Finance for Nature in Cities

In Cities

Broadly, urban Nature-based Solutions (NbS) and investment in nature encompass the "principle of bringing nature into cities for the multiple benefits that it can deliver".UNEP’s State of Finance for Nature 2023 report finds that in 2022, investments in nature-based solutions totaled approximately $200 billion, but finance flows to activities directly harming nature were more than 30 times larger. It exposes a concerning disparity between the volumes of finance to nature-based solutions and nature-negative finance flows, and underscores the urgency to address the interconnected crises of climate change, biodiversity loss, and land degradation.

The findings, based on an analysis of global financial flows, reveal that private nature-negative finance flows amount to US$5 trillion annually, 140 times larger than the US$35 billion of private investments in nature-based solutions. The five industries channeling most of the negative financial flows – construction, electric utilities, real estate, oil and gas, and food and tobacco – represent 16 per cent of overall investment flows in the economy but 43 per cent of nature-negative flows associated with the destruction of forests, wetlands, and other natural habitats.

Government spending on environmentally harmful subsidies in four sectors - agriculture, fossil fuels, fishery, and forestry - is estimated at US$1.7 trillion in 2022. Reforming and repurposing environmentally harmful subsidies, particularly to fossil fuels and agriculture is critical. Fossil fuel subsidies to consumers alone doubled from US$563 billion in 2021 to US$1.163 billion in 2022.

The State of Finance for Nature 2023 report suggests that simply doubling or tripling investment in nature-based solutions will not be sufficient to reach the three Rio targets unless the almost $7 trillion finance flows to nature-negative practices are dramatically reduced and ideally repurposed in favor of nature. A major turnaround for nature is needed:

  • The financial sector and businesses must not only increase investments in nature-based solutions but also implement incentives to redirect finance from harmful activities, fostering positive outcomes for nature.
  • Government policies must also play a crucial role in creating an enabling environment for nurturing investment opportunities. 

Moreover, the State of Finance for Nature in Cities 2023 shows that the unique features and co-benefits to resilience, conservation, and biodiversity of urban NbS remain relatively unknown to investors and decision-makers, at all levels of government and in the private sector. Four actions could shift this trend:

  1. Engaging champion mayors and city officials already supporting urban NbS can help inform and educate national and subnational public and private sector decision-makers about the importance of investing in nature.
  2. Multi-level governance and policy reform are key to success. In line with the newly adopted Global Biodiversity Framework and Target 12, aligning and placing local governance at the centre of national and global climate and biodiversity. 
  3. Developing global metrics that track progress over time can enable the integration of urban NbS in public and private sector decision-making.
  4. Increasing private investment in NbS at the urban level. In cities, the private sector, working with local governments, can have an important role in harnessing urban nature to reach global climate goals. Identifying investment ready local-level (or subnational) NbS can be a catalyst to harnessing the power of private sector participation in cities to accelerate action



Our Action

With the planet experiencing a decline in nature at rates unprecedented in human history – and the largest loss of animal and plant species since the dinosaurs – cities can play an important role to address biodiversity loss.

Together with the University of Pennsylvania and the Cities Climate Finance Leadership Alliance, UNEP launched coordinated efforts to benchmark existing nature investments in cities, map barriers preventing additional investments and deliver recommendations on how to overcome them.  

In the walk up to UNCBD COP15, in December 2022, mayors from 15 cities around the world called for increased direct financing to allow cities to implement ambitious greening and ecosystem restoration projects. The mayors called on the finance community and national governments for reform of financial infrastructure and greater direct collaboration with the private sector. This would equip cities to fund nature-based solutions, such as forests, green belts, water streams, and parks in and around urban areas.

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