An increasing number of corporations and countries worldwide have committed to achieving net-zero emissions, motivating more entities to follow suit. The demand for carbon credits in this regard has witnessed a sharp increase in the past few years, considering its ability to facilitate emissions reductions. Nature-based Climate Solutions (NbS) especially have gained traction in the process. For instance, in 2021, more than two-thirds of the transaction value in the voluntary carbon markets were represented by carbon credits generated through nature-based projects. Notably, the value of transactions in the voluntary carbon markets surged to almost $2 billion in 2021, tripling the figure from the previous year. This increase was largely driven by the growth of Forestry and Land Use carbon credit projects, which accounted for over $1.3 billion or 66% of the total transactions in 2021. Read our blog to learn more about the growth of the carbon market.
What are Nature-based Solutions, and why are they gaining prominence?
Nature-based solutions to climate change refers to actions, policies and strategies that use nature and its ecosystems to help mitigate or adapt to the impacts of climate change. These solutions include conserving, restoring and land management projects that can avoid, reduce or remove carbon dioxide (CO2) from the atmosphere. These approaches also aim to address several challenges at once, such as protecting ecosystems, furthering climate change adaptation and mitigation, and enhancing human well-being.
The concept of Nature-based Solutions emerged in 2009 at the fifteenth session of the Conference of the Parties (COP 15) for the United Nations Framework Convention on Climate Change. The idea was built upon the ecosystem-based adaptation concept, which includes biodiversity and ecosystem services as part of an overall adaptation strategy. However, it slightly departs from this concept as it emphasises on both people and nature.
These solutions include a wide range of practices, which can be broadly classified into four categories:
Forestry practices: such as planting new trees, reducing forest degradation and improving forest management.
Wetland-related practices: focus on conserving and restoring peatlands and coastal wetlands, such as mangroves.
Restorative agriculture: this approach focuses on enhancing soil health, biodiversity, and ecosystem services and includes practices such as conservation tillage, cover cropping, agroforestry, and rotational grazing.
Ocean-based practices: which protects, restores, and enhances marine and coastal ecosystems. Examples of these practices include marine conservation and blue carbon projects.
NbS is gaining prominence as it offers many benefits, including:
Combatting climate change and minimising its impact: Utilising nature-based solutions such as afforestation, reforestation, and wetland restoration can aid in carbon sequestration and decrease greenhouse gas emissions. It is estimated that nature-based solutions, particularly in agriculture, forestry, and land use, can contribute to about 30% of the necessary emissions reductions by 2030 to restrict temperature increase to less than 2 degrees Celsius. Read our blog to learn more about how coastal ecosystems act as carbon sinks.
Biodiversity benefits: Nature-based solutions provide significant biodiversity benefits by creating habitats for various plant and animal species, enhancing ecosystem services, and supporting natural processes that sustain diverse ecosystems. These benefits are crucial, given the risk of extinction many species face due to habitat loss and degradation. According to a recent Intergovernmental Panel on Climate Change report if global temperatures reach 1.5 degrees Celsius, about up 14% of land species could face a high risk of extinction. Likewise, the report estimated that half of plant and animal species could be threatened if global temperatures rise 4 degrees celsius.
Economic benefits: NbS projects can also provide economic benefits, particularly for local communities. For example, by restoring wetlands, water is absorbed and stored during flood events, reducing the need for costly infrastructure such as dams and levees. It also filters pollutants from water, reducing the need for expensive water treatment facilities. This not only saves money but also provides benefits to local communities, such as improved water quality, which can support the recreation and fishing industries. Furthermore, these projects can provide additional economic benefits, such as ecotourism which can provide income and employment opportunities.
Human well-being: Nature-based solutions can also have significant benefits for human well-being. Increasing resilience to climate change can help communities better withstand extreme weather events such as floods and heat waves. Further, it provides them with better air and water quality, enhancing their standard of living.
Owing to these benefits, the demand for nature-based solutions has expanded significantly over the years.
Leveraging the Power of Nature to Enable Development in Global South
In addition to facing challenges associated with underdeveloped economies, such as weak infrastructure, lower adaptive capacity to risks, and lack of basic facilities, countries in the Global South are also highly vulnerable to the impact of climate change.
According to a study, 91% of deaths from sudden-onset climate, weather, and water-related disasters from 1970 to 2019 occurred in developing economies.
