If nature is infrastructure, what comes next?

This is article 4 in the Environmental Infrastructure series. Earlier pieces explored why environmental projects can remain institutionally fragile even when finance is available, and why value, risk, authority and responsibility often sit with different actors. This piece asks the next question: what changes when we begin treating environmental systems as infrastructure?

Earlier this month, Türkiye and the Asian Infrastructure Investment Bank signed a new cooperation agreement to support environmental investment, urban infrastructure and climate action. Its first phase is expected to include an investment package of approximately €400 million for environmental projects in the Marmara region, directed primarily toward advanced biological wastewater-treatment facilities supporting efforts to clean up the Sea of Marmara.

There is something instructive about the way the problem is being approached. The pollution is an environmental crisis that becomes dramatically visible in the water, damaging ecosystems, disrupting fisheries and affecting communities along the coast. Yet much of the response is not being structured simply as a programme to clean the sea. Instead, investment is being directed upstream, toward wastewater treatment and the urban infrastructure that influences what ultimately reaches it.

That distinction points toward a larger shift taking place across environmental finance. We have become increasingly comfortable recognising that forests, wetlands, watersheds, coastlines and healthy rivers provide economically valuable services. More recently, governments, development banks and investors have begun taking the next conceptual step: treating some of these systems as infrastructure.

It is an important development, but it also raises a question that may prove more difficult than deciding what deserves the infrastructure label: once we recognise an environmental system as infrastructure, what do we have to build around it?

From environmental value to infrastructure function

The idea that nature can perform infrastructure functions is moving quickly toward the mainstream. A recent paper from Earth Capital Nexus at the London School of Economics, for example, argues that some natural systems are sufficiently important to economic and financial stability that they should be understood as "macro-critical infrastructure." Forests help regulate rainfall, while rivers and other critical natural systems underpin food and water security, energy production, supply chains and economic activity far beyond their geographic boundaries.

The scale of some of these dependencies is striking. The paper estimates direct economic dependencies on forest-linked rainfall of more than US$5 trillion across over 130 countries, with almost another US$3 trillion in upstream supply-chain dependencies. The implication is not simply that nature has considerable economic value. It is that parts of the economy depend upon natural systems continuing to perform particular functions.

That begins to look much more like the way we think about infrastructure. A city depends upon its water system delivering clean water. An economy depends upon electricity networks functioning reliably. A port matters not because concrete and cranes have intrinsic value, but because other economic activities depend upon the services they provide. If a watershed regulates water flows, a wetland reduces flood risk or a mangrove protects coastal communities, the conceptual distance between natural and built infrastructure begins to narrow.

This is why the growing effort to treat nature as infrastructure matters. Development banks are already moving in this direction. Recent work involving AIIB and EBRD has described natural capital as capable of providing infrastructure-grade services and explored how familiar mechanisms such as infrastructure planning, blended finance and public-private delivery partnerships might be extended to natural systems.

But recognising an infrastructure function is not quite the same thing as creating functioning infrastructure.

What sits around the asset?

Consider an ordinary water-treatment plant. We see pipes, pumps, buildings and machinery, and understandably think of those physical assets as the infrastructure. Yet much of what makes the plant dependable is less visible. There is an operator, a maintenance regime, technical standards, procurement rules, monitoring systems, regulatory authority and some combination of tariffs, public budgets or contracted revenues that keeps the system functioning. These arrangements are as important to its performance as the physical asset itself and, without them, that asset can deteriorate remarkably quickly.

Environmental systems pose a similar challenge, although the institutional architecture surrounding them is often much less developed. A restored wetland may reduce flood risk for a city, but somebody still has to protect the land, manage competing uses and monitor whether the ecological function is being maintained. A watershed may improve water quality for downstream users, but the activities determining its condition may sit across multiple municipalities, agencies and private landowners. A mangrove restoration project may attract grant or impact capital for its first few years, while the benefits it is intended to provide are expected to continue for decades.

Perhaps, then, the defining feature of infrastructure is not simply the asset itself, but the continuity of responsibility around it.

That continuity is something we largely take for granted in mature infrastructure sectors. Roads have authorities responsible for them. Utilities have operators. Power systems have regulators and revenue models. The arrangements are imperfect, and they vary enormously across countries, but responsibility generally persists beyond the construction of the asset or the tenure of the original financing. For environmental infrastructure, that continuity is often precisely what is missing.

This is also why Environmental Infrastructure should not become simply another name for natural infrastructure. The systems producing environmental outcomes increasingly combine natural and built assets: watersheds and treatment plants, wetlands and drainage systems, rivers and waste infrastructure, coastlines and urban development. The institutional arrangements connecting them may matter as much as the distinction between what is natural and what is engineered.

Finance follows architecture

Recent developments in water finance provide an interesting illustration. A new China Water Risk white paper examines efforts in China to bring more private capital into water resilience. Among the mechanisms now being tested are water conservancy REITs, water asset-backed securities and securities backed by water revenue rights. Five financing innovations examined in the report raised approximately CNY6.6 billion between 2024 and 2026.

