Making blended finance work for nature-based solutions
There is global recognition that biodiversity loss is just as urgent as the climate crisis and that they are intimately linked. One effective solution is to use nature-based solutions which can address the climate crisis, land degradation and biodiversity loss, as well as contribute to addressing a variety of social issues, such as water scarcity management and poverty alleviation. Nature-based solutions have enormous potential; however, they are greatly underfunded. Thus, there is an urgent need to restructure and redirect the planning and distribution of public and private finance to better support these initiatives.
This paper provides an overview of various financial instruments available for climate action and nature conservation, focusing on the innovative approaches taken by the Green Climate Fund (GCF) and its partners to catalyze finance at scale. This paper discusses five categories of instruments to catalyze finance for nature-based solutions and how instruments can be combined for maximum impact, such as blended finance mechanisms. It also aims to share the experiences of GCF and its partners in designing examples of these and other blended finance mechanisms through three approaches: complementarity, sequencing and partnerships.