enhancing carbon sinks. 

Improved Forest Management

Trees Outside of Forests (TOF) systems focus on planting trees in urban areas, agricultural landscapes, and along infrastructure corridors. These trees play a crucial role in not just increasing green cover but also provide environmental, social, and economic benefits to communities and ecosystems. Agroforestry, a crucial TOF system, can help improve soil fertility, improve farmer incomes, enhance food and nutritional security and revive water bodies. It helps smallholders to create a diversified portfolio of products other than just annual crops, often with significantly higher economic value. 

Trees Outside of Forests

Other Revenue Streams from Nature Investments

Non-Timber Forest Products

Non-Timber Forest Products (NTFPs) such as medicinal herbs and fruit are key to the viability of Nature-based Solutions. NTFPs are a key source of livelihoods and sustenance for rural communities and many industries rely on these for raw material such as pharma companies. By integrating NTFPs into conservation and restoration projects, nature-based solutions can generate long term financial returns through sustainable harvesting, value-added processing, and access to premium markets.

Sustainable Timber Value Chains

Sustainable timber production through certified forestry is a robust nature-based solution that offers long-term financial returns while driving large-scale forest restoration. By integrating responsible practices on degraded landscapes, it restores ecosystems, enhances carbon sequestration, supports biodiversity, reduces deforestation, creates green jobs, and supplies renewable raw materials. International standards like FSC (Forest Stewardship Council) certification ensure transparency, fairness, and respect for indigenous rights, often commanding price premiums that benefit both investors and landowners.

Sustainable Agriculture Value Chains

Land-use change for crops and pasture is the leading cause of global deforestation, often driven by key commodities like coffee, cocoa, palm oil, soy, meat, dairy, and rubber. By investing in nature-based solutions—agroforestry, regenerative agriculture, and forest conservation— companies can not only align with regulations such as EU Regulation on Deforestation-free Products (EUDR), and strengthen their agri value chains but can also deliver multiple ecological benefits. In the long-term, sustainable agriculture value chains hold the potential to reduce environmental risks and secure economic gains through carbon finance, ecosystem services, and the growing demand for sustainable products.

Ecotourism

Ecotourism presents a compelling investment opportunity, delivering both financial and conservation returns, generating sustainable revenue streams, particularly in high-biodiversity areas where ecosystem services are abundant. Ecotourism prioritizes conservation, community livelihood and well-being, and awareness, helping support the local economy and create opportunities to incentivize habitat protection. The global ecotourism market is projected to reach $333.8 billion by 2027, growing at a CAGR of 14.3% from 2021 to 2027. Investors can capitalise on this rising demand and can generate revenue from opportunities like park entry fees, eco-lodges, guided tours, and conservation-linked experiences.