Alongside my co-authors I conducted a systematic review of literature across five ecosystems and three intervention types, identified four persistent barriers:
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Limited financial returns
Nature projects often generate revenues that are insufficient to meet risk-adjusted expectations. This is particularly evident in projects with long payback periods or where the benefits are diffuse and non-monetisable. Moreover, competing land uses such as agriculture or timber extraction frequently provide higher short-term financial returns, making conservation or restoration less attractive to private financiers.
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High risk and uncertainty
Nature-related finance face multiple layers of uncertainty: ecological (e.g., fire, disease, extreme weather), market (e.g., volatile carbon prices, immature biodiversity credit markets), and governance (e.g., weak regulation, unclear land tenure). Projects that sell credits are also bound by permanence requirements that may extend for decades or even centuries, adding to investor hesitation. However, this risk is often overstated due to limited data and valuation frameworks, creating a cycle where under-investment leads to further ecological degradation, which then raises both real and perceived risks.
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High transaction costs
Fragmented landholdings, especially in smallholder and community contexts, lead to prohibitively high costs for project development, monitoring, and certification. Complex procedures for verifying ecosystem benefits and distributing payments also add layers of cost, sometimes enabling elite capture and corruption. These costs disproportionately burden early-stage or community-led projects, making them less competitive compared to larger, standardised ventures.
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Undervaluation of nature
Conventional financial accounting frameworks fail to capture the full benefits of nature such as systemic resilience or cultural value. As a result, many conservation or restoration projects appear unprofitable because their long-term and non-market benefits are excluded from cost–benefit assessments. Moreover, discount rates applied to nature investments often ignore positive externalities such as reduced flood risks or sustained fisheries, leading to systematic undervaluation and under-investment in nature.
