Incentives and barriers to private finance for forest and landscape restoration

Abstract

AbstractIncreased private finance can accelerate forest and landscape restoration globally. Here we conduct semi-structured interviews with asset managers, corporations and restoration finance experts to examine incentives and barriers to private restoration finance. Next, we assess what type of restoration projects and regions appeal to different private funders and how current financial barriers can be overcome. We show that market incentives for corporations include meeting net-emission-reduction commitments, impact and sustainable branding opportunities, and promotion of sustainability in supply chains. Conversely, asset managers face stronger barriers to investing in restoration as it is deemed a high-risk, unknown investment with low profitability. We find that investment finance biases towards restoration projects in low-risk areas and corporate finance towards areas with business presence. Both private finance types tend to omit projects focusing on natural regeneration. Through expanded and diversified markets for restoration benefits, strong public policy support and new financial instruments, private finance for restoration can be scaled for a wider variety of restoration projects in more diverse geographical contexts.