5 ways to unlock restoration finance

Helen Ding, Sofia Faruqi, Caroline Gagné and Andrés Anchondo Ortega

Trees are obviously good for the planet. What’s not so clear to most people — governments, NGOs, investors, the public — are their socioeconomic benefits. Trees are essential for the economy, our health and our wellbeing.

Research shows that every $1 invested in restoring degraded land generates an estimated $7–$30 in economic benefits, including improved food production, carbon sequestration and water quality. Yet each year, deforestation and land degradation costs the world $6.3 trillion in lost ecosystem services such as agricultural products, recreational opportunities and clean air — equivalent to 8.3 percent of global GDP in 2016.

Despite these clear costs and benefits, restoration receives only a tiny fraction of the funding it needs. That’s where governments come in.

A new WRI report, “Roots of Prosperity: The Economics and Finance of Restoring Land,” looks at the barriers and opportunities to scale up finance in restoration.

Governments can design policies and strategies that help unlock restoration finance, including:

1. Monetizing environmental and social benefits: Carbon taxes are gaining momentum around the world. This is set to continue as 81 national climate plans (PDF), known as nationally determined contributions (NDCs), include some form of carbon pricing. Directing some revenues or proceeds from carbon pricing to climate solutions such as restoration will increase the impact of these prices in tackling climate change.

2. Shifting incentives from land degradation toward restoration: In Costa Rica, for example, the government phased out cattle subsidies in 1991 and began financing restoration through a 3.5 percent tax on fossil fuels. This helped to increase national forest cover from 29 percent in 1991 to 54 percent in 2015 and supported the rise of eco-tourism, which contributes 5.8 percent of national GDP.

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