As the climate change crisis worsens, these extreme climate-related events have become more frequent and severe and are projected to further worsen in the coming years. In this regard, experts predict that by 2050, at least 570 cities and 800 million people will be exposed to rising seas and storm surges, making these countries even more vulnerable to the ghastly effects of climate change.
Since the Global South is home to many countries with vast forested and natural ecosystems, it makes them prime candidates for leveraging nature-based solutions (NbS) to address the challenges posed by climate change. By increasing the resilience of ecosystems and communities, NbS holds tremendous potential to mitigate the dire consequences of the worsening climate crisis. For example, mangroves play a critical role in safeguarding landscapes from the current and future impacts of climate change, such as storm surges, flooding, and rising sea levels. Scientific experiments indicate that 30 trees per 100 square meters can reduce the maximum flow of a tsunami by over 90%. Likewise, a study revealed that the presence of mangroves in Florida reduced damages caused by Hurricane Irma in 2017 by approximately 25% in counties where they were present.
By using innovative solutions customised to every area, NbS also helps in addressing other interlinked societal and environmental challenges. This includes providing benefits such as enhancing food security and sustainability and aiding communities in diversifying their income sources. As a result, they can bring significant advantages in terms of ecosystem services and social and economic benefits.
According to Dalberg “By providing developing countries with protection against the economic cost of climate change, Nature-based Solutions could save approximately US$104 billion in 2030 and US$393 billion in 2050”.
Scaling Up Nature-Based Solutions with AI and Satellite Technology
Despite the potential of the market, it is marred with various challenges. The lack of trust on the demand side and significant bureaucracy and inefficiencies on the supply side are the major factors hindering its growth. One of the challenges here is the costly and labour-intensive process of estimating the carbon reduction of conservation or restoration projects. Forest conservation projects, for example, require measuring individual trees by hand. This manual process involves sending crews to remote areas, where they measure the height and diameter of trees in randomly sited plots, making it a slow and expensive process. This method is also prone to monitoring, reporting and verification (MRV) challenges. The inability to measure and track the impact of sequestration projects has also led to phantom forests (deliberately and accidentally) and provided space for companies to greenwash their initiatives.
The resulting MRV challenges have thus led to opacity in the carbon market, which has raised questions regarding the environmental integrity of these projects. Apart from allowing scam credits to populate the market, the lack of transparency poses other challenges as well, such as in pricing carbon credits. The pricing challenge is further complicated as carbon markets are fragmented and unregulated. The associated lack of standardisation in processes has thus limited harmonisation efforts in carbon pricing, making it difficult for buyers to know if they are buying offsets at a fair price. As a result, there is a growing need for more transparent and verifiable data to provide stronger evidence of the impacts of Nature-based Solutions. This will help overcome the trust deficit in the market, making it easier to get new projects off the ground and aid in addressing the challenges associated with verifying, measuring, monitoring, and reporting.
Artificial Intelligence (AI) and Satellite technology have emerged as promising tools in this regard, as they offer far more scalable and cost-effective solutions that ensure transparency and verifiability. Today AI in conjunction with satellites equipped with remote sensing technology, can provide independent and high-resolution data on carbon sequestration in forests, wetlands, and other ecosystems. This data can be utilised to monitor and track project implementation and accurately estimate the amount of carbon stored in forests by analysing factors such as canopy height, vegetation density, and tree species. By utilising appropriate machine learning models, these observations can be interpreted to obtain precise carbon estimates.
Furthermore, AI and satellite data can also optimise agricultural practices, minimise waste, and increase yields, presenting significant opportunities for businesses to improve operational efficiency.
Thus by bringing transparency and accountability to an opaque ecosystem, these technologies hold tremendous potential to accelerate investments in nature dramatically. Read our blog “Bridging the Trust Deficit in the Carbon Market through Satellite-based Monitoring” to learn more.
Leverage Satellite Technology to Meet Net Zero Goals
According to a recent report by Accenture, companies are likely to fall short of their net zero goals if they do not at least double their rate of emissions reductions by 2030. AI and satellite technologies can play a crucial role here by helping improve the efficiency and effectiveness of nature-based solutions, making them more attractive to investors, creating favourable trading conditions and better market opportunities.
Partnering with climate intelligence firms possessing strong analytical skills and computational capacity, which can enable entities to derive actionable data sets from various satellites won't only help companies meet their net-zero targets but can also contribute to scaling up solutions that can protect vulnerable populations and landscapes, build resilience, and potentially mitigate the impacts of climate change.