Carbon & Climate Finance

Nature-Based Assets

Reforestation, mangroves, soil sequestration projects.

Investment Overview

Nature-based assets encompass reforestation, mangrove restoration, soil carbon sequestration, and regenerative agriculture projects that generate carbon credits while providing ecosystem co-benefits (biodiversity, water quality, coastal protection). Market size: $1.2B nature-based carbon credits (2024), representing 60% of voluntary market. Reforestation credits trade $8-$25/ton; mangrove restoration $15-$40/ton. Investment via direct project investment, carbon credit purchases, or nature-based funds. Key challenge: Permanence risk from wildfires, hurricanes, disease. Buffer pools (15-30% credits set aside) insure against reversals.

Market Context & Trends

Nature-based solutions (NBS) fell from 80% to 60% of voluntary market (2023) after investigations questioned additionality and permanence. High-quality projects (native species reforestation, mangrove restoration with community involvement) still command premiums. Corporate buyers increasingly require 40+ year permanence monitoring and satellite verification (Planet Labs, Pachama) to ensure forest persistence.

How to Invest in Nature-Based Assets

Pachama Forest Carbon Marketplace: Satellite-verified reforestation credits, $10-$30/ton

The Nature Conservancy Carbon Projects: Blue carbon (mangroves, seagrass), coastal restoration

Nori Soil Carbon Credits: Regenerative agriculture, US-based farmland, $10-$20/ton

Gold Standard Nature-Based Projects: Verified reforestation and agroforestry

NCX Forest Carbon Program: Short-term forest harvest deferral, annual contracts

Key Platforms & Access Points

Pachama: AI-powered forest carbon marketplace, satellite verification, project due diligence

The Nature Conservancy: Blue carbon projects (mangroves, seagrass), coastal ecosystems

Nori: Soil carbon marketplace, regenerative agriculture focus, US Midwest

NCX: Forest carbon program, short-term harvest deferrals, satellite monitoring

Verra REDD+: Forest protection credits (quality concerns after 2023 investigations)

Key Investment Metrics

Permanence: 40-100 year monitoring required; buffer pools 15-30% for reversal insurance

Additionality: Would reforestation happen without carbon revenue? Financial additionality tests

Co-benefits: Biodiversity (species count), water quality (runoff reduction), community impact

Satellite verification: Pachama, Planet Labs, NCX use remote sensing for forest monitoring

Native species: Native tree plantations preferred over monoculture eucalyptus/pine

Risk Considerations

Understanding these risks is critical before investing in nature-based assets.

Wildfire risk: California wildfires burned carbon credit forests; 2020 losses exceeded annual issuance
Permanence failures: 30% of forest carbon projects experience reversals (disease, fire, illegal logging)
Additionality doubts: 2023 investigations found 70% of REDD+ credits protected forests already unlikely to be cut
Community conflicts: Land tenure disputes, indigenous rights violations in reforestation projects
Buffer pool inadequacy: 15-20% buffer insufficient for catastrophic events (2020 wildfires proved)

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