Zelal Aktas
administrator

What Are Nature-based Solutions? An Overview Of Asset Classes

Oct 4 2022 | 16 MINS READ

Share

image of a forest surrounded by fog and clouds

Key Insights:

·      Nature-based Solutions can tackle the climate crisis while also providing many co-benefits that tackle issues such as biodiversity loss and economic and social insecurity.

·      Supporting and investing in Nature-based Solutions will contribute to global and corporate net-zero targets.

·      Nature-based Solutions are a scientifically proven, scalable, low cost and high-impact opportunity for companies to take action to protect, restore and conserve the planet.

·      The different asset classes of NbS tackle a range of unique issues which include climate change mitigation, climate change adaptation, community benefits, biodiversity and pollution, and waste reduction.


There is no doubt that we need to conserve and restore our nature and ecosystems to be able to survive on this planet for the next centuries – climate change and biodiversity loss being the most imminent threats to our existence (Cowie et.al, 2022). Nature-based Solutions are one of the most effective and comprehensive ways to tackle the climate and nature crises while also creating social benefits for local communities and supporting global and corporate net-zero targets. This is emphasized by the World Bank, which details that Nature-based Solutions can contribute 37% towards near-term global targets as set by the Paris Agreement. The multi-faceted solutions offered by NbS are further confirmed by the World Bank Managing Director of Development Policy and Partnership (Pangestu, 2021), who states:

“Investing in nature can contribute to recovery efforts by creating jobs, targeting the poorest communities, and building long-term resilience”

Most importantly, compared to technology-based solutions, Nature-based Solutions provide companies asking the question, ‘how can we remove corporate emissions?’ with scalable, high-impact, and scientifically proven solutions.

Despite the promising potential of NbS, if projects are to make an impact on climate action, biodiversity, and society, investment in Nature-based Solutions needs to be tripled by 2030 and total $8.1 trillion USD by 2050 (UNEP et al., 2021).

Picking the best model for your business and understanding where to buy carbon credits requires an understanding of what kinds of Nature-based Solutions are on the market, which ones will develop in the future, and deciding which models align with your company’s needs. To support this process, we provide an overview of different types of Nature-based Solutions (different “asset classes”), revealing how valuable investing in Nature-based Solutions can be for companies and nature alike.

The Benefits of Nature-based Solutions by the Asset Classes:

birdseye drone image over a forest

Forests and Reforestation Projects:

The most common Nature-based Solutions are those which rebuild degraded and destroyed forest lands, also known as afforestation or reforestation. It is estimated since 1990 alone we have lost 420 million hectares of our forests, largely due to the increasing agricultural demands of our global community  (FAO, 2020), making the need for reforestation projects evident.

Science reveals that the most effective approach to restoring our forests is focusing efforts in areas that were previously forests (“reforestation”), rather than planting trees in other ecosystems. We should not endorse activities that destroy other ecosystems for tree-planting as this has detrimental effects, and, in many cases unsuccessful. Therefore, at goodcarbon we ensure that our support goes to “reforestation” projects, and not just any tree-planting projects.

What are the many benefits of reforestation projects?

These projects largely tackle climate change mitigation but also come with an array of other benefits, including climate change adaptation, community benefits, biodiversity restoration, and more.

    1. The carbon sequestration ability of trees and especially complete forests has been scientifically proven in hundreds of research articles. Reforestation projects can sequester as much as 15-25 tons of CO2 equivalents per hectare per year, making them one of the most effective ecosystems in climate change mitigation.
    2. There are huge biodiversity benefits. Rebuilding forests and re-establishing whole ecosystems help re-settle flora and fauna alike. Many projects recreate habitats for endangered species. Many also provide “corridors” to connect different forests, therefore enabling an exchange between ecosystems that were previously separated. Projects such as the Generation Forest Group in Panama, one of the goodcarbon partners, plant more than 20 native tree species creating forests where many animals, including jaguars, can resettle.
    3. Community benefits are maximized via the engagement and employment of local and Indigenous communities in project design and further activities. For instance, the Generation Forest Group employs more than 3,500 locals, providing opportunities for income, increased access to education, and employment to women. The success of the project becomes intrinsic to the local community, giving them ownership over the forest. goodcarbon only works with projects that put a real emphasis on integrating the local communities as opposed to some reforestation projects, for instance, that exclude communities from the achieved benefits.

