University of Oxford
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OX1 3SZ
UK
6th February 2025
3 minutes read
We have just published a new paper in Nature Ecology & Evolution following 3 years of work: “The current state, opportunities & challenges for upscaling private investment in biodiversity in Europe“.
Our team Thomas Lundhede, Bo Jellesmark Thorsen, Qian Liu, Isobel Hawkins and Joe W Bull from the SUPERB project ran 3 focus groups with biodiversity finance experts across Europe, and I interviewed 25 top experts.
In short, here were the key themes:
Opportunities:
-Changes in macroeconomic conditions that are putting pressure on farming, emerging regulations which could plausibly increase demand, & changes in societal expectations and values
-Innovation – financial, technological, & increasing levels of professional experience bringing down novelty and transaction costs
Challenges:
-The ongoing lack of *highly* profitable investment opportunities, coupled with investors’ low risk tolerance
-Large political & regulatory risks
-Some fundamental conflicts between the nature of conservation projects and the needs of investors
-Risks from social perceptions that nature markets have the potential to exacerbate inequalities
A really interesting finding I think from the work was that governments were perceived both as the major catalyst of increased investment, but also one of the biggest barriers. Direct public investment was still generally perceived as the most important thing. Additionally, I identified a number of internal contradictions within government policies that need to be addressed if the vision of upscaling private investment is to be realised:
-Poor coordination between different government policies and funding sources. The main one that came out here was the way agricultural subsidies ‘compete’ with nature markets. There is a need for much better coordination between government policies to direct the types of funding that suit the characteristics of each project into the right places.
-Investors seek de-risking… but one of the key risks they seek to mitigate is political and regulatory risks presented by government itself.
My take is people generally underestimate how large the role of public policy would have to be to enable that vision & the investment required. Governments would have to a) create the investment opportunities through nature-related markets; b) govern the markets to ensure they work; c) de-risk the markets to incentivise private actors to invest. Doing this effectively would require vast investment, and for me it is still ambiguous whether the upscaling of private investment in nature is more efficient or cost-effective than direct public financing, given the huge administrative capacity and regulatory change required. We argue therefore that the private vs public investment dichotomy is misleading – private investment in nature is better perceived as an extension of public policy.
Read the full paper here: https://www.nature.com/articles/s41559-024-02632-0
Author
Sophus has won numerous awards for policy impact, including being named by the ENDS Report as one of the 100 most influential environmentalists in the UK in 2022 and 2026 and as the most impactful early career environmental scientist in the country in 2023 by NERC. Sophus runs and lectures on executive education programmes on biodiversity economics across several Oxford departments, and is the director of the Biodiversity Economics module on the University's Biodiversity Conservation and Nature Recovery Master's programme. Sophus consults for businesses, governments, and non-profits on biodiversity finance, biodiversity safeguards and nature markets. His work has featured regularly in the media, with over 100 media stories in the last 5 years. He has had numerous expert advisory roles in different UK government departments and the EU Commission, including in 2025 being named as the Specialist Advisor on Natural Capital to UK Parliament's Environmental Audit Committee.