Cloud Forest Assets: Financing a Valuable Nature-based Solution

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Published on
December 12, 2022

Nature is an asset for our economic development, and not just for its carbon. This report focuses on revealing the function of ‘cloud forests’, a little-known and highly threatened tropical ecosystem, which plays an outsized role in ensuring water provision. Despite their importance, most cloud forests are not currently protected and poorly financed.

The report shows how these vital ecosystems work as ‘water towers’ across the tropics, and assesses the value at stake across 25 developing countries where many cities, companies and industries depend on the water their cloud forests produce. In particular, we zoom in on how existing hydropower dams, energy transition plans, and future dams already in the pipeline would be affected by their loss.

Our data analysis underpins a series of finance and investment proposals, currently being piloted, which have been developed in collaboration with banks, investors and natural-asset experts. The proposals aim to enable cloud forest countries and companies to finance these forests as a strategic ‘green infrastructure’. From design options for a Cloud Forest Bond’ to unlock payments for ecosystem services, to regenerative investment pipelines tackling commodities that make for the largest deforestation drivers, the report provides an innovative blueprint enabling a sustainable development path for these countries in balance with their natural assets.

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