Our planet is facing a climate catastrophe and the pace of nature’s decline is accelerating at an unprecedented rate. But, the cause of a significant amount of this crisis also holds a large part of the solution. If we were able to stop the loss of the world's most carbon-rich natural ecosystems – tropical forests and mangroves – and instead protect and restore them, they could provide us with at least a third of the mitigation action needed by 2030 to meet the Paris Agreement goal to limit the average temperature increase to 1.5 degrees Celsius.
Yet, less than 3 per cent of global climate investment currently goes towards funding these nature-based solutions or natural climate solutions (NCS), which tempers its significant potential in combatting the devastating impacts of climate change.
The cost of climate change
It is well known that the risk of climate change inaction is costly. An analysis by scientific journal Nature estimates that the climate crisis could cause the global economy to lose between US$150 trillion to US$792 trillion by 2100. The global cost of adapting to climate impacts is expected to grow to US$140-300 billion per year by 2030 and US$280-500 billion per year by 2050, according to estimates by The UN Environment Programme.
A silver lining against this backdrop is that climate mitigation solutions may never be as cost-effective than they are today – and to capture that value we must recognise the potential of NCS in Southeast Asia and around the world.
The business case for NCS
Our recent study with the National University of Singapore, DBS Bank and Temasek titled The Business Case For Natural Climate Solutions: Insights and Opportunities For Southeast Asia offers an in-depth analysis of the market opportunities and trends for NCS in Southeast Asia with a focus on the private sector.
Southeast Asia has the highest density of carbon prospecting for NCS investments in the world due to its immense tropical forests and mangroves. In fact, protection of these ecosystems, in this region, could potentially generate a return-on-investment of up to US$27.5 billion per year.
Given that in Singapore alone, the current commitment to mitigate and adapt to climate change amounts to US$74 billion over the next 50-100 years, there is significant opportunity to realise the potential of NCS in Southeast Asia.
NCS present a substantial opportunity to businesses and investors – in particular, those with risks in their supply chain linked to deforestation and land-use change, or those that seek cost-effective investment options to meet their climate commitments and targets.
Progressive companies are increasingly implementing measures to reduce their carbon footprint and NCS can complement or supplement these strategies with significant upside to investors, biodiversity, climate and local communities.
The private sector is uniquely positioned to catalyse and accelerate investment in NCS. It has the power to invest in innovation that can remove technical and political barriers to action, stimulating an increase in project development and mitigation action.
The key consideration in ensuring that the private sector can support a more transparent and thriving global carbon market is that buyers and investors must commit to high-quality credits at fair and transparent prices.
This will help ensure the success and expansion of existing projects that will result in effective and sustainable management of these vital ecosystems, with significant co-benefits for local communities and all stakeholders.
The significant additional biodiversity and social benefits of NCS are important to factor in when considering the full return on investment that such projects provide.
Nature is the foundation of our economies, livelihoods, food security, health and quality of life. It provides fresh water, air filtration, and helps communities to be more resilient in the face of future uncertainty. For example, mangrove forests protect coastlines, reduce erosion, and, in the event of a natural disaster, decrease the impact of storm surge and flooding for coastal communities.
NCS also protect and support biodiversity conservation, an increasingly urgent need as we witness the most significant rate of species loss in human history. Such investments can also help to improve brand perception and customer loyalty, attract positive media attention and improve employee morale. With these benefits accurately valued, the market for carbon from the highest quality project sites will offer extremely compelling return on investment opportunities when considered against other engineered alternatives.
Blue carbon is a major opportunity for Southeast Asia
Blue carbon activities, which include mangrove restoration, clearly offer significant co-benefits ranging from storm protection to water filtration. Southeast Asia has been cited as having the highest total extent of potentially restorable mangrove area (estimated at over 3,000 square kilometres or more than a third of the global total) and Indonesia holds the most individual national potential, with more restorable mangrove area than the rest of the entire region combined.
Southeast Asia also holds some of the highest potential for not only natural climate solutions return on investment, but also co-benefits for biodiversity and people. Vietnam represents the greatest opportunity for co-benefits in terms of the number of people (2.8M) that would benefit from restoration efforts, while our studies found co-benefits also particularly high in Malaysia, Thailand, and Cambodia where NCS sites overlapped with key biodiversity areas and rural communities who would benefit from associated livelihood improvement outcomes.
The time to act is now
The cost of inaction on climate change on future generations and economies is far too great to ignore. Now, as the world stands on a precipice, it is up to businesses to demonstrate leadership to protect, restore and to catalyse and accelerate investment in NCS at scale.
At Conservation International, we are committed to designing innovative solutions to complex problems that are good for business, good for nature and good for people. We know that nature can provide vital, unmatched, and ongoing returns, at a very low cost, to all of humanity.
We see Singapore’s business community as a potential global leader in the establishment of a trusted, efficient and transparent private sector carbon market while also benefitting from becoming a thriving regional scientific and carbon services hub that will lead the region and influence the business trajectory of our planet for years to come. We think that you’ll agree, it’s time for business to invest in the natural climate solutions that our planet needs to secure a more stable future for us all.
This article first appeared in The Business Times as a commentary here.
