Financing sustainable land use

Sustainable Land Use (SLU) protects the climate by reducing carbon emissions and preserving nature’s vital carbon sinks by averting or mitigating deforestation, degradation and carbon-intensive agriculture, while providing safeguards for meeting increasing human needs for food and fibre, as well as a habitat for biodiversity.

Agriculture, forestry and other land use (AFOLU) sectors still remain major contributors of Greenhouse Gas (GHG) emissions.

Worldwide, growing demand for food and energy is putting increasing pressure on land, threatening our planet’s natural resources. Studies show that inaction could generate tremendous economic and social costs, due to reduced food security, an increased rate of climate-change-related natural disasters and damages.

There is an urgent need to shift towards “natural climate solutions” and sustainable land use practices, in particular forest conservation and sustainable agriculture activities, which have great carbon mitigation potential. For instance, halving deforestation rates by 2030 would enable to reduce GHG emissions by 1.5 to 2.7 gigatons CO2 and avoid more than $3.7 trillion in damages from climate change. To tackle this issue, attracting private capital at scale is key.

In 2017, commissioned by the Blended Finance Taskforce, KOIS conducted an in-depth study on SLU with two aims: highlighting SLU investment opportunities for the private sector as well as demonstrating the essential role of blended finance instruments in unlocking these opportunities.

The working paper was released on January 2018 and outlined a spectrum of SLU concrete opportunities, both for private and public investment, presenting attractive risk-adjusted returns, from quick wins to medium and long-term opportunities, all of them with specific needs in terms of blended finance.

"For sustainable land use to reach scale and deploy its full mitigation potential, there is a need for private sector investors to adopt higher risk and more patient investment profiles which are inherent to the sector. In return, they will be able to capture significant value from long-term growth enabled by catalytic blended finance tools from public and philanthropic funds."

Benhan Limketkai, Principal, KOIS, London

Read the full report here

Read the two-pager summary here

Sources: Eliasch review, Climate Change: Financing Global Forests, 2008

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