With the aforementioned qualities, reforestation NbS equate to seamless, trustworthy, and successful projects, for companies looking to invest but unsure of the risks.

No alt text provided for this image

Agroforestry Projects:

Agroforestry projects are the inclusion and planting of trees on farms. They are usually carried out with private, smallholder farmers and are often combined with regenerative agriculture practices and improved irrigation methods for the farms. Agroforestry is a reliable project type as the style and activities are not a new concept, but rather founded on “good practice” that has been practiced by farmers for centuries.

Agroforestry systems hold these key advantages:

    1. Projects conserve the stability and fertility of the soil and thus increase farm productivity, which are major issues for degraded land. For example, the IUCN-supported agroforestry project in Rwanda has restored more than 700,000 hectares of degraded land, resulting in an estimated 100 million tons of CO2 sequestered, and simultaneously led to the creation of more than 22,000 jobs (IUCN, n.d.-b)
    2. Good agroforestry projects are designed to improve the income levels and livelihoods of smallholder farmers. Through the inclusion of fruit or timber trees on their farms, they generate additional sources of income while also achieving better yields and herd performance. In many regions that can also offer an important alternative solution for those otherwise dependent on deforestation.
    3. Agroforestry also increases wildlife presence, the welfare of livestock, and even water flow management. Farmers engaged in agroforestry contribute to climate change adaptation by reducing the heat on their farmland.

Society’s reliance on agriculture means that we won’t reduce our demand for produce at a scale necessary to protect crucial ecosystems. Therefore, such projects allow us, through farm holders, to adopt more sustainable agriculture models, while shifting our dependence on unsustainable consumption toward more holistic and balanced lifestyles.

picture of a forest landscape with a river

 REDD+ Projects:

Reduced Emissions from Deforestation and Degradation (REDD). They tackle mostly illegal deforestation and are a solution against the slow developing policy or non-implementation of policies at the state and global levels

REDD+ projects are science-backed. In fact, scientists have a very strong preference for the protection of existing ecosystems over restoration efforts for climate and biodiversity effects, since it is way more effective to preserve what is already there. While afforestation efforts are underway, deforestation at a large scale is still very much present. To break this cycle, we need methodologies such as REDD+.

REDD+ projects provide alternative income sources to local communities and therefore do not only protect our precious forests but bring a series of other benefits that go beyond conservation.

REDD+ projects equate to high impact, low costs, and quick results.

REDD+ projects provide the following benefits:

    1. REDD+ projects avoid the release of the carbon that has been stored in forests for centuries. They are thus a classic “avoidance” project. They provide a low-cost option to mitigate global greenhouse gas (GHG) emissions in the near term (Siikamäki et al., 2012). For investors looking for support in reaching near-term targets, REDD+ are a viable and reliable option. For instance, the first ever REDD+ project to achieve verification in the Voluntary Carbon Market: The Kasigau Corridor Project will achieve the avoidance of more than 7.5 million tons of CO2 over a 30-year period (Wildlife Works, 2022).
    2. REDD+ projects reduce biodiversity loss by safeguarding whole ecosystems and all species that live within them. Re-establishing a complete ecosystem takes decades, therefore the REDD+ approach to avoid ecosystem loss tackles the problem at the root and is extremely efficient.
    3. REDD+ projects usually center around the local and indigenous communities by introducing sustainable usage of the forests and other reliable sources of income. In many cases, employment opportunities for women as well as educational efforts are part of the projects, too. They, therefore, contribute to a large range of SDGs such as poverty reduction, health and wellbeing, hunger alleviation, gender equality, and improving institutions.
No alt text provided for this image

 Blue Carbon Mangrove Projects:

Mangroves are trees that can grow in salt and fresh water. These forests are situated on tropic and subtropical coastlines, in 118 countries along the equator (Verein für Mangrovenschutz e.V., 2022). In total mangrove forests cover just 0.1% of the world’s surface area yet contain “the highest carbon density of all terrestrial ecosystems” (Fatoyinbo et al., 2017). Mangroves can store up to five times as much organic carbon as tropical upland forests (Donato et al., 2011).

Mangrove forests are among the most biologically diverse ecosystems on earth, serving as coastal protection against hurricanes and floods, improving water quality, counter erosion, and maintaining livelihood for many people (Verein für Mangrovenschutz e.V., 2022). Despite the undeniable value of Mangroves, the area of mangrove forests has decreased by over 1 million hectares in the last 3 decades alone (FAO, 2020, p. 38).

