What is Nature Finance?
Nature Finance places nature at the heart of financial decision-making. It is the flow of financial mechanisms, investments and strategies to protect, restore and sustainably manage natural ecosystems and the services they provide. It ensures increased resilience by creating markets for services such as flood management and carbon removals.
The State of Nature in the UK
The UK is one of the most nature depleted countries in the World. The 2023 UK State of Nature Report found that 19% of species studied are in decline and nearly 1 in 6 species threatened with extinction.
The UK Government has set ambitious targets to halt this decline:
- protect 30% of its land and sea by 2030.
- halt the decline in species populations by 2030 and increase populations by at least 10% by 2042 and increase tree and woodland cover to 16.5% of England’s total land area by 2050.
- restore 70% of designated features in Marine Protected Areas to favourable conditions by 2042.
The benefits to the UK from a strong, natural ecosystem extend beyond economic stability, influencing sectors ranging from agriculture and food security to insurance and climate resilience.
The Investment Gap
To achieve these targets between 2022 and 2032, the UK needs roughly £56 billion more than currently planned, equating to around £5.6 billion per year. Encouraging private investment in nature is critical to bridging this gap.
Currently, private investment in nature-based solutions is around £95 million per year. The government aims to increase this to at least £500 million a year by 2027, and to over £1 billion a year by 2030. While private funding through grants, donations or corporate social responsibility (CSR) programmes is well-established in the UK, there is often a lack of structure and traceability.
Biodiversity Credits and Markets
The 2021 Environment Act introduced Biodiversity Net Gain (BNG) to England, creating a structured market for biodiversity credits. BNG policy, launched in 2024, requires developers to achieve at least 10% net gain in biodiversity for all new developments. Where this is not possible, especially in urban areas, biodiversity credits allow companies to offset their impact against a 2021 baseline.
Biodiversity markets let organisations and individuals invest in projects that protect, restore or enhance natural habitats and species. Biodiversity credits provide a tradable, measurable, and verifiable system for financing real-world nature outcomes, similar to how carbon markets support climate action, but focused on nature-positive impacts. They offer a way to reward actions that improve the health of natural habitats.
Market Maturity and Opportunity
The biodiversity credit market in England is still emerging but shows significant potential for growth. Research commissioned by Defra in 2021 estimated the market could be worth between £135-£274 million annually. However, challenges around measurement, reporting and verification remain, and regulations are still evolving to standardise credit frameworks. Credit prices vary depending on habitat type: from £42,000 for low-distinctiveness habitats to £650,000 for high-distinctiveness habitats like lakes.
The current approach of locally planned projects also needs to be reassessed. To achieve the scale of impact required to meet investment demand and support UK biodiversity goals, a step change that delivers projects at a systemic, connected and national level is needed. Only by taking a national view can the UK meet its biodiversity and investment goals. As nature projects scale and grow so do the challenges of planning and monitoring. Space technology can play a crucial role in supporting the planning and monitoring of a connected and large-scale network of nature finance projects.
How Space Technology Can Help
Space technology is increasingly important for enabling the biodiversity market. It supports every stage of a project:
- Site selection and project design: satellites can identify degraded areas or sites with high restoration potential, ensuring projects deliver maximum impact.
- Monitoring and mapping: satellites capture changes in land, vegetation, habitats and tree cover over time, tracking project progress and outcomes.
- Measurement, reporting and verification (MRV): satellite data is consistent, scalable and reliable, helping to measure the outcomes of nature projects.
- Market transparency and investor confidence: using satellite data adds credibility to biodiversity credits, reducing risks like greenwashing, double-counting or poor performance which boosts investor confidence.
- Risk assessment and disclosures: investors can use satellite data to assess risk, verify performance and support sustainability reporting.
Conclusion
The UK is in a strong position to lead the development of nature finance markets. As the market grows, investors will increasingly depend on transparent, data-driven systems to measure outcomes and impact at scale. Space technology has the power to transform how we plan, monitor, assess and verify nature projects. By integrating space-based insights into the maturing UK biodiversity market, the UK can build confidence, attract investment, and ensure every project delivers real, positive outcomes for nature.