The instruments themselves are interesting, but the institutional evolution that made them possible may be more important. Over more than a decade, regulators have progressively created pathways through which water and environmental assets can enter structures already familiar to infrastructure investors. Policies have enabled asset securitisation, supported PPP structures in water and environmental protection, and progressively incorporated water and pollution-control assets into infrastructure financing frameworks.

The financial instruments, then, did not emerge in isolation. They followed a gradual development of the regulatory and institutional architecture that made the underlying assets increasingly legible to mainstream infrastructure finance.

This may offer a useful lesson for environmental finance more broadly. We have devoted considerable effort to designing new instruments capable of attracting capital to environmental outcomes — blue bonds, nature bonds, blended-finance vehicles, outcome payments, guarantees and increasingly sophisticated forms of environmental credit. Many are valuable. But perhaps the more important evolution is not simply the creation of additional instruments, but making environmental systems understandable to the institutions that already finance infrastructure.

That requires more than demonstrating environmental value. It requires making responsibility, performance and risk sufficiently clear that someone can underwrite them.

The missing layer

I was reminded of this recently at Oxford's Social Outcomes Conference. In discussions around outcomes-based approaches, considerable attention understandably focused on measurement: what outcome occurred, how confidently can it be verified, and under what conditions should payment be triggered?

Those questions are essential, particularly as environmental finance becomes more performance-oriented. Yet I found myself returning to another question sitting underneath the mechanics of payment: which institution remains responsible for the outcome after the financing structure has done its job?

An outcomes contract can specify what constitutes success. Blended finance can redistribute risk. A development bank can provide concessional capital, and a corporation or government can pay for an environmental service from which it benefits. None of those mechanisms necessarily creates the institutional capacity required to maintain that outcome over the following decade.

This is where I think the emerging idea of Environmental Infrastructure may have something additional to contribute. Finance has become adept at constructing a capital stack, combining different sources of capital with different appetites for risk and return. Environmental infrastructure may require an equally serious examination of what we might call its institutional stack: the public authority, operating capacity, revenue arrangements, procurement systems, data, accountability, community relationships and long-term stewardship that sit around an environmental asset and allow it to continue performing.

The components will vary considerably. A municipal wastewater system in Türkiye does not require the same institutional arrangements as a watershed in China, a mangrove system in Southeast Asia or a forest spanning multiple jurisdictions. Nor should the concept become an excuse to impose additional layers of administration where capable institutions and communities already exist.

Indeed, the opposite may sometimes be true. Recent work on critical natural systems identifies a particularly important asymmetry: countries and communities responsible for stewardship may carry its direct costs while many of the economic benefits accrue elsewhere. In those circumstances, the task may be less about creating new institutions than recognising, financing and strengthening the ones already performing the work.

The common question is whether there is sufficient institutional continuity to match the lifespan of the environmental outcome we are trying to finance.

Broadening infrastructure twice

This is why I am cautious about stopping at the increasingly popular idea that nature should simply be treated like infrastructure. The direction is important, but infrastructure status is not itself a financing solution.

A wetland does not acquire contracted revenues because an economic study establishes its flood-protection value. A forest does not become investable merely because we can quantify the industries that depend upon its rainfall. Nor does moving an environmental intervention from an "impact" allocation into an infrastructure portfolio resolve fragmented authority, uncertain revenue or unclear responsibility.

What changes the investment proposition is the architecture around those assets: understanding who depends upon the environmental function, who receives its value, who carries the risk of failure, who has authority to act and who will remain responsible for performance.

The Sea of Marmara brings us back to where we started. The environmental problem becomes visible in the sea, while much of the infrastructure determining the outcome sits upstream — in wastewater treatment, municipal systems, public institutions and long-term investment. Natural and built systems cannot be separated neatly, and neither can the institutions responsible for their performance.

Perhaps this is where the Environmental Infrastructure conversation now needs to go. The case for recognising nature as infrastructure is increasingly persuasive. What follows is harder: establishing who will maintain a watershed over 30 years; how responsibility for a river should be shared between upstream and downstream beneficiaries; or which institution can coordinate an environmental system that crosses municipal, institutional or national boundaries.

These are not secondary governance questions to be addressed once the financing has been arranged. They are part of the infrastructure itself. Seen this way, moving from funding environmental projects to sustaining environmental systems may require us to broaden our definition of infrastructure twice: first to recognise the environmental assets on which economies depend, and then to include the institutional architecture required to keep those assets performing.

Infrastructure, after all, is not simply something we build or protect. It is something for which responsibility endures.

Monty Simus is Senior Advisor for Blue Finance at The Ocean Cleanup and leads illuminem's Environmental Infrastructure initiative. He is also a PhD researcher at the University of Birmingham's Treatied Spaces Research Group. His work sits at the intersection of environmental infrastructure, innovative finance and governance, with professional experience across Asia, the Pacific and North America. His current writing explores how environmental outcomes can be financed, governed and sustained at scale, while his academic research examines Indigenous jurisdiction and resource politics in Bristol Bay, Alaska.

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