LocationsIndia’s Next Big Investment: Natural Capital
May 22, 2025
India is home to some of the world’s most extraordinary biodiversity—from the towering Himalayas and dense Western Ghats to the coral-rich Andaman Islands and the bio-cultural mosaic of the Northeast. This natural wealth is not only a source of ecological security but also the backbone of our economy, cultural heritage, and the livelihoods of millions.
A Turning Point for Nature
The world is at an ecological inflection point. Global biodiversity is declining at an alarming rate, driven by unchecked urban expansion, industrial pressure, and climate change. Over the past century, more than 400 vertebrate species have vanished, and nearly one million species are now at risk of extinction.
Reversing this crisis requires two things: intent and investment. Over the past decade, India has demonstrated both.
India’s Leadership in Biodiversity Finance
In 2015, India launched one of its most forward-thinking initiatives—BIOFIN (the Biodiversity Finance Initiative)—led by the Ministry of Environment, Forest and Climate Change (MoEFCC), in partnership with UNDP and the National Biodiversity Authority. BIOFIN enabled India to assess its biodiversity expenditures, identify financing gaps, and develop its first comprehensive Biodiversity Finance Plan.
This plan mapped the cost of achieving India’s National Biodiversity Targets and proposed strategies to close the annual shortfall. Since then, India has expanded its ambition. At COP15 in 2022, it adopted the Kunming-Montreal Global Biodiversity Framework and aligned with 23 new national targets to halt and reverse biodiversity loss by 2030.
The intent is clear—but achieving these targets requires robust financial backing and scalable innovation.
Why Biodiversity is Worth the Investment
India estimates that meeting its biodiversity conservation goals will cost approximately INR 816 billion (USD 9.8 billion) annually. This is not an expenditure—it’s a strategic investment.
Just as no business would ignore the depreciation of its physical assets, India cannot afford to overlook the erosion of its natural capital. Nature offers critical services—pollination, groundwater recharge, flood protection, carbon storage—that support every sector of our economy. Globally, the estimated value of these ecosystem services is around USD 125 trillion per year—the cost humanity would bear if we had to artificially replicate them.
Consider mangroves: restoring them is far cheaper than building sea walls and delivers co-benefits like carbon sequestration and fisheries support. In Odisha, villages with mangrove buffers fared far better during Cyclone Phailin. Similarly, expanding Marine Protected Areas in the Gulf of Mannar has revived fish stocks and sustained coastal livelihoods.
Nature, in short, is not a luxury. It is critical infrastructure. Underinvesting in it is not only shortsighted—it is economically risky.
Shifting the Finance Paradigm
India is advancing biodiversity finance through three strategic shifts:
Mainstreaming biodiversity into public schemes
Flagship programmes like MGNREGS, Smart Cities, and watershed development are embedding biodiversity objectives into their frameworks. For example, integrating afforestation using native species into MGNREGS can boost rural employment while restoring degraded ecosystems.
Unlocking private capital through CSR
In FY23, Indian companies spent nearly INR 30,000 crore on Corporate Social Responsibility (CSR), but less than 10% was allocated to biodiversity. Several pioneering businesses are already demonstrating how biodiversity investment supports long-term resilience and brand value.
Developing innovative financial instruments
India is exploring green bonds, biodiversity credits, and Access and Benefit Sharing (ABS) mechanisms. With the biodiversity credit market projected to grow from USD8 million today to USD2 billion by 2030, India is well-positioned to lead and ensure fair returns to communities who protect our biological resources.
Together, these approaches could mobilize an additional INR19,800 crore (~USD 2.2 billion) annually—bringing us closer to bridging the biodiversity finance gap.
The Road Ahead
The path forward is clear: biodiversity finance is about economic strategy, national security, and global leadership. By embedding nature into economic planning and scaling up public-private collaboration, India can lead by example and show the world that ecological stewardship and development are not at odds—they are interdependent.
The biodiversity financing gap is not just a funding issue—it is the space between business as usual and a sustainable future. Closing that gap is not just necessary—it is India’s opportunity to lead.
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