Efforts to reverse the world’s accelerating loss of biodiversity may require more than simply attracting investment into conservation projects. Researchers are urging a fundamental shift in how nature recovery is financed, warning that an excessive reliance on market-based solutions risks overlooking the ecological and social outcomes that conservation funding is supposed to achieve.

In a paper published in Global Environmental Change, researchers call on governments, investors and conservation organisations to reconsider their approach to nature finance. The study comes as the COP17 biodiversity summit takes place in Armenia, where financing conservation and ecosystem restoration is a major priority. The authors argue that raising money should serve the broader goal of restoring nature rather than becoming an objective in itself.

Despite decades of experimentation, policy development and academic research, natural capital markets remain a relatively small and specialised source of conservation funding. Yet these markets continue to dominate discussions about financing biodiversity recovery. The researchers question whether the attention devoted to expanding such markets is justified by their actual contribution to protecting and restoring ecosystems.

“Nature’s decline is driven by economic systems that still reward its degradation,” said co-author Nathalie Seddon, Professor of Biodiversity at the University of Oxford. While acknowledging that natural capital markets have encouraged innovation, she warned that expectations surrounding their potential have become unrealistic. Conservation efforts, she argued, should prioritise thriving ecosystems alongside the rights and wellbeing of communities responsible for caring for them.

The study identifies five major weaknesses in natural capital markets: difficulties expanding their scale, an emphasis on compensating for environmental damage rather than restoring ecosystems, financial returns taking precedence over ecological benefits, problems measuring results, and concerns about fairness and equity. Market-driven approaches can also exclude local communities and Indigenous knowledge from decision-making, potentially deepening existing inequalities. Although stronger standards and improved oversight may help, the researchers argue that these measures cannot resolve the markets’ underlying limitations.

Dr Theo Stanley, lead author and Research Fellow at the University of Southampton, said society has placed too much confidence in markets to deliver conservation that is both effective and fair. Because market-based projects must satisfy commercial demands, they cannot necessarily address the full range of environmental and community needs. He urged policymakers to place ecological recovery and social benefits at the centre of financing decisions while exploring a broader range of funding approaches.

Co-author Justin Adams, a fellow at the University of Oxford, stressed that natural capital markets can still provide vital support for conservation projects. However, improving these markets alone will not change the economic incentives responsible for environmental destruction. Drawing on more than two decades of experience in nature finance, he called for stronger collaboration among businesses, governments and communities to develop investment approaches that protect biodiversity, support local livelihoods and strengthen the resilience of natural ecosystems.

More information: Theo Stanley et al, Reimagining nature finance, Global Environmental Change. DOI: 10.1016/j.gloenvcha.2026.103252

Journal information: Global Environmental Change Provided by University of Oxford