Case Study

Quantifying the value of nature in investment: Our work with CDC Group

CDC Group asked Earth Security to assess the economic value that the restoration of mangroves by one of their investments - Zephyr Power Limited (ZPL) in Pakistan – could provide to the business as a nature-based climate solution.

The purpose of this analysis was to assess the evidence and calculate this value; and present it in such a way as to enable CDC Group to quantify the value in its investment. This would also enable CDC Group to leverage the value of nature as part of its climate strategy more broadly, and provide the DFI community at large with much-needed evidence on how to apply nature-based solutions to investment portfolios.

The 50 MW wind power project, operated by ZPL in Pakistan, is in the Gharo-Keti-Bandar Wind Corridor near Karachi. It is situated in a region of degraded coastal marshes, which exposes the project’s infrastructure to climate change risks, particularly coastal erosion and sea level rise.

“We know that nature-based solutions have a tangible value in helping project assets to become more resilient to climate change. Our partnership with Earth Security is looking at these economic values more systematically and showing other global investors how they can benefit from integrating nature-based approaches in their projects” - Nik Stone, ESG manager, CDC Group.

Mangroves regenerating on the Zephr Power site. Haider Mukhi

Our analysis identified and quantified three areas of value for the investment: the protection of physical assets, community development and social license to operate, and regulatory requirements by international investors. The values described in the report provide solid evidence for investors to use natural assets, such as mangroves, as a cost-effective tool to mitigate climate change risks and build more resilient investments.

Overall, the evidence suggests that the investment in mangrove restoration can return up to 20 times its value through the protection of physical assets against coastal erosion, saving the project up to $7 million in maintenance costs over the project’s 25-year timeframe, as well as creating a substantial local impact on livelihoods by doubling the incomes of local communities dependent on subsistent farming.

The process included the active engagement of the project’s team in Pakistan and local stakeholders, as well as a collaboration with CDC Group team. The resulting report presents the evidence in a balance sheet format, which allows the project and its investors to clearly see the return on investment.

This has enabled CDC Group to both quantify the return on investment that ecological restoration can accrue for this project, supporting the ongoing internal process to consider how these values can be leveraged as part of its wider climate strategy. The case study also supports CDC Group’s leadership with the wider DFI community, providing the much-needed evidence for DFIs and investors in real assets to embed the value of nature for climate resilience across investment portfolios.