If nature were listed on an exchange, it would be the most undervalued asset in the world. Consider the arithmetic. The world faces a $700 billion annual biodiversity financing gap, while $7.3 trillion flows into nature-negative activities every year, only $220 billion is spent conserving it; in other words, for every $30 spent destroying nature only $1 is spent protecting it. Yet every $1 invested in ecosystem restoration is estimated to return between $7 and $30 in economic benefits.
This shouldn’t come as a surprise, given that over half of global GDP ($63 trillion) is moderately or highly dependent on nature according to the WEF. Financial institutions are exposed in the trillions—with nearly three-quarters of euro area bank loans to companies highly dependent on ecosystem services. Financial markets are failing to adequately price the risks related to nature exposure and dependence. Economists who built the world’s first biodiversity-adjusted sovereign credit ratings model at the Universities of Sussex, Sheffield, and Heriot-Watt, have published new research that finds that some $83 trillion of global assets are exposed to mispricing, leaving countries facing higher borrowing costs and potential debt crises as nature degrades. At the corporate level, consulting firm Verisk Maplecroft has found that almost $6 trillion in asset value linked to companies in the world’s three largest stock markets sits in locations that are at risk of damaging vitally important natural resources.
The gap between what nature needs and what nature offers is, in other words, one of the great mispricings of our time. It’s a principle reason why we recently hosted a lunch with two investors who have spent decades proving the point on the ground: Josep Oriol, Managing Partner of Okavango Capital Partners, and Tom Hancock, Chair of BioCarbon Partners. Together, they have led strategies and businesses that protect more than six million hectares of high-value habitat in partnership with hundreds of thousands of rural citizens. Their projects have generated tens of millions of dollars in economic benefits for local communities — while delivering attractive returns to investors. They are now deploying capital through Terra Labs, their nature-focused investment platform backing leaders in carbon, biodiversity, and water within a multi-billion dollar, high-impact opportunity. What Terra Labs is proving is that because nature is frequently the most affordable way to address the challenges communities face—from flood defence to carbon removal— it also delivers co-benefits few other asset classes can match, including improved livelihoods, more resilient farming, and from eco-tourism to water security, all of which support the communities. They are also proving that nature provides a compelling investment opportunity in its own right.
Why Africa, and Why Communities Come First
The conversation started by first discussing why it’s critical to look at Africa and emerging markets. In Africa, agriculture, forestry, and land use—deforestation, fires, and forest degradation—account for over half of total emissions (56%). Agricultural expansion drives nearly two-thirds of the continent’s forest loss. Much of this is driven by domestic demand—often wood burned for fuel—and, ultimately, by rural poverty.
The implication is profound: reducing emissions in Africa must include supporting communities, by providing income to maintain and restore land, complemented by initiatives that reduce dependence on wood, such as solar lighting and cleaner stoves. Conservation that ignores livelihoods fails. Conservation that builds them compounds.
Real Returns, Real Risks, Real Expertise
At the same time, nature sensitive investing is an area that can generate real returns. It is not unusual for a nature-based solutions project to deliver an IRR north of 20%. Yet institutional investors are often unable to write the smaller cheques this nascent market requires. This is precisely why it presents such a compelling opportunity for family offices to step in, take some of the earlier risk, help prove the business case, and scale the space toward institutional readiness.
A useful mental model: think of nature-based solutions like real estate development, with layered and growing revenue streams—carbon, fire risk management, biodiversity, water, agriculture, tourism—but often more capital light, with more diversified revenues, and generating hugely positive externalities.
The risks are real too: regulatory, jurisdictional, community acceptance, revenue concentration. This is where specialist knowledge earns its keep—managing those risks while understanding the full potential of diverse revenue streams. It is also why Terra Labs takes an entrepreneurial, problem-solving approach, structuring vehicles to align with the timeframes nature restoration actually requires.
Carbon Markets: Don’t Throw the Baby Out with the Bathwater
Carbon markets have taken criticism—some fair, much of it since disproved or addressed through improved methodologies and technologies like geospatial AI, which are making measurement dramatically more robust, granular, and accurate. Methodologies are advancing on a rapidly maturing scientific base, and in the most robust areas demand now far outstrips supply. Biochar is one example, prized for its measurement accuracy and co-benefits. Grassland restoration is another fast-emerging frontier: hugely important for carbon sequestration and now far more measurable—which is why Octopus Energy Generation has committed $100 million with Cultivo to restore US grasslands across 650,000 acres, aiming to remove nine million tonnes of CO2 over 30 years.
And while much early corporate money has flowed to Direct Air Capture, on a cost-per-tonne basis nature-based carbon capture is far cheaper—before even counting the co-benefits in water, livelihoods, food, and biodiversity. The planet doesn’t care where you emit or where you capture; we should optimise globally, and the opportunity to deliver protection and restoration at scale in emerging markets is significant. Carbon markets also support corporate action: MSCI research analysing over 4,000 companies found that those using material quantities of carbon credits are decarbonising at roughly twice the rate of companies that don’t use them at all, debunking many previous criticisms that carbon markets would disincentivise corporate decarbonisation.
The scale possible is remarkable. BioCarbon Partners protects over 6 million hectares of land and forest, or about 1.5x the size of Switzerland. They also protect a 700km stretch of river—the distance from London to Edinburgh and back—as well as Zambia’s Luangwa Valley, the largest REDD+ project in Africa by land area and the largest in the world by quantified social impact.
REDD+—a UN backed standard for paying organisations or communities to protect forests—remains the best methodology for protecting large forest areas at scale and lowest cost; philanthropy is the only alternative. However, philanthropy is neither guaranteed nor, at present, in particularly good health. These large protection efforts can then be magnified with investments in the surrounding community—sustainable agriculture, renewable power, and local enterprise.
Momentum is building at the sovereign level too. Article 6 of the Paris Agreement allows nations to purchase carbon from other countries toward their nationally determined contributions, and buyers including Singapore, Switzerland, Sweden, Norway, and Japan are ramping up programmes. These offtakes will trade at a premium, though volumes remain low and open questions remain over how value is shared between developers and communities.
The Family Office Opportunity
The pattern here should feel familiar to readers of our recent work: the investment case is not the constraint. The nature economy offers proven models, experienced operators, maturing measurement, 20%+ IRRs, and co-benefits that compound across communities and ecosystems. What is needed is early, patient, values-aligned capital willing to write the cheques institutions cannot yet write—which will help build the track record that will unlock the billions waiting behind them.
That is precisely what family offices do best.
This article is not investment advice. Any investment opportunity presented by EthicalFin is intended for qualified investors only. Early-stage investments are high risk and illiquid, and you may lose all of the capital invested. Terra Labs is a client of EthicalFin under an advisory and introducer engagement.
EthicalFin hosted this lunch with Josep Oriol (Okavango Capital Partners) and Tom Hancock (BioCarbon Partners) as part of our ongoing work helping family offices deploy capital into nature-based solutions. To learn more about Terra Labs or our nature investment ecosystem, get in touch.
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