The benefits of Mangrove restoration can be attested to these points:

    1. Mangrove projects support climate change mitigation, through their high levels of carbon sequestration and storage capabilities. They do not only store carbon in the biomass of the trees, but they also store large amounts of carbon in the soil and are known to be carbon sinks that can remain for millennia. Although covering only 0.7% of global tropical forests, mangroves can store equivalent to 2.5x of annual global CO2 emissions. They store 3-4 times more carbon in their soil per hectare than other tropical forest types (IUCN, n.d.-a).
    2. Mangroves are a biodiversity hotspot. Not only are mangroves home to many species from barnacles to Bengal tigers, but they are also one of the oceans’ nesting grounds. From shrimp to sharks, mangroves are breeding grounds and home to the juveniles of many species, with an estimated 75% of all commercial fish spending a portion of their time in mangroves or relying on food webs that do. (American Museum of Natural History, n.d.).
    3. Mangroves are especially valuable for climate change adaptation. One significant feature of mangroves is their bio-shield capabilities. Large bands of thick mangrove forests can act as a natural defense against storms, breaking high winds and waves and significantly reducing the impact on the shore. Therefore, restoring mangrove forests are not only an environmental imperative but also brings huge economic benefits. One study mentions how mangrove restoration can provide $100,000s/ha in flood protection benefits over project lifetimes (Beck et al., 2022). This is further supported by IUCN-backed projects which have saved $57billion of flooding damages in China, Vietnam and Mexico, and the U.S. (IUCN, n.d.).
    4. Good mangrove reforestation projects involve the local communities and produce a range of benefits. Restoration and conservation efforts provide job opportunities. A restored mangrove ecosystem results in more fish and crabs for local fishermen and the reduced salinity in the soil behind the “bio-shield” allows for agricultural activities on land.
    5. Mangroves improve the water quality through natural filtration and also support sedimentation, improving the life cycle of the ocean (Nellemann et al., 2009, p. 7).
image of a rice paddy

 Rice Projects:

Rice farming is responsible for 12% of the global emissions of methane – a highly potent greenhouse gas that is produced by bacteria that grow in the flooded rice field. Rice projects, also known as AWD (Alternate wetting and drying), introduce a different irrigation method to rice farmers that includes regular dry periods. These regular dry periods result in less bacterial growth in the rice paddocks and therefore less methane release.

The key benefits of rice projects are:

    1. The AWD method supports change adaptation through water management. Water resources are a key factor in reversing climate damage, as we are faced with increasing water scarcity and suffer from long periods of drought.
    2. The introduction of dry periods allows for bacteria in the soil to produce less methane, of which rice farming is a major emitter, making these projects also climate mitigation focused. The major benefit of rice projects is methane emission reduction. Though the sequestration rates are not the highest (with 2/3 tons CO2 equivalents p/ha p/year) rice projects are emission avoidance projects that cannot be reversed. This is a unique feature that makes rice projects 100% permanent. Regardless of whether the irrigation method is discontinued, the methane emissions that have been avoided will not be reversed.
    3. Rice farmers are still highly vulnerable and face extreme poverty, while the rice crop is notoriously demanding on the environment, requiring immense volumes of water, especially when grown at high intensity. This means that rice farming is also economically demanding for rice farmers to produce. The AWD method allows rice farmers to significantly lower production costs by reducing the use of water, which helps to sustain vulnerable populations through affordable produce.
No alt text provided for this image

 Wetland Restoration Projects:

Wetlands are areas where the soil is waterlogged for varying periods of time during the year. Examples are peatlands, tidal marshes, or swamps. Both coastal and freshwater wetlands, such as peat bogs, are natural buffers against floods. “Wetlands may support both aquatic and terrestrial species. The prolonged presence of water creates conditions that favor the growth of specially adapted plants (hydrophytes) and promote the development of characteristic wetland (hydric) soils” (US EPA, n.d.). They reduce the impact of floods by storing significant floodwater and thus reducing the intensity and frequency.

