From Forests to Finance: How Nature Credits Could Transform Global Conservation and Investment

Nature credits could unlock new investment in biodiversity conservation, ecosystem restoration and sustainable development, but weak buyer demand, high costs and regulatory gaps threaten their growth. The report urges governments, development banks and businesses to prioritise transparent regulations, reliable financing, community participation and measurable environmental results before expanding nature-credit markets.

The global push to protect biodiversity is creating new opportunities for governments, development banks and private investors to finance environmental conservation. However, a policy brief released in October 2026 by the Multilateral Development Banks (MDB) Nature Technical Working Group warns that emerging nature-credit markets could struggle without clear regulations, reliable buyers and measurable environmental results. Developed with contributions from the African Development Bank, Asian Development Bank, European Investment Bank, Inter-American Development Bank Group and World Bank Group, the report, Opportunities, Challenges and the Road to Scale, examines how nature credits could attract investment into ecosystem restoration while supporting economic development, climate resilience and local livelihoods.

Nature credits represent verified improvements in biodiversity, habitats and ecosystems. They could help finance forest restoration, wetland protection and wildlife conservation. Unlike carbon credits, however, nature credits cannot automatically compensate for environmental destruction elsewhere. The report stresses that governments must focus on genuine conservation outcomes rather than simply creating new financial products.

Nature Credits Offer New Investment Opportunities, but Buyers Remain Scarce

Nature-credit markets could provide additional funding for environmental protection as governments face competing demands on public budgets. Businesses dependent on agriculture, tourism, water resources and natural supply chains could benefit from investing in healthier ecosystems.

For example, protecting watersheds could improve water availability for farmers and industries, while restoring wetlands could reduce flooding risks and protect local communities. These benefits could strengthen economic productivity and reduce future infrastructure and disaster-related costs.

However, the report finds that most nature-credit initiatives remain experimental. Although governments and development institutions are developing certification systems and pilot projects, completed transactions are limited.

One major challenge is measuring biodiversity. Unlike carbon emissions, which can be measured in common units, environmental improvements vary across forests, grasslands, wetlands, and coastal ecosystems.

This makes credits difficult to compare, price and trade. Governments must therefore avoid assuming that nature-credit markets will develop as quickly as carbon markets.

Chile, Thailand and Other Countries Reveal the Challenges of Scaling Up

The report examines experiences from four countries, showing that environmental ambition does not automatically create functioning markets.

Chile established its Biodiversity and Protected Areas Service, which became operational in February 2026. The country is developing biodiversity certification rules, but no nature credits have been issued and confirmed buyers remain absent.

The Dominican Republic is exploring a biodiversity-credit registry while strengthening environmental regulations. A December 2025 assessment estimated registry development costs between $150,000 and $800,000, depending on the system selected. These figures highlight the financial risks of investing in market infrastructure before establishing demand.

Ireland is developing a peatland restoration framework that measures biodiversity, carbon, water quality and community benefits. Peatlands cover approximately 20% of Ireland's land area, making restoration important for environmental protection and land management.

Thailand is testing biodiversity-credit methodologies through conservation projects and partnerships, including initiatives supported by the Asian Development Bank.

An illustrative financial assessment suggests potential nature-credit revenue of approximately $2 million against project costs of $50 million, equivalent to just 4% of total expenditure. These are indicative figures, not realised earnings.

The comparison demonstrates why nature credits should complement public funding, grants and other financing mechanisms rather than replace them.

Governments and Development Banks Must Build Trust Before Markets

For policymakers, the report identifies eight essential areas for developing credible nature-credit systems, including legal frameworks, governance, scientific standards, market infrastructure, buyer demand, project financing and community safeguards.

Governments must clarify who owns nature credits, how environmental improvements are verified and what claims companies can make after purchasing them.

Transparent monitoring and independent verification are necessary to prevent misleading environmental claims and ensure that conservation investments produce measurable results.

Development banks can help countries overcome financing barriers through grants, concessional loans, guarantees and technical assistance. Such support is particularly important because restoration projects often require substantial investment before generating revenue.

The report also emphasises the rights of Indigenous Peoples and local communities. Clear land ownership, meaningful participation and fair benefit-sharing arrangements are essential for preventing disputes and ensuring that conservation finance supports rural development.

For private investors, credible regulations and transparent project information can reduce financial and reputational risks.

A 24-Month Action Plan Could Turn Conservation Ambitions Into Results

The report recommends a phased roadmap covering approximately 12 to 24 months.

During the first three months, governments should assess conservation priorities, existing institutions and potential buyers. The following three months should focus on legal issues, community rights and financing requirements.

Between months six and twelve, authorities should prepare pilot projects, strengthen monitoring systems and seek financing commitments.

The final stage should focus on implementation, independent verification and assessing whether projects deserve expansion.

For businesses, the greatest opportunities may come from conservation investments linked directly to water security, agricultural productivity, tourism and supply-chain resilience.

For international development partners, the priority should be helping countries develop financially viable projects rather than expensive trading platforms.

Ultimately, the report concludes that nature credits could become a valuable source of conservation finance, but their success depends on credible environmental outcomes, dependable demand and strong public institutions. The central message is clear: protecting nature must come before creating markets around it.