Regional : Nature Solutions Finance Hub for Asia and the Pacific

Sovereign Project | 57222-001

This project will launch the Nature Solutions Finance (NSF) Hub to specifically focus on catalyzing finance into Nature-based Solutions (NbS) to support nature-based climate actions and biodiversity conservation. Its establishment will be an opportunity to develop innovative solutions to address the intertwined crises of nature and climate. The NSF Hub's goal is to increase investments in NbS projects across Asia and the Pacific by proactively developing scalable and bankable demonstration projects by creating a platform with practical NbS solutions centered around innovative finance approaches. It aims to do this through a partnership approach with global development entities in the nature space along with concessional fund sources who can work together with ADB under a focused roadmap of activities.

Project Details

  • Project Officer
    Endo, Isao
    Climate Change and Sustainable Development Department
    Request for information
  • Country/Economy
    Regional
  • Sector
    • Agriculture, natural resources and rural development
Project Name Nature Solutions Finance Hub for Asia and the Pacific
Project Number 57222-001
Country / Economy Regional
Project Status Active
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 10154-REG: Nature Solutions Finance Hub for Asia and the Pacific
Technical Assistance Special Fund US$ 200,000.00
Operational Priorities OP3: Tackling climate change, building climate and disaster resilience, and enhancing environmental sustainability
Sector / Subsector

Agriculture, natural resources and rural development / Land-based natural resources management

Gender Some gender elements
Description This project will launch the Nature Solutions Finance (NSF) Hub to specifically focus on catalyzing finance into Nature-based Solutions (NbS) to support nature-based climate actions and biodiversity conservation. Its establishment will be an opportunity to develop innovative solutions to address the intertwined crises of nature and climate. The NSF Hub's goal is to increase investments in NbS projects across Asia and the Pacific by proactively developing scalable and bankable demonstration projects by creating a platform with practical NbS solutions centered around innovative finance approaches. It aims to do this through a partnership approach with global development entities in the nature space along with concessional fund sources who can work together with ADB under a focused roadmap of activities.
Project Rationale and Linkage to Country/Regional Strategy

As the Climate Bank of Asia and the Pacific, ADB has been taking the lead in strengthening its climate efforts with several initiatives including the upcoming Climate Tech Hub (CTH) in the Republic of Korea and the ASEAN Catalytic Green Finance Facility (ACGF) amongst others. It now aims to launch a Nature Solutions Finance Hub (NSF Hub) to specifically focus on catalyzing finance into Nature-based Solutions (NbS) to support nature-based climate actions and biodiversity conservation. While the understanding about the value and efficiency of NbS in mitigating and adapting to climate change through the protection, conservation, restoration, and sustainable use and management of natural ecosystems has increased, adoption and scalability of such solutions remains limited. This has been due to on-going challenges such as mismatched planning and decision-making processes, regulatory and governance challenges, limited evidence base and technical challenges and access to finance. The establishment of a NbS Hub is an opportunity to overcome these issues and develop innovative solutions to address the intertwined crises of nature and climate.

The NSF Hub's goal is to increase investments in NbS projects across Asia and the Pacific by proactively developing scalable and bankable demonstration projects by creating a platform with practical NbS solutions centered around innovative finance approaches. It aims to do this through a partnership approach with global development entities in the nature space along with concessional fund sources who can work together with ADB under a focused roadmap of activities. The operation of the NSF Hub will be long-term and will potentially require several million dollars in grants and several hundreds of millions of dollars in concessional and other co-financing to implement NbS at scale on an accelerated timeframe. The NSF Hub will deliver services for: (i) capacity building for policy triggers; (ii) proactive project origination for scalable demonstration projects; (iii) structuring innovative-finance products and models into projects; and (iv) creating a possible fund for de-risking NbS projects by partnering with development finance institutions including philanthropic private capital sources. The NSF Hub also aims at creating a partnership platform to provide: (i) technical assistance to develop pilot projects; (ii) additional experts to the NSF Hub; and (iii) knowledge products such as innovative finance instruments.

For the NSF Hub to be effective there is a need for this SSTA to scope potential design elements, investigate innovative finance models, hold consultations with stakeholders to seek buy in to the development and potential financing for the Hub and increase visibility for NbS in ADB's developing member countries and especially sustainable pathways for these countries to adopt, internalize and scale up with ADB's support.

Scaling up the efforts to address nature loss means scaling up funds to meet the required $711 billion per year to reverse biodiversity loss by 2030. Annual investments in NbS, currently valued at $133 billion, will need to triple by 2030 and increase four times by 2050 (using 2020 as a base year). ADB, like other MDBs and numerous bilateral assistance programs, has identified the need to better integrate and scale-up NbS with investments in climate adaptation and mitigation. The needs and opportunities to generate co-benefits on climate, biodiversity, ecosystem health and services, and poverty reduction and sustained growth, and increasingly open new space for private sector investment in nature in the region are diverse and massive but largely untapped. While the value of economic returns from scaled up investments in nature-based resilience is huge, generating co-benefits for resilience to climate impacts, biodiversity, carbon sequestration, economic growth, and poverty reduction, the challenge is on linking such positive externalities to actual projects to make them bankable to global pools of capital through capital markets. The World Economic Forum estimates investment in nature can scale up to $10 trillion in additional annual business revenue and create employment opportunities worth up to $395 million by 2030. Without a scale of bankable NbS projects, the needed flows of capital will not materialize.

The SSTA is aligned with ADBs Strategy 2030 Operational Priority 3 tackling climate change, building disaster resilience, and enhancing environmental sustainability. NbS is one of the key approaches pursued by ADB to ensure environmental sustainability in the region. A SSTA is the best mechanism to undertake these activities based on (i) the short implementation time frame of one year; and (ii) the need for early-stage consultation and stakeholder engagement to support awareness raising and provide input to design the NSF Hub. Implementation of the resulting NSF Hub will be done through follow-up TA support.

Impact

Investments in NbS projects across Asia and the Pacific increased.

Project Outcome
Description of Outcome

Innovative finance approaches for NbS available

Progress Toward Outcome
Implementation Progress
Description of Project Outputs

Awareness among DMCs and other stakeholders on best practices of NbS projects and financing instruments raised.

Detailed NSF Hub design developed.

Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location Regional
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Responsible ADB Officer Endo, Isao
Responsible ADB Department Climate Change and Sustainable Development Department
Responsible ADB Division Climate Change, Resilience, and Environment Cluster (CCRE)
Executing Agencies
Asian Development Bank
Timetable
Concept Clearance -
Fact Finding 05 Sep 2023 to 05 Sep 2023
MRM -
Approval 27 Sep 2023
Last Review Mission -
Last PDS Update 23 Oct 2023

TA 10154-REG

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
27 Sep 2023 - 27 Sep 2023 30 Sep 2024 - -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
200,000.00 0.00 0.00 0.00 0.00 0.00 200,000.00 02 Feb 2024 0.00

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