· 9 min read
As the world scrambles to address the converging crises of global environmental change, geopolitical tensions and widening social inequality, one truth is becoming clear: nature is no longer just a victim of these crises—it is also our most powerful ally. For Latin America—a region blessed with extraordinary biological wealth, cultural heritage, and environmental stewardship—the moment to lead a global transition toward a nature-based economy is now.
For too long, nature has been treated as a passive backdrop to economic activity—a so-called “externality” left out of financial statements and policy decisions. But this oversight is more than a market failure; it is a failure of imagination. We are now living in a world where ecosystem collapse threatens the viability of our economic systems. The question has fundamentally changed. It is no longer simply how human activity impacts nature, but how nature’s degradation now undermines every aspect of human activity—from food systems to supply chains to sovereign risk.
From crisis to opportunity: Nature as strategic infrastructure
Nature is no longer a soft environmental concern—it is hard infrastructure. Its decline is already destabilizing economies, reshaping investment portfolios, and disrupting livelihoods. The acceleration of climate change and biodiversity loss is actively eroding the natural capital on which our economies depend.
The Taskforce on Nature-related Financial Disclosures (TNFD) has marked a turning point. Its 2023 release introduced a systemic risk lens through which financial institutions now identify, disclose, and act on nature-related risks. This is not an ESG add-on—it is a recalibration of value itself. TNFD’s integration with frameworks like the EU's CSRD, IBAT, and the Kunming-Montreal Global Biodiversity Framework signals that nature is moving to the core of financial decision-making. From sovereign wealth funds to corporate boardrooms, nature is entering the balance sheet.
Leading firms are shifting from net-zero pledges to net-positive strategies, embedding ecosystem resilience into their core operations. The Norwegian Sovereign Wealth Fund’s recent acknowledgment of its exposure to nature-related risks sent shockwaves through markets: 96% of its USD 1.6 Trillion value is exposed to environmental risks. Nature is no longer someone else’s problem—it is now a shared liability.
Several countries are pioneering the creation of Natural Capital Sovereign Funds (NCSFs) or analogous structures to manage and invest in nature as a strategic asset. Costa Rica, Bhutan, Gabon, and Ecuador have established national mechanisms that channel public and private capital into the long-term conservation of forests, biodiversity, and ecosystem services—often through innovative tools like payments for ecosystem services, debt-for-nature swaps, and biodiversity-linked finance. Indonesia and the UAE are integrating natural capital into sovereign investment strategies, while countries like the UK and Australia are developing regulatory and institutional frameworks to enable sovereign-level investment in nature.
The UK is emerging as a global leader in promoting the nature economy through a combination of regulatory innovation and market-building initiatives. A key advance is the Biodiversity Net Gain (BNG) policy, now mandatory for land developers, requiring measurable improvements in biodiversity as a condition for planning approval. Complementing this, the British Standards Institution (BSI) has introduced principles to guide integrity in nature markets, covering transparency, additionality, and benefit-sharing. These include guidance on additionality, transparency, governance, and benefit-sharing—critical for building trust and scaling investment. On the financial side, UK regulators are aligning with the TNFD and exploring mechanisms to recognize natural capital as a new asset class, encouraging private investment through clearer accounting rules, sustainability-linked incentives, and green finance integration.
These efforts signal a paradigm shift: from exploiting natural resources for short-term gains to stewarding them as core assets of national wealth, resilience, and competitiveness.
Global financial institutions are taking notice of nature’s investment potential. From J.P. Morgan’s $1.5 billion Forest & Climate Solutions Fund II to Goldman Sachs’ $500 million Biodiversity Bond Fund, and China’s $824 million green sovereign bond issuance in London, major players are increasingly positioning nature and biodiversity as emerging asset classes. These moves signal a growing shift in capital markets toward recognizing the financial value of ecosystem integrity and climate resilience.
Multilateral Development Banks (MDBs) are progressively embedding natural capital at the heart of their strategic and operational agendas. The Inter-American Development Bank (IDB), for instance, has launched its 2024–2025 Action Plan on Natural Capital and Biodiversity, which aims to mainstream ecosystem values into public policies, investment planning, and financial instruments across the region. Meanwhile, the World Bank has played a pivotal role through its Wealth Accounting and the Valuation of Ecosystem Services (WAVES) initiative, supporting countries in developing natural capital accounts. These efforts are redefining development finance to recognize nature as essential economic infrastructure underpinning resilience, equity, and long-term growth.
The market is still taking shape, with new initiatives, financial mechanisms, vehicles, and regulatory frameworks rapidly emerging. While much remains to be done, the direction is clear: a new nature-based economy is on the rise. Now is the time to engage proactively, contribute to its development, and prepare to participate in ways that are both impactful and equitable.
