The market for nature tech is necessary, emergent and dynamic
Nature-based solutions (NbS) urgently require substantial and immediate scaling up on a global scale – and finance to get there. Global public and private flows of capital to NbS are currently $133 billion per year, with estimates suggesting that investment levels need to increase four-fold in real terms by 2050 if the world is to meet its climate change, biodiversity and land degradation targets.
Nature tech is an emerging sector that is supporting the implementation and financing of high-integrity NbS. It’s defined as any technology that can be applied to enable, accelerate and scale up NbS, which are deployed to protect, restore and manage natural systems and ecosystems.
We need nature-based solutions to provide 30% of the mitigation required by 2030 in order to keep our global climate and nature goals within reach. The application of technology to NbS makes sense, both for the sake of the planet and financially, since an estimated $44 trillion of economic value relies on nature. It also has a huge role to play in giving people confidence in how nature can help us deliver on our climate targets
A new report into the nature tech market by Nature4Climate and Capital for Climate is intended to provide more information and clarity around this emerging sector – and to help build trust in the role that NbS have in restoring balance to the climate and the natural world.
An interviewee in the report and nature tech entrepreneur, Manual Pinuela, co-founder of Cultivo said: ‘Capital moves to nature at the speed of trust.’ Without improving levels of integrity, transparency, monitoring, reporting, verification and connectivity around NbS, there will be continued uncertainty that hinders large-scale movement of capital towards desired net-zero and nature-positive investments.
While it is not the only answer, nature tech can certainly play a role in addressing some of the challenges and concerns about implementing NbS. These include the following: difficulties in monitoring the results from NbS; the need to redirect finance flows to more sustainable practices; the need to mobilise millions of people; current tools and technology aren’t fit-for-purpose for NbS; and the investment ecosystem isn’t yet well structured to do NbS investing.
Many of the emerging nature tech solutions are designed to address all of these issues – and more. But today, the market consists of many smaller players offering point solutions that haven’t yet achieved scale. Trends are still difficult to discern; and ways of talking about the market – its taxonomy – are likewise just coming into focus. The commercial investment databases haven’t yet ‘tagged’ for nature tech, making it difficult to assess current and addressable market sizes.
One of the goals of this new report, therefore, is to introduce a taxonomy – distinct from climate tech and ag tech – that will help investors and users of nature tech to describe it consistently. It builds upon an earlier paper produced by Nature4Climate called What you Can Measure, You can Manage: How Nature Tech can help us solve the climate and nature crises, which broke the market down into four segments: deployment, such as drone technology for reforestation; monitoring, reporting and verifying (MRV), through satellite monitoring, LiDAR and eDNA testing; transparency, by the use of blockchain for carbon transactions and registries; and connection, such as mobile apps that can connect local communities to higher-paying markets, helping to drive the sustainable use of natural ecosystems.
The outlook for the nature tech market is one of exponential growth. The current market size is approximately $2 billion and is estimated to grow to $6 billion in less than ten years. Pressure from policymakers and consumers, and the climate crisis, are driving demand to solve the nature problem. Solution providers are being rewarded with more productive farms, forests, and landscapes, nature-based credits (e.g., carbon credits or biodiversity credits), and increasingly premium pricing for their products.
While the nature tech market’s growth seems certain, there are of course many uncertainties at this early stage. Nonetheless, four trends seem clear:
- Nature tech’s ability to value and report on nature will greatly improve, providing increasingly bankable benefits for those who protect, restore, and manage natural systems, ecosystems, and landscapes;
- The main driver of nature tech market growth won’t be technology per se, but the world’s ability to create effective policy, and to build human capacity and community;
- As nature tech solutions mature and scale, the market will undergo considerable consolidation and vertical integration, but perhaps with a “mass customization” twist;
- Some of the most important innovations in nature tech will come from the Global South.
As more companies and investors wake up to the importance of putting biodiversity and nature at the centre of their climate strategies, nature tech will certainly have a role to play – and earn the respect, and capital, that it deserves.