Additional benefits of wetland restoration projects include:

    1. Wetlands store large quantities of carbon and support climate change mitigation. For example, peatlands are one of our most valuable carbon sink biomes. One study concludes that ‘20-30% of the Earth’s soil pool of carbon is stored in wetlands‘ (Mitsch et al., 2014, p. 584) despite making up only 5-8% of the land surface. When destroyed, like other natural ecosystems, wetlands will release the carbon they have sequestered back into the atmosphere. Therefore, the conservation and restoration of wetlands are intrinsic to climate change mitigation.
    2. In coastal geographies, wetlands can protect against storms, tropical hurricanes, and against wind-generated waves (known as wind wave). Therefore, wetland restoration has significant potential for achieving climate change adaptation.
    3. Wetland restoration supports the protection and reintroduction of biodiversity. Wetlands are home to rich wildlife habitats and are breeding grounds and sources of food for shellfish, fish, birds, amphibians, and other organisms. Protection is also valuable for migratory bird populations, which use wetlands as resting and breeding grounds, plus for the preservation of wildlife corridors, much like forests.
No alt text provided for this image

Seagrass and Seaweed Projects:

While mangrove projects are currently the most researched method for Blue Carbon restoration, there is a growing interest in seagrass and seaweed as future projects with high-impact potential. “Seaweed ecosystems currently cover about 3.4 million square kilometers of ocean terrain” (McKinsey, 2022) however seaweed and seagrass NbS are still in the research phase. The UN as part of its Ocean Decade is giving significant attention to the capabilities of seaweed and seagrass as viable Nature-based Solutions, and we will see an increase in investment for such projects in the near future.

Here are the benefits of seagrass and seaweed projects:

Both seaweed and seagrass have strong climate change mitigation potential. They both store carbon in the biomass as well as in the soil.

    1. Seaweed and seagrass also help ocean acidification, prevent soil erosion, and provide coastal protection (Duarte et al., 2017). It is estimated that seaweeds account for approximately 70% of the world’s oxygen (Kramp, 2019).
    2. Seagrass and seaweed also have strong biodiversity benefits. Seagrass is a unique flowering plant that forms complex underwater ecosystems that are highly productive and rich in biodiversity. Both plants provide shelter and food to a diverse group of animals, from shrimps to turtles, to tiger sharks. One study even finds that “a single acre of seagrass can support upwards of 40,000 fish and 50 million small invertebrates”(Reynolds, n.d.).
    3. Seagrass and seaweed projects provide economic opportunities for coastal communities, especially in Small Island and Developing States (SIDS) (Duarte et al., 2017). From insulating houses to supporting commercial fisheries, cleaning water, and fertilizing fields to being used as bandages, seagrass is known to be the third most valuable ecosystem for a reason. While seaweed is both consumed directly and used for pharmaceutical purposes and for the production of thickening and gelling agents (Rimmer et al., 2021). In this way, both plants provide a broad range of social benefits beyond carbon sequestration and biodiversity protection.

The UN  argues that these projects are ‘one of the most scalable nature-based solutions’ (UN Global Compact, 2022), with their value estimated to be around $19,000 per hectare per year. Therefore, as further research is concluded in the next years, seaweed and seagrass projects offer the opportunity to get ahead of the curve, support ocean restoration, and leverage immense potential for both short and long-term climate targets. 

So, there we have it – a detailed and comprehensive list covering the different Nature-based Solution examples. Our breakdown of the benefits of Nature-based Solutions clarifies how the asset classes are diverse enough to suit all business needs and aims. It’s clear that NbS already support net-zero targets and are a necessary model for climate resilience, protection, and restoration.

Combined with a diverse range of co-benefits, including biodiversity and livelihoods, the impact of NbS are clear, while the need for growth of these projects to combat climate change is evident. Increasing intergovernmental support, research, and policy development around NbS will further develop and standardize this model of climate action. Coupled with growing support from the private sector, and organizations like us here at goodcarbon, the Voluntary Carbon Market and Nature-based Solutions will become beacons of high-impact, permanent climate solutions.

However, for these Nature-based Solutions to deliver this diverse range of benefits they need funding, investment, and support. If you are interested in joining us on our mission of shifting the focus of global capital to converse and restore abundance to our precious ecosystems, submit the form below and we will keep you updated with the latest news via our monthly newsletter.


Definitions:

Nature-based Solutions: actions to protect, sustainably manage and restore natural or modified ecosystems that address societal challenges effectively and adaptively, simultaneously providing human well-being and biodiversity benefits (IUCN, n.d.).
REDD+: Projects conserve and protect existing but threatened ecosystems, to avoid the loss of further forestland. The “+” element in REDD+ projects ‘signifies the role of conservation, sustainable management of forests and enhancement of forest carbon stocks’ (Conservation International, n.d.).