The Latin American opportunity: From biodiversity to bioeconomy
Latin America holds over 40% of the world’s biodiversity, half of its tropical forests, and some of its most vital freshwater and carbon sinks. These are not constraints to growth—they are the foundation of a new development model. Investing in nature is no longer about compensation or charity. It is a forward-looking strategy to build resilience, generate sustainable growth, and align economic ambition with planetary boundaries.
Several Latin American countries are emerging as pioneers in integrating natural capital into economic and policy frameworks, laying the foundation for a nature-positive development model. Costa Rica, Colombia, and Brazil have led the way with robust regulatory systems for Payments for Ecosystem Services (PES). Peru and Chile are actively promoting PES legislation and pilot programs. In parallel, several countries are institutionalizing natural capital governance: Brazil, Colombia, Chile, Mexico, Peru, Ecuador, and Dominican Republic have established or are working in Natural Capital Committees or national accounting systems aligned with the UN SEEA framework. These structures aim to value and integrate biodiversity and ecosystem services into fiscal policy, land use planning, and public investment strategies—moving from rhetoric to implementation in the transition toward a regenerative, nature-based economy.
Nature finance is more than an emerging trend—it is the foundation of a new economic sector where nature is valued as a strategic asset, not a cost. For Latin America, this represents a transformative opportunity to unlock entrepreneurship, create quality green jobs, and position the region at the forefront of the global living economy. By investing in regenerative practices, NatureTech innovation, and high-integrity markets for biodiversity, carbon, and ecosystem services, the private sector can lead this transition.
Latin America is not just a provider of ecosystem services—it is also a proving ground for the economic models of the future. Across the region, countries are actively working to build the policy frameworks and institutional foundations needed to support a thriving nature-based economy.
The challenge: Enabling conditions still under construction
The potential is vast—but so are the risks. Without robust safeguards, the nature economy could repeat the failures of the carbon market, leading to speculation, greenwashing, and social exclusion. To succeed, nature markets must be built on firm foundations:
• Robust regulatory frameworks that offer legal clarity, define environmental assets, protect against speculation and establish safeguards.
• High-integrity principles to ensure only real, additional, measurable, and durable outcomes are recognized.
• Inclusive participation mechanisms that recognize Indigenous Peoples and Local Communities (IPLCs) as rights-holders—not just stakeholders.
• Transparent public registries that track agreements and transactions in real time, ensuring traceability and trust while avoiding double counting.
• Equitable benefit-sharing to ensure those who protect nature receive a fair share of the value it generates.
These are not optional features. They are preconditions for the credibility, scalability, and legitimacy of any nature-based financial mechanism.
At the heart of this architecture must be a foundational legal principle: ecosystem service transactions must never compromise land rights or national sovereignty. Clarity on the legal status of ecosystem services, paired with safeguards and transparent benefit-sharing arrangements, is critical to ensuring that local communities, Indigenous peoples, and governments participate as equal partners—not as passive beneficiaries.
Three transformations Latin America must champion
To seize this moment, Latin America must drive three interconnected transformations in the global sustainability narrative:
-
From Carbon to Nature as a Whole
While carbon markets have opened the door, they only scratch the surface. True sustainability means protecting and restoring entire ecosystems and recognizing their full range of services, from biodiversity to resilience. Area-based projects are the future. -
From Offsetting to Regeneration
The time has come to move beyond offsetting as a license to pollute. We must adopt a regenerative mindset where investing in nature creates long-term value, reduces systemic risk, and revitalizes local economies. Regeneration is an imperative. -
From Beneficiaries to Bioeconomy Entrepreneurs
Landowners, Indigenous Peoples and Local Communities are not recipients of aid; they are innovators, stewards, and entrepreneurs. Nature-based markets must empower them as co-creators and equity holders in a new, inclusive economy rooted in reciprocity and regeneration. They are protagonists of the economy of living.
Toward an economy of life: Latin America’s moral and strategic imperative
This is not only a financial or environmental agenda—it is a civilizational choice. Latin America and the Caribbean have what the world needs most: energy, food, environmental balance, and cultural wisdom. But unless the region claims its place at the table—with strategy, unity, and vision—it risks remaining a cheap supplier in a market shaped by others.
The time is now. The rules of the new economy are being written. Latin America must be an architect, not a bystander.
Governments, legislators, businesses, and civil society have the opportunity to trigger a continent-wide dialogue on the enabling conditions for high-integrity nature markets. This means passing legislation, strengthening institutions, securing land rights, piloting new instruments, and building regional platforms for coordination and learning.
Nature finance is not a silver bullet—but it can be a bridge. A bridge to an economy that sustains life, regenerates ecosystems, and uplifts communities. A bridge between ancestral knowledge and cutting-edge technology. A bridge from a past of extraction to a future of regeneration.
Because if what sustains life has no value, then nothing does.
illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.
