THANK YOU FOR DOWNLOADING
Learn More
If you would like to hear more from Orbitas, including updates on our analysis and resources, please subscribe here.
How investors can unlock Brazil’s natural capital opportunities at scale
Author: Kyle Saukas, Matt Piotrowski
Nature is the most undervalued asset class in climate finance. In 2023, the agriculture, forest, and land-use (AFOLU) sector received just 2% of global climate finance—despite offering one-third of the emissions reductions needed by 2030. Considering that natural climate solutions can account for one-third of climate solutions. There is urgent demand for more investment in nature.
The finance gap for nature is driving key shifts amongst global leaders and markets to make investments more attractive. Climate-driven transitions are opening new opportunities to invest in a climate-safe future. And today, Brazil is the epicenter of action for rebalancing the equation.
But this opportunity won’t achieve its full potential unless investors foster growth for the natural capital sector and support growing infrastructure to mitigate risks across the sector.
Why Brazil Is Leading on Natural Capital
Brazil is a prime example of where opportunity can grow as the nation continues preparation for hosting COP30 this year and seeks to attract a wave of foreign investment to its emerging bioeconomy. The country has massive potential for investing in its bioeconomy.
In fact, under the right conditions, replanting forests across Brazil on degraded agricultural land could become a $141 billion opportunity. This market could create 369,000 annual jobs helping restore nearly 60 million hectares of degraded land.
Unlocking the full potential of Brazil’s forest restoration and other natural climate solutions will require private capital leaders to fundamentally shift the dynamics of the natural capital market. Investors must seek out new ways to engage in Brazil’s reforestation programs and other emerging markets to mitigate risks and realize potential opportunities.
Investing in Brazil’s natural capital offers strong payoffs, while the impacts of delay or negligence could, like most climate change impacts, be materially harmful.
See the full analysis
How Investors Can Maximize Brazil’s Forest Restoration Potential
To draw in the finance to scale up natural capital, private investors must see strong returns and manageable risks. Looking specifically at the forest restoration market in Brazil, investors can achieve these goals by engaging in policy and market climate transitions.
Policy
Currently, Brazil’s government is taking major steps to foster a positive environment for investment. Specifically relevant to reforestation, and many other natural climate solutions, Brazil is developing an Emissions Trading System and a national carbon standard.
Investors can engage specifically with Brazilian leaders on how the nation’s carbon market is developed and utilizes credits for projects related to reforestation. As this market emerges into a lucrative revenue stream for forest restoration projects, investors can support measures to ensure high-integrity market rules to mitigate potential risks and secure rewarding landowners and local communities who are key to successful projects.
In addition to carbon credits, sustainable wood product demand growth is another major driver of Brazil’s reforestation opportunity. Investors should seek ways to support policies that incentivize utilizing sustainable wood products instead of higher emitting resources like cement or steel in construction.
The Principles for Responsible Timber Construction provides an opportunity to engage on sustainable wood, presenting policy principles and supporters at COP30 that could influence national policies worldwide that will increase demand for sustainable wood significantly. With investors supporting the growth in demand of sustainable wood as a climate solution, markets will likely see increased demand for the sustainably grown wood from Brazil.
Market
Lastly, investors should engage in Brazil’s growing market for forest restoration and sustainable commodities. For example, the Brazilian government launched a coalition of investors, companies, and NGOs known as the Brazil Restoration & Bioeconomy Finance Coalition to raise USD 10 billion and restore 5 million hectares by 2030. Entities like Capital for Climate and Innovative Finance for the Amazon, Cerrado and Chaco are regularly fostering collaboration between investors, project developers, landowners and others to develop new financing mechanisms.
Green bonds and blended finance opportunities are opening new doors for significant investment in natural capital across Brazil. A challenge for investors is working together and with on-the-ground stakeholders to continue to expand new financial tools by incubating new funding platforms, de-risking financial tools, and creating public-private partnerships that will attract additional early-stage capital for forest restoration to occur on the ground.
Brazil can bring natural capital to scale
Now is the time for private capital to help scale Brazil’s forest restoration—unlocking long-term returns while accelerating global progress on nature and climate. The restoration economy is emerging as a sector capable of delivering long-term, risk-adjusted returns alongside measurable climate, biodiversity, and social benefits. These gains are already underway and can scale rapidly.
For investors seeking high-impact opportunities that align with climate ambition, forest restoration in Brazil is not the only way to put their money to work for natural climate solutions. Yet, the potential size of the market offers opportunities to scale up investment in other natural climate solutions globally. In other words, Brazil’s forest restoration market could be the seed that fosters solutions for investors looking to invest in the